3 Reporting Pagine Eliminate

SUSTAINABILITY REPORTING
Prof. Davide Galli Ph.D.

davide.galli@unicatt.it
© UCSC
AGENDA
q Group Case #01 discussion

q Sustainability reporting
q The Global Reporting Initiative (GRI)
q Focus: Corporate Knights (2019) The 2019 Global 100
2019/2020 - Sustainability management

© UCSC Prof. Davide Galli
Developments
§ ‘70s rinsing levels of incomes + new focus of society and

politics on quality of life => social reports with new
accounting techniques such the value-added statement;
§ ‘80s incidents and environmental catastrophe +
increased pressure for greater transparency + new laws
and standards (e.g. EMAS scheme) => environmental
reports
§ Late ‘90s companies’ claims to depict an overall picture
of their ecological, social and economic activities and
performance => sustainability reports
§ ‘10s more attention on selected environmental and
social aspect of corporate financial performance =>
extended financial reports and integrated (business)
reports
SUSTAINABILITY REPORTING
§ Social reporting support business case fo CSR and

sustainability practices;
§ Perceived advantages:
ü Business efficiency;
ü Market drivers;
ü Reputation;
ü Risk management;
ü Stakeholder engagement;
ü Internal champions;
ü Mimetic motivations.

INTEGRATING REPORTING IN
EUROPE
§ Since 2003 companies of a certain size, state-owned or listed
companies and companies that are significant emitters of
pollution must integrate their financial report with other
information;
§ IIRC (International integrated reporting council) is a standard

defined in 2010 giving a set of principles and aspects to be
included in the report;
§ By 2016 all unlisted companies with annual revenue of

€100m or more and staff of 500 or more must produce IR,
according to EU Accounting Directives;

IIRC FRAMEWORK

IR FRAMEWORK: CONTENT ELEMENTS
• The following Guiding Principles underpin the preparation

and presentation of an integrated report, informing the
content of the report and how information is presented:
§ A Strategic focus and future orientation
§ B Connectivity of information
§ C Stakeholder relationships
§ D Materiality
§ E Conciseness
§ F Reliability and completeness
§ G Consistencyandcomparability

IIRC FRAMEWORK

AGENDA


GLOBAL REPORTING INITIATIVE
https://www.globalreporting.org/Pages/default.aspx
§ The Global Reporting Initiative (GRI) is a network-based

organization that produces a comprehensive sustainability
reporting framework that is widely used around the world.
§ GRI is committed to the Framework’s continuous improvement

and application worldwide. GRI’s core goals include the
mainstreaming of disclosure on environmental, social and
governance performance.
§ GRI's Reporting Framework is developed through a
consensus-seeking, multi-stakeholder process.
Participants are drawn from global business, civil society,
labor, academic and professional institutions.

BENEFIT OF GRI REPORTING
§ Sustainability reports based on the GRI Framework can be

used to demonstrate organizational commitment to
sustainable development, to compare organizational
performance over time, and to measure organizational
performance with respect to laws, norms, standards and
voluntary initiatives.
§ GRI promotes a standardized approach to reporting to

stimulate demand for sustainability information – benefitting
both reporting organizations and report users.

GRI FRAMEWOK
§ The Reporting Framework sets out the principles and

Performance Indicators that organizations can use to
measure and report their economic, environmental, and social
performance.
§ The cornerstone of the Framework is the Sustainability
Reporting Guidelines. The third version of the Guidelines –
known as the G3 Guidelines - was published in 2006, and is a
free public good.
§ Other components of the Framework include Sector
Supplements (unique Indicators for industry sectors) and
National Annexes (unique country-level information).

SUSTAINABILITY
REPORTING GUIDELINES
§ The Guidelines are the foundation of the Framework and are
now in their fourth generation (G4);
§ They feature Performance Indicators and Management
Disclosures that organizations can adopt voluntarily, flexibly and
incrementally;
§ The G4 Guidelines are the latest and most complete version of
GRI's Sustainability Reporting Guidelines;
§ These Guidelines are based on G3 but contain expanded
guidance on local community impacts, human rights and
gender. While G3-based reports are still valid, GRI
recommends that reporters use G4, the most comprehensive
reporting guidance available today.

SUSTAINABILITY
REPORTING GUIDELINES
q Part 1 – Reporting Principles and Guidance
ü Principles to define report content: materiality,
stakeholder inclusiveness, sustainability context, and
completeness;
ü Principles to define report quality: balance,
comparability, accuracy, timeliness, reliability, and
clarity.
ü Guidance on how to set the report boundary.
q Part 2 – Standard Disclosures

ü General Standard Disclosures
ü Specific Standard Disclosures
ü Disclosures on Management Approach
ü Indicators and Aspect-specific Disclosures on
Management Approach
Report’s content Principles
q MATERIALITY The information in a report should

cover topics and Indicators that reflect the
organization’s significant economic, environmental,
and social impacts, or that would substantively
influence the assessments and decisions of
stakeholders.
q STAKEHOLDER INCLUSIVENESS The reporting
organization should identify its stakeholders and
explain in the report how it has responded to their
reasonable expectations and interests.

Report’s content Principles
q SUSTAINABILITY CONTEXT The report should

present the organization’s performance in the wider
context of sustainability.
q COMPLETENESS Coverage of the material topics
and Indicators and definition of the report boundary
should be sufficient to reflect significant economic,
environmental, and social impacts and enable
stakeholders to assess the reporting organization’s
performance in the reporting period.

Report’s quality Principles
q BALANCE The report should reflect positive and

negative aspects of the organization’s performance
to enable a reasoned assessment of overall
performance.
q COMPARABILITY Issues and information should be
selected, compiled, and reported consistently.
q ACCURACY The reported information should be
sufficiently accurate and detailed for stakeholders to
assess the reporting organization’s performance.

Report’s quality Principles
q TIMELINESS Reporting occurs on a regular

schedule and information is available in time for
stakeholders to make informed decisions.
q CLARITY Information should be made available in a
manner that is understandable and accessible to
stakeholders using the report.
q RELIABILITY Information and processes used in
the preparation of a report should be gathered,
recorded, compiled, analyzed, and disclosed in a
way that could be subject to examination and that
establishes the quality and materiality of the
information

GENERAL STANDARD
DISCLOSURE
q Strategy and
Analysis
q Organizational
Profile
q Identified Material
Aspects and
Boundaries
q Stakeholder
Engagement
q Report Profile
q Governance
q Ethics and Integrity

GENERAL STANDARD DISCLOSURE
STRATEGY AND ANALYSIS

DEFINING MATERIAL ASPECT AND
BOUNDARIES

REPORT PROFILE AND GOVERNANCE

SPECIFIC STANDARD DISCLOSURE



ECONOMIC INDICATORS

ENVIRONMENTAL INDICATORS

ENVIRONMENTAL INDICATORS

SOCIAL INDICATORS: LABOUR AND
HUMAN RIGHTS

SOCIAL INDICATORS: SOCIETY

SOCIAL INDICATORS: PRODUCT
RESPONSIBILITY

SECTOR SUPPLEMENTS
q GRI Sector Supplements are tailored versions of the GRI

Guidelines. Sector Supplements help to make sustainability
reports more relevant, and easier to produce.
q Some sectors face unique issues, such as noise for the airports
sector, or resettlement of people in the mining and metals
sector. Sector Supplements capture the relevant issues
essential to sustainability reporting in a specific sector. These
issues may not appear in the GRI Guidelines since they are
relevant primarily for a specific range of reporting organizations
or sectors.

SECTOR SUPPLEMENTS
q Organizations can report using G3 or G3.1. Existing Sector

Supplements are:
ü Airport Operators
ü Construction and Real Estate
ü Electric Utilities
ü Event Organizers
ü Financial Services
ü Food Processing
ü Media
ü Mining and Metals
ü NGO
ü Oil and Gas.

SECTOR SUPPLEMENTS:
FOOD PROCESSING

GENERAL CONSIDERATIONS ON
INTERNET BASED REPORTING
q Printed reports have some limitations and they are not

sustainable;
q Internet allows to present an integrated view of different
aspects of sustainability
ü 24-hours accessibility;
ü Specific information tailoring and distribution;
ü Individual access for stakeholders;
ü Combination of different media elements such as words,
figures, images, voices, videos;
ü Supporting on-line dialogue with stakeholders.
q Disavantages:
q Information change without warning;
q Low assurance of web content.

SUSTAINABILITY REPORTING RISKS
q Managing threats to organizational legitimacy;

q Performance-potrayal gap: comparing company’s
performance disclosures with information obtained from other
sources;
q Shadow reporting:
ü Technology that collects and compiles, make visible,
represents and communicates evidence from external
sources in order to reveal contradictions in reporting
practices;
ü Attempt to moving away from an organization-centered
perspective through the use of independent but not
necessarily objective sources.

POTENTIAL AND PRACTICAL LIMITS
OF SUSTAINABILITY REPORTING
q Inadequate target group orientation and rick of creating an
information overload;
q Mismatch between the information interests of most
stakeholders and social reports;
q Scientific approach remote from the reality of most
people’s lives;
q Low quality of data published;
q Misuse of social reporting as public relation tool;
q Insufficient integration of social and financial reporting.
q Tension between using reporting guidelines as a legitimating
exercise and demonstrating accountability for views and need
for a broad range of stakeholders.

AGENDA


SUCCESSES
Ranking is conducted by Corporate Knights, a specialized

media and investment research firm
q Annual ranking of corporate sustainability performance
q Released each January at the World Economic Forum in
Davos; published in leading media including Forbes.com
q Size: Global mid, large and mega-cap companies
q Industry and geography: All industries and geographies are
automatically considered
CLASS 2019
q Ranking number one this year is Chr. Hansen Holding, a

Danish bioscience firm that derives over 80% of its revenue
developing natural solutions for preserving foods like yogurt
and milk, protecting crops using natural bacteria instead of
pesticides, and alternatives to antibiotics for animals.
q In second place on the roster is Kering SA, a French firm
better known for the consumer-facing brands it owns: fashion
houses Gucci, Yves Saint Laurent and Alexander McQueen,
among others. The brand has shown it takes sustainability
seriously by sourcing more than 40% of its products from
certified sustainable sources.
q Third in the Global 100 ranking is Neste Corporation, which
held second place last year. Based in Finland, Neste is a
petroleum refinery and marketing company with annual
revenue of more than $10 billion.
2019 GLOBAL 100 RESULTS
Overall
Rank Company Country GICS Industry
Score
Chr. Hansen Food or other Chemical
1 Denmark 82,9%
Holding A/S Agents
2 Kering SA France Apparel and Accessories 81,6%
Neste
3 Finland Petroleum Refineries 80,9%
Corporation
4 Orsted Denmark Wholesale Power 80,1%
5 GlaxoSmithKline UK Biopharmaceuticals 79,4%
6 Prologis, Inc. U.S. Real Estate Investment 79,1%
7 Umicore Belgium Primary Metals Products 79,1%
8 Banco do Brasil Brazil Banks 78,2%

Shinhan South
9 Banks 77,78%
Financial Group Korea
Taiwan
10 Taiwan Semiconductor Equipment 77,7%
Semiconductor
KEY FEATURES OF THE GLOBAL 100
q Approach: driven by data, not judgment

q Transparent: clear approach for getting from the project’s
starting universe (n =~ 4,000 companies) to the 2017 Global
100
q Scoring: Companies are only scored on ‘relevant’ KPIs for
their respective industry
q Data gaps: the project incentivizes more disclosure, not less

disclosure
q Scope: the Global 100 sticks to indicators that can be
objectively measured – it does not purport to gauge
companies’ exposure to qualitative sustainability risks
q The approach and methodology are reviewed annually
through stakeholder consultations and expert input
PHILOSOPHICAL PERSPECTIVE OF
THE GLOBAL 100
q Relevance: The ranking is meant to be representative of
business sustainability in the current socio-economic context.
q Transparency: The precise methodology of the ranking and
the results of the process are fully disclosed.
q Objectivity: Eligible companies will only be assessed using
quantitative data and performance indicators.
q Public data: Only data-points that are part of the public
domain are used
q Comparability: Companies are compared based on
performance indicators for which the underlying data are
reasonably well disclosed by their industry group globally.
q Engagement: Companies eligible for the ranking will be
informed prior to the ranking.
q Stakeholders: Stakeholder feedback is actively solicited
throughout the project.
SCREENING CRITERIA

RESOURCE MANAGEMENT KPI

FINANCIAL MANAGEMENT KPI

EMPLOYEE MANAGEMENT KPI

ADDITIONAL KPI

ADDITIONAL KPI AND THE FOUR
UNIVERSAL KPIS
q Corporate Knights uses a 10-person in-house team of
researchers and data scientists—as well as 50 outside data
collectors—to plow through financial and ecological information
from Bloomberg, Thompson Reuters and other sources. They
then verify some of that information with the companies they’re
researching and internally vet incoming data. The entire
research process requires sifting through 3.7 million data points
and takes about 5,000 hours of work, says Heaps.
q All companies, irrespective of GICS Industry are also assessed

on all eights universal KPIs: Percentage Tax Paid, Pension
Fund Status, Supplier Sustainability Score (except financial
services organizations), Women in Executive Management,
Women on Boards, Sustainability Pay Link, Sanctions
Deductions, Clean Revenue

OUR FOCUS ON SUSTAINABILITY
STRATEGIES
80th in 2019, 41st in 2018
Clean revenue score = 60%; Overall = 57,9%
39th in 2019, 77th in 2018

Clean revenue score =100%; Overall = 68,3%
Not ranked in top 100%
28th in 2019, 9th in 2018

Clean revenue score = 80%; Overall = 71,3%


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SUSTAINABILITY REPORTING

Prof. Davide Galli Ph.D.

q Group Case #01 discussion

2019/2020 - Sustainability management

§ ‘70s rinsing levels of incomes + new focus of society and

§ Social reporting support business case fo CSR and

2019/2020 - Sustainability management

§ IIRC (International integrated reporting council) is a standard

§ By 2016 all unlisted companies with annual revenue of

2019/2020 - Sustainability management

2019/2020 - Sustainability management

• The following Guiding Principles underpin the preparation

§ A Strategic focus and future orientation

2019/2020 - Sustainability management

2019/2020 - Sustainability management

q Group Case #01 discussion

2019/2020 - Sustainability management

§ The Global Reporting Initiative (GRI) is a network-based

§ GRI is committed to the Framework’s continuous improvement

2019/2020 - Sustainability management

§ Sustainability reports based on the GRI Framework can be

§ GRI promotes a standardized approach to reporting to

2019/2020 - Sustainability management

§ The Reporting Framework sets out the principles and

2019/2020 - Sustainability management

2019/2020 - Sustainability management

q Part 2 – Standard Disclosures

q MATERIALITY The information in a report should

2019/2020 - Sustainability management

q SUSTAINABILITY CONTEXT The report should

2019/2020 - Sustainability management

q BALANCE The report should reflect positive and

2019/2020 - Sustainability management

q TIMELINESS Reporting occurs on a regular

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

2019/2020 - Sustainability management

q GRI Sector Supplements are tailored versions of the GRI

2019/2020 - Sustainability management

q Organizations can report using G3 or G3.1. Existing Sector

2019/2020 - Sustainability management

2019/2020 - Sustainability management

q Printed reports have some limitations and they are not

2019/2020 - Sustainability management

q Managing threats to organizational legitimacy;

2019/2020 - Sustainability management

2019/2020 - Sustainability management

q Group Case #01 discussion

2019/2020 - Sustainability management

Ranking is conducted by Corporate Knights, a specialized

q Ranking number one this year is Chr. Hansen Holding, a

7 Umicore Belgium Primary Metals Products 79,1%