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ACCA MALAYSIA SUSTAINABILITY REPORTING AWARDS (MaSRA) 2010
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ACKNOWLEDGEMENT
ACCA would like to thank and acknowledge the contribution and support of the distinguished panel of judges, AccountAbility, Bursa Malaysia Berhad, The Business Council for Sustainable Development in Malaysia (BCSDM), CorporateRegister.com, The Department of Environment (DOE), The Edge Business Weekly, The Edge Financial Daily and last but not least all participating companies in the Awards. We believe that the participating companies deserve recognition for leading the way to identify and communicate their environmental and social performance. Companies such as these are contributing towards the advancement of sustainable development and performance.
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Introduction 4
Panel of Judges 7
Entrants 8
Short-listed Companies 10
ACCA MaSRA 2010 Winners 13
Judges’ Feedback 21
Supporting Organisations 24
About ACCA 30
Contents
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Introduction
Globally, sustainability reporting has grown by leaps and bounds in just two short decades. A few corporate environmental - or “environment, health and safety” - reports trickled onto the market in 1990 and 1991 while social reports were first issued in the mid-1990s. The first true sustainability reports were issued at the end of the decade, coinciding with the establishment of the Global Reporting Initiative (GRI) and the issuance of the first set of GRI sustainability reporting guidelines in 1999. In contrast, financial reports were already in circulation in the 19th century.
In 2010, it is likely that over 3,000 companies world-wide will issue sustainability (or corporate responsibility) reports, with a substantial proportion being based on the third generation of the GRI guidance. Considering it has taken nearly 200 years for financial reporting to reach its current stage of maturity, we have come a long way in a remarkably short time in terms of developing an entirely new sustainability reporting framework.
ASEAN countries too are becoming increasingly involved in sustainability reporting. While sustainability reporting within the selected ASEAN countries is not regarded as mainstream, the increase in disclosure and heightened commitment to transparency over the last decade is evident. According to ACCA’s recent research publication The Rise of the Report and the Regulator, over a hundred and twenty companies operating in Malaysia, Thailand, Indonesia, Singapore and the Philippines are producing, or have in the past decade produced, a Sustainability Report, or include substantial sustainability-related reporting within their annual report. In fact, the number of companies reporting increased dramatically in 2006, almost doubling the number of reports produced in previous years. This growth is attributed to increasing government and regulatory involvement, heightened awareness of
sustainability concerns amongst local media and civil society, and the private sector becoming more engaged with corporate responsibility.
Malaysia Leads in Sustainability Reporting in ASEAN
Within the five ASEAN countries surveyed, Malaysia has the distinction of having the highest number of reporters with a total of forty-nine companies overall producing ninety-seven Sustainability Reports in the past eight years.
A number of positive factors account for this. One, there is explicit government and regulatory support of corporate social responsibility. In 2004, the then-Minister of Finance, Tan Sri Nor Mohamed Yakcop, shared the government’s perspective on CSR in a special address at a Corporate Social Responsibility conference titled “CSR: Creating Greater Competitive Advantage.” He announced that the government “strongly supports the adoption of voluntary CSR reporting and standards”, stating that the government does not favour regulations interfering with the private sector’s CSR initiatives which exist within a voluntary framework. In addition, he encouraged companies to disclose their CSR activities to help investors identify those with sustainable practices.
The government has continued to push for good corporate behaviour and transparency. Its budget speeches began focusing on CSR from 2006 when then-Prime Minister and Minister of Finance Dato’ Seri Abdullah Badawi announced that all public-listed companies (PLCs) must disclose their CSR activities, in a move to “inculcate the culture of corporate social responsibility”. In the 2007 budget speech, he also specified that from FY/08, all PLCs must disclose their workforce diversity statistics by race and gender, as well as programmes taken to develop Bumiputera vendors.
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Introduction (continued)
To embed the culture of sustainability reporting, regulators have taken steps to mandate disclosure, on top of providing best practice guides. In September 2006, the Stock Exchange of Malaysia, Bursa Malaysia, amended its Listing Requirements to include a “requirement to provide a description of the corporate social responsibility activities or practices undertaken by the listed issuer and its subsidiaries or if there are none, a statement to that effect.” At the same time, Bursa Malaysia launched a CSR Framework as a guide for PLCs in implementing and reporting on CSR. The Bursa Malaysia CSR Framework looks at four main focal areas for CSR practice – the Environment, the Workplace, the Community and the Marketplace. Although this has provided a useful guide to businesses, no requirements are outlined with respect to the amount of disclosure required.
Other initiatives which have raised the profile of sustainability reporting include the Silver Book for government-linked corporations. In September 2006, the Putrajaya Committee on Government-Linked Company (GLC) Performance (PCG), (a body established by the government to drive development and grow the economy) released as part of an ongoing series within its Transformation Manual, the Silver Book: Achieving Value through Social Contribution. Within the Silver Book, GLCs are advised that they should “develop and implement communications and reporting programmes to communicate their contributions to society on an annual basis. The Silver Book also provides reporting guidelines.
Furthermore, Malaysia is included in the Asian Sustainability Rating™, which is an online tool for companies and their stakeholders with respect to sustainability disclosure. This has raised the profile of Malaysia within the regional sphere of corporate social responsibility and sustainability reporting.
Key awards and monitoring schemes have also encouraged sustainability reporting by rewarding and recognising responsible companies. ACCA Malaysia is proud to have pioneered the sustainability reporting movement with the launch of the ACCA Malaysia Environmental Reporting Awards (MERA) in 2002. Following the second edition of MERA in 2003, these annual awards were rebranded as the ACCA Malaysia Environmental and Social Reporting Awards (ACCA MESRA) from 2004 – 2007. They were rebranded again as the ACCA Malaysia Sustainability Reporting Awards (ACCA MaSRA) from 2008 onwards, to encourage companies to reflect and report on the triple bottomline: people, planet and profit. The MaSRA Awards in Malaysia for 2009 have grown in strength and reputation, and solicited 56 entrants from just 11 in 2002.
For the 2010 MaSRA reporting cycle, ACCA Malaysia received a total of 53 entries. There were 20 stand-alone sustainability reports up for review, down from 27 in 2009, which could be an outcome of cost-cutting exercises due to the recent economic downturn. However, the number of companies reporting on sustainability within their annual reports increased to 33 from 25 last year. Out of the 53 entries, 13 stand-alone sustainability reports and 7 annual reports were shortlisted for the final round of judging.
How Can Sustainability Reporting Be Elevated?
While Malaysia and ASEAN’s progress in sustainable reporting has been commendable given its infancy, there are key catalysts that can build further capacity and elevate quality. First, companies in the ASEAN countries which produce sustainability reports, outlining the impact their activities are having on the environment, should be rewarded by markets. In other words, markets should offer a premium (e.g. in terms of
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Introduction (continued)
enhanced brand recognition and enhanced shareholder value) for companies with good sustainability practices and disclosure, which in turn would be an incentive for good reporting.
Second, the role of the government and regulators in formulating and enforcing clear policies that encourage and even mandate sustainability reporting should not be denied. ASEAN governments and regulators are a practical bunch and they realise that sustainability can be a source of added value and competitiveness. Therefore, ASEAN governments and regulators have been keen to promote sustainability to companies operating in their markets and have begun to put law, regulation and guidelines in place to direct companies in this regard. Nevertheless, further measures should be taken by these five ASEAN governments to toughen existing laws and rules to ensure more companies publish sustainability reports.
Finally, while the onus is on companies to produce more and better reports, the future of quality reporting also hinges on stakeholders who read and use these reports to respond to such reports and to recognise and reward examples of best practice. In The Rise of the Report and the Regulator, companies surveyed unanimously stated that they are reporting in order to provide information to stakeholders. More so, companies in the ASEAN region produce a Sustainability Report to gain a competitive edge when attracting and retaining capital, dealing with global clients and managing relationships with governments.
How do stakeholders rank in order of importance? Specifically, shareholders were the group most frequently cited, followed by government and local authorities; customers; business partners; the general community and NGOs.
Since stakeholders – especially shareholders - hold some measure of power over companies, they should exercise said power to demand better reporting. In return, stakeholders should favour and reward companies that go the distance and produce quality sustainability reports, which in turn promote a virtuous cycle of good corporate reporting.
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THE ACCA MaSRA 2010 JUDGES
Mr Goh Ching Yin*
Executive Director, Strategy and Development, Securities Commission
Y Bhg Dato’ Hajah Rosnani Ibarahim
Director General, Department of Environment, Malaysia
Y Bhg Dato Kok Wee Kiat
Honorary President, the Business Council for Sustainable Development for Malaysia
Ms Selvarany RasiahChief Regulatory Officer, Bursa Malaysia Berhad
Ms Dorothy TeohGroup Editor-In-Chief, The Edge Communications Sdn Bhd
Associate Professor Salleh HassanAssociate Professor of Accounting, Nottingham University Business School
Mr Lee Weng Seong
Chairman and Chief Executive Officer, Philips Group of Companies in Malaysia
Associate Professor Faizah Darus**Director of Academic Development / Head of Asia Pacific Centre of Sustainability (APCeS), Universiti Teknologi MARA (UiTM)
Dr Ho Jo Ann**Lecturer, Department of Management and Marketing, Universiti Putra Malaysia
Ms Rikke Netterstrom**Director Malaysia, CSR Asia
* Chairman of Judging Panel
** Shortlist Judge
Panel of Judges
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Entrants 2010
Alliance Bank Malaysia BerhadAFGB Annual Report 2009
ASTRO ALL ASIA NETWORKS plcInspiring Sustainability 2009 Report
British American Tobacco (Malaysia) BerhadAnnual Report 2009
Chemical Company of Malaysia BerhadAnnual Report - Supporting Communities
CIMB FoundationMaking A Difference Annual Report 2009
CIMB GroupHarmony in Diversity Annual Report 2009
CIMB GroupCorporate Responsibility in Action Report 2009
DiGi Telecommunications Sdn BhdDiGi.com Berhad Sustainability Report 2009
Faber Group BerhadFaber Group Berhad - Annual Report 2009
Guinness Anchor BerhadLeading Sustainability, CR Report 2009
Gamuda BerhadGamuda Berhad Annual Report 2009
Hitech Padu BerhadAnnual Report 2009
HSBC Bank Malaysia BerhadCorporate Sustainability Report 2009
IJM Corporation BerhadAnnual Report 2009
IJM Land BerhadAnnual Report 2009
IJM Plantations BerhadAnnual Report 2009
Indah Water Konsortium Sdn BhdSustainability Report 2008 - 2009
Kulim (Malaysia) BerhadKulim (Malaysia) Berhad Annual Report 2009
Kulim (Malaysia) Berhad (Plantation Division)Sustainability Report 2009
Lafarge Malayan Cement Berhad2009 LMCB Annual Report - Delivering Operational Excellence
Malaysian Resources Corporation BerhadMRCB Sustainability Report 2009
Malaysian Resources Corporation BerhadMRCB Annual Report 2009
Maxis Communications BerhadAnnual report 2009: Tomorrow is here
McDonald’s Malaysia2009 Corporate Responsibility Report
Media Prima BerhadAnnual Report 2009
Media Prima BerhadSustainability Report 2009
MERCY MalaysiaMERCY Malaysia Annual Report 2009
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Entrants 2010 (continued)
Mesiniaga BerhadMesiniaga Corporate Responsibility Report 2009
Mesiniaga BerhadMesiniaga Annual Report 2009
Naim Cendera Holdings BerhadAnnual Report 2009
Nestlé (Malaysia) BerhadNestlé (Malaysia) Berhad Creating Shared Value Report 2009
Nestlé (Malaysia) BerhadNestlé (Malaysia) Berhad Corporate Report 2009
Opus Group Berhad Sustainabilty Report 2009
Petroliam Nasional BerhadPETRONAS Sustainability Report 2009
Pfizer (Malaysia) Sdn Bhd Working Together For A Healthier World
Pharmaniaga Berhad Annual Report - “Delivering Value”
Plus Expressways BerhadPLUS Corporate Social Responsibility - Report 2009
Plus Expressways BerhadPLUS Annual Report 2009
Public Bank BerhadPublic Bank 2009 Annual Report
Puncak Niaga Holdings BerhadAnnual Report 2009
Putrajaya Perdana BerhadPutrajaya Perdana Berhad 2009 Annual Report
Ranhill BerhadAnnual Report 2009
Sunway City BerhadSunway City Berhad Delivering Values Annual Report 2009
Sunway Holdings BerhadAnnual Report 2009
Telekom Malaysia BerhadSustainability Report
The Star Publications (Malaysia) BerhadAnnual Report 2009
Time Engineering BerhadCreating Values For Tomorrow
TNT MalaysiaHSE and CSR Report
Tradewinds (M) BerhadAnnual Report 2009
UEM Environment Sdn BhdSustainability Report 2008
YTL Corporation Berhad YTL Sustainability Report 2009
YTL Corporation Berhad Annual Report 2009
Yung Kong Galvanising Industries BerhadAnnual Report 2009
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Short-listed ReportsStand Alone Category
ASTRO ALL ASIA NETWORKS plcInspiring Sustainability 2009 Report
DiGi Telecommunications Sdn BhdDiGi.com Berhad Sustainability Report 2009
Guinness Anchor BerhadLeading Sustainability, CR Report 2009
Indah Water Konsortium Sdn BhdSustainability Report 2008 - 2009
Kulim (Malaysia) Berhad (Plantation Division)Sustainability Report 2009
Malaysian Resources Corporation BerhadMRCB Sustainability Report 2009
Media Prima BerhadSustainability Report 2009
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Short-listed Reports - Stand Alone Category (continued)
Nestlé (Malaysia) BerhadNestlé (Malaysia) Berhad Creating Shared Value Report 2009
Petroliam Nasional BerhadPETRONAS Sustainability Report 2009
Plus Expressways BerhadPLUS Corporate Social Responsibility - Report 2009
Telekom Malaysia BerhadSustainability Report
UEM Environment Sdn BhdSustainability Report 2008 - UEM Environment
YTL Corporation Berhad YTL Sustainability Report 2009
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Short-listed ReportsAnnual Report Category
British American Tobacco (Malaysia) BerhadAnnual Report 2009
IJM Corporation BerhadAnnual Report 2009
IJM Plantations BerhadAnnual Report 2009
Kulim (Malaysia) BerhadKulim (Malaysia) Berhad Annual Report 2009
Public Bank BerhadPublic Bank 2009 Annual Report
Puncak Niaga Holdings BerhadAnnual Report 2009
Sunway Holdings BerhadAnnual Report 2009
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ACCA MaSRA 2010Winners
OVERALL WINNER – BEST SUSTAINABILITY REPORT
Kulim (Malaysia) Berhad (Plantation Division)
1ST RUNNER UP – BEST SUSTAINABILITY REPORT
UEM Environment Sdn Bhd
WINNER – INTEGRATED REPORTING IN AN ANNUAL REPORT
Puncak Niaga Holdings Berhad
WINNER – BEST FIRST TIME REPORTER
DiGi Telecommunications Sdn Bhd
COMMENDATION – REPORTING ON STRATEGY & GOVERNANCE
Kulim (Malaysia) Berhad (Plantation Division)
COMMENDATION – REPORTING ON STAKEHOLDERS ENGAGEMENT & INCLUSION
DiGi Telecommunications Sdn Bhd
Nestlé (Malaysia) Berhad
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ACCA MaSRA 2010 Winners (continued)
KULIM (MALAYSIA) BERHAD (PLANTATION DIVISION)
Clearly links sustainability strategy to business objectives, specific operating environment and stakeholder concerns.
Governance statement clearly acknowledges the Board of Directors as the highest decision-making body in the company responsible for sustainability
Joint welcome message from both the Chairman and Managing Director indicates good tone from the top and management support for sustainability initiatives.
Transparently lists targets and commitments in terms of people, planet and profit and the current outcome (e.g. achieved, in progress, revised, new targets set)
Spearheaded by a Sustainability and Quality Council tasked with sustainability strategies and action plans to further embed sustainabilityin its business.
Sustainability agenda and processes are communicated through the Kulim Sustainability Handbook, which is distributed to all staff and indicates effective employee engagement.
Clearly identifies and addresses select stakeholders, including industry and RSPO, NGOs, investors, outgrowers and communities, and employees.
Addresses gender diversity concerns more effectively through its Women Onwards (WoW) programme, which aims to promote more women to management positions, encourage entrepreneurship and provide a neutral channel for grievances.
Engages employees through programmes focusing on improving quality of life and bridging income diversity.
Clearly lists its biodiversity targets and status of projects, and elaborates on its conservation partnerships and its wildlife defense programmes, which include sending its security head for wildlife protection training in Thailand.
OVERALL WINNER – BEST SUSTAINABILITY REPORT & COMMENDATION – STRATEGY AND GOVERNANCE
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ACCA MaSRA 2010 Winners (continued)
KULIM (MALAYSIA) BERHAD (PLANTATION DIVISION)
Prompt disclosure of negative news and subsequent action; land was cleared without conducting a prior high value conservation assessment and the company is looking into appropriate biodiversity offsets.
RSPO (Roundtable on Sustainable Palm Oil) certification for the whole company and ISO14001 certification for individual mills and estates boost credibility and assurance
A strong internal audit function which assesses environmental risks according to the ISO14001 guidelines and social impact risks according to the SA8000 standard enhances credibility and assurance
Report is crafted and indexed using the global Global Reporting Initiative (GRI) G3 Index and according to the AA1000As standard of responsiveness, materiality and completeness
Includes an external assurance statement
Tabulates key information in clear, easy-to-read data pages with year-on-year comparisons
Includes a glossary of key biodiversity terms for easy reference
Attractive graphic illustrating the palm oil value chain from estates to mills to buyers grabs attention and furthers audience’s understanding of the palm oil business.
Provides a contact and feedback form including e-mail addresses of key senior personnel
Report is written in simple language and is very well-presented and laid out
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ACCA MaSRA 2010 Winners (continued)
UEM ENVIRONMENT SDN BHD
Only company to report on its carbon footprint and voluntary reduction of carbon emissions, according to the standard Greenhouse Gas (GHG) protocol from World Resources Institute
Provides comprehensive tables of comparative data for annual carbon emissions from diverse activities (electricity use, transportation, contractors, plants) and disclosed reasons behind the overall CO2 increase
Explains its Carbon Management Plan to achieve carbon neutrality, flawed by non-disclosure of future targets and timelines
Testimonials and interviews with employees demonstrate corporate and personal commitment to the sustainability agenda
Provides pictures, names and titles of management team as well as a governance statement
Report complies with GRI guidelines
Provides comparative year-on-year historical data in easy-to-read performance charts and highlights key figures such as annual energy efficiency savings and its customer approval rating
Publishes a performance review scorecard which summarises the relevant metrics, status, progress for the year under review and action to be taken in the following year
Discloses sustainability cost commitments and total expenditures for two comparative years
Scope of report is clearly defined, and additional reporting metrics explained but report is flawed by lack of timeliness; company is reporting for 2008 whereas others are reporting for 2009
Openly discloses that report is compiled and prepared by a consultant
Includes an external verification statement
FIRST RUNNER-UP – BEST SUSTAINABILITY REPORT
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ACCA MaSRA 2010 Winners (continued)
WINNER – INTEGRATED REPORTING IN AN ANNUAL REPORT
PUNCAK NIAGA HOLDINGS BERHAD
Highlights interesting facts and figures linked with water and its impact on health, food security and the environment throughout the report
Clearly links sustainability to the long-term viability of its business, specifically through environmental action, regulatory compliance and leadership in environmental management
Explains its role in the water supply system using schematic diagrams
Demonstrates leadership’s commitment to sustainability and responsible corporate citizenship
Balanced reporting includes disclosure of negative environmental impacts, such as raw water quality violations and plant shutdowns
Discloses probable causes, dates, sites affected and other relevant information for major plant shutdowns
Reports on carbon emissions from electricity consumption for the first time
Acknowledges limited scope of carbon emission reporting, although it adheres to ISO14064 guidelines for greenhouse gas (GHG) emissions and the World Resources Institute GHG protocol
Provides data on waste management and reduction in electricity consumption
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ACCA MaSRA 2010 Winners (continued)
DIGI TELECOMMUNICATIONS SDN BHD
Discloses its strategy of linking sustainability to every aspect of its organisation
Reports its evolution from community engagement and philanthropy (2002 – 2005) to CSR (2005 – 2009) to sustainability (2009 and onwards)
Lays out the 16 fundamental principles of its Code of Conduct which defines its values and behaviour
Clearly identifies its diverse stakeholders and explains stakeholder engagement initiatives in an easy-to-read chart
Explains its Deep Green climate change strategy which is integrated into its entire business operations e.g. through green procurement methods and customer e-billing, and targets 50% carbon reduction by 2012
CEO and staff leadership roles in Deep Green demonstrate excellent tone at the top as well as employee buy-in
Mobilises its workforce to achieve climate change targets by reducing personal carbon footprints e.g. through carpooling programmes, a paperless workplace, active 3R practices including the “no styrofoam rule” and permitting virtual or remote meetings
Discloses CO2 emissions reduced for 2009 and 2009 as well as targets for 2011
Engages the community in climate change through its Challenge for Change project aimed at university students and its building of a micro-hydroelectric system in remote Lumpagas, Sabah
Engages suppliers in greening procurement through the introduction of a mandatory Supplier Code of Principles aligned with the UN Millennium Development goals
WINNER – BEST FIRST TIME REPORTER & COMMENDATION – REPORTING ON STAKEHOLDER ENGAGEMENT AND INCLUSION
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ACCA MaSRA 2010 Winners (continued)
DIGI TELECOMMUNICATIONS SDN BHD
Devotes significant attention to explaining its key success factors: employees and customers
Includes figures and graphics on racial and gender diversity among its workforce
Relates key details of its employee engagement programmes, e.g. its flat hierarchy, conducive work-life balance and alternative ways of work, and individual career development plans
Aims to become the first telecommunications company in Malaysia to achieve ISO14001 certification, which will enhance assurance and credibility
Written in simple, readable language
Clearly explains the audience and scope of its sustainability report
Testimonials from partners, NGOs and media and awards from external bodies enhance credibility
Extracts of selected data related to its sustainability agenda are laid out in easy-to-read performance tables which explain the specific initiative, objective, target and progress as of 2009
Explains the gaps in reporting and the steps taken to address these e.g. DIGI aims to obtain external assurance for its sustainability report within the next two years, will work towards GRI-based reporting and will include year-on-year comparisons of performance data and indicators beyond climate change data.
Discloses negative incidents e.g. being penalised for excessive carbon monoxide emissions from a company vehicle and how the problem was rectified
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ACCA MaSRA 2010 Winners (continued)
NESTLÉ (MALAYSIA) BERHAD
Pictures of Nestle staff with consumers and members of the community as well as photos of its community and welfare initiatives provide robust assurance of its sustainability agenda
Clearly identifies its stakeholders ranging from employees to the environment to consumers and the marketplace
Reports on two sessions held with diverse stakeholders in January and December 2009 to report on its progress in implementing its sustainability strategy, dubbed the Creating Shared Value strategy demonstrating good stakeholder engagement
Published a summary of the sessions’ outcomes in clear performance tables, which explain the topic, the issues highlighted, the relevant stakeholder recommendations and the action plans by Nestle. Topics included nutrition and wellness, food security, rural development, and water and environment
Summarises its sustainability performance and targets in tables at the back-of-the-book for easy reference; uses smiley faces to indicatewhether progress has been good, satisfactory or requires improvement
Includes tables and graphs on financial performance, which earned points for inclusion through reporting on the triple bottomline
COMMENDATION – REPORTING ON STAKEHOLDER ENGAGEMENT AND INCLUSION
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Judges’ Feedback
2010 heralded a turning point in the ACCA Malaysian Sustainability Reporting Awards (MaSRA) whereby ACCA and its distinguished panel of judges decided that it was time to elevate reporting quality, on top of the original objective of building capacity by encouraging companies to report.
“In 2002, when the awards were first launched, ACCA intended to build capacity and encourage reporting on environmental performance. Subsequently, the awards were enlarged to encompass social performance, and later on, sustainability. Now, we believe that it is time to raise the bar further to improve the quality of reporting and drive home the message that sustainability is irrevocably linked with better business performance and competitiveness,” said Jennifer Lopez, ACCA Malaysia Country Head.
For this reporting cycle, the panel of judges decided not to select winners for best environmental report and best social report. The judges viewed that segregating performance into these two categories detracts from the overall objective of sustainability, which is to improve performance on the triple bottomlines of people, planet and profit. The message here is that social responsibility and environmental responsibility should not be viewed in isolation.
To improve the quality of future sustainability reports, judges recommended that companies take action to:
INTEGRATE SUSTAINABILITY
As per previous years, this was the primary flaw in many reports as the majority of companies still neglect to link sustainability initiatives to improving business performance. “We now expect behavioural changes; we want companies to internalise sustainability,” commented judges.
Linked to this is the failure to identify and disclose their key risks, as well as the efforts being taken to mitigate these risks which threaten long-term sustainability – and optimal business performance. Companies also failed to report on strategy and governance, which is “one of the most lacking areas” and is the bridge that connects performance and sustainability. Ideally, companies should name board members and committees responsible for strategy and governance in order to augment accountability.
EXPAND THE REPORTING SCOPE
As subsidiaries of the government-linked corporations (GLCs) Johor Corporation Berhad and UEM Group respectively, judges commended overall winner Kulim (Malaysia) Berhad – Plantations Division (Kulim) and runner-up UEM Environment Sdn Bhd (UEM Enviro) for producing superior stand-alone sustainability reports for the second year running. “This indicates that sustainability and the need for high-quality integrated reporting is catching on among GLCs,” said the panel.
However, it was pointed out that the majority of the winners are already incumbent in highly-regulated industries where sustainability is part-and-parcel of daily operations. Reporting on their environmental and societal impacts would thus be “business as usual” for these companies e.g. Kulim, UEM Enviro and Puncak Niaga, as opposed to companies and subsidiaries operating in sectors where impacts and footprints are less immediate and obvious, such as banking and finance and services. The judges urged diversified companies to up the ante by reporting holistically on their footprints across the board, and not to restrict reporting to single divisions and sectors. “Winners are examples of best practice in educating and building capacity. It is hoped that Kulim (Malaysia) Berhad and
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Judges’ Feedback (continued)
UEM Group will report on other aspects and divisions.”
To build capacity, the judges encouraged other companies to step forward and report holistically on their impacts – and to submit their reports for judging. Greater participation from sectors such as property development, IT, telecommunications and banking and finance would be highly welcome and enhance Malaysia’s growing reputation for sustainability reporting.
ENGAGE ALL KEY STAKEHOLDERS
For the sake of inclusion and credibility, companies need to identify all relevant stakeholders. These include, and may not be limited to government leaders, regulators, employees, business partners, academics, non-governmental organisations, environmental groups, community leaders, individuals with interests in corporate responsibility and the communities in which a company operates.
Candidates which failed to engage key stakeholders and address their concerns were penalised. Members of the panel have repeatedly brought up the issue of conflict between “unethical or harmful” businesses that seek redress or redemption through their sustainability agenda and through “mitigation reporting”. Can such companies be genuinely sustainable by undertaking corporate social responsibility (CSR) projects while not addressing the risks of their core business? For example, companies in high risk industries such tobacco should go beyond reporting broadly on its CSR initiatives. Ideally, in this case example, there should be ample disclosure of said company’s strategies and success in addressing concerns such as juvenile smoking and cancer risks.
PROVIDE COMPLETE AND INCLUSIVE INFORMATION
As in previous years, the majority of companies failed to disclose targets as well as pertinent financial information on sustainability costs and investments, which are fundamental reporting omissions. Disclosing performance targets demonstrates commitment to monitoring and improving performance. Reporting company-wide targets related to the sustainability report help employees and stakeholders see the practical implications of broad policy. Targets can be based on meeting minimum certification requirements such as those embedded in ISO 14000 or international agreements such as Kyoto Protocol.
Alternatively, companies can also report on goals and progress for year-on-year improvement, such as aiming for reductions in carbon emissions or making products more energy-efficient. For the sake of transparency, companies should also make an effort to explain the omission, and disclose how they intend to address the problem.
Judges also recommended that companies begin reporting on their carbon footprints according to guidelines such as the Greenhouse Gas (GHG) protocol from the World Resources Institute as well as product and service life cycle analyses.
ENHANCE ASSURANCE AND CREDIBILITY
Judges abstained from awarding a special commendation award for assurance in the 2010 MASRA reporting cycle, citing that “companies should be reporting on dimensions of assurance beyond external assurance.”
How then can companies improve future reporting on assurance?
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Judges’ Feedback (continued)
One, companies are encouraged to invest in the appropriate assurance and risk management systems and strive for global sustainability certification, which is evidence that they have internalised the sustainability agenda. Companies which disclosed their internal audit assurance processes and risk management systems while demonstrating completeness of data and information ranked high. Similarly, companies certified to AA1000AS and ISO14001 scored high marks with judges because global certification demands management and systems integrity. “These carry a lot of weight. If you are serious about sustainability, you will invest in the necessary systems,” commented judges.
Two, companies should not regard external assurance as being a sufficient gauge of credibility. The judges felt that many companies view an external assurance certificate as a “rubber-stamp for credibility”, and an easy means of scoring points in awards schemes.
In addition, judges questioned the calibre of external assurance providers and the quality of their opinions. It was observed that external assurance letters validating reports originating from different organisations were virtually the same, or “formatted letters.” Likewise, the agencies issued similar recommendations for improvement to their clients, regardless of industry or sector, pointed out judges. Ideally, letters and recommendations should be tailored to fit the diverse sustainability requirements of different companies and sectors.
The judges also voiced concerns that some companies might have retained external assurance agencies to create and produce their reports. Such outsourcing would be a clear conflict of interest and is a basis for disqualification.
IMPROVE COMMUNICATIONS AND PRESENTATION
Some reports were faulted on a number of counts in
terms of communication. For example, heavy use of jargon resulted in content that could have been too technical for the layman and diverse shareholders to digest. “How technical should a report be? How do you provide sufficient data while tailoring the language to general stakeholders?” asked judges rhetorically.
While the use of diagrams and charts is commendable, this needs to be balanced with narrative that explains the illustrations in order to avoid a “communications letdown.”
In general, most of the reports submitted were described as “overpackaged and lacking soul.” Judges also criticised certain companies for using fonts that were so light that they were virtually illegible, resulting in “jaundiced print”.
REFRAIN FROM CURSORY COMPLIANCE
Ideally, reporters should be making an effort to comply with global standards and best practices, such as the GRI guidelines, the current international benchmark for presenting environmental, social and economic information. Other than GRI Guidelines, companies are advised to comply with local reporting best practices, such as the Bursa Malaysia CSR framework and Khazanah Nasional’s Silver Book for GLC Transformation.
However, companies should comply in substance, rather than practising “cursory compliance”, said judges. A key grievance of the judges lay in the GRI indexing system – companies would list the page with the relevant GRI reference, but the page in question contained little elaboration and sometimes, only a one-word mention. “GRI should be a guide, and not a box-checking exercise,” commented the panel. “Companies cannot just offer a shallow report that just scratches the surface, but must embed strategy and address key risks and issues.”
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Supporting Organisations
AccountAbility
AccountAbility works to promote accountability innovations for sustainable development.
We are a unique global network of leading business, public and civilinstitutions working to build and demonstrate the possibilities fortomorrow’s global markets and governance through thought-leadershipand advisory services. By working together we aim to scale up impactsthrough:
• Enabling open, fair and effective approaches to stakeholder engagement;
• Developing and rewarding strategies for responsible competitiveness in companies, sectors, countries and regions;
• Creating and developing effective collaborative governance strategies for partnerships and multilateral organisations that are delivering innovation and value, and
• Setting and influencing sustainability standards.
Our vision is of a world of civil power where people have a say in thedecisions that impact on them and where decision makers act, and aretransparent about their actions, on the issues that matter. At the core ofour work is the AA1000 Series of Standards based on the principles of:
• Inclusivity - people should have a say in the decisions that impact on them
• Materiality - decision makers should identify and be clear about the issues that matter
• Responsiveness - organisations should be transparent about their actions
ENDORSERS
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Bursa Malaysia Berhad
Bursa Malaysia Berhad is an exchange holding company that regulates and operates the trading activities on Bursa Malaysia, a stock market with just under 1,000 companies across 50 economic activities. This fully integrated exchange offers equities, derivatives, offshore, bonds as well as Islamic products and remains one of the largest bourses in Asia,offering a diverse range of investment choices globally. Companies are either listed on the Main Market for large-cap established companies, while the ACE Market is for emerging companies of all sizes and economic sectors.
For more information on Bursa Malaysia, visit the websitewww.bursamalaysia.com
Supporting Organisations (continued)
ENDORSERS
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Supporting Organisations (continued)
ENDORSERS
Business Council for Sustainable Development in Malaysia (BCSDM)
The Business Council for Sustainable Development in Malaysia (BCSDM)was formed because the business community was concerned for theEnvironment.
BCSDM’s vision is to be the leading business advocate of sustainabledevelopment in Malaysia.
BCSDM’s mission is to catalyse the sustenance of environmentalconservation and socio-economic growth in Malaysia, and be the mainlink of Government, the Business Community and Society in sustainabledevelopment.
With its vision, mission and action plans set out to-date, BCSDM hasorganised workshops, seminars, “green projects”, luncheon talks, studyvisits, and fundraising projects, and is the co-organiser of the PrimeMinister’s Hibiscus Award for environmental accomplishment. BCSDMalso participates and represents the business voice in four policy-makingand advisory government committees, namely the Ministry of Housing &Local Government, Ministry of Agriculture, Economic Planning Unit in the Prime Minister’s Department, Construction Industry Development Board Malaysia and Industrial Standards Committee (SIRIM).
The Ministry of Natural Resources and the Environment (NRE) recognises the role of BCSDM having included it in the national framework for sound environmental management.
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Supporting Organisations (continued)
ENDORSERS
Department of Environment (DOE)
The Department of Environment (DOE), established in 1975, ismandated under the Environmental Quality Act (EQA), 1974 to prevent,control and abate pollution. It is also empowered to enforce Section IVof the Exclusive Economic Zone Act, 1984.
Mission
DOE’s mission is to promote, ensure and sustain sound environmentalmanagement in the process of nation building.
Strategies in environmental management
• Pollution Control and Prevention
• Sustainable Development through Conservation of Resources
• Integration of Environmental Factors in Development Planning
• Environmental Education and Awareness
• Public Participation
• Inter-Agency and Federal-State Cooperation
• Bilaterally, Regionally and International Cooperation
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Supporting Organisations (continued)
SUPPORTER
CorporateRegister.com
CorporateRegister.com is the global corporate responsibility (CR)resources website. It hosts the world’s most comprehensive directory of CR and sustainability reports, profiling nearly 21,000 reports worldwide from over 5,000 companies. With an archive stretching back to 1990 it is indispensable for anyone working in the field of CR and sustainability reporting.
Working with some of the leading organisations in corporateresponsibility, CorporateRegister.com hosts several official reporting registers. Further site features include a fully searchable directory of over 5,000 organisations (‘reporting partners’) actively involved in CR reporting.
CorporateRegister.com developed the world’s first annual global online CR reporting awards, the CRRA – see www.reporting-awards.com
[email protected]+44 20 7014 3366
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Supporting Organisations (continued)
MEDIA PARTNERS
The Edge Business Weekly
The Edge Business Weekly is an award-winning and bestselling business and investment weekly newspaper in Malaysia. It provides readers with authoritative, analytical content on the corporate, investment, real estate, technology, management, media and lifestyle sectors. Since its launch in 1994, it has become the weekly staple for corporate executives to keep abreast of business and investment developments in the country. It is distributed nationwide via newsstands and by paid subscription.
The Edge Business Weekly is published by The Edge Communications Sdn Bhd.
The Edge Financial Daily
Launched on May 22, 2007, The Edge Financial Daily is the latest title from the publishers of The Edge. It acts as a standalone daily business paper which complements its weekly sister publication. Published Mondays to Fridays, The Edge Financial Daily provides business news reporting and articles with local insights and global perspectives. It is distributed mainly in the Klang Valley as well as other key market centres. It is available at newsstands and by paid subscription.
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About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies at all stages of their development. We seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and their delivery to meet the diverse needs of trainee professionals and their employers. We support our 140,000 members and 404,000 students in 170 countries, by helping them to develop successful careers in accounting and business, based on the skills required by employers. We work through a network of 83 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
ACCA has been actively involved in the unfolding debateof CSR and sustainability reporting for more than 15years. ACCA promotes transparency and aims to helpbusinesses and organisations realise the growingimportance of sustainability. ACCA promotes CSR andsustainability globally and in Malaysia throughrecognition of best practices, capacity building,education/information and research.
Recognition of Best Practices
ACCA Reporting Awards
ACCA has been actively promoting sustainabilityreporting awards throughout Europe, Africa, NorthAmerica and the Asia-Pacific region. ACCA AwardsSchemes are now established in Sri Lanka, Pakistan (inpartnership with WWF), Malaysia, Singapore, Hong Kong, Australia and New Zealand, South Africa, and North America (in partnership with CERES).
Launching the awards has helped raised the profile ofcorporate transparency and responsibility issues withinthose countries. The sharing of best practices provideopportunity to benchmark social and environmentalperformance. ACCA Awards serve to encouragenon-reporters to publish information on their social andenvironmental impacts, and ultimately, help underline the business case for sustainable practices and development.
Capacity Building
ACCA has been requested to share and contribute itsexpertise on Corporate Responsibility and sustainabilityreporting in workshops, international and localconferences and seminars.
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About ACCA (continued)
Education/Information
The growing awareness towards the concepts andapplications of Corporate Responsibility has promptedstrong interest from the media. Working with the media,ACCA educates the public and industry through articlesin The Edge, The Star and Accountants Today.
Accounting & Sustainability e-Newsletter
Accounting & Sustainability is published every threemonths and reports on recent news, publications andforthcoming events about issues such as:
• sustainability and social reporting
• developments in assurance
• management accounting and environmental finance
• environmental taxation and other legislation
• developments in standardisation, e.g. AA 1000 and ISO 14000
• accounting for externalities
• socially responsible investment
For other local and global publications on corporatesocial responsibility and sustainability issues, please visit:www.accaglobal.com/sustainability
ACCA Social and Environmental Research
ACCA conducts research to explore CSR andsustainability issues. Issues researched includesustainability accounting in local government, social and environmental reporting, ethical investment, full cost accounting, social capital, and ecological footprintanalysis. Research projects undertaken or funded byACCA are listed in the Research Publications Catalogueat: www.accaglobal.com/research
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ACCA Malaysia Sdn Bhd (473007 P)27th Floor Sunway TowerNo 86 Jalan Ampang 50450 Kuala Lumpurtel: +(603) 2713 5051 fax: +(603) 2713 5052email: [email protected]
An invitation to participate:
If you disclose environmental, social or full sustainability information about your organisation, we invite you to participate in ACCA Malaysia Sustainability Reporting Awards 2011.
The ACCA Malaysia Sustainability Reporting Awards 2011 timetable is:
March 2011 Announcement of the 2011 Awards
30 June 2011 Entry deadline
August 2011 Judges’ meetings
October 2011 Awards presentation ceremony
If you have any questions about the Awards scheme, please contact:
Ms Zaiti Waddell-Mohd Alitel : +(603) 2713 5051 ext 18fax : +(603) 2713 5052e-mail : [email protected]
Kuching BranchUnit #8.01 8th Floor Gateway BuildingNo 9 Jalan Bukit Mata 93100 Kuching Sarawaktel: +(6082) 425051 fax: +(6082) 426061
ACCA Malaysia Sustainability Reporting Awards (MaSRA) 2011
