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Page 1: Corporate Leadership Group on integrated reporting 5... · Corporate Leadership Group on integrated reporting ... Anniek Mauser (Unilever), Pavan Sukhdev ... Corporate Leadership

© GRI (2015)

Corporate Leadership Group

on integrated reporting

Lab 5 – Connecting narrative and data:

communication and technology

Summary notes – Day 1 (9 February 2016)

Note: this document is exclusively available to the Corporate Leadership Group on integrated reporting

members. This summary is not a word-to-word transcription of the discussion.

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 2 of 7

Date 9 - 10 February 2016

Location GRI Secretariat, Amsterdam

Staff Nikki McKean-Wood, Juliette Gaussem, Jonathon Hanks, Ivana Miladinova

In person David Hoppe (Delta Lloyd), Michel Washer (Solvay), Vera Stelkens (Munich Airport), Kirsten

Hovi (Norsk Hydro), Ursula Fischler (Hoffmann-La Roche), Monica Streck (Munich Airport),

Jessica de Boer (ING), Sandra Schoonhoven (ING)

Absent Hilary Parsons (Nestle), Emmanuelle Probst (Hoffmann-La Roch), Marian Fernando (Nestle),

Eda Pogany (Coca-Cola HBC), Raji Hattar (Aramex), Leonardo Feijo (Banco do Brasil), Ana

Maria Macedo (Banco do Brasil)

Invited

experts

Tanja Castor (BASF), Anniek Mauser (Unilever), Pavan Sukhdev (GIST Advisory), Enrico

Giovannini, Marjella Alma (eRevalue), Geoff Kendall (Future-Fit)

Connecting the Dots – Companies shared practices

BASF has a company purpose based on sustainability since 2011: “We create chemistry for sustainable future”. In

order to start integrating sustainability in the cost steering processes, BASF’s starting point was a

materiality analysis which ended up with a materiality matrix. In the materiality matrix 40 topics were

identified which were then prioritized. This has led to a few material aspects and detailed discussions with all of

BASF’s business units where they were asked to asses and monetize the impacts that they see along the whole

value chain. This exercise started when the company shifted from GRI G3.1 to G.4. Another element in the very

first start of their integration was the assessment process of the company’s huge investments. The

investments have not being assessed in a very holistic way but BASF is now part of the standard assessment

process where each and every investment is holistically assessed. There are investment decisions which at the

end were decided not to be addressed due to the fact that there might be a significant negative impact in terms

of the ESG aspect and that is what the company is planning to do in the future. BASF also steers its whole

product portfolio via holistic assessments based on sustainability. The company has published its sustainable

solutions steering methodology which assessed more than 60 000 BASF products and applications in terms of

specific sustainability performance.

The corporation is focused on integrating sustainability in its Global Competency Model. The company

experienced that not all of its employees needed to go through sustainability trainings. Therefore, BASF has

adjusted its strategy to sustainability integration and employee engagement. Discussions with all employees have

been started about what is their specific contribution to sustainability without necessarily mentioning the term

sustainability.

For BASF, the investors were a key driver for integrated reporting. When it comes to integrated reporting, it

comes to interdependencies. The company is trying to show the interdependencies to all stakeholders by

providing examples (“value boxes”) which they quantify, not necessarily monetise, and qualify. With regards to

monetization, BASF’s recommendation is to carefully consider when it really makes sense to quantify specific

interdependency and when it makes sense to put a price tag on it. It is not only about combining financial and

non-financial information but understanding the interdependencies and then being able to disclose them, quantify

them and sometimes monetise them. As the company is trying to create credibility and transparency, it sees that

it is still at the beginning and there is a long way to go.

Tanja Castor – Deputy Head of Corporate Sustainability Relations – BASF

Tanja has been working in the field of sustainability since 2005. She is part of BASF since

2005. Tanja has specialties in Sustainability reporting, Integrated reporting, Corporate

Social Responsibility, integration of sustainability in core business, issue management,

Human Rights, Stakeholder Dialogue, and sustainable supply chain management.

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 3 of 7

During her presentation, Anniek shared practices and challenges of connectivity and identified solutions to

enabling it. She led us through the process of engaging Unilever’s people in the journey of sustainability. The

journey started with the development of the employee engagement framework tool. Unilever is very

focused on consumer behaviour change, therefore it has developed the “5 Leavers for Change Model”. It is

about 5 principles you have to keep in mind in order to create behaviour change. Anniek realized that employees

are generally happy with the model, but sometimes they ask themselves “What does it mean for me? How can I

translate it to my job and make it tangible?” Therefore, she recognized a gap between their sustainability strategy

and people’s daily job who really focus on the bottom line and their daily targets. She then decided that it was

important to change employees’ knowledge, attitude and behaviour, create dialogues internally and create a real

interaction. Therefore, Unilever has created the platform Bright Future in Action for its people to share

their thoughts, needs, ideas, frustrations, etc. What the platform does? - It provides people with the knowledge,

the tools, and the empowerments to drive sales, deepen our brand equity, to inspire new innovations, etc. How

it works? - In a period of 6 weeks, every week there is a challenge focused on a specific sustainability theme. For

each challenge, the office community is invited to go to the platform, play and compete. By getting informed

people start to feel empowered. Gamification works! There was 65-70% participation across the community

which mean that people got interested and the platform gave them value.

Connecting the dots – Group exercise The participants were asked to read the latest reports of Unilever, BASF, Oceana or three additional reports of

their choice. They identified key elements of these reports that suggest connectivity within the organization, as

well as aspects that suggest integrated thinking:

BASF – ambitious report, interesting setting, however, not sufficiently honest; limited connectivity between the

financial and non-financial indicators, missing clarity

Unilever – understand the material issues for their company, issues that matter most, clear link to the strategy

Deutsche Bahn – interesting to see that each director from the board is assigned with one specific material

issue

Oceana – very connected report, combination of financial and non-financial indicators, link between each stage

of the value chain and its impacts on the capital stocks

The members also shared a few challenges they face in their own reporting processes:

struggling to find the main capitals that the company wants to use, to clarify the strategy to focus on just a few

difficult to create the value creation model, set the value proposition, challenging brand differentiation

During the group exercise, the participants rated their companies on integrated thinking and quality of integrated

report.

Delta

Lloyd

Norsk

Hydro

ING Munich Airport Solvay La Roche

Integrated Thinking 7 7 6 – 6.5 7.5 4 5.5

Integrated Report 7 7 7 6 – 7.5 7 5.5

The members identified the following key strengths and areas for improvement for their companies in terms of

integrated thinking and integrated reporting:

Delta Lloyd – positive change, integrated management structure

Munich Airport – developing new balance sheet with capitals showing the connection between the financial

and non-financial aspects in the business model and value creation per capital; new and deeper approach for

describing value creation processes;

Solvay – still missing connectivity in the reports, limited number of priorities, connectivity done in a qualitative

way, keeping it focused

ING – focused on transparency and disclosure, honesty about aspects not going well, earning the story

Anniek Mauser – Head of Sustainability, Unilever Benelux

Anniek has been a Sustainability Director at Unilever Benelux since 2010. In her position,

she supports the Benelux business to make the Unilever Sustainable Living Plan tangible

and actionable for colleagues, support the marketing and sales teams in the translation to

the market or local sustainable sourcing journeys and represent Unilever externally in the

area of sustainability. Previously, she was also a Sustainability Manager for Ben & Jerry's

Europe and Head of Sustainability at Unilever's ice cream division.

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 4 of 7

Data Integrity and Technology – Panel Discussion

In his presentation, Pavan shared his thoughts on appropriate metrics that demonstrate integrated thinking and

enhance corporate accountability. He also talked about how companies can more effectively integrate

sustainability issues into corporate decision-making, practice and reporting. Pavan shared his views on how

companies can bring together data effectively to create an integrated narrative in their reporting, including in

particular as regards the role of GRI data within integrated reporting. GIST advisory has engaged the concept of

“four dimensional profit and loss” what some call “integrated profit and loss”. It is about looking at the idea

that a corporation is responsible for its impacts not just on its shareholders but on all stakeholders. It is about

recognizing the capital and nature of those impacts, estimating them and where appropriate even valuing them in

economic terms, and then presenting the whole thing as a four dimensional profit and loss. This is about

understanding the total flows that a company is engaging with society beyond just the shareholder, and looking at

all categories of stakeholders. The basic tool kit is an integrated and common framework that was published on

the organization’s website. While it is trying to prepare these so called integrated profit and loss statements, it

looks holistically at the financial value addition beyond the profit. Why the four categories? Basically, these are

the four categories that one can find in any textbook on environment and economics. It’s about physical,

human, social and natural capital. If these four capitals are prized apart, all of the six capitals of the IIRC can

be found covered. According to Pavan, there is nothing in the so called world of intellectual capital that cannot

either be classified as physical capital, or classified as human capital. If the different layers of ownership are

acknowledged but the fact that ownership can be in different layers is not, then there is a problem of classifying

it as a separate capital. Therefore, Pavan’s organization sticks with the four capitals. He shared a few past

examples of companies which have been working with this approach of integrated profit and loss, calculating the

externalities, measuring them and in some cases even disclosing them. Infosys, was the first to do human capital

externalities and found that its training program is positive in terms of creating value and it created not just

human capital for the company but a billion dollars’ worth of externalities simply because it was losing as part of

its normal attrition. GIST Advisory does not just look at the positive and negative externalities but also looks at

risk factors. Pavan beliefs this is where GRI data might contribute by looking at the social hotspots data database,

and using it as a base. At the end of his presentation, Pavan raised the questions “How do we scale up? How

do we make sure this movement continues in the right direction and scales up?”

Pavan Sukhdev – Founder & CEO, GIST advisory

Pavan Sukhdev is founder-author of 'Corporation 2020', a movement that sees corporate

sustainability as the cornerstone of a 'green economy' and maps a rapid pathway to a new

model for corporate behaviour driven by regulatory changes & responsive to the reality of

planetary boundaries and their imminent tipping-points. Pavan wrote his book

'Corporation 2020' at Yale University where he was awarded the 2011 McCluskey

Fellowship. Pavan is also founder-CEO of GIST Advisory, a consulting firm that specializes

in helping governments and corporations value and manage their impacts on natural and

human capital. Earlier, Pavan was Special Adviser and Head of UNEP’s Green Economy

Initiative as well as Study Leader for the G8+5 commissioned project on The Economics

of Ecosystems and Biodiversity (TEEB). Moreover, he is a Goodwill Ambassador for

UNEP and he also serves on the boards of Conservation International, the Stockholm

Resilience Centre (SRC), and the Global Reporting Initiative (GRI).

Enrico Giovannini – Co-chair The UN Secretary General’s Independent Expert Advisory

Group on a Data Revolution for SD

Enrico Giovannin is an Italian economist and statistician, member of the Club of Rome.

Since 2002 he is full professor of economic statistics at the Rome University “Tor

Vergata”. He is Senior Fellow of the LUISS "School of European Political Economy",

member of the “Commission Economique de la Nation” of the French Government, Co-

chair of the "Independent Expert Advisory Group on the Data Revolution for Sustainable

Development" established by the Secretary General of the United Nations. He is also

chair and member of several boards of Italian and international organisations. From April

2013 to February 2014 he was Minister of labour and social policies in the Italian

government. From August 2009 to April 2013 he was President of the Italian Statistical

Institute (Istat). From January 2001 to July 2009, he was Director of Statistics and Chief

Statistician of the Organisation for Economic Co-operation and Development (OECD).

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 5 of 7

In his presentation, Enrico talked about the role of data, not only for measuring wellbeing and SDGs, but also the

way to achieve sustainable development goals in particular. Data are an asset like many other assets people deal

with. It is an intangible asset but it is not very different from other intangible assets, for which there are markets,

regulators and so on. On the contrary, there is still no market, no regulation for data which brings great

opportunity but also risks. In the old economic paradigm human needs were met through more production and

GDP. Enrico proposed the development paradigm in a working group for the King of Bhutan. In this new

paradigm, there are the four forms of capital and outcomes that are much more than what is called ‘the

equitable and sustainable wellbeing’. There are also additional components such as ‘happiness and

resilience skills’ that contribute to transform what is there in terms of material and non-material outcomes

into what is considered as societal happiness. From corporation’s point of view, it is known that not only a

specific good or service is being produced but much more. The way people work within the company has a lot

to do with their happiness and their capacity of being resilient to changes and this change the whole way in

which the company works. The agenda of the sustainable development goals is very comprehensive and

everybody has a responsibility to improve the functioning of this system. In the report that Enrico coordinated,

following points were summarized:

- The data revolution is already happening:

- There is a huge opportunity in the data revolution but also several risks: risks to privacy, risk to human

rights; poor quality data may lead to poor decisions, breakdown of trust and this is particularly

important for the private sector because of course the private sector hold most of these data - Data are not necessarily for monitoring but also for achieving SDGs

- Monitoring will require substantial additional investment to develop data on new subjects, to ensure

that no group is excluded with an unprecedented level of detail and timeliness

The report was published in November 2014. The goals are to support country roadmaps for sustainable

development data, bridge data gaps and improve capacities to generate share and use statistics, and data for

sustainable development, and then support the development and promotion of international norms and

guidelines, and build a global consensus on principles to harness the data. According to Enrico, to meet these

goals, profound changes need to be carried in the way in which decision making processes are made. The data

are very important to make decisions, and data revolution is a huge opportunity to produce better and

timelier data.

E-Revalue started with the idea of how meaning can be derived from narrative, with the idea that there is so

much information out there. So much information has already been produced in terms of financial and

sustainability reports, there are regulations, there are media and social media but it is still not at our finger tips.

The question “Is there a way in which we can make sustainability information an integral part of our day as

companies as data users, as consumers?’ got eRevalue to start thinking about how we can utilize technology in a

way one can always have access to sustainability information and use it for decision making. Technology allows

people to do incredible things. Marjella gave an example with Amazon for sustainability professionals. How

Amazon usually works - if someone wants to buy blue jeans, he types in blue jeans and Amazon tells him where

to buy the jeans from, how much they cost, different brands, etc. What Marjella suggested - what if it was

possible to fill in bio-diversity and find the information you are looking for. She shared that she is optimistic

about technology and what it can do in terms of narrative and analytics. The narrative information can be used

for strategic decision making. eRevalue is monitoring environmental, social and corporate governance issues in

the media and any online news, but also in social media to derive what is trending, what the public cares about.

This allows the transcription of qualitative information into quantifiable indicators. The remaining questions

according to her are “How to do the individual efforts as companies and individuals, and to what extent do they

matter? What is necessary in terms of society to be achieved, in terms of the climate change goals in terms of

the SDGs where do we want to go?”

Marjella Alma – CEO, eRevalue, United Kingdom

Marjella Alma is co-Founder and CEO of eRevalue, a data technology company with

offices in London and New York City. eRevalue looks at the corporate reporting,

regulatory and stakeholder landscapes, extracting useful and meaningful data to inform

companies on what issues are really important, providing analyses and insights into trends.

Alma is a former director of the Global Reporting Initiative, having worked as an external-

facing technical expert.

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 6 of 7

From his past work experience Geoff has come to realization there are a lot of companies committed to do the

thing however they most of the times do not know what the right thing is. “How would we know a truly

sustainable company if we saw one? How do we know when a company is doing enough?” Just as importantly, to

guide people towards that “how can we tell how far away a company is now from where it needs to be?” These

are questions that are difficult to be answered. According to him, the gap between where companies are now

and where they need to be has to be measured. That is what Future-Fit Benchmark is trying to do. It focuses on

a desired future state, which is the difference between where a company is now and where it needs to be.

Future-Fit is trying to define what that future state looks like, what needs to happen to ensure that humans and

other life can flourish on Earth forever, and how that translates in what business needs to do. The foundation

has created a set of Future-Fit goals by starting with best available natural systems and social science. These

goals define a minimum any company must do, to make sure it is not any way hindering progress towards a

sustainable future. As stated by Geoff, having goals is great to prioritize effectively, but people need to be able to

measure progress towards the goals. They are also defining a set of what they call key fitness indicators for each

goal, which follow these five C design criteria. They are concise. Although they provide the detailed level of

insight a company needs to actually prioritize action effectively and support these hot spots, they can be bubbled

up into a single indicator per goal, on the scale of 0-100 so the company can see where its biggest gaps are. It is

comparable. One can compare across companies of any size and sector. The performance measurement

approach is an open source methodology companies can apply to score themselves.

In the long term, the foundation’s commitment is to offer a credible, concise and compelling way for companies

to start understanding where their real gaps are, reporting progress towards the idea of future fitness, and start

shifting investor and consumer behaviour.

Discussion:

Panellists were asked to discuss on how can we recognize if

we need the right data and share what is their advice for

those in the panel as to what companies should be doing to

get that data right.

Panellists were asked to discuss on whether they feel

optimistic that we can get the change that is needed.

Enrico shared his opinion that we should consider data as

an asset and therefore companies have to decide who should

be in charge of managing this asset. He believes that around

the SDGs we can converge at least on basic definitions, basic meanings of data and therefore having a better alignment of

different reporting systems to a common framework.

According to Enrico, if our society gets more complicated

and change in the way that income or GDP is not good

anymore, we will abandon that. He has been advocating for

years the measurement of human capital, and he thinks that the society is not too far from having a quite good measure

of human capital, but it is needed to engage the bigger

international organizations.

According to Pavan, we need to measure things in ways,

which the CEO and the CFO understand, express all of

these human, social, natural capital impacts and dependencies

in financial terms, help them understand what is big and what

is not, etc. He thinks the understanding of a company’s

overall perspective is fundamental as well as identifying the

needed framework.

According to Pavan, there is leadership but followership is

needed. He thinks that this is the big challenge and the

leaders will go their way but at the end of the day even their

experimentation with these new ideas, and new approaches

to managing the company will only survive if they find that

their leadership is being followed. To bridge that gap

between leadership and followership, he beliefs that we need

the regulators to change the rules.

Geoff Kendall – CEO and Co-Founder, Future-Fit Foundation, United Kingdom

Geoff is an entrepreneur whose experience spans sustainability consulting, high-tech

startups, and academic research. He is co-founder and CEO of 3D Investment Foundation,

which is leading the creation of the Future-Fit Business Benchmark: a new open source

benchmark designed to help business leaders and investors assess the true future-fitness

of companies. Geoff holds a PhD in artificial intelligence. He was part of the London-based

think-tank SustainAbility, where for the past four years he has led the communications

team and directed consulting projects with some of the world’s biggest corporations. His

core focus has been to help companies understand how to change the way they do

business in pursuit of a sustainable world.

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Corporate Leadership Group on integrated reporting – Lab 3: Comprehensive notes Page 7 of 7

Geoff shared that he would like to see more companies just

looking at where they need to be.

Marjella was optimistic because technology gives us an

opportunity to provide diagnostic, on an area that was

largely untapped and these data sets, and these sustainability

reports that no one might have heard of, these regulatory

initiatives that might be pushed aside because they are still

voluntary. Where she is pessimistic but this is also where the

opportunity is – there are a lot of companies already doing

this.

Guest Speaker

The discussion in Lab 2 on integrated thinking and the focus on how to reconstruct the company and see the

different parts of the business model such as the customer value preposition, costs, revenues, key relationships,

etc. led David into thinking of how he can translate these parts in a sort of smart form that will help him in

structuring all different parts that have to be managed in the writing of an integrated report. Systems are

complex, dynamic, and yet they have to be decomposed, restructured and value creation has to be

communicated. Delta Lloyd is linking the relationships, helping the external agency which is writing reports to

get the internal stakeholder view so that it can take account of all interconnected relationships. These are the

common steps David took the participants through – firstly, it is important to identify the company’s strategy,

customer value proposition, profit formula, business activities, strategic plan, revenues, material themes, etc.; we

have to link these, give them description, and make them explicit; we have to answer what are the expenses, the

revenues and to put them in different categories, key resources, capitals, etc.; in the end we have to list all the

material themes and end up with all the parts identified and captured in this structure. These steps have been

taken in Delta Lloyd. David and his colleagues identified 6 material themes and then filled these templates.

David’s purpose of sharing this with the participants was to show them how they can also think about tooling.

David Hoppe

Communications Advisor

Delta Lloyd