Management of material sustainability matters

Background Information:

Such examples of material sustainability matters are climate change, pollution, human rights or diversity,
and new governance. These are the activities which pose a risk to the environment or society that are
associated with your organizations’ core operations and affect your business’ reputation.

(Example & Explanation: Airline companies’ issue about being one of the fastest growing sources of
greenhouse gas emissions driving global climate change and serious health hazard that concerns
stakeholders and are now demanding better data and more evidence that airlines are making real efforts
to reduce GHGs (greenhouse gases) )

Important notes from the book:

 Responses to material sustainability matters:

1. Developing policies and procedures
2. Implementing various initiatives, measures, or action plans
3. Setting goals and timeframes inline with strategic objectives of organization
4. Implementing new and changing systems to analyze and manage data requirements
associated with each material sustainability matter.

(Example & Explanation: In relation to the airline companies, they are working to use cleaner fuel
sources to combat their carbon footprint. They are switching from traditional fossil-derived jet fuels to
ones that are made from renewable sources and have lower emissions during production such as SAF or
sustainable aviation fuels which are made from used cooking oil and processing waste.

Also, airlines are looking to new materials and coating technologies to make planes lighter, more
aerodynamic, and more resistant to wear and tear. An airplane's weight significantly contributes to its
carbon footprint because lighter aircraft need less fuel to operate, and less fuel burned means lower
emissions. In October 2021, the global aviation industry took its climate commitment one step further by
declaring that it will achieve net-zero carbon emissions by 2050.)

 Information regarding sustainability performance and how it is linked to overall business strategy
and financial performance is important for stakeholders (especially to investors and market
analysts) to better understand investment risks.

(Example & Explanation: Kagaya nung nasabi sa taas, interested mga investors sa environmental, social,
and governance issues. Kaya ang particular concern nila is paano mapapababa yung GHG sa mabilis na
paraan kase nakakaaffect to sa economic health ng industry.)

 Management approach to material sustainability matters should be approved by the Board or

delegated to a Board committee (if applicable).

https://www.vistra.com/insights/airline-industry-and-esg-what-investors-need-know
Communicating and Providing Credibility to Your Sustainability Performance and Disclosures

 Provide a content index to its sustainability-related disclosure.

(Explanation: These includes ESG factors, covering sustainability practices, policies, and
performance. Typically found in sections like Corporate Governance or Risk Management in annual
reports, they outline how the company operates, its leadership, and ethical compliance. This index
enhances transparency and exhibits the company's dedication to sustainability and responsible
governance.)

 Organizations should familiarize themselves with stakeholders’ preference for types of assurance
(internal or external).

(Explanation: Some stakeholders might trust internal reports, while others might seek external
validation. Familiarity allows organizations to meet diverse expectations and build trust with
stakeholders.

Internal assurance example: Employees, as stakeholders invested in the company’s culture and
operations, prefer internal assurance due to their trust in the organization’s ability to self-assess, make
changes, and foster an inclusive workplace environment.

External assurance example: A publicly traded company committed to sustainability decides to publish
an ESG report detailing its environmental impact, social initiatives, and governance practices. Investors,
being stakeholders interested in the long-term sustainability and ethical conduct of the company, prefer
external assurance as it offers credibility, comparability, risk mitigation, and a demonstration of the
company's commitment to sustainable practices.)

 Board and senior management should ensure credibility of the information before relying on or
communicating the information. To instill confidence of information is via the provision of
assurance.

Assurance

 Assurance can be provided to different types of sustainability disclosures.

o Data and/or its associated collection process (Explanation: This ensures that the data
collection processes align with defined standards and accurately represent the
company's sustainability performance.)
o Narratives (Explanation: It checks whether the qualitative information provided
accurately represents the company's actions, goals, and impacts related to
sustainability.)
o Management processes (Explanation: It evaluates the effectiveness and adequacy of the
internal systems and controls to manage sustainability-related risks)
o Disclosures developed in accordance with standards and frameworks such as the GRI
Standards (Explanation: It confirms whether the organization's disclosures adhere to the
requirements and guidelines set by these frameworks.)

 Several criteria that an organization needs to set.

o Scope of the assurance assignment
 o Standard to which it is being performed
o Competence of the assurance team
o Method of presentation

(Explanation: By considering these criteria, organizations can effectively plan and execute assurance
activities that verify the accuracy, reliability, and adherence of their sustainability disclosures to
established standards, ensuring credibility and transparency in their reporting practices.)