Professional Services · 2013-05-16 · Professional Services. As GRI adopts Scope 4 guidelines, the pressure on services firms by clients/customers to report on and verify ESG data

Sustainability Topics for Sectors: What do stakeholders want to know?

PROFESSIONAL SERVICES

May 2013 Page 1 of 17

This table shows a list of topics identified as relevant by different stakeholder groups. They can be considered as stakeholders’ suggestions or requests for topics to be monitored or disclosed by organizations.

Additional information about the project can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx

15 – Professional Services

13 Topics

Companies providing business support services relating to human capital management. Includes employment agencies, employee training,

payroll & benefit support services, retirement support services and temporary agencies. Includes companies involved in management consulting

services, architectural design, business information or scientific research, marketing, and testing & certification services. Excludes companies

providing information technology consulting services. Companies primarily providing research and consulting services to businesses and

governments not included elsewhere.

Sustainability Category

Topic Topic Specification (if available)

Explanation Reference(s)1 Constituency

Social Labor conditions Empowerment of human capital

Social as defined by the fair treatment, capacity building and empowerment of human capital to optimize positive impacts on the environment [broadly defined]. Within the broader category of Social, we recommend professional services organizations be held accountable for disclosure on the following KPI items: Labor practices, Human rights, Diversity & Inclusion, Employee training, Employee welfare (as measured by employee engagement data, compensation benchmarking, workplace flexibility programs, safety

94, 115 Mediating Institution

https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx








record, outside verification [such as listing on Fortune's Best Companies to Work For]), Employee health, Community impact, Philanthropy, Pro bono hours [professional time & volunteerism] and evidence of Stakeholder engagement. The core business of a professional services' organization focuses on the performance of human capital. As such, among all of the capitals (as currently outlined in the IIRC suggested integrated reporting principles) human capital has the greatest potential in terms of either a positive or negative impact on society at large. People are the most "material" input and output of the sector and therefore people should receive the most attention, investment, disclosure and evaluation within the context of ESG disclosure and evaluation in any sector guidance for Professional Services. As GRI adopts Scope 4 guidelines, the pressure on services firms by clients/customers to report on and verify ESG data will increase. With the current focus chiefly on environmental KPIs within the context of a manufacturing or process-driven business, the true risks and opportunities of this sector are hidden altogether or greatly masked. Currently, client questionnaires and reporting frameworks have the unintended effect of focusing on services' firms least important contribution to footprint - reducing comparatively small units of carbon emissions - and missing the potentially more significant impact on social benefits that professional







services firms are uniquely positioned to deliver. As the supply chain has become the common standard or focal point for much of this discussion, it would be significantly more impactful to focus on the unique characteristics of the professional services supply chain - its people.

Total amount of bonuses, incentives and stock opinions paid out in €

153 Financial Markets & Information Users

Capacity building

Employees and community

Capacity building as defined by investments and support in developing sustainable human, societal and community resources that are enabled to replenish and regenerate themselves. Capacity building is an index that falls with the S of ESG. Professional services' organizations have such a large potential impact here, we believe it should be distinguished as its own category. Metrics within this topic could include: investments in employee education, learning and professional development; diversity in recruitment sources; micro lending and finance as part of the philanthropic budget; investments in community activism groups; support for employee volunteerism, sabbaticals and secundments; mentoring and apprentice programs; MBE/WBE or equivalent supply chain spending requirements; Professional services organizations invest millions of dollars and hours building capacity in their communities. Capacity building is a core implicit principle of

116 Mediating Institution







sustainability, but doesn't often garner the same attention or market recognition as do some of the more traditional environmental commitments. The next generation of GRI guidelines should spell out common standards on a revenue or per FTE basis as one way to calculate the positive societal impact made through these investments in pro bono initiatives, community service and direct philanthropy.

Services' quality and accuracy

Transparency on governance, codes of conducts and procedures

Within most CSR/Sustainability frameworks, transparency is often addressed under Governance. Within the context of a professional services' organization, transparency becomes even more critical as a device to monitor and document the quality, efficacy and accessibility of information germane to operating a sustainable enterprise. As such, for this sector, it should be reported on as a standalone item. Transparency can be demonstrated through some or all of the following items: Specific codes and compliance standards (including supplier codes of conduct), Disclosure of Executive Compensation, Disclosure of Conflicts of Interest, Adoption of Integrated Reporting principles, Self Reporting [on public sites such as SEDEX and GRI], Access to Best Practices through Communities of Practice and Open Access portals, Publication of results from customer satisfaction, safety and other quality metrics and audits. The essence of a successful services organization is in the quality and accuracy of the services it delivers and those services come chiefly in the form of expertise, counsel,








thought leadership and intellectual capital. A client's ability to understand and assess the various inputs into those deliverables is vital to being able to evaluate risk and make a sound business decision about engaging the firm. As such, transparency is simply a more material filter in the professional services' sector and should be better defined and disclosed in the development of sector guidance.

Conflict of interest

Code of ethics Avoidance of conflicts of interest and disclosure to the client of any possible circumstances that could affect the objectivity of decisions/actions taken

260 Business

Other Confidential information protection

Code of Ethics Code of ethics treat appropriately all confidential client information that is not public knowledge, take reasonable steps to prevent it from access by unauthorized people, and will not take advantage of proprietary or privileged information, either for use by myself, the client's firm, or another client, without the client's permission.

260 Business

Corporate governance

Gender participation on governance bodies

GOVERNANCE / EUROPE: boardroom lady boom: is it possible without quotas? On 22 June, the CapitalCom agency published its 2011 survey into the boardroom gender mix of CAC 40 companies, with fairly encouraging results: the proportion of women on the board has doubled in recent years, from 10.5% in 2009 to 20.8% in 2011.

389 Financial Markets & Information Users







In January, the French parliament adopted legislation imposing quotas for the proportion of women on the board of major companies. Under the measures, the development of female board membership is mandatory and gradual: 20% for listed groups, public companies of an administrative, industrial and commercial nature by January 2014, rising to 40% by January 2017. The law also stipulates that companies with no women present on their board must appoint at least one within six months of it being on the statute books (voted on 13 January 2011). In France, some 2,000 companies are affected (the 650 largest listed firms and companies with more than 500 employees and those generating sales in excess of €50bn). In terms of sanctions for noncompliance, appointments that run counter to the parity principles are to be declared null and void and attendance fees are to be temporarily suspended. At the European level and at the instigation of the Vice-president of the European Commission, Viviane Reding, the European parliament will decide in March 2012 on whether to adopt common legislation on this matter (a mandatory proportion of women in decision-making positions of 30% in 2015 and 40% in 2020). This will depend on the level of improvement seen based on the selfregulation of European companies, in accordance with the equality initiative adopted by the European Commission in December 2010 and the European parliament resolution of 17 January 2008 calling for the Commission and member states to promote a balance







between women and men on company boards, particularly where member states are shareholders. Europe as a whole illustrates the degree of hesitation between a soft-law approach and conventional legislation (quotas in this instance), but it is clear from the experience at national level that the second method tends to get much better results.

Governance practices

Counseling impacts on third-party clients

Governance from a dual perspective: the procedures adopted by the services' organization for its own operations as well as its counsel to third-party clients on these matters. When assessing "good governance" by a services' organization, an evaluator should consider all of the following factors: the degree of transparency, rigor and standards related to ethics, standards for risk assessment, lobbying practices, conflict of interest policies, FCPA & corruption measures, political contributions, board governance policies and supplier codes of conduct. As a sector, professional services organizations play a special role in commercial and civic society: they are often the trusted advisor and thought partner to their clients on a host of compliance, business and operational matters. As such, their governance practices play double duty: they help to steward organizational character and culture for their own organizations and, perhaps even more importantly, they can provide a multiplier effect by








promoting these practices with their clients. In particular, due to the complexion of this section - with professionals in the areas of law, communication, technology and consulting - the impact of their counsel has a tremendous ripple effect suggesting that standards and KPIS in the governance category should be more heavily weighted than those of other types of outsource providers in the manufacturing sector.

Criteria for "good governance" assessments - Transparency, ethics, risks, lobbying, conflict of interest, corruption, political contributions, supplier codes of conduct

Governance from a dual perspective: the procedures adopted by the services' organization for it own operations as well as its counsel to third-party clients on these matters. When assessing "good governance" by a services' organization, an evaluator should consider all of the following factors: the degree of transparency, rigor and standards related to ethics, standards for risk assessment, lobbying practices, conflict of interest policies, FCPA & corruption measures, political contributions, board governance policies and supplier codes of conduct. As a sector, professional services organizations play a special role in commercial and civic society: they are often the trusted advisor and thought partner to their clients on a host of compliance, business and operational matters. As such, their governance practices play double duty: they help to steward organizational character and culture for their own organizations and, perhaps even more importantly, they can provide a multiplier effect by








promoting these practices with their clients. In particular, due to the complexion of this section - with professionals in the areas of law, communication, technology and consulting - the impact of their counsel has a tremendous ripple effect suggesting that standards and KPIS in the governance category should be more heavily weighted than those of other types of outsource providers in the manufacturing sector.

Trust and ethics Trust: Within the overall topic of governance and ethics, professional services' organizations have a higher bar when it comes to operating/behaving in a manner to foster trust. At first blush, declaring Trust to be a measurable index sounds challenging. However, a services' organization's fundamental value proposition and in many cases, its competitive advantage comes down to the clients' perception of trust, reliability and organizational character. These attributes can be teased out through employee tenure and turnover rates; customer satisfaction surveys; inclusion on Ethisphere's Top 100 companies; average customer tenure; quality outcomes; and brand equity. A professional services' organization sells expertise, judgment and advice. If the organization meets a host of other ESG criterion - it buys carbon offsets for business travel and leases space in LEED/Green buildings and allows employees to telecommute - while at the same time giving clients poor advice based on short-term gains








or misleading financial statements or questionable legal practices, is it really a good corporate citizen? By putting more emphasis on trust indicators, the marketplace will reinforce and reward behaviors that are more consistent with sustainability principles and real triple bottom line management. This is an emerging field. Edelman publishes a Trust Barometer and Ethisphere has advanced the conversation and attention on ethics. GRI could bolster this attribute by highlighting it more prominently within the governance domain.

Recruitment and employment criteria and practices

Employment and recruitment agencies

Employment & Recruitment agencies are engaged in the recruitment or employment of workers in virtually every sector of the economy, from IT and electronics manufacturing to the extractive industries, the food industry, hospitality, and domestic and clerical work. Example: Communicating on efforts to combat forced labour: Without effective policies and processes in place, E&R agencies risk being involved with forced labour or trafficking, including through the actions of their contractors/suppliers. Risks may arise either at the point of recruitment or at the point of employment, but the highest risk is likely to be at the recruitment stage, whether or not this is something that the E&R agency itself does. The risk is heightened in situations where individuals are more likely to accept poor working conditions as a result of endemic poverty, or where the payment of fees for work placement services is legal or








widely practiced (and where loan agencies are often in long-term relationships with local E&R agencies). E&RA is clearly a growing business. Most of an E&R agency’s business relationships will be with user enterprises (or government employers) that contract with the agency to provide temporary workers. Individual user enterprises/clients, and user enterprises/clients in multistakeholder initiatives, are beginning to focus on the need for effective policies and processes to implement the responsibility to respect in their labour hiring practices. There are a number of aspects of the state duty to protect human rights that have particular implications for E&R agencies’ efforts to meet their responsibility to respect human rights. In particular these centre on: • The absence of effective regulation of the sector in some states, allowing “rogue” companies to proliferate (including criminal organisations, involved for example in human trafficking), especially given the ease of entry into the business. • A lack of robust protection of labour rights (particularly in relation to freedom of association and collective bargaining) either in national law or practice in a number of states. • Major gaps in the regulation of international recruitment of migrant workers, with many states lacking bilateral agreements on the issue (or failing to enforce their provisions in practice) and/or allowing E&R







agencies to charge fees to such workers. There is also an overall low rate of ratification of the relevant UN and ILO instruments. • The implications for potentially vulnerable workers of immigration regulations in destination countries that tie immigration status to a particular employer, particularly where power is vested in individual “sponsors” rather than in an independent state agency. Wherever governments perform poorly, or provide poor protections, in these and other respects, it heightens the risk of human rights abuses occurring and becomes proportionately more challenging for E&R agencies to meet their own responsibility to respect human rights.

Alternative communication and transport services

Business travel Environmental: Professional services organizations do not have the same potential impact as other sectors involved in the sourcing, processing, packaging, warehousing, distribution, sales and end of life involved in product sales. Environmental indexes should be narrowed to better reflect this sector's business model. Within the broad spectrum of all environmental impacts, services' firms should be measured against these five categories: Energy use, Waste, Water use, Occupancy & Transportation. Occupancy can be verified by real estate in LEED certified buildings and/or the use of "green leases" [see Jones Lang LaSalle link as an example of compliance to this standard]. Transportation can be verified by reductions in business travel and increases in telecommuting, video








conferences, stipends for employee carpooling and use of public transportation. In addition to providing a common standard for organizations to report on efforts adhere to a set of ESG outcomes, GRI has become the de facto measurement for organizations to use when complying with requests for data from clients/customers seeking to validate the environmental efficacy of their supply chains. The most typical request comes in the form of an RFP with dozens of questions related to environmental impacts that are LESS material to a services' firm. In suggesting a REDUCTION or better targeting of the environmental reporting items to these five, requesters will get better and more relevant information about the organization it is seeking to evaluate. These questionnaires tend to be generic templates whose environmental questions often focus on the carbon footprint inputs to the client's supply chain and on issues such as biodiversity, indigenous populations and other aspects that are more common to component manufacturers than service provides. Moreover, the inputs sought by clients miss the most significant impacts of a services' firm. By recalibrating and realigning GRI Sector Guidance to focus on select issues, GRI can have a greater impact on organizational behavior and practice within professional services.







Building occupancy

Environmental: Professional services organizations do not have the same potential impact as other sectors involved in the sourcing, processing, packaging, warehousing, distribution, sales and end of life involved in product sales. Environmental indexes should be narrowed to better reflect this sector's business model. Within the broad spectrum of all environmental impacts, services' firms should be measured against these five categories: Energy use, Waste, Water use, Occupancy & Transportation. Occupancy can be verified by real estate in LEED certified buildings and/or the use of "green leases" [see Jones Lang LaSalle link as an example of compliance to this standard]. Transportation can be verified by reductions in business travel and increases in telecommuting, video conferences, stipends for employee carpooling and use of public transportation. In addition to providing a common standard for organizations to report on efforts adhere to a set of ESG outcomes, GRI has become the de facto measurement for organizations to use when complying with requests for data from clients/customers seeking to validate the environmental efficacy of their supply chains. The most typical request comes in the form of an RFP with dozens of questions related to environmental impacts that are LESS material to a services' firm. In suggesting a REDUCTION or better targeting of the environmental reporting items to these five, requesters will get better








and more relevant information about the organization it is seeking to evaluate. These questionnaires tend to be generic templates whose environmental questions often focus on the carbon footprint inputs to the client's supply chain and on issues such as biodiversity, indigenous populations and other aspects that are more common to component manufacturers than service provides. Moreover, the inputs sought by clients miss the most significant impacts of a services' firm. By recalibrating and realigning GRI Sector Guidance to focus on select issues, GRI can have a greater impact on organizational behavior and practice within professional services.

1 All references can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx





References

All references can be found at https://www.globalreporting.org/reporting/sector-guidance/Topics-Research/Pages/default.aspx

94 CSC, 2013. Our CSC CR Framework. [Online] Available at: http://www.csc.com/cr/ds/31889-our_csc_cr_framework [Accessed 19 March 2013].

115 Edelman, 2012. 2012 Citizenship Report. [Online] Available at: http://citizenship2012.edelman.com/ [Accessed 26 February 2013].

116 Edelman, 2013. Business and social purpose. [Online] Available at: http://www.edelman.com/practice/business-social-purpose/ [Accessed 19 March 2013].

117 Edelman, Updated Annually. Trust Barometer Global Results. [Online] Available at: http://trust.edelman.com/trust-download/global-results/ [Accessed 26 February 2013].

129 Ethisphere, 2013. Ethisphere's most ethical companies. [Online] Available at: http://ethisphere.com/wme/ [Accessed 19 March 2013].

153 European Federation of Financial Analysts Societies (EFFAS) and Society of Investment Professionals in Germany (DVFA), 2010. KPIs for ESG - A Guideline for the Integration of ESG into Financial Analysis and Corporate Valuation, Frankfurt am Main: EFFAS.

256 Institute for Human Rights and Business (IHRB), Guidance for the Employment and Recruitment Agencies Sector on Implementing the UN Guiding Principles on Business and Human Rights, 2013.

260 Institute of Management Consultants, 'Institute of Management Consultants USA Code of Ethics', 2005.





346 Jones Lang Lasalle, 2012. CSR and sustainability strategy. In: Sustainable Value in a Changing World. New York: Jones Lang Lasalle, pp. 8-10. Jones Lang Lasalle, 2012. Governance. In: Sustainable Value in a Changing World. New York: Jones Lang Lasalle, pp. 11-12.

347 Jones Lang Lasalle, 2013. Green Buildings and Office Worker Productivity. [Online] Available at: http://www.joneslanglasalle.com/Pages/Global-property-sustainability-perspective-Green-Buildings-Worker-Productivity.aspx [Accessed 19 March 2013].

348 Jones Lang Lasalle, 2013. Green buildings. [Online] Available at: http://www.joneslanglasalle.com/Pages/CSR-Green-Buildings.aspx [Accessed 26 February 2013].

389° Natixis, 2011. Strategy Note Equity Research - Strategy/SRI: Monthly review June 2011, Paris: Natixis.

474 SEDEX Global, 2013. SEDEX Global. [Online] Available at: http://www.sedexglobal.com [Accessed 26 March 2013].

° Resource available on request and/or for a fee.

Documents

Professional Services · 2013-05-16 · Professional Services. As GRI adopts Scope 4 guidelines, the pressure on services firms by clients/customers to report on and verify ESG data