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Sustainability Reporting- Business Ethics
- 2. Conserving an ecological balance by avoiding depletion of natural resources Capability of being maintained at a steady level without exhausting natural resources or causing severe ecological damage
- 3. An ever-greater number of companies and other organizations are recognizing the need to make their operations more sustainable. The governments, stock exchanges, markets, investors, and society at large are calling on companies to be transparent about their sustainability goals, performance and impacts.
- 4. SUSTAINABILITY REPORTING Sustainability reporting is the practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance towards the goal of sustainable development. It is a broad term considered synonymous with others used to describe reporting on economic, environmental, and social impacts (e.g., triple bottom line, corporate responsibility reporting, etc.). A sustainability report should provide a balanced and reasonable representation of the sustainability performance of a reporting organization – including both positive and negative contributions.
- 5. Sustainability reports based on the GRI Reporting Framework disclose outcomes and results that occurred within the reporting period in the context of the organization’s commitments, strategy, and management approach. Reports can be used for the following purposes, among others: Benchmarking Demonstrating Comparing
- 6. IMPORTANC E Corporate companies that focus on SR outperform their peers over the longer run, which in turn results into a stronger market position and increased profitability. There is a reliable co-relation between business integrity and above average financial performance. SR helps to acquire national and international listings and provide access to otherwise restricted markets. SR will provide a sound understanding of the organization's customer needs, especially foreign international customers. Other benefits include attracting finance through transparent relationships with credit providers, improving management systems and improving employee motivation and customer satisfaction.
- 7. SUSTAINABILITY REPORTING FRAMEWORK Principles for defining contents: •Materiality •Stakeholder inclusiveness •Sustainability context •Completeness Principles for defining quality: •Balance •Clarity •Accuracy •Timeliness •Comparability •Reliability Standard Disclosures: 1- Strategy and profile 2– Management approach 3 – Performance Indicators
- 8. SUSTAINABILITY REPORTING FRAMEWORK Economic Environmental Social Human rights Society Product responsibility Sector Supplements: •Airports •Apparel & Footwear • Automotive • Construction and Real State • Electric Utilities • Financial Services • Food Processing • Logistic & Transportation• Mining & Metals • NGOs • Public Agencies • Telecommunication s • Tour Operators
- 9. STANDARD DISCLOSURES1. Profile Disclosures Strategy & Analysis of the organization Organizational Profile Report Parameters for the organization Governance, Commitments and Engagements of the organization 2. Disclosures on Management Approach 3. Disclosure on Performance Indicators Economic Environmental Social Labour Practices and Decent Work Society Human Rights Product Responsibility
- 11. GLOBAL REPORTING INITIATIVEThe Global Reporting Initiative (GRI) is a multi- stakeholder process and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. The Guidelines are for voluntary use by organisations for reporting on the: ◦ Economic, ◦ Environmental, and ◦ Social dimensions of their activities, products, and services.
- 13. GRI REPORTING OVER THE YEARS ( https://www.globalreporting.org/resourcelibrary/G
- 14. National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business • The National Guidelines on the Economic, Social and Environmental Responsibilities of Business (Guidelines) initiated by the Ministry of Corporate Affairs (MCA) in September 2015. • After extensive discussions between the MCA and the Indian Institute of Corporate Affairs (IICA), it was decided to update the National Voluntary Guidelines on the Social, Environmental and Economic Responsibilities of Business (NVGs), which were released in 2011.
- 15. Principles Principle 1: Businesses should conduct and govern themselves with integrity in a manner that is Ethical, Transparent and Accountable. Principle 2: Businesses should provide goods and services in a manner that is safe and sustainable Principle 3: Businesses should respect and promote the well-being of all employees, including those in the value chain Principle 4: Businesses should respect the interests of and be responsive to all its stakeholders Principle 5: Businesses should respect and promote human rights Principle 6: Businesses should respect and make efforts to protect and restore the environment Principle 7: Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent Principle 8: Businesses should promote inclusive growth and equitable development Principle 9: Businesses should engage with and provide value to their consumers in a responsible manner
- 16. Sustainability Reporting – Challenges Reasons for Reporting Reasons against Reporting Mandatory approaches to reporting •Changing the corporate culture – leaders will continue to innovate above minimum requirements •Incompleteness of voluntary reports •Comparability •Non-disclosure of negative performance •Legal certainty •Reduction of non-diversifiable market risk free rider problem •Cost savings •Standardization •Equal treatment of investors •Knowledge gap between regulators and industry •One size does not fit all •Inflexibility in the face of change and complexity •Lack of incentive for innovation •Constraints on efficiency and competitiveness Voluntary approaches to reporting •Flexibility •Proximity •Compliance •Collective interest of industry •Conflicts of interest •Inadequate sanctions •Under-enforcement •Global competition •Insufficient resources
- 17. Barriers to Sustainability Reporting • Unclear / rapidly evolving reporting standards and frameworks - Breadth of topics under sustainability can be overwhelming • Resources: cost, time, expertise • Lack of management support or understanding -Fear of risking credibility and reputation, risking misinterpretation -Senior-level ownership is important -Training and education of management and employees responsible for report • Mandating sustainability reporting places companies and stock exchanges at a competitive disadvantage -Companies risk credibility or misinterpretation
- 18. Rio Declaration • The Rio Declaration on Environment and Development, often shortened to Rio Declaration, was a short document produced at the 1992 United Nations "Conference on Environment and Development" (UNCED), informally known as the Earth Summit. • The Rio Declaration consisted of 27 principles intended to guide countries in future sustainable development. It was signed by over 170 countries.
- 19. • The Rio Declaration proclaims 27 principles. It includes formulations of the • Precautionary principle and • Polluter pays principle.
- 20. Principles of stockholm declaration • The meeting agreed upon a Declaration containing 26 principles concerning the environment and development; an Action Plan with 109 recommendations, and a Resolution.
- 21. Kyto Protocol • The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change, which commits its Parties by setting internationally binding emission reduction targets.
- 22. challenges of implementation of sustainable development goals 1. Lack of financial resources to carry out and plan sustainable development 2. Sustainable development is often not possible in under developed or developing countries as there are other priorities on hand. 3. The governmental conflict between immediate profit and investment towards sustainable technologies. 4. Lack of efforts at a municipal level
- 23. Thank you…
- 24. Continued strong growth in sustainability reporting Increased interest in what organizational leadership identifies as critical sustainability topics Increased interest from report users for clearly presented and accessible information Harmonisation between reporting tools and systems Increased integration of financial and sustainability reporting
- 27. G4: NEXT GENERATION OF REPORTINGG4, the fourth generation of the Guidelines, was launched in May 2013. It marked the culmination of two years of extensive stakeholder consultation and dialogue with hundreds of experts from across the world from a wide variety of sectors. Aim of G4: to help reporters prepare sustainability reports that matter – and to make robust and purposeful sustainability reporting standard practice.
- 28. G4 Objectives Be user friendly for beginners and experienced reporters Improve technical quality with clearer definitions Align with other international reporting references (frameworks) Lead to reports that cover material topics Offer guidance on how to link sustainability and integrated reporting, aligned with the IIRC
- 29. STRUCTURE & FORMATThe G4 is presented in two separate documents: 1.Reporting Principles and Standard Disclosures: GRI’s Reporting Principles are the criteria that should be used to guide your choices, in order to achieve effective GRI reporting. Standard Disclosures are the GRI ‘questions’ you answer in your report. (Strategy & Analysis, DMA, Indicators) 2.Implementation Manual: This is the ‘how to’ section, and provides detailed advice and recommendations for reporting with G4.
- 30. Examples of Performance Indicators Economic ◦ Financial implications and other risks and opportunities due to climate change (G4-EC2) ◦ Local hiring (G4-EC6) Environmental ◦ Materials used (G4-EN1) ◦ Materials used that are recycled input materials (G4-EN2) – Coca Cola ◦ Energy consumed (G4-EN3) – Hazira, RIL ◦ Impact on biodiversity in protected areas (G4-EN12) ◦ Amount of waste (G4-EN23) – P&G ◦ Environmental impact associated with transportation (G4-EN29) – Coca Cola, Bata
- 31. Examples of Performance Indicators Labor ◦ Health and safety measures (G4-LA6) – P&G ◦ Hours of training (G4-LA9) ◦ Governance body/employee diversity (G4-LA12) - Dell Human Rights ◦ Human rights screening on suppliers and contractors (G4-H10) - Tata ◦ Violation of indigenous rights (G4-HR8) Society ◦ Impact on community (G4-SO1) - Vedanta ◦ Training against corruption (G4-SO5) Product Responsibility ◦ Life cycle assessment of products/services (G4-PR1) ◦ Customer satisfaction (G4-PR5) - Dell
- 34. List of India companies with GRI based sustainability reporting
- 36. Comparison of the standards Features GRI AA 1000 SA 8000 ISO 26000 T le bott li So acco ting, reporting accontabi So respsib Corporate ty Reporting & Man ement Codes, issues & asse ts ance Su pillar ility Triple bottom line Primarily social, se nd rily enviro l economical labour - mainly Sustain le development Application Normative asp indicators Non normative Normative Normative 3rd party audit Y Yes Yes Y Indicators Se Up to t
- 37. National Scenario The reporting in India is still at a nascent stage with nearly 80 companies out of 7000 listed companies, disclosing their sustainability performance. Out of these 80, there are about 60 companies which have publicly declared that they use GRI Guidelines. And out of these 60, only 51 sustainability reports are registered on the GRI database. Reporting companies are mainly from Oil and Gas, Mining, Cement, Steel, Minerals, Automotive, etc. Reliance, ITC, Dr. Reddy's, Jubiliant Organosys, Tata Steel, Tata, Lafarge are some of the most active companies reporting themselves. Reliance and ITC are the highest rating (3 A+) companies.
- 38. 2011 onwards
- 39. Global Scenario Of the 250 largest global companies, over 65% are already publishing a sustainability report. More than 3,000 companies across the world report on how they minimise their environmental footprint, engage with stakeholders, adopt fair social practices or embed sustainability into their day - to - day business, R & D or marketing practices. Companies across Europe, Canada, Australia, Japan and USA and across sectors have been coming up with the sustainability reports for 6 to 10 years now. Companies like BP, ABN, AMRO, BT, Novo NORDISK etc. have been rated amongst the top reporters for years now.
- 40. 2013 Global CSR Reputation Winner Companies RANK POINTS OUT OF 100 MICROSOFT 1 72.97 WALT DISNEY 2 72.83 GOOGLE 3 72.71 BMW 4 72.14 DAIMLER 5 70.65 SONY 6 69.49 INTEL 7 69.29 VOLKSWAGEN 8 69.21 APPLE 9 69.12 NESTLE 10 69.00 Source: Reputation Institute
- 41. Comparing 4 Years Ranking By Reputation Institute
- 42. Companies lagging behind in reporting – G3.1 Most of the companies do not have regular checks and internal assurance protocol in place. Most of the reports issued by companies fail to define clear focus areas and identifying key stakeholders. Very few reporters have sustainability strategy with well - defined objectives and SMART targets. The Sustainability Reports issued during the last few years are highly packaged but lack emphasis on the main issue of sustainability. Climate change has emerged on the key sustainability risks across industries but only small number of companies report on climate change risks.
- 43. What can be done? – G4 The expectations from Indian reporters going forward are to focus on presenting information related to: ◦Sustainability issues, challenges, dilemmas and opportunities. ◦Regulatory environment and fact-based information. ◦Information of interest to investors such as materiality of issues in financial terms, vision and strategy, statements, goals and targets, etc. ◦Explanation on identification and prioritization of material issues. ◦Reader friendly report design.
- 47. EMPOWERING NON PROFITS Bill gates has donated $ 36,854,000,000 in his lifetime.
- 49. CASE STUDY - RIL
- 52. CASE STUDY - TATA Approximately two third of the equity of the parent firm, Tata Sons Ltd. is held by philanthropic trusts endowed by Sir Dorabji Tata and Sir Ratan Tata, son of Jamshedji Tata, the founder of today’s Tata empire in the 1860s. Through these trusts, Tata Sons Ltd. utilizes on average between 8 to 14 percent of its net profit every year for various social causes. Even when economic conditions were adverse, as in the late 1990s, the financial commitment of the group towards social activities kept on increasing, from Rs 670 million in 1997-98 to Rs 1.36 billion in 1999-2000. In the fiscal year 2004 Tata Steel alone spent Rs 45 crores on social services.
- 53. In July 2004, B. Muthuraman, Managing Director, Tata Steel Limited (TISCO) announced that in future TISCO would not deal with companies, which do not conform to the company's Corporate Social Responsibility (CSR) standards. Speaking at the annual general meeting of the Madras Chamber of Commerce and Industry, He stated, "We will not either buy from or sell to companies that do not measure up to Tata Steel's social responsibility standards."
- 54. •Over 500 self-help groups are currently operating under various poverty alleviation programs; out of which over 200 are engaged in activities of income generation thorough micro enterprises. •Women empowerment programs through Self-Help Groups have been extended to 700 villages. From the year 2003 to 2006, the maternal and infant survival project had a coverage area of 42 villages in Gamharia block in Seraikela Kharsawa and a replication project was taken up in Rajnagar block.
- 55. Tata Steel supports various social welfare organizations. They include; Tata Steel Rural Development Society Tribal Cultural Society Tata Steel Foundation for Family Initiatives National Association for the Blind Shishu Niketan School of Hope Centre for Hearing Impaired Children Indian Red Cross Society, East Singhbhum •In 2010-11, TCS supported its local communities in the United States: supported the victims of the 2010 Chilean earthquake. As far as the Tata group is concerned , it has gone a long way in fulfilling its duty and responsibility towards the society and the nation.
- 56. Comparing with international firm As both a supplier and a customer in the technology industry, Dell has a robust process to understand how the chemicals and materials used inside our products and during their manufacturing processes affect humans, plants and animals. Materials usage laws and regulations differ around the world, and suppliers’ levels of transparency and accountability can also vary. DELL FOCUSES ON : ENVIRONMENT COMMUNITIES PEOPLE
- 57. In 2013 dell achieved their long term recycling goal to collect 1 billion pounds of e-waste, a full year ahead of schedule. They recycled more than 170 million pound of electronic globally. Dell continued to close the recycling loop by using 7.8 million pounds (3,542,556 kg) of recycled-content plastics in flat- panel monitors and Optic Plex desktops an increase of 6 percent over FY12.
Editor's Notes
- #25: Principles of the Stockholm Declaration: Human rights must be asserted, apartheid and colonialism condemned Natural resources must be safeguarded The Earth's capacity to produce renewable resources must be maintained Wildlife must be safeguarded Non-renewable resources must be shared and not exhausted Pollution must not exceed the environment's capacity to clean itself Damaging oceanic pollution must be prevented Development is needed to improve the environment Developing countries therefore need assistance Developing countries need reasonable prices for exports to carry out environmental management Environment policy must not hamper development Developing countries need money to develop environmental safeguards Integrated development planning is needed Rational planning should resolve conflicts between environment and development Human settlements must be planned to eliminate environmental problems Governments should plan their own appropriate population policies National institutions must plan development of states' natural resources Science and technology must be used to improve the environment Environmental education is essential Environmental research must be promoted, particularly in developing countries States may exploit their resources as they wish but must not endanger others Compensation is due to states thus endangered Each nation must establish its own standards There must be cooperation on international issues International organizations should help to improve the environment Weapons of mass destruction must be eliminated