Contents

Welcome Message from PwC Global Sustainability Leader Sunny Misser

Industry Focus The Financial Services Industry The Challenges of Building Trust Credibility and a Good Reputation

Client Interview Corporate Citizenship at Citigroup An Interview with Pamela Flaherty Senior VP ndash Citigroup Community Affairs Joseph Sprouls Global Head ndash CItigroup Realty Services and Stephen Lane Global Director of Capital Projects ndash Citigroup Realty Services

PwC Case Study Stakeholder Engagement at Fujifilm

PwC Partnerships 2005 Young Managers Team Project World Business Council on Sustainability Development Meeting ndash Nagoya Japan

PwC Solution Focus Closing Gaps in Traditional Enviromental Due Diligence Incorporating EHS and Corporate Responsibility Risks to Achieve Business Goals

Sustainability Issues Focus Broad-Based Black Economic Empowerment in South Africa

Region Focus PwC Russia ndash Delivering Sustainability to an Emerging Market

New Publications from PwC The Sustainability Yearbook 2005

Calendar of Global Sustainability Conferences amp Events

Links bull Contact a Sustainable Business Solutions (SBS) Leader in Your Country bull Rate Our Newsletter bull Take Our Online Poll Question bull Subscribe to the Corporate Responsibility Report

The Corporate Responsibility Report

NY-ST-05-1291 copy 2005 PricewaterhouseCoopers All rights reserved PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited each of which is a separate and independent legal entity Delaware limited liability partnership) or as the context requires other member firms of PricewaterhouseCoopers International Limited each of which is a separate and independent legal entity

ContributorsJohn Fillo PhD CPEA Director Pittsburgh United States johnfillouspwccom

Akiko Gosho PhD Supervisor Tokyo Japan akikogoshojppwccom

Douglas Grier Senior Consultant Moscow Russia douglasgrierrupwccom

Douglas Hileman PE CPEA Director Los Angeles United States douglashilemanuspwccom

Natasha Issa Manager Zurich Switzerland natashaissachpwccom

Myrto Kontaxi Manager Athens Greece myrtokontaxigrpwccom

Markus Noethiger Senior Manager Zurich Switzerland markusnoethigerchpwccom

Alison Ramsden Director Johannesburg South Africa alisonramsdenzapwccom

Welcome Message from PwC Global Sustainability Leader Sunny Misser

Dear Readers

Welcome back to Pricewaterhouse- Coopersrsquo sustainability newsletter ndash The Corporate Responsibility Report Thank you for providing feedback to our last newsletter ndash your insights continue to help us deliver a more relevant newsletter

In this issue we offer several interest-ing market insights According to the 2005 ldquoBanana Skinsrdquo1 annual survey environmental risk is one of the ldquofastest growing risksrdquo for banks So how are companies responding Inside this newsletter three Citigroup executives reflect on how Citigroup is managing the environmental footprint of their operations worldwide and they discuss how the company is embrac-ing corporate citizenship

Also in this issue we discuss how companies can better manage the sustainability risks and opportunities associated with mergers and acquisi-tions Increasingly companies are leveraging acquisitions joint ventures and other strategic alliances to gain access to emerging markets and lower-cost manufacturing In response to this market dynamic Pricewater-houseCoopers offers perspectives to companies from an enterprise risk viewpoint to better identify prioritize and manage key corporate responsi-

bility risks and opportunities through-out the transaction lifecycle

We hope you enjoy this newsletter We would like to thank all of our clients and global practitioners who have challenged our thinking and have helped us in sharing our knowl-edge and experiences

We would like to hear your thoughts through the Rate Our Newsletter section of this issue If you would like further information or would like to learn more about our network please see our website at wwwpwccomsustainability

Regards

Sunny Misser Global Sustainability Leader

1 Banana Skins 2005 The CSFIrsquos Annual Survey of the Risks Facing Banks Centre for the Study of Financial Innovation (CSFI) and by the New York CSFI 2005

volume 3 September 2005

The Financial Services Industry The Challenges of Building Trust Credibility and a Good Reputation

By Markus Noethiger and Natasha Issa

The financial services industryrsquos expo-sure to non-financial risks and opportu-nities is extensive because of its reliance on trusted relationships through its role in raising allocating and pricing capital and providing risk coverage As the providers or withhold-ers of financing to governments corporations projects and individuals financial institutions are continuously exposed to a broad spectrum of risks some of which are not easily quantifi-able ndash from environmental and social liabilities to reputation risks As institu-tional investors they have an interest in the long-term value of companies which is not limited to economic actors but extends to the non-financial spheres As providers of insurance they are facing a rapidly changing risk landscape ndash impacts from water scarcity and climate change to obesity are significantly altering risk profiles To top it all off there is growing pressure from regulators and other key stakeholders for the financial sector to demonstrate responsible business conduct by embedding the right ethical culture throughout its operations

There are strong business incentives for financial institutions to take on board non-financial issues Some key drivers include

The Corporate Responcibility Report volume 3 September 2005 2

bull Effective management of non-financial risks in decision-making processes further reduce risk exposure and improve the bottom-line and long-term shareholder value

bull Changing risk landscapes and grow-ing societal expectations or more res-ponsible corporate behaviour create business opportunities for new finan-cial products and services which incor-porate non-financial value-drivers

bull Responsible business conduct helps maintain trust credibility and reputation This in turn enhances trusted relationships with customers and third parties on which the effective functioning of financial markets depends A related benefit is that of reduced regulation risk

To further clarify the relevance of non-financial risks and opportunities to the industry the following paragraphs will touch upon a few important sector-specific concerns

Treating customers fairlyThe industry has to attract and retain customers to grow its business and increase the bottomline Competitive-ness product choice quality and cus-tomer service are only some of the required elements in attracting and retaining customers Trust among cus-tomers and thus credibility and reputa-tion are also key factors Additionally the industry has been facing increasing pressure from regulators and other key stakeholders to address the way in which customers are treated To main-

tain customer loyalty and trust and address regulatory risks more transpar-ency is required around the costs of financial products and services clarity of documentation clear pricing structures and identification of commission pay-ments and more systematic and appro-priate handling of complaints In the UK the Financial Services Authority (FSA) introduced the lsquoTreating Customers Fairlyrsquo (TCF) programme in July 2004 aimed at expecting lsquofirms and their senior management to consider the implications of TCF for their business and to take steps to tackle any shortfalls which they identify as a resultrsquo1 Similarly in the US bi-partisan legislation has recently introduced into Congress (HR 1295 The Responsible Lending Act)

The overarching issue here is that of responsible marketing and selling of financial products and services Some key questions the industry must tackle include the following Is the product appropriate for the customers being targeted Are the customers adequately informed about all the related risks Is the pricing structure clear Are the conflicts of interest between the seller and the customer adequately managed One recent example of mis-management of these issues is the mis-selling of endowment-linked mortgages which in the case of one UK mortgage lender resulted in a GBP 8000000 fine Undoubtedly the cost of the reputation-al damage will be much more severe and long lasting

Managing non-financial risksAs a rule the financial services industry has well-established risk management processes in place but the focus remains on quantifiable risks This expo-ses the industry to a wide range of non-financial risks with regard to its opera-tions Such risks whether they are exposure to environmental liabilities in corporate lending or exposure to gover-nance failures through investments influence the bottom line and long-term shareholder value

For example corporate lending exposes the industry to potentially huge environ-mental and health-related liabilities The

The Corporate Responsibility Report volume 3 September 2005 3

industry may also suffer reputational damage through association with business misconduct such as account-ing improprieties at corporate clients Involvement in environmentally or socially controversial international development projects also has a potentially damaging impact on reputa-tion Several initiatives are addressing the integration of non-financial risks in project financing The Equator Princi-ples for example provide a framework to manage the social and environmental dimensions of project financing (wwwequator-principlescom)

The asset management side of the industry is also exposed to non-financial risks through its investment processes To enhance the performance of invest-ment products investment decisions must be informed by an assessment of companiesrsquo value Traditionally the focus has been on economic perfor-mance but it is now recognised that a companyrsquos long-term value is signifi-cantly influenced by less easily quantifi-able non-financial factors such as good corporate governance and responsible business behaviour

These issues are especially important to the pension fund industry which has a long-term view and is representing an increasingly broad and diverse group of beneficiaries To protect the end benefi-ciaries regulators and other stakehold-ers are demanding more transparency around investment policies from the pension fund industry and a more active stance towards the management of companies invested in

A growing market for Socially Respon-sible Investment (SRI) products has also opened up business opportunities for the industry There are now several financial indices that apply non-financial inclusion criteria the FTSE4Good and the Dow Jones Sustainability Indices are just two examples

Conclusions

Arguably the overarching challenge facing the financial services sector is to build trust credibility and a good reputation This helps maintain trust

among customers by reducing the risk of additional regulation A key element in building trust is demonstrating and embedding responsible corporate conduct Many institutions have already adopted or strengthened their codes of conduct and compliance programs setting out expected corporate behav-iour Policies and codes however do not necessarily equal integrity in business behaviour As alluded to in the Sarbanes-Oxley Act the lsquotone at the toprsquo is pivotal in embedding integrity throughout an organization Clearly the example set by top management sends a strong message Setting the right lsquotone at the toprsquo is about drawing attention to expected behaviours and how that influences the culture of the company To further embed responsible business conduct appropriate controls have to be in place to identify and manage non-financial risks More importantly the right business incen-tives have to be in place to drive each employee to behave in line with agreed principles ndash one cannot promote responsible sales practices while providing incentives only on the basis of sales volume

Another crucial step in rebuilding credi-bility and restoring trust is accountability and transparency ndash communicating openly on performance and value creation It is not only important to be transparent about the challenges and opportunities that a company faces but to clearly make the link to business performance Traditional financial Markus Noethiger Senior Manager Switzerland

reporting needs to be enhanced in order to provide a more detailed and transpar-ent picture of performance ndash market opportunities strategy risks intangible assets and other important non-financial value drivers2

From embedding responsible corporate conduct to managing non-financial risks and reporting effectively the challenges facing the financial services industry are significant The potential payout however in terms of better business performance resulting from a good reputation and restored trust in financial institutions and markets would undoubtedly be much more significant

For more information please contact Markus Noethiger in Switzerland at +41 (1) 630 2734 or Natasha Issa in Switzerland at +41 44 638 2849

1 Treating Customers Fairly ndash Progress and Next Steps wwwfsagovuk 2 The PwC ValueReporting TM Framework

The Corporate Responsibility Report volume 3 September 2005 3

industry may also suffer reputational damage through association with business misconduct such as account-ing improprieties at corporate clients Involvement in environmentally or socially controversial international development projects also has a potentially damaging impact on reputa-tion Several initiatives are addressing the integration of non-financial risks in project financing The Equator Princi-ples for example provide a framework to manage the social and environmental dimensions of project financing (wwwequator-principlescom)

The asset management side of the industry is also exposed to non-financial risks through its investment processes To enhance the performance of invest-ment products investment decisions must be informed by an assessment of companiesrsquo value Traditionally the focus has been on economic perfor-mance but it is now recognised that a companyrsquos long-term value is signifi-cantly influenced by less easily quantifi-able non-financial factors such as good corporate governance and responsible business behaviour

These issues are especially important to the pension fund industry which has a long-term view and is representing an increasingly broad and diverse group of beneficiaries To protect the end benefi-ciaries regulators and other stakehold-ers are demanding more transparency around investment policies from the pension fund industry and a more active stance towards the management of companies invested in

A growing market for Socially Respon-sible Investment (SRI) products has also opened up business opportunities for the industry There are now several financial indices that apply non-financial inclusion criteria the FTSE4Good and the Dow Jones Sustainability Indices are just two examples

Conclusions

Arguably the overarching challenge facing the financial services sector is to build trust credibility and a good reputation This helps maintain trust

among customers by reducing the risk of additional regulation A key element in building trust is demonstrating and embedding responsible corporate conduct Many institutions have already adopted or strengthened their codes of conduct and compliance programs setting out expected corporate behav-iour Policies and codes however do not necessarily equal integrity in business behaviour As alluded to in the Sarbanes-Oxley Act the lsquotone at the toprsquo is pivotal in embedding integrity throughout an organization Clearly the example set by top management sends a strong message Setting the right lsquotone at the toprsquo is about drawing attention to expected behaviours and how that influences the culture of the company To further embed responsible business conduct appropriate controls have to be in place to identify and manage non-financial risks More importantly the right business incen-tives have to be in place to drive each employee to behave in line with agreed principles ndash one cannot promote responsible sales practices while providing incentives only on the basis of sales volume

Another crucial step in rebuilding credi-bility and restoring trust is accountability and transparency ndash communicating openly on performance and value creation It is not only important to be transparent about the challenges and opportunities that a company faces but to clearly make the link to business performance Traditional financial Markus Noethiger Senior Manager Switzerland

reporting needs to be enhanced in order to provide a more detailed and transpar-ent picture of performance ndash market opportunities strategy risks intangible assets and other important non-financial value drivers2

From embedding responsible corporate conduct to managing non-financial risks and reporting effectively the challenges facing the financial services industry are significant The potential payout however in terms of better business performance resulting from a good reputation and restored trust in financial institutions and markets would undoubtedly be much more significant

For more information please contact Markus Noethiger in Switzerland at +41 (1) 630 2734 or Natasha Issa in Switzerland at +41 44 638 2849

1 Treating Customers Fairly ndash Progress and Next Steps wwwfsagovuk 2 The PwC ValueReporting TM Framework

The Corporate Responsibility Report volume 3 September 2005 4

five years that wersquove made sustained progress In terms of energy use and greenhouse gas emissions I donrsquot think any other financial institution with significant global operations does a comprehensive global energy survey And our effort in that regard over a period of years is leading to changes in the way we do business ndash itrsquos not just information lost in a report

A second area of real accomplishment is microfinance ie the provision of financial services to the poor mostly in emerging markets We have been a global leader in supporting microfinance for nearly 40 years primarily through volunteerism philanthropic support and partnerships But last year we began something new in addition to volunteer and philanthropic activities we are now approaching microfinance as a busi-ness We formed a group under excel-lent leadership to develop business with worldwide MFIs ndash microfinancing institutions In most cases we ourselves are not lending directly to customers but rather doing business with the institu-tions that understand local markets and needs We bring them to the capital markets we help them improve their remittance processes and so on

Wersquore also proud of our progress in the area of environmental and social risk management in our corporate invest-ment bank Wersquove made huge strides on implementing not just the Equator Principles to which we are a formal signatory but also our own environmen-tal and social risk management policies

mean in terms of our business practic-es It means a highly principled approach to the communities in which we do business high standards in our treatment of our employees and high standards in how we deal with our clients These things are not separate from our business they are embedded ndash and so itrsquos not as if there is somebody at the corporate level who is exclusively ldquoresponsible for corporate citizenshiprdquo I perform some global coordinating functions but it is our objective to have corporate citizenship embedded in every part of our business by and through the business leaders who actually conduct that business

| PwC What broad corporate citizen-ship programs are under way within the company

| Pam Flaherty A lot of what we do is not programmatic in the sense of discrete programs Programs of that kind can amount to ldquodo-good initia-tivesrdquo and as I said wersquore interested in embedding certain values and attitudes Still we have a number of activities wersquore particularly proud of One of them is the responsibility of Joe Sprouls Steve Lane and their colleagues greening our own operations If wersquore going to have credibility with clients and external stakeholders we have to do at home what we preach to others Wersquove made a lot of progress ndash even five years ago we were pretty much nowhere with regard to sustainability and environmen-tal issues Yes we had done some things But itrsquos really in the last three to

Another Kind of Leverage Corporate Citizenship at Citigroup

When the worldrsquos largest global finan-cial institution sets the goal to embed corporate citizenship into its culture policies decisions and practices there is reason to take notice With a net income of $170 billion in fiscal 2004 assets of $15 trillion and 300000 employees worldwide Citigroup is applying the keen analy- tical intelligence for which it is widely admired to the issues of corporate social responsibility and environmental stewardship Citigrouprsquos vast reach and influence ensure that its approach will be closely studied by others and offers a model of what is possible Citigrouprsquos focus is external (for example new corporate citizenship standards for assessing project finance proposals) and internal (for example a host of programs that reduce Citigrouprsquos greenhouse gas emissions)

In this interview Pricewaterhouse-Coopers (PwC) speaks with the execu-tives who are making this happen Pamela Flaherty Senior Vice President ndash Global Community Relations respon-sible for Citigrouprsquos corporate citizen-ship activities in more than 100 countries Joseph Sprouls Global Head ndash Citigroup Realty Services and Stephen Lane Global Director of Capital Projects ndash Citigroup Realty Services Mr Sprouls is responsible for managing Citigrouprsquos real estate portfolio which spans more than 12000 facilities worldwide

| PwC What does corporate citizen-ship mean for Citigroup

| Pam Flaherty Our corporate citizen-ship objectives are very aptly embodied in Chuck Princersquos goal for the whole institution which is to be the worldrsquos most respected financial institution as well as the worldrsquos most profitable We are the most profitable and in many areas we are highly respected But our objective is to be the most respected financial institution What does that

The Corporate Responsibility Report volume 3 September 2005 5

but wersquore carefully measuring its impact Wersquore piloting hoteling programs in a new facility in Warren New Jersey and in Long Island City People can reserve desks for the times they need them This alternative workplace strategy reduces the number of people we have in buildings at any one time reduces the number of desks reduces our green-house gas emissions and reduces the amount of utilities we buy

| Steve Lane Whenever we plan to open an office we do extensive demo-graphic studies We want to locate our operations centers which are the core of our consumer business in areas where our employees live so that they commute less Access to mass trans-portation is extremely important to us One of the reasons why wersquore probably the largest private employer in New York is that mass transportation in the city is outstanding Outside of the city ndash for example in Warren New Jersey where we have just leased a very significant technology center ndash we look carefully at demographic studies to ensure that employees will generally have short commutes Thatrsquos better for the environ-ment and it enhances the quality of life

| PwC Much of what yoursquore telling us seems to have those two benefits better for the environment better for the bottom line

| Joe Sprouls Wersquove become much more strategic not as reactive and ad-hoc as we used to be We actually have global strategies about how we want to manage our infrastructure

competitors per employee less space than our competitors per employee and therefore wersquore putting out less greenhouse gas emissions and spend-ing less on utilities

Another important point we look closely at our vacancy Our surplus vacancy worldwide is just 2 percent ndash by far the lowest in the industry This is a measure wersquore able to track closely and the benefits of low vacancy are what you would expect lower utility bills lower greenhouse gas emissions per employee

We work with Citigroup businesses from what you might call an inside-out perspective Our relationship managers work with each business to understand how the participants interact how they collaborate and we design the work-place around their needs We set up laboratories before we build a space so that future users can look at what we have in mind and give us input

Seemingly small things can have a large impact For example we experimented recently in St Louis with an under-the-floor HVAC system which cut our utility costs in the first year by 30 percent Amazing Wersquore going to introduce that into other buildings Another example in New York we introduced a system for remotely monitoring utilities usage in all of our branch banks ndash lights on lights off heating requirements at different times of day and so on The payback on that system was one year Another effective strategy is hoteling As you know itrsquos common in large companies

Finally I would cite in the consumer bank our focus on how we treat clients and the fairness of our products particularly in the area of sub-prime lending This has been a big issue in the past five or six years We had plenty of work to do but today we receive praise from key activist organizations In our most recent Citizenship Report Maude Hurd president of ACORN gives us a wonderful report card ACORN is one of our strongest partners in financing for low and middle-income families

Two kinds of green| PwC Joe Sprouls your unit of Citigroup ndash Citigroup Realty Services ndash is responsible for more than 12000 Citigroup facilities worldwide Can you tell us about your management of that vast building footprint from the perspective of corporate citizenship and environmental impact

| Joe Sprouls Pam alluded to the fact that we track greenhouse gas emissions on over 12000 properties publish the results and benchmark our year-to-year results A key issue in achieving good numbers and improving on them is maximizing usage of the space we occupy At our request the Real Estate Executive Board in 2004 measured our densities in office and operation centers against all of our major competitors We found that we have probably the most efficient density per usable square foot of any financial company There is a sweet spot a maximum density at which employees are comfortable and highly productive but beyond that point people are likely to find the work envi-ronment difficult One of the secrets of hitting the sweet spot is to provide col-laborative spaces and amenities ndash for example child-care centers spacious cafeterias wellness centers fitness centers Even though we have a some-what dense environment there are enough extras for employees to feel comfortable and well served

This relates to sustainability By minimi- zing our footprint and maximizing our usable square feet per employee I believe that we emit far less green-house gas than our competitors We literally have fewer buildings than our

The Corporate Responsibility Report volume 3 September 2005 6

doing and we are going to tell you what wersquore doingrdquo Citigrouprsquos 2004 Corpo-rate Citizenship Report which is available online is one part of our effort to report to the public and the media

| PwC Financial services is a fiercely competitive industry and only 30 financial institutions have so far signed What is the impact if any on your competitiveness

| Pam Flaherty We would like to make environmental and social standards not a source of competitive advantage for any financial institution There needs to be a level playing field in this regard

| PwC Is that actually coming about

| Pam Flaherty I think therersquos a serious effort on the part of many financial insti-tutions The Equator Principles give all of us a way to articulate what wersquore doing and what wersquore not doing Are all financial institutions getting ready to sign up Not as far as I know ndash I wouldnrsquot say itrsquos a stampede We have a long way to go to reach a truly level playing field where these issues are concerned But the Equator Principles can have and I think are having a big impact on the market a positive impact They estab-lish a clear set of expectations

| PwC How are your most valued customers responding to the Equator Principles and to Citigrouprsquos overall position on corporate citizenship

| Pam Flaherty As we were saying earlier many of our clients are way ahead of us Our biggest clients involved in infrastructure projects have dealt with these issues for years Now herersquos an interesting side issue some NGOs (non-governmental organizations) have said to us that if we really want to prove wersquore implementing these envi-ronmental and social risk policies we should put a section in our annual Corporate Citizenship Report on clients and projects wersquove turned down Our answer to that is that wersquore not in business to not do business Our objective is to do good deals with our clients and our clients appreciate our adherence to a clear set of principles

ples And it would be best to have an external standard we can point to as opposed to just saying wersquore really smart wersquove figured this out trust usrdquo

Just at that time a number of interna-tional banks including Citigroup had been convened by the IFC the Internat-ional Finance Corporation As you may know the IFC is a member of the World Bank Group ndash the private finance member specialized in project finance in the developing world That larger meeting made clear that we all had similar problems We all had criteria and processes for project finance decisions but there were differences large and small Four banks volunteered to explore the issues and eventually pro-posed a set of joint principles ndash the Equator Principles They were announced in June 2003 initially with 10 financial institutions signing their agreement to adopt them The number of signatories is now 30

Chuck encouraged and promoted and demanded our leadership on this and he personally attended the press event in Washington at which the Principles were first announced and discussed ndash he was the only senior executive from any of the signing financial institutions By attending he wanted to make very clear that the Principles are supported at the top of our organization A journal-ist covering the event asked him ldquoHow are we going to know whether you actually follow the Equator Principlesrdquo He said ldquoPeople like you are going to make sure we do Yoursquore going to demand that we tell you what wersquore

| Steve Lane Forgive the clicheacute but itrsquos a journey not a destination Wersquore getting better year-to-year learning through our own efforts and by partici-pating in industry forums that examine these issues We hear what other companies are doing and bring that back to our own organization Inciden-tally some of our most valuable learning has come from non-financial institu-tions They tend to have been at this longer than we have

Project finance and the Equator Principles

| PwC Citigroup was a founder and first signatory of the Equator Princi-ples which call for voluntary compli-ance with certain standards in global project financings Projects that cannot meet the environmental and social standards formulated in the Equator Principles donrsquot get financed at least not by the financial institu-tions that have joined together to support the Principles As the worldrsquos largest financial institution Citigroup has tremendous influence It can make things happen and it can stop things from happening

| Pam Flaherty I want to tell you how the Equator Principles came about In fall 2002 we had a series of internal discussions around project finance and a lot of issues were surfacing about specific projects we had financed ndash how why under what guidelines At the time Chuck Prince was CEO of our Corporate and Investment Bank He pulled several of us together and said ldquoWe need a way to describe our princi-

The Corporate Responsibility Report volume 3 September 2005 7

shared by many of the financial institu-tions they deal with Major project financings are all syndicated deals so having everybody sing from the same hymnbook is a good thing Itrsquos true that some smaller clients may be less familiar with the issues surrounding environmental and social risks but we work with them and itrsquos not long before they understand our approach

A process to look ahead

| PwC In terms of sustainability and corporate citizenship what do you think the world will look like in ten years

| Pam Flaherty I donrsquot think anybody knows how the worldrsquos going to look in ten years we certainly donrsquot But we do have a process to look ahead at what issues are out there and what we should pay attention to and we discuss those issues with our board The most impor-tant thing is to have a culture and process that enable you to see and understand important issues as they emerge This isnrsquot a small thing It calls for a culture of listening a culture of transparency and exchange of views We may not be able to predict the key issues five and ten years out but if we have the right process in place and a culture thatrsquos willing to scan and observe and understand and absorb then we hope to be able to see the issues far enough in advance to respond effectively

Pam Flaherty Senior VP ndash Community Affairs Citigroup

| PwC How important is the CEOrsquos influence and participation in developing corporate citizenship

| Joe Sprouls The CEO is absolutely critical That doesnrsquot mean that every-body can sit around and say ldquoIf Chuck doesnrsquot tell me what to do nothing gets donerdquo You can get a lot done But if the CEO sets the tone then those of us who manage Citigroup businesses on a day-to-day basis have a receptive audience

| Pam Flaherty I had a conversation about two months ago with the head of our Corporate and Investment Bank and we touched on some of the activi-ties that Joe Sprouls is leading in the area of renewable energy And he said ldquoI want to hear about that ask Joe to get in touch and tell me what hersquos doingrdquo Wersquore building a culture

We take our commitments very seriously When we say wersquore going to do something we do it We have to know how wersquore going to do it and we have to believe we can do it or we wonrsquot state either internally or publicly that wersquore going to do it We donrsquot sign up for anything wersquore not serious about doing

For more information about the Equator Principles please see wwwequator-principlescom

Joseph Sprouls Global Head ndash Citigroup Realty Services

Stephen Lane Global Director ndash Capital Projects Citigroup Realty Services

The Corporate Responsibility Report volume 3 September 2005 5

but wersquore carefully measuring its impact Wersquore piloting hoteling programs in a new facility in Warren New Jersey and in Long Island City People can reserve desks for the times they need them This alternative workplace strategy reduces the number of people we have in buildings at any one time reduces the number of desks reduces our green-house gas emissions and reduces the amount of utilities we buy

| Steve Lane Whenever we plan to open an office we do extensive demo-graphic studies We want to locate our operations centers which are the core of our consumer business in areas where our employees live so that they commute less Access to mass trans-portation is extremely important to us One of the reasons why wersquore probably the largest private employer in New York is that mass transportation in the city is outstanding Outside of the city ndash for example in Warren New Jersey where we have just leased a very significant technology center ndash we look carefully at demographic studies to ensure that employees will generally have short commutes Thatrsquos better for the environ-ment and it enhances the quality of life

| PwC Much of what yoursquore telling us seems to have those two benefits better for the environment better for the bottom line

| Joe Sprouls Wersquove become much more strategic not as reactive and ad-hoc as we used to be We actually have global strategies about how we want to manage our infrastructure

competitors per employee less space than our competitors per employee and therefore wersquore putting out less greenhouse gas emissions and spend-ing less on utilities

Another important point we look closely at our vacancy Our surplus vacancy worldwide is just 2 percent ndash by far the lowest in the industry This is a measure wersquore able to track closely and the benefits of low vacancy are what you would expect lower utility bills lower greenhouse gas emissions per employee

We work with Citigroup businesses from what you might call an inside-out perspective Our relationship managers work with each business to understand how the participants interact how they collaborate and we design the work-place around their needs We set up laboratories before we build a space so that future users can look at what we have in mind and give us input

Seemingly small things can have a large impact For example we experimented recently in St Louis with an under-the-floor HVAC system which cut our utility costs in the first year by 30 percent Amazing Wersquore going to introduce that into other buildings Another example in New York we introduced a system for remotely monitoring utilities usage in all of our branch banks ndash lights on lights off heating requirements at different times of day and so on The payback on that system was one year Another effective strategy is hoteling As you know itrsquos common in large companies

Finally I would cite in the consumer bank our focus on how we treat clients and the fairness of our products particularly in the area of sub-prime lending This has been a big issue in the past five or six years We had plenty of work to do but today we receive praise from key activist organizations In our most recent Citizenship Report Maude Hurd president of ACORN gives us a wonderful report card ACORN is one of our strongest partners in financing for low and middle-income families

Two kinds of green| PwC Joe Sprouls your unit of Citigroup ndash Citigroup Realty Services ndash is responsible for more than 12000 Citigroup facilities worldwide Can you tell us about your management of that vast building footprint from the perspective of corporate citizenship and environmental impact

| Joe Sprouls Pam alluded to the fact that we track greenhouse gas emissions on over 12000 properties publish the results and benchmark our year-to-year results A key issue in achieving good numbers and improving on them is maximizing usage of the space we occupy At our request the Real Estate Executive Board in 2004 measured our densities in office and operation centers against all of our major competitors We found that we have probably the most efficient density per usable square foot of any financial company There is a sweet spot a maximum density at which employees are comfortable and highly productive but beyond that point people are likely to find the work envi-ronment difficult One of the secrets of hitting the sweet spot is to provide col-laborative spaces and amenities ndash for example child-care centers spacious cafeterias wellness centers fitness centers Even though we have a some-what dense environment there are enough extras for employees to feel comfortable and well served

This relates to sustainability By minimi- zing our footprint and maximizing our usable square feet per employee I believe that we emit far less green-house gas than our competitors We literally have fewer buildings than our

The Corporate Responsibility Report volume 3 September 2005 6

doing and we are going to tell you what wersquore doingrdquo Citigrouprsquos 2004 Corpo-rate Citizenship Report which is available online is one part of our effort to report to the public and the media

| PwC Financial services is a fiercely competitive industry and only 30 financial institutions have so far signed What is the impact if any on your competitiveness

| Pam Flaherty We would like to make environmental and social standards not a source of competitive advantage for any financial institution There needs to be a level playing field in this regard

| PwC Is that actually coming about

| Pam Flaherty I think therersquos a serious effort on the part of many financial insti-tutions The Equator Principles give all of us a way to articulate what wersquore doing and what wersquore not doing Are all financial institutions getting ready to sign up Not as far as I know ndash I wouldnrsquot say itrsquos a stampede We have a long way to go to reach a truly level playing field where these issues are concerned But the Equator Principles can have and I think are having a big impact on the market a positive impact They estab-lish a clear set of expectations

| PwC How are your most valued customers responding to the Equator Principles and to Citigrouprsquos overall position on corporate citizenship

| Pam Flaherty As we were saying earlier many of our clients are way ahead of us Our biggest clients involved in infrastructure projects have dealt with these issues for years Now herersquos an interesting side issue some NGOs (non-governmental organizations) have said to us that if we really want to prove wersquore implementing these envi-ronmental and social risk policies we should put a section in our annual Corporate Citizenship Report on clients and projects wersquove turned down Our answer to that is that wersquore not in business to not do business Our objective is to do good deals with our clients and our clients appreciate our adherence to a clear set of principles

ples And it would be best to have an external standard we can point to as opposed to just saying wersquore really smart wersquove figured this out trust usrdquo

Just at that time a number of interna-tional banks including Citigroup had been convened by the IFC the Internat-ional Finance Corporation As you may know the IFC is a member of the World Bank Group ndash the private finance member specialized in project finance in the developing world That larger meeting made clear that we all had similar problems We all had criteria and processes for project finance decisions but there were differences large and small Four banks volunteered to explore the issues and eventually pro-posed a set of joint principles ndash the Equator Principles They were announced in June 2003 initially with 10 financial institutions signing their agreement to adopt them The number of signatories is now 30

Chuck encouraged and promoted and demanded our leadership on this and he personally attended the press event in Washington at which the Principles were first announced and discussed ndash he was the only senior executive from any of the signing financial institutions By attending he wanted to make very clear that the Principles are supported at the top of our organization A journal-ist covering the event asked him ldquoHow are we going to know whether you actually follow the Equator Principlesrdquo He said ldquoPeople like you are going to make sure we do Yoursquore going to demand that we tell you what wersquore

| Steve Lane Forgive the clicheacute but itrsquos a journey not a destination Wersquore getting better year-to-year learning through our own efforts and by partici-pating in industry forums that examine these issues We hear what other companies are doing and bring that back to our own organization Inciden-tally some of our most valuable learning has come from non-financial institu-tions They tend to have been at this longer than we have

Project finance and the Equator Principles

| PwC Citigroup was a founder and first signatory of the Equator Princi-ples which call for voluntary compli-ance with certain standards in global project financings Projects that cannot meet the environmental and social standards formulated in the Equator Principles donrsquot get financed at least not by the financial institu-tions that have joined together to support the Principles As the worldrsquos largest financial institution Citigroup has tremendous influence It can make things happen and it can stop things from happening

| Pam Flaherty I want to tell you how the Equator Principles came about In fall 2002 we had a series of internal discussions around project finance and a lot of issues were surfacing about specific projects we had financed ndash how why under what guidelines At the time Chuck Prince was CEO of our Corporate and Investment Bank He pulled several of us together and said ldquoWe need a way to describe our princi-

The Corporate Responsibility Report volume 3 September 2005 7

shared by many of the financial institu-tions they deal with Major project financings are all syndicated deals so having everybody sing from the same hymnbook is a good thing Itrsquos true that some smaller clients may be less familiar with the issues surrounding environmental and social risks but we work with them and itrsquos not long before they understand our approach

A process to look ahead

| PwC In terms of sustainability and corporate citizenship what do you think the world will look like in ten years

| Pam Flaherty I donrsquot think anybody knows how the worldrsquos going to look in ten years we certainly donrsquot But we do have a process to look ahead at what issues are out there and what we should pay attention to and we discuss those issues with our board The most impor-tant thing is to have a culture and process that enable you to see and understand important issues as they emerge This isnrsquot a small thing It calls for a culture of listening a culture of transparency and exchange of views We may not be able to predict the key issues five and ten years out but if we have the right process in place and a culture thatrsquos willing to scan and observe and understand and absorb then we hope to be able to see the issues far enough in advance to respond effectively

Pam Flaherty Senior VP ndash Community Affairs Citigroup

| PwC How important is the CEOrsquos influence and participation in developing corporate citizenship

| Joe Sprouls The CEO is absolutely critical That doesnrsquot mean that every-body can sit around and say ldquoIf Chuck doesnrsquot tell me what to do nothing gets donerdquo You can get a lot done But if the CEO sets the tone then those of us who manage Citigroup businesses on a day-to-day basis have a receptive audience

| Pam Flaherty I had a conversation about two months ago with the head of our Corporate and Investment Bank and we touched on some of the activi-ties that Joe Sprouls is leading in the area of renewable energy And he said ldquoI want to hear about that ask Joe to get in touch and tell me what hersquos doingrdquo Wersquore building a culture

We take our commitments very seriously When we say wersquore going to do something we do it We have to know how wersquore going to do it and we have to believe we can do it or we wonrsquot state either internally or publicly that wersquore going to do it We donrsquot sign up for anything wersquore not serious about doing

For more information about the Equator Principles please see wwwequator-principlescom

Joseph Sprouls Global Head ndash Citigroup Realty Services

Stephen Lane Global Director ndash Capital Projects Citigroup Realty Services

The Corporate Responsibility Report volume 3 September 2005 6

doing and we are going to tell you what wersquore doingrdquo Citigrouprsquos 2004 Corpo-rate Citizenship Report which is available online is one part of our effort to report to the public and the media

| PwC Financial services is a fiercely competitive industry and only 30 financial institutions have so far signed What is the impact if any on your competitiveness

| Pam Flaherty We would like to make environmental and social standards not a source of competitive advantage for any financial institution There needs to be a level playing field in this regard

| PwC Is that actually coming about

| Pam Flaherty I think therersquos a serious effort on the part of many financial insti-tutions The Equator Principles give all of us a way to articulate what wersquore doing and what wersquore not doing Are all financial institutions getting ready to sign up Not as far as I know ndash I wouldnrsquot say itrsquos a stampede We have a long way to go to reach a truly level playing field where these issues are concerned But the Equator Principles can have and I think are having a big impact on the market a positive impact They estab-lish a clear set of expectations

| PwC How are your most valued customers responding to the Equator Principles and to Citigrouprsquos overall position on corporate citizenship

| Pam Flaherty As we were saying earlier many of our clients are way ahead of us Our biggest clients involved in infrastructure projects have dealt with these issues for years Now herersquos an interesting side issue some NGOs (non-governmental organizations) have said to us that if we really want to prove wersquore implementing these envi-ronmental and social risk policies we should put a section in our annual Corporate Citizenship Report on clients and projects wersquove turned down Our answer to that is that wersquore not in business to not do business Our objective is to do good deals with our clients and our clients appreciate our adherence to a clear set of principles

ples And it would be best to have an external standard we can point to as opposed to just saying wersquore really smart wersquove figured this out trust usrdquo

Just at that time a number of interna-tional banks including Citigroup had been convened by the IFC the Internat-ional Finance Corporation As you may know the IFC is a member of the World Bank Group ndash the private finance member specialized in project finance in the developing world That larger meeting made clear that we all had similar problems We all had criteria and processes for project finance decisions but there were differences large and small Four banks volunteered to explore the issues and eventually pro-posed a set of joint principles ndash the Equator Principles They were announced in June 2003 initially with 10 financial institutions signing their agreement to adopt them The number of signatories is now 30

Chuck encouraged and promoted and demanded our leadership on this and he personally attended the press event in Washington at which the Principles were first announced and discussed ndash he was the only senior executive from any of the signing financial institutions By attending he wanted to make very clear that the Principles are supported at the top of our organization A journal-ist covering the event asked him ldquoHow are we going to know whether you actually follow the Equator Principlesrdquo He said ldquoPeople like you are going to make sure we do Yoursquore going to demand that we tell you what wersquore

| Steve Lane Forgive the clicheacute but itrsquos a journey not a destination Wersquore getting better year-to-year learning through our own efforts and by partici-pating in industry forums that examine these issues We hear what other companies are doing and bring that back to our own organization Inciden-tally some of our most valuable learning has come from non-financial institu-tions They tend to have been at this longer than we have

Project finance and the Equator Principles

| PwC Citigroup was a founder and first signatory of the Equator Princi-ples which call for voluntary compli-ance with certain standards in global project financings Projects that cannot meet the environmental and social standards formulated in the Equator Principles donrsquot get financed at least not by the financial institu-tions that have joined together to support the Principles As the worldrsquos largest financial institution Citigroup has tremendous influence It can make things happen and it can stop things from happening

| Pam Flaherty I want to tell you how the Equator Principles came about In fall 2002 we had a series of internal discussions around project finance and a lot of issues were surfacing about specific projects we had financed ndash how why under what guidelines At the time Chuck Prince was CEO of our Corporate and Investment Bank He pulled several of us together and said ldquoWe need a way to describe our princi-

The Corporate Responsibility Report volume 3 September 2005 7

shared by many of the financial institu-tions they deal with Major project financings are all syndicated deals so having everybody sing from the same hymnbook is a good thing Itrsquos true that some smaller clients may be less familiar with the issues surrounding environmental and social risks but we work with them and itrsquos not long before they understand our approach

A process to look ahead

| PwC In terms of sustainability and corporate citizenship what do you think the world will look like in ten years

| Pam Flaherty I donrsquot think anybody knows how the worldrsquos going to look in ten years we certainly donrsquot But we do have a process to look ahead at what issues are out there and what we should pay attention to and we discuss those issues with our board The most impor-tant thing is to have a culture and process that enable you to see and understand important issues as they emerge This isnrsquot a small thing It calls for a culture of listening a culture of transparency and exchange of views We may not be able to predict the key issues five and ten years out but if we have the right process in place and a culture thatrsquos willing to scan and observe and understand and absorb then we hope to be able to see the issues far enough in advance to respond effectively

Pam Flaherty Senior VP ndash Community Affairs Citigroup

| PwC How important is the CEOrsquos influence and participation in developing corporate citizenship

| Joe Sprouls The CEO is absolutely critical That doesnrsquot mean that every-body can sit around and say ldquoIf Chuck doesnrsquot tell me what to do nothing gets donerdquo You can get a lot done But if the CEO sets the tone then those of us who manage Citigroup businesses on a day-to-day basis have a receptive audience

| Pam Flaherty I had a conversation about two months ago with the head of our Corporate and Investment Bank and we touched on some of the activi-ties that Joe Sprouls is leading in the area of renewable energy And he said ldquoI want to hear about that ask Joe to get in touch and tell me what hersquos doingrdquo Wersquore building a culture

We take our commitments very seriously When we say wersquore going to do something we do it We have to know how wersquore going to do it and we have to believe we can do it or we wonrsquot state either internally or publicly that wersquore going to do it We donrsquot sign up for anything wersquore not serious about doing

For more information about the Equator Principles please see wwwequator-principlescom

Joseph Sprouls Global Head ndash Citigroup Realty Services

Stephen Lane Global Director ndash Capital Projects Citigroup Realty Services

The Corporate Responsibility Report volume 3 September 2005 7

shared by many of the financial institu-tions they deal with Major project financings are all syndicated deals so having everybody sing from the same hymnbook is a good thing Itrsquos true that some smaller clients may be less familiar with the issues surrounding environmental and social risks but we work with them and itrsquos not long before they understand our approach

A process to look ahead

| PwC In terms of sustainability and corporate citizenship what do you think the world will look like in ten years

| Pam Flaherty I donrsquot think anybody knows how the worldrsquos going to look in ten years we certainly donrsquot But we do have a process to look ahead at what issues are out there and what we should pay attention to and we discuss those issues with our board The most impor-tant thing is to have a culture and process that enable you to see and understand important issues as they emerge This isnrsquot a small thing It calls for a culture of listening a culture of transparency and exchange of views We may not be able to predict the key issues five and ten years out but if we have the right process in place and a culture thatrsquos willing to scan and observe and understand and absorb then we hope to be able to see the issues far enough in advance to respond effectively

Pam Flaherty Senior VP ndash Community Affairs Citigroup

| PwC How important is the CEOrsquos influence and participation in developing corporate citizenship

| Joe Sprouls The CEO is absolutely critical That doesnrsquot mean that every-body can sit around and say ldquoIf Chuck doesnrsquot tell me what to do nothing gets donerdquo You can get a lot done But if the CEO sets the tone then those of us who manage Citigroup businesses on a day-to-day basis have a receptive audience

| Pam Flaherty I had a conversation about two months ago with the head of our Corporate and Investment Bank and we touched on some of the activi-ties that Joe Sprouls is leading in the area of renewable energy And he said ldquoI want to hear about that ask Joe to get in touch and tell me what hersquos doingrdquo Wersquore building a culture

We take our commitments very seriously When we say wersquore going to do something we do it We have to know how wersquore going to do it and we have to believe we can do it or we wonrsquot state either internally or publicly that wersquore going to do it We donrsquot sign up for anything wersquore not serious about doing

For more information about the Equator Principles please see wwwequator-principlescom

Joseph Sprouls Global Head ndash Citigroup Realty Services

Stephen Lane Global Director ndash Capital Projects Citigroup Realty Services

The Corporate Responsibility Report volume 3 September 2005 8

their stakeholder meetings and that various levels of company manage-ment joined the meetings plans for direct dialogue with their stakeholders on an ongoing basis have not yet been adopted

bull The companyrsquos initiatives to enhance their CSR governance structure incorporated their mid-term business plan ldquoVISION75rdquo While environmental management is being focused across the Fujifilm Group other CSR initia-tives are still in a transitional phase from the parent company level to the entire corporate group level including subsidiaries at home and abroad At present Fujifilm is reorganizing a systematic collection of information and performance data on CSR In the meantime Fujifilm is also reorganizing its information collection system on environmental data and expects to introduce a web-based system in 2005

The solutionPricewaterhouseCoopers Japan has provided independent assurance for Fujifilmrsquos reports since their first issu-ance of the environmental report in 1999 and has attended Fujifilmrsquos stake-holder meetings as a third party assur-ance through provider since 2002 For external use (ie for readers of the sus-tainability report) Japan provides the Independent Assurance Report and for internal use we provide written recom-mendations pointing out required improvements in the social and environ-mental arenas

Additionally they found that the inter-ests expectations and concerns of their stakeholders about their voluntary initiatives (ie efforts beyond compli-ance) had been historically shared only within limited parties These parties had a direct interest such as operational divisions at the head office or relevant local factories but were not shared across the Fujifilm Group except where such information was related to Product Liability Law complaints or claims The company realized that if this situation continued it would erode their sustain-able business activities The company is now engaged in more active dialogues with their stakeholders

In 2004 Fujifilm held three types of stakeholder meetings with different target participants as shown in the chart above

2 Fujifilmrsquos challenge

Based on the findings of the stakeholder meetings Fujifilm identified the follow-ing areas for action

bull Fujifilm expanded the scope of dis-closure from environmental to social aspects It is also expanding the scope of the report to include group companies However the consistency of data pertaining to the group com-panies could be improved

bull Fujifilm also encouraged their stake-holdersrsquo to engage through their stakeholder meetings While it is com-mendable that Fujifilm invited their global stakeholders to participate in

Stakeholder Objective

The community Explain chemical management in factories

Readers of sustainability report (Multi-stakeholder)

Understand needs and expectations of stakeholders

Global academia (CSR experts in the world)

Seek sustainable management advice

Stakeholder Engagement at Fujifilm

By Akiko Gosho PhD

Description of clientrsquos business

Fujifilm is one of the largest global photography companies providing a wide-range of products and services from graphic arts and medical systems to the industry-leading FinePix digital cameras The company has extended their business globally since the late 1960s and established an international network with a trilateral production structure in Japan US and Europe (UK Netherlands and Germany) They deploy their business in over 200 regions around the world The company actively explores new markets includ-ing the promising Chinese market where they are expanding their production and sales base Overseas revenue on a consolidated basis is now close to 50 of the total revenue of 2560387 mill yen in FY2003

The clientrsquos challenge

1 Analysis of current situation

With their philosophy of creating ldquoan imaging and information culturerdquo Fujifilm recognizes their responsibility as a corporate citizen by contributing to a sustainable society and addressing environmental issues They issued their first environmental report in 1999 In 2003 their new ldquoSustainability Reportrdquo expanded this theme to encompass broader environmental and social areas Moreover the 2004 edition emphasized enhancing dialogue with their stake-holders and disclosed additional information to achieve this goal As part of this process Fujifilm reviewed the objective of publishing a sustainability report and identified what and how they should communicate with their stakeholders including employees and communities As a result Fujifilm recognized the importance of evaluating different interests expectations and concerns of each stakeholder group since this approach would enable the company to release appropriate infor-mation to the specific target audience

Management System based on its standard Second potential risks existing in the daily operations for each employee not detected using the traditional managment systems will be extracted through communications with stakeholders and the findings will be reflected in their business operations ndash thereby contributing to a sustainable development of the company

For more information please contact Toshie Inoue Director at the Environ-mental Audit Division in ChuoAoyama PricewaterhouseCoopers at toshieinouejppwccom

The Corporate Responsibility Report volume 3 September 2005 9

The following is a summary of the involvement of Pricewaterhouse-Coopers Japan in connection with Fujifilm stakeholder meetings

bull Participation in Fujifilmrsquos stakeholder meetings as an observer and third party assurance provider

bull Analysis of the findings from stake-holder meetings and evaluation of Fujifilmrsquos performance through its independent assurance Its evaluation is included in the Fujifilm Sustainability Report 2004 p90-91 and

bull Feedback to Fujifjilm on evaluation findings in the form of written recommendations for internal use

Benefits for the clientBased on the findings from the comp-anyrsquos stakeholder meetings and the results of the evaluation of PwC Japanrsquos Independence Assurance Fujifilm is aware of their voluntary responsibilities and risk concerns beyond compliance requirements This resulted in increased company awareness of the importance of stakeholder dialogue and regular stakeholder meetings will now be held As part of their commitment Fujifilm is considering adopting the AA1000 Framework effective 2005 The compa-ny derives two benefits from the AA1000 Framework First it will be able to function as a comprehensive man-agement tool utilising existing manage-ment tools adopted across the Group such as ISO14001 ISO9000 and Fujifilmrsquos Labor Safety and Health

The World Business Council for Sustainable Development 2005 Young Managers Team ldquoMoving sustainable development out of the specialist box into the mainstreamrdquo

By Myrto Kontaxi

For the third year in a row Pricewater-houseCoopers is participating in the Young Managers Team (YMT) of the World Business Council for Sustainable Development (WBCSD) The programrsquos goal is to bring together a diverse group of young professionals for one year to explore creative solutions to challenges facing global companies trying to conduct business in a sustainable and ecologically-efficient manner

This year the WBCSDrsquos Young Manag-ers Team is working to create and stimulate the connections required to spread sustainable development awareness They hope to build bridges on an international level as well as on a local one between individuals and organizations and between the public and private sectors by recognising the diversity of sustainability perspectives

The YMT 2005 is pursuing three sepa-rate work-streams along parallel lines the Education work-stream the Finance work-stream and the Media work-stream All work-streams focus on the topic of ldquoMoving sustainable develop-ment out of the specialist box into the mainstreamrdquo but tackle the problem in different ways To maintain focus on their goal and outcomes the YMT 2005 decided to appoint an overall coordina-tor PwC participant Myrto Kontaxi (Sustainable Business Solutions Athens Greece) will be the coordinator who will also participate in the Educa-tion work-stream PwCrsquos 2005 contribu-tion extends beyond the participation in the work streams including the coordi-nation of 26 people from around the globe into a coherent group with a common goal and a meaningful impact

Akiko Gosho PhD Supervisor Japan

The Corporate Responsibility Report volume 3 September 2005 10

The Education work-streamrsquos goal is to create university programmes that will enhance an understanding of the role of business The underlying ration-ale behind this goal is two-fold to help academia understand what the business world is looking for in future sustainable development in turn academia can supply business with well prepared future professionals and leaders

To achieve their goal the Education work-stream integrates current business cases from each group memberrsquos company into the curriculum of under-graduate and graduate schools bringing their perspective of sustainability issues into the lecture room a place where these professionals were not too long ago

The Finance work-stream is building on existing work of the WBCSD to address key challenges related to financial performance and sustainability The overall goal is to present the business case for sustainability in a language and logic used and under-stood by businesses This will be achieved through case studies and analyses of existing sustainability metrics used by businesses today

The Media work-stream aims to refor-mulate and improve the sustainable development message to appeal to the mainstream It has based its work on the premise that traditional internal communication channels of the sustain-able development message are not always effective especially for the majority of employees The Media group exploits new channels and formats of communication to inspire people to learn about sustainable development and take action

The year-long YMT project is divided into three phases exploration consulta-tion and implementation defined by three face-to-face meetings in between Geneva marked the beginning of the exploration phase The Young Managers met again from 6 ndash 9 June in Nagoya Japan sharing their work to date and planning the next steps Their

The 2005 WBCSD Young Managers Team at a recent liaison delegate meeting in Nagoya Japan

PwC strongly represented in the WBCSD Liaison Delegate (LD) and Council Meeting in Nagoya Japan

The week of 6-10 June 2005 was very busy for both the WBCSD but also for our PwC people who participated in an event-packed week The following highlights include

bull Over 240 professionals from 31 countries attended the Council Meeting on Friday June 10th The theme ldquoBridges to Sustainabilityrdquo was the focus of panel discussions including Asia and a Sustainable Future Business Success in Tomorrowrsquos Society and Eco-systems and Business This year Sam DiPiazza PwCrsquos Global CEO joined the Executive Committee of the WBCSD and was present at the Council Meeting

bull At the Aichi 2005 World Expo the WBCSD in conjunction with Nippon Keidanren co-hosted a seminar on the role of business in the 21st cen-tury Honoured by the presence of the Crown Prince of Japan the seminar attracted a great amount of media attention

bull The YMT 2005 brought together 26 people from WBCSD member com-panies who had the chance to inter-act with Liaison Delegates and com-pany leaders while analysing their work and the work of others

bull The three WBCSD Focus Areas - Development Energy and Climate and The Role of Business in Society generated an enthusiastic discus- sion throughout the week helping shape specific goals over the coming months

bull The Liaison Delegates meeting convened mid-week hosted 200 LDs Working Group Members and representatives from the Regional Network Fourteen ldquoLearning by Sharingrdquo workshops provided a platform for challenging debates on some cutting-edge topics

bull The WBCSD Accountability amp Reporting Project Report co-chaired by Sam DiPiazza Global CEO of PwC and Travis Engen President amp CEO of Alcan was launched in Nagoya Beginning in 2002 this report marks the culmination of a project involving more than 60 WBCSD member companies

The Corporate Responsibility Report volume 3 September 2005 11

entering a transaction ndash divestiture acquisition joint venture or service agreement ndash should focus on broader environmental health and safety (EHS) and Corporate Responsibility (CR) issues that may affect the business goals of the transaction in order to avoid liabilities manage risks contain costs successfully integrate businesses and create value

Environmental due diligence today

Environmental risks have long been part of business and transactions The familiar ldquoPhase 1 Environmental Site Assessment (ESA)rdquo as outlined in the American Society of Testing and Materials (ASTM) Standard E-1527 first published in 1993 and updated in 2000 is perhaps the most familiar US stan-dard for EDD This methodology was designed to gather data that would enable parties to make more informed decisions about environmental liabilities In the US requirements are imposed primarily by the Comprehensive Envi-ronmental Responsibility Compen-sation and Liability Act (CERCLA or ldquoSuperfundrdquo) of 1980 amended in 1986 by establishing an ldquoinnocent purchaser defencerdquo and by similar state statutes The Small Business Liability Relief and Brownfields Revitalization Act of 2002 created additional landowner protec-tions and an obligation for US EPA to establish ESA requirements under a new All Appropriate Inquiry rule

Closing Gaps in Traditional Environmental Due Diligence PwC explores how incorporating environmental health and safety and corporate responsibility risks can achieve business goals

By Doug Hileman and John Fillo PhD CPEA

Companies have been conducting Environmental Due Diligence (EDD) for over twenty years In that period the methodology and products have remained largely unchanged However transactions have become more complex along with the drivers that shaped the original EDD methodology

bull Corporations and business transactions are more complex

bull Successful and fast integration is key to delivering value

bull The types of issues causing environ-mental risks and liabilities are more complex and

bull There are potential risks from a range of Corporate Responsibility (CR) issues

The concept of EDD as a data-gathering exercise to protect buyers (and sellers) from acquiring (or retaining) liabilities such as contaminated properties is still necessary to protect a company from financial exposure However a company

meeting was held concurrently with the WBCSD Liaison Delegate and Council Meeting allowing them to participate and to contribute to both meetings as well as to attend the World ExPo The YMT programrsquos consultation phase will end in October at the Fall WBCSD Liaison Delegates Meeting in Montreaux Switzerland Implementation of work-stream projects will begin at this time culminating in March 2006 when the YMT 2005 will have the option of a final wrap up meeting in Beijing One of the primary objectives of this yearrsquos YMT as explained by coordinator Myrto Kontaxi is to find ways to move this work forward both internally in their companies and externally by other organizations

For more information on the 2005 YMT or the recent meeting in Nagoya Japan please contact Myrto Kontaxi in Greece at myrtokontaxigrpwccom

Myrto Kontaxi Manager Greece

The Corporate Responsibility Report volume 3 September 2005 12

However requirements and guidelines governing the assessmentremediation of contaminated soil and groundwater are international in scope

bull International Standards Organization (ISO) 14015 ndash This 2001 standard addresses environmental assess-ments of sites and organizations including potential multi-media impacts It was developed as an international standard for multi-national corporations to aid in mer-gers acquisitions and real estate transactions

bull European Union (EU) Environmental Liability Directive (200435CE) ndash Establishes a legal framework to prevent and remedy environmental damage Designed around the lsquopolluter paysrsquo principle it is appli-cable to contaminated sites including water land protected species and natural habitats

bull European RegulationsGuidelines ndash Many countries have regulations governing contaminated sites some in place for over a decade Guide-linesmethodologies for identification and investigation of these sites and national site inventories are available as well

Even with rudimentary lsquoPhase 1rsquo reporting the necessities of business transactions and the incremental nature of ESAs and remediation prevent parties from fully knowing or characterizing all environmental aspects prior to closing a transaction Parties developed contrac-

tual provisions or simply assumed liabilities However traditional EDD only looks historically ndash it doesnrsquot consider how EHS or CR can affect the partiesrsquo business objectives for the transaction

Critical questions could include (for a purchaser)

bull Can we obtain permits to increase production

bull Will we trigger or accelerate environ-mental clean-up or permitting requirements if we rationalize production among several facilities close facilities or change land use

bull Are there differences in financial reporting of environmental liabilities that would require adjustments to reserves modifications of financial disclosures or even restatement of earnings for previous accounting periods

bull How does compliance management compare between the two com-panies Will changes in staffing technology or other resources be required

bull Does the other company use materials we have eliminated or contractors we have stopped doing business with or that we have pledged to our customers to avoid

bull Are there emerging issues such as climate change that will have a significant impact on the integrated company Will this require capital investment additional staff or will it limit production

Companies have conducted ESAs and remediation so that sites are better understood illuminating potential risks and liabilities Other EHSCR risks however are not as well understood and their impact on companies is growing How then should this be addressed as companies consider and complete transactions and integrate operations

A new approach applying COSO to EHSCR transaction support

As transactions unfold business considering EHSCR issues can benefit using a broader framework for internal controls and risk management The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an established business framework to assess the effectiveness of internal controls The COSO II framework published in September 2004 provides an integrated framework for enterprise risk management (ERM) that is inclusive of the internal controls framework Integral to these frameworks are three key business objectives compliance reporting (including financial) and operations

The COSO framework can be applied to EHS and broader CR issues just as it is for a corporationrsquos business activities Each of these three COSO objectives includes elements of EHSCR for histori-cal current and dynamic issues that are relevant to a transaction

COSO II ERM framework

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

Management System based on its standard Second potential risks existing in the daily operations for each employee not detected using the traditional managment systems will be extracted through communications with stakeholders and the findings will be reflected in their business operations ndash thereby contributing to a sustainable development of the company

For more information please contact Toshie Inoue Director at the Environ-mental Audit Division in ChuoAoyama PricewaterhouseCoopers at toshieinouejppwccom

The Corporate Responsibility Report volume 3 September 2005 9

The following is a summary of the involvement of Pricewaterhouse-Coopers Japan in connection with Fujifilm stakeholder meetings

bull Participation in Fujifilmrsquos stakeholder meetings as an observer and third party assurance provider

bull Analysis of the findings from stake-holder meetings and evaluation of Fujifilmrsquos performance through its independent assurance Its evaluation is included in the Fujifilm Sustainability Report 2004 p90-91 and

bull Feedback to Fujifjilm on evaluation findings in the form of written recommendations for internal use

Benefits for the clientBased on the findings from the comp-anyrsquos stakeholder meetings and the results of the evaluation of PwC Japanrsquos Independence Assurance Fujifilm is aware of their voluntary responsibilities and risk concerns beyond compliance requirements This resulted in increased company awareness of the importance of stakeholder dialogue and regular stakeholder meetings will now be held As part of their commitment Fujifilm is considering adopting the AA1000 Framework effective 2005 The compa-ny derives two benefits from the AA1000 Framework First it will be able to function as a comprehensive man-agement tool utilising existing manage-ment tools adopted across the Group such as ISO14001 ISO9000 and Fujifilmrsquos Labor Safety and Health

The World Business Council for Sustainable Development 2005 Young Managers Team ldquoMoving sustainable development out of the specialist box into the mainstreamrdquo

By Myrto Kontaxi

For the third year in a row Pricewater-houseCoopers is participating in the Young Managers Team (YMT) of the World Business Council for Sustainable Development (WBCSD) The programrsquos goal is to bring together a diverse group of young professionals for one year to explore creative solutions to challenges facing global companies trying to conduct business in a sustainable and ecologically-efficient manner

This year the WBCSDrsquos Young Manag-ers Team is working to create and stimulate the connections required to spread sustainable development awareness They hope to build bridges on an international level as well as on a local one between individuals and organizations and between the public and private sectors by recognising the diversity of sustainability perspectives

The YMT 2005 is pursuing three sepa-rate work-streams along parallel lines the Education work-stream the Finance work-stream and the Media work-stream All work-streams focus on the topic of ldquoMoving sustainable develop-ment out of the specialist box into the mainstreamrdquo but tackle the problem in different ways To maintain focus on their goal and outcomes the YMT 2005 decided to appoint an overall coordina-tor PwC participant Myrto Kontaxi (Sustainable Business Solutions Athens Greece) will be the coordinator who will also participate in the Educa-tion work-stream PwCrsquos 2005 contribu-tion extends beyond the participation in the work streams including the coordi-nation of 26 people from around the globe into a coherent group with a common goal and a meaningful impact

Akiko Gosho PhD Supervisor Japan

The Corporate Responsibility Report volume 3 September 2005 10

The Education work-streamrsquos goal is to create university programmes that will enhance an understanding of the role of business The underlying ration-ale behind this goal is two-fold to help academia understand what the business world is looking for in future sustainable development in turn academia can supply business with well prepared future professionals and leaders

To achieve their goal the Education work-stream integrates current business cases from each group memberrsquos company into the curriculum of under-graduate and graduate schools bringing their perspective of sustainability issues into the lecture room a place where these professionals were not too long ago

The Finance work-stream is building on existing work of the WBCSD to address key challenges related to financial performance and sustainability The overall goal is to present the business case for sustainability in a language and logic used and under-stood by businesses This will be achieved through case studies and analyses of existing sustainability metrics used by businesses today

The Media work-stream aims to refor-mulate and improve the sustainable development message to appeal to the mainstream It has based its work on the premise that traditional internal communication channels of the sustain-able development message are not always effective especially for the majority of employees The Media group exploits new channels and formats of communication to inspire people to learn about sustainable development and take action

The year-long YMT project is divided into three phases exploration consulta-tion and implementation defined by three face-to-face meetings in between Geneva marked the beginning of the exploration phase The Young Managers met again from 6 ndash 9 June in Nagoya Japan sharing their work to date and planning the next steps Their

The 2005 WBCSD Young Managers Team at a recent liaison delegate meeting in Nagoya Japan

PwC strongly represented in the WBCSD Liaison Delegate (LD) and Council Meeting in Nagoya Japan

The week of 6-10 June 2005 was very busy for both the WBCSD but also for our PwC people who participated in an event-packed week The following highlights include

bull Over 240 professionals from 31 countries attended the Council Meeting on Friday June 10th The theme ldquoBridges to Sustainabilityrdquo was the focus of panel discussions including Asia and a Sustainable Future Business Success in Tomorrowrsquos Society and Eco-systems and Business This year Sam DiPiazza PwCrsquos Global CEO joined the Executive Committee of the WBCSD and was present at the Council Meeting

bull At the Aichi 2005 World Expo the WBCSD in conjunction with Nippon Keidanren co-hosted a seminar on the role of business in the 21st cen-tury Honoured by the presence of the Crown Prince of Japan the seminar attracted a great amount of media attention

bull The YMT 2005 brought together 26 people from WBCSD member com-panies who had the chance to inter-act with Liaison Delegates and com-pany leaders while analysing their work and the work of others

bull The three WBCSD Focus Areas - Development Energy and Climate and The Role of Business in Society generated an enthusiastic discus- sion throughout the week helping shape specific goals over the coming months

bull The Liaison Delegates meeting convened mid-week hosted 200 LDs Working Group Members and representatives from the Regional Network Fourteen ldquoLearning by Sharingrdquo workshops provided a platform for challenging debates on some cutting-edge topics

bull The WBCSD Accountability amp Reporting Project Report co-chaired by Sam DiPiazza Global CEO of PwC and Travis Engen President amp CEO of Alcan was launched in Nagoya Beginning in 2002 this report marks the culmination of a project involving more than 60 WBCSD member companies

The Corporate Responsibility Report volume 3 September 2005 11

entering a transaction ndash divestiture acquisition joint venture or service agreement ndash should focus on broader environmental health and safety (EHS) and Corporate Responsibility (CR) issues that may affect the business goals of the transaction in order to avoid liabilities manage risks contain costs successfully integrate businesses and create value

Environmental due diligence today

Environmental risks have long been part of business and transactions The familiar ldquoPhase 1 Environmental Site Assessment (ESA)rdquo as outlined in the American Society of Testing and Materials (ASTM) Standard E-1527 first published in 1993 and updated in 2000 is perhaps the most familiar US stan-dard for EDD This methodology was designed to gather data that would enable parties to make more informed decisions about environmental liabilities In the US requirements are imposed primarily by the Comprehensive Envi-ronmental Responsibility Compen-sation and Liability Act (CERCLA or ldquoSuperfundrdquo) of 1980 amended in 1986 by establishing an ldquoinnocent purchaser defencerdquo and by similar state statutes The Small Business Liability Relief and Brownfields Revitalization Act of 2002 created additional landowner protec-tions and an obligation for US EPA to establish ESA requirements under a new All Appropriate Inquiry rule

Closing Gaps in Traditional Environmental Due Diligence PwC explores how incorporating environmental health and safety and corporate responsibility risks can achieve business goals

By Doug Hileman and John Fillo PhD CPEA

Companies have been conducting Environmental Due Diligence (EDD) for over twenty years In that period the methodology and products have remained largely unchanged However transactions have become more complex along with the drivers that shaped the original EDD methodology

bull Corporations and business transactions are more complex

bull Successful and fast integration is key to delivering value

bull The types of issues causing environ-mental risks and liabilities are more complex and

bull There are potential risks from a range of Corporate Responsibility (CR) issues

The concept of EDD as a data-gathering exercise to protect buyers (and sellers) from acquiring (or retaining) liabilities such as contaminated properties is still necessary to protect a company from financial exposure However a company

meeting was held concurrently with the WBCSD Liaison Delegate and Council Meeting allowing them to participate and to contribute to both meetings as well as to attend the World ExPo The YMT programrsquos consultation phase will end in October at the Fall WBCSD Liaison Delegates Meeting in Montreaux Switzerland Implementation of work-stream projects will begin at this time culminating in March 2006 when the YMT 2005 will have the option of a final wrap up meeting in Beijing One of the primary objectives of this yearrsquos YMT as explained by coordinator Myrto Kontaxi is to find ways to move this work forward both internally in their companies and externally by other organizations

For more information on the 2005 YMT or the recent meeting in Nagoya Japan please contact Myrto Kontaxi in Greece at myrtokontaxigrpwccom

Myrto Kontaxi Manager Greece

The Corporate Responsibility Report volume 3 September 2005 12

However requirements and guidelines governing the assessmentremediation of contaminated soil and groundwater are international in scope

bull International Standards Organization (ISO) 14015 ndash This 2001 standard addresses environmental assess-ments of sites and organizations including potential multi-media impacts It was developed as an international standard for multi-national corporations to aid in mer-gers acquisitions and real estate transactions

bull European Union (EU) Environmental Liability Directive (200435CE) ndash Establishes a legal framework to prevent and remedy environmental damage Designed around the lsquopolluter paysrsquo principle it is appli-cable to contaminated sites including water land protected species and natural habitats

bull European RegulationsGuidelines ndash Many countries have regulations governing contaminated sites some in place for over a decade Guide-linesmethodologies for identification and investigation of these sites and national site inventories are available as well

Even with rudimentary lsquoPhase 1rsquo reporting the necessities of business transactions and the incremental nature of ESAs and remediation prevent parties from fully knowing or characterizing all environmental aspects prior to closing a transaction Parties developed contrac-

tual provisions or simply assumed liabilities However traditional EDD only looks historically ndash it doesnrsquot consider how EHS or CR can affect the partiesrsquo business objectives for the transaction

Critical questions could include (for a purchaser)

bull Can we obtain permits to increase production

bull Will we trigger or accelerate environ-mental clean-up or permitting requirements if we rationalize production among several facilities close facilities or change land use

bull Are there differences in financial reporting of environmental liabilities that would require adjustments to reserves modifications of financial disclosures or even restatement of earnings for previous accounting periods

bull How does compliance management compare between the two com-panies Will changes in staffing technology or other resources be required

bull Does the other company use materials we have eliminated or contractors we have stopped doing business with or that we have pledged to our customers to avoid

bull Are there emerging issues such as climate change that will have a significant impact on the integrated company Will this require capital investment additional staff or will it limit production

Companies have conducted ESAs and remediation so that sites are better understood illuminating potential risks and liabilities Other EHSCR risks however are not as well understood and their impact on companies is growing How then should this be addressed as companies consider and complete transactions and integrate operations

A new approach applying COSO to EHSCR transaction support

As transactions unfold business considering EHSCR issues can benefit using a broader framework for internal controls and risk management The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an established business framework to assess the effectiveness of internal controls The COSO II framework published in September 2004 provides an integrated framework for enterprise risk management (ERM) that is inclusive of the internal controls framework Integral to these frameworks are three key business objectives compliance reporting (including financial) and operations

The COSO framework can be applied to EHS and broader CR issues just as it is for a corporationrsquos business activities Each of these three COSO objectives includes elements of EHSCR for histori-cal current and dynamic issues that are relevant to a transaction

COSO II ERM framework

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 10

The Education work-streamrsquos goal is to create university programmes that will enhance an understanding of the role of business The underlying ration-ale behind this goal is two-fold to help academia understand what the business world is looking for in future sustainable development in turn academia can supply business with well prepared future professionals and leaders

To achieve their goal the Education work-stream integrates current business cases from each group memberrsquos company into the curriculum of under-graduate and graduate schools bringing their perspective of sustainability issues into the lecture room a place where these professionals were not too long ago

The Finance work-stream is building on existing work of the WBCSD to address key challenges related to financial performance and sustainability The overall goal is to present the business case for sustainability in a language and logic used and under-stood by businesses This will be achieved through case studies and analyses of existing sustainability metrics used by businesses today

The Media work-stream aims to refor-mulate and improve the sustainable development message to appeal to the mainstream It has based its work on the premise that traditional internal communication channels of the sustain-able development message are not always effective especially for the majority of employees The Media group exploits new channels and formats of communication to inspire people to learn about sustainable development and take action

The year-long YMT project is divided into three phases exploration consulta-tion and implementation defined by three face-to-face meetings in between Geneva marked the beginning of the exploration phase The Young Managers met again from 6 ndash 9 June in Nagoya Japan sharing their work to date and planning the next steps Their

The 2005 WBCSD Young Managers Team at a recent liaison delegate meeting in Nagoya Japan

PwC strongly represented in the WBCSD Liaison Delegate (LD) and Council Meeting in Nagoya Japan

The week of 6-10 June 2005 was very busy for both the WBCSD but also for our PwC people who participated in an event-packed week The following highlights include

bull Over 240 professionals from 31 countries attended the Council Meeting on Friday June 10th The theme ldquoBridges to Sustainabilityrdquo was the focus of panel discussions including Asia and a Sustainable Future Business Success in Tomorrowrsquos Society and Eco-systems and Business This year Sam DiPiazza PwCrsquos Global CEO joined the Executive Committee of the WBCSD and was present at the Council Meeting

bull At the Aichi 2005 World Expo the WBCSD in conjunction with Nippon Keidanren co-hosted a seminar on the role of business in the 21st cen-tury Honoured by the presence of the Crown Prince of Japan the seminar attracted a great amount of media attention

bull The YMT 2005 brought together 26 people from WBCSD member com-panies who had the chance to inter-act with Liaison Delegates and com-pany leaders while analysing their work and the work of others

bull The three WBCSD Focus Areas - Development Energy and Climate and The Role of Business in Society generated an enthusiastic discus- sion throughout the week helping shape specific goals over the coming months

bull The Liaison Delegates meeting convened mid-week hosted 200 LDs Working Group Members and representatives from the Regional Network Fourteen ldquoLearning by Sharingrdquo workshops provided a platform for challenging debates on some cutting-edge topics

bull The WBCSD Accountability amp Reporting Project Report co-chaired by Sam DiPiazza Global CEO of PwC and Travis Engen President amp CEO of Alcan was launched in Nagoya Beginning in 2002 this report marks the culmination of a project involving more than 60 WBCSD member companies

The Corporate Responsibility Report volume 3 September 2005 11

entering a transaction ndash divestiture acquisition joint venture or service agreement ndash should focus on broader environmental health and safety (EHS) and Corporate Responsibility (CR) issues that may affect the business goals of the transaction in order to avoid liabilities manage risks contain costs successfully integrate businesses and create value

Environmental due diligence today

Environmental risks have long been part of business and transactions The familiar ldquoPhase 1 Environmental Site Assessment (ESA)rdquo as outlined in the American Society of Testing and Materials (ASTM) Standard E-1527 first published in 1993 and updated in 2000 is perhaps the most familiar US stan-dard for EDD This methodology was designed to gather data that would enable parties to make more informed decisions about environmental liabilities In the US requirements are imposed primarily by the Comprehensive Envi-ronmental Responsibility Compen-sation and Liability Act (CERCLA or ldquoSuperfundrdquo) of 1980 amended in 1986 by establishing an ldquoinnocent purchaser defencerdquo and by similar state statutes The Small Business Liability Relief and Brownfields Revitalization Act of 2002 created additional landowner protec-tions and an obligation for US EPA to establish ESA requirements under a new All Appropriate Inquiry rule

Closing Gaps in Traditional Environmental Due Diligence PwC explores how incorporating environmental health and safety and corporate responsibility risks can achieve business goals

By Doug Hileman and John Fillo PhD CPEA

Companies have been conducting Environmental Due Diligence (EDD) for over twenty years In that period the methodology and products have remained largely unchanged However transactions have become more complex along with the drivers that shaped the original EDD methodology

bull Corporations and business transactions are more complex

bull Successful and fast integration is key to delivering value

bull The types of issues causing environ-mental risks and liabilities are more complex and

bull There are potential risks from a range of Corporate Responsibility (CR) issues

The concept of EDD as a data-gathering exercise to protect buyers (and sellers) from acquiring (or retaining) liabilities such as contaminated properties is still necessary to protect a company from financial exposure However a company

meeting was held concurrently with the WBCSD Liaison Delegate and Council Meeting allowing them to participate and to contribute to both meetings as well as to attend the World ExPo The YMT programrsquos consultation phase will end in October at the Fall WBCSD Liaison Delegates Meeting in Montreaux Switzerland Implementation of work-stream projects will begin at this time culminating in March 2006 when the YMT 2005 will have the option of a final wrap up meeting in Beijing One of the primary objectives of this yearrsquos YMT as explained by coordinator Myrto Kontaxi is to find ways to move this work forward both internally in their companies and externally by other organizations

For more information on the 2005 YMT or the recent meeting in Nagoya Japan please contact Myrto Kontaxi in Greece at myrtokontaxigrpwccom

Myrto Kontaxi Manager Greece

The Corporate Responsibility Report volume 3 September 2005 12

However requirements and guidelines governing the assessmentremediation of contaminated soil and groundwater are international in scope

bull International Standards Organization (ISO) 14015 ndash This 2001 standard addresses environmental assess-ments of sites and organizations including potential multi-media impacts It was developed as an international standard for multi-national corporations to aid in mer-gers acquisitions and real estate transactions

bull European Union (EU) Environmental Liability Directive (200435CE) ndash Establishes a legal framework to prevent and remedy environmental damage Designed around the lsquopolluter paysrsquo principle it is appli-cable to contaminated sites including water land protected species and natural habitats

bull European RegulationsGuidelines ndash Many countries have regulations governing contaminated sites some in place for over a decade Guide-linesmethodologies for identification and investigation of these sites and national site inventories are available as well

Even with rudimentary lsquoPhase 1rsquo reporting the necessities of business transactions and the incremental nature of ESAs and remediation prevent parties from fully knowing or characterizing all environmental aspects prior to closing a transaction Parties developed contrac-

tual provisions or simply assumed liabilities However traditional EDD only looks historically ndash it doesnrsquot consider how EHS or CR can affect the partiesrsquo business objectives for the transaction

Critical questions could include (for a purchaser)

bull Can we obtain permits to increase production

bull Will we trigger or accelerate environ-mental clean-up or permitting requirements if we rationalize production among several facilities close facilities or change land use

bull Are there differences in financial reporting of environmental liabilities that would require adjustments to reserves modifications of financial disclosures or even restatement of earnings for previous accounting periods

bull How does compliance management compare between the two com-panies Will changes in staffing technology or other resources be required

bull Does the other company use materials we have eliminated or contractors we have stopped doing business with or that we have pledged to our customers to avoid

bull Are there emerging issues such as climate change that will have a significant impact on the integrated company Will this require capital investment additional staff or will it limit production

Companies have conducted ESAs and remediation so that sites are better understood illuminating potential risks and liabilities Other EHSCR risks however are not as well understood and their impact on companies is growing How then should this be addressed as companies consider and complete transactions and integrate operations

A new approach applying COSO to EHSCR transaction support

As transactions unfold business considering EHSCR issues can benefit using a broader framework for internal controls and risk management The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an established business framework to assess the effectiveness of internal controls The COSO II framework published in September 2004 provides an integrated framework for enterprise risk management (ERM) that is inclusive of the internal controls framework Integral to these frameworks are three key business objectives compliance reporting (including financial) and operations

The COSO framework can be applied to EHS and broader CR issues just as it is for a corporationrsquos business activities Each of these three COSO objectives includes elements of EHSCR for histori-cal current and dynamic issues that are relevant to a transaction

COSO II ERM framework

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 11

entering a transaction ndash divestiture acquisition joint venture or service agreement ndash should focus on broader environmental health and safety (EHS) and Corporate Responsibility (CR) issues that may affect the business goals of the transaction in order to avoid liabilities manage risks contain costs successfully integrate businesses and create value

Environmental due diligence today

Environmental risks have long been part of business and transactions The familiar ldquoPhase 1 Environmental Site Assessment (ESA)rdquo as outlined in the American Society of Testing and Materials (ASTM) Standard E-1527 first published in 1993 and updated in 2000 is perhaps the most familiar US stan-dard for EDD This methodology was designed to gather data that would enable parties to make more informed decisions about environmental liabilities In the US requirements are imposed primarily by the Comprehensive Envi-ronmental Responsibility Compen-sation and Liability Act (CERCLA or ldquoSuperfundrdquo) of 1980 amended in 1986 by establishing an ldquoinnocent purchaser defencerdquo and by similar state statutes The Small Business Liability Relief and Brownfields Revitalization Act of 2002 created additional landowner protec-tions and an obligation for US EPA to establish ESA requirements under a new All Appropriate Inquiry rule

Closing Gaps in Traditional Environmental Due Diligence PwC explores how incorporating environmental health and safety and corporate responsibility risks can achieve business goals

By Doug Hileman and John Fillo PhD CPEA

Companies have been conducting Environmental Due Diligence (EDD) for over twenty years In that period the methodology and products have remained largely unchanged However transactions have become more complex along with the drivers that shaped the original EDD methodology

bull Corporations and business transactions are more complex

bull Successful and fast integration is key to delivering value

bull The types of issues causing environ-mental risks and liabilities are more complex and

bull There are potential risks from a range of Corporate Responsibility (CR) issues

The concept of EDD as a data-gathering exercise to protect buyers (and sellers) from acquiring (or retaining) liabilities such as contaminated properties is still necessary to protect a company from financial exposure However a company

meeting was held concurrently with the WBCSD Liaison Delegate and Council Meeting allowing them to participate and to contribute to both meetings as well as to attend the World ExPo The YMT programrsquos consultation phase will end in October at the Fall WBCSD Liaison Delegates Meeting in Montreaux Switzerland Implementation of work-stream projects will begin at this time culminating in March 2006 when the YMT 2005 will have the option of a final wrap up meeting in Beijing One of the primary objectives of this yearrsquos YMT as explained by coordinator Myrto Kontaxi is to find ways to move this work forward both internally in their companies and externally by other organizations

For more information on the 2005 YMT or the recent meeting in Nagoya Japan please contact Myrto Kontaxi in Greece at myrtokontaxigrpwccom

Myrto Kontaxi Manager Greece

The Corporate Responsibility Report volume 3 September 2005 12

However requirements and guidelines governing the assessmentremediation of contaminated soil and groundwater are international in scope

bull International Standards Organization (ISO) 14015 ndash This 2001 standard addresses environmental assess-ments of sites and organizations including potential multi-media impacts It was developed as an international standard for multi-national corporations to aid in mer-gers acquisitions and real estate transactions

bull European Union (EU) Environmental Liability Directive (200435CE) ndash Establishes a legal framework to prevent and remedy environmental damage Designed around the lsquopolluter paysrsquo principle it is appli-cable to contaminated sites including water land protected species and natural habitats

bull European RegulationsGuidelines ndash Many countries have regulations governing contaminated sites some in place for over a decade Guide-linesmethodologies for identification and investigation of these sites and national site inventories are available as well

Even with rudimentary lsquoPhase 1rsquo reporting the necessities of business transactions and the incremental nature of ESAs and remediation prevent parties from fully knowing or characterizing all environmental aspects prior to closing a transaction Parties developed contrac-

tual provisions or simply assumed liabilities However traditional EDD only looks historically ndash it doesnrsquot consider how EHS or CR can affect the partiesrsquo business objectives for the transaction

Critical questions could include (for a purchaser)

bull Can we obtain permits to increase production

bull Will we trigger or accelerate environ-mental clean-up or permitting requirements if we rationalize production among several facilities close facilities or change land use

bull Are there differences in financial reporting of environmental liabilities that would require adjustments to reserves modifications of financial disclosures or even restatement of earnings for previous accounting periods

bull How does compliance management compare between the two com-panies Will changes in staffing technology or other resources be required

bull Does the other company use materials we have eliminated or contractors we have stopped doing business with or that we have pledged to our customers to avoid

bull Are there emerging issues such as climate change that will have a significant impact on the integrated company Will this require capital investment additional staff or will it limit production

Companies have conducted ESAs and remediation so that sites are better understood illuminating potential risks and liabilities Other EHSCR risks however are not as well understood and their impact on companies is growing How then should this be addressed as companies consider and complete transactions and integrate operations

A new approach applying COSO to EHSCR transaction support

As transactions unfold business considering EHSCR issues can benefit using a broader framework for internal controls and risk management The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an established business framework to assess the effectiveness of internal controls The COSO II framework published in September 2004 provides an integrated framework for enterprise risk management (ERM) that is inclusive of the internal controls framework Integral to these frameworks are three key business objectives compliance reporting (including financial) and operations

The COSO framework can be applied to EHS and broader CR issues just as it is for a corporationrsquos business activities Each of these three COSO objectives includes elements of EHSCR for histori-cal current and dynamic issues that are relevant to a transaction

COSO II ERM framework

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 12

However requirements and guidelines governing the assessmentremediation of contaminated soil and groundwater are international in scope

bull International Standards Organization (ISO) 14015 ndash This 2001 standard addresses environmental assess-ments of sites and organizations including potential multi-media impacts It was developed as an international standard for multi-national corporations to aid in mer-gers acquisitions and real estate transactions

bull European Union (EU) Environmental Liability Directive (200435CE) ndash Establishes a legal framework to prevent and remedy environmental damage Designed around the lsquopolluter paysrsquo principle it is appli-cable to contaminated sites including water land protected species and natural habitats

bull European RegulationsGuidelines ndash Many countries have regulations governing contaminated sites some in place for over a decade Guide-linesmethodologies for identification and investigation of these sites and national site inventories are available as well

Even with rudimentary lsquoPhase 1rsquo reporting the necessities of business transactions and the incremental nature of ESAs and remediation prevent parties from fully knowing or characterizing all environmental aspects prior to closing a transaction Parties developed contrac-

tual provisions or simply assumed liabilities However traditional EDD only looks historically ndash it doesnrsquot consider how EHS or CR can affect the partiesrsquo business objectives for the transaction

Critical questions could include (for a purchaser)

bull Can we obtain permits to increase production

bull Will we trigger or accelerate environ-mental clean-up or permitting requirements if we rationalize production among several facilities close facilities or change land use

bull Are there differences in financial reporting of environmental liabilities that would require adjustments to reserves modifications of financial disclosures or even restatement of earnings for previous accounting periods

bull How does compliance management compare between the two com-panies Will changes in staffing technology or other resources be required

bull Does the other company use materials we have eliminated or contractors we have stopped doing business with or that we have pledged to our customers to avoid

bull Are there emerging issues such as climate change that will have a significant impact on the integrated company Will this require capital investment additional staff or will it limit production

Companies have conducted ESAs and remediation so that sites are better understood illuminating potential risks and liabilities Other EHSCR risks however are not as well understood and their impact on companies is growing How then should this be addressed as companies consider and complete transactions and integrate operations

A new approach applying COSO to EHSCR transaction support

As transactions unfold business considering EHSCR issues can benefit using a broader framework for internal controls and risk management The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an established business framework to assess the effectiveness of internal controls The COSO II framework published in September 2004 provides an integrated framework for enterprise risk management (ERM) that is inclusive of the internal controls framework Integral to these frameworks are three key business objectives compliance reporting (including financial) and operations

The COSO framework can be applied to EHS and broader CR issues just as it is for a corporationrsquos business activities Each of these three COSO objectives includes elements of EHSCR for histori-cal current and dynamic issues that are relevant to a transaction

COSO II ERM framework

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 13

bull Commitment to Companiesrsquo externally-stated or internal goals (eg reduce GHG emissions adhere to Company standards worldwide)

These commitments require resources and may pose risks if they are not met They can also influence the success timing and resources required to integrate and modify operations

Reporting and Disclosures

This COSO reporting objective can address both financial disclosures and reporting of non-financial informa-tion (NFI)

Financial reporting Reporting require-ments for reservesprovisions for environmental remediation liabilities asset retirement obligations (AROs) and other legal liabilities can vary apprecia-bly as can the procedures for calculat-ing and reporting these disclosed amounts (eg US GAAP International Financial Reporting Standards) Chang-es or trends in financial re-porting (eg US Financial Accounting Stan-dards Board Interpretation 47 (FIN 47) at the time of this publication may require additional review and possible accruals to company balance sheets Since company-specific application of new and existing accounting rules and guidelines can vary this reporting may not consistently capture all lsquoprobable and estimablersquo liabilities at the time of a transaction

Financial disclosure Companies disclose financial information relative to EHSCR in their annual reports 10Ks

These requirements can be more difficult to identify and assess due to the ad-hoc basis on which they are usually tracked and particularly if there are confidentiality provisions in place prior to closing a transaction Companies should beware of the liabilities ndash or opportunities ndash that these requirements may pose

Company policies and commitments Companies vary in their approach to identifying and managing their commit-ments relative to CR Examples may include

bull Conformance with industry trade association systems or standards (eg American Chemistry Councilrsquos Responsible Care or Edison Electric Institutersquos Environmental Excellence programs)

bull Conformance with voluntary agency standards (eg OSHA Voluntary Protection Program)

bull Commitments to customers neighborhood associations or employees such as commitments by a facility manager to local residents to limit hours of plant operations to reduce noise levels

bull Commitments to stakeholder groups or adherence to their standards (eg Sullivan principles Global Reporting Initiative (GRI) Reporting Guidelines or commitments to socially responsible investing (SRI) ratings agencies to avoid doing business in certain countries)

Compliance

Regulatory Compliance with regulatory requirements is essential complex (especially for global companies) and can include confor-mance with the following

bull Stipulated permit limits andor reporting requirements

bull Written plans and procedures pursuant to regulations (eg contin-gency plans preparedness plans)

bull Facility configuration materials staffing and other information prov- ided in the permit application andor included in pre-construction or operating permits and

bull Consent decrees with agencies for enforcement actions brought pursuant to regulatory non-compliance

Since companies are increasingly global they can be subject to require-ments in countries outside their primary headquarters For example companies are considering the applicability of Sarbanes-Oxley for their US subsidiar-ies operations and SEC registrants Global companies with operations in the EU (and other specific territories) must meet obligations to reduce greenhouse gas (GHG) emissions under the Kyoto Protocol Global transactions must consider these issues and the potential requirements

Other legal requirements Many companies identify and comply with other legal requirements often on an ad hoc basis EHSCR examples may include

bull Indemnifications or warranties in previous sales or purchases of businesses

bull Contracts with landlords lending and financial institutions

bull Service agreements with companies that operate cogeneration facilities wastewater treatment plants or maintenance facilities and

bull Health and safety responsibilities and requirements for contract workers

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 14

associated EHS or CR exposures and opportunities

bull Operations their dynamics and how EHSCR can affect and be affected by them

Businesses must rise to the occasion as well They must understand that the path forward may no longer be as simple as getting a report cleaning up a site or obtaining a contractual provision Trusted advisors with a broader range of experience can help avoid a broad range of CR liabilities and risks ndash and contrib-ute to a successful transaction that can quickly capture synergies and value

For more information on EHS and CR Transaction Support at Pricewater-houseCoopers LLP please contact Geoff Lane in the United Kingdom at +44 207 213 4378

and the attendant consolidation or expansion of same can affect EHSCR risks and opportunities as follows

bull Retained acquired or divested operations can materially affect the magnitude of environmental remediation liabilities

bull Consolidation or expansion of operations can affect facility operating permits the need for permit revisions and associated facility operating constraints

bull Emission baselines can be affected along with the ability to achieve emission reduction commitments and compliance requirements and

bull Reporting of NFI can become more challenging especially if the veracity of systems processes and controls is drastically different between the two companies

Keys to success

With the complexity of business drivers and CR risks and opportunities EHS or CR support to transactions must evolve No two transactions are identi-cal so effective EHS and CR support to transactions is not likely to reduce to a simple standard methodology What skill sets are advisable to achieve the most value Parties to transactions will be served well by working with professionals who have a broad under-standing of

bull Corporate Responsibility implications of CR issues or opportunities beyond the traditional focus of EHS liabilities

bull The new face of ldquocompliancerdquo sources and types of commitments that companies make that result in risks and opportunities beyond regulatory requirements

bull Financial reporting and disclosures financial reporting and disclosures to maintain compliance and fully identify financial risks

bull Nature of business the complexity of business and transactions and

10Qs 20Fs and other documents available to the public This information can be used by investors and other stakeholders to determine current value and future performance of companies as well as to hold them accountable for actually spending the monies as indi-cated EHSCR examples may include

bull Intended spending for emissions controls for SOx NOx andor GHG emissions and

bull Projected spending to address EHSCR issues in supply chain management with respect to renewable energy use human rights or other areas

If the two companies have different EHSCR policies programs or relative financial commitments to EHSCR stakeholders may expect the merged company to achieve the higher standards

Reporting of non-financial information (NFI) Many companies ndash including most in higher-risk and higher-visibility industries ndash now engage in formal external reporting of EHS or CR perfor-mance External reporting can include annual CR reports information on company websites and information and data provided on an on-going basis to customers investors trade associa-tions ratings groups and others external to the company Such reporting can also be mandated based on country-specific requirements (eg UK banking industry France) The demand for SRI has spawned a cottage industry of groups evaluating companies based upon their CR performance both as published by the companies themselves and as reported by other watchdog groups These parties rely upon the informationrsquos accuracy making deci-sions on investments vendors employ-ment decisions ndash and whom to target for proxy or publicity campaigns

Operations

Operations and compliance with EHSCR requirements go hand in hand Acquisition or divestiture of operations

Douglas Hileman Director United States

John Fillo Director United States

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

Broad-Based Black Economic Empowerment

By Alison Ramsden

One of the defining features of Apart-heid was the use of race to control and severely restrict black people from access to economic opportunities and resources The Broad-Based Black Economic Empowerment Act (B3E2) of 2003 and the South African govern-mentrsquos black economic empowerment strategy aim to address inequalities resulting from the systematic exclusion of the majority of South Africans from meaningful participation in the econ-omy The Governmentrsquos strategy for B3E2 looks beyond the redress of past inequalities and aims to position B3E2 as a tool to broaden the countryrsquos econom-ic base and accelerate growth job creation and poverty eradication

Codes of Good Practice have been developed to assist and advice both public and private sectors in their implementation of the objectives of the B3E2 act The Codes of Good Practice provide principles and guidelines to facilitate and accelerate the implemen-tation of B3E2 in a meaningful and sustainable manner

An array of governmental regulations and industry-specific requirements (called industry charters) were passed requiring externally assured B3E2

performance reporting from corporate South Africa annually

The governmentrsquos vision is aptly sum-marised by recent mining sector indus-try regulation stating ldquoAll the actions and commitments set out below are in the pursuit of a shared vision of a glo-bally competitive mining industry that draws on the human and financial resources of all South Africarsquos people and offers real benefits to all South Africans The goal of the empowerment charter is to create an industry that will proudly reflect the promise of a non-racial South Africardquo

Key measurements and reporting criteria are as follows

1 Direct Empowerment Ownership and control of enterprises and assets

2 Human Resource Development Employment equity and skills development

3 Indirect Empowerment Preferential procurement and enterprise development

4 Corporate Social Investment A percentage of post tax operating profits directed per annum to corpor-ate social investment projects such as education environment or health

The Sustainable Business Solutions (SBS) practice in Johannesburg ensures that PwC responds to the advisory and assurance needs within the market with a cross-line of service perspective PwC South Africa is in a position to assist clients in responding appropriately and effectively to the challenges of B3E2

within their environments by framing service offerings within the context of the spirit and letter of the charters and the accompanying scorecards

The market concern for compliance to the charters will certainly drive business opportunities in this area However accelerating economic growth sustain-able job creation and a greater more equitable income distribution will only be achieved if every business in South Africa responds to the requirements of the charter within the spirit of broad based socio-economic development

PwC South Africa can assist clients in complying with the charter require- ments and by acknowledging and responding to the challenges of econo- mic transformation

Foreign companies operating in South Africa are not excluded from responding to B3E2 The assumption from many companies both foreign and domestic has been that they only need to address direct empowerment in response to the governmentrsquos requirements As illustrat-ed above direct empowerment is only one of the requirements

Corporate South Africa has been recog-nised for what is generally accepted as best-in-class strides in corporate gover-nance industry regulation according to the King Report on Corporate Gover-nance The King Report clearly refers to the importance of B3E2 and overall executive accountability for its strategic implementation

For corporate South Africa the chal-lenge is as follows

1 Incorporation of the elements and measurement criteria listed above into their corporate strategy (where applicable)

2 Sustained strategic management of an increase in diversity at all levels in the workplace

3 Effective stakeholder communication in relation to the above

4 Development of appropriate systems and management processes for external assurance on B3E2 reporting

The Corporate Responsibility Report volume 3 September 2005 15

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 16

To provide assurance in the future SBS South Africa will have to be accredited by the South African National Accredita-tion System as a B3E2 certification agency This process will be very similar to that of an ISO certification process

The practicersquos future work in this area can be quite extensive but the accredi-tation body requires over and above competence including details of the transformation or B3E2 credentials of the applying agency As a firm in South Africa PwC will have to show clear evidence of commitment to transform-ing the workplace

The following is an illustration of some of the work that PwC South Africa has conducted thus far

bull Reviewed a large mining companyrsquos procurement practices in relation to B3E2 also using the output to support development of a B3E2 procurement policy and implementation framework

bull Assisted many financial services cli-ents by performing internal gap-ana-lyses of their readiness to report on B3E2 This project included a review of systems and processes in relation to their suitability for assurance

bull Provided a local insurance company with assurance on the ownership component of B3E2 PwC reviewed the voting rights of its membership the contractual basis of the member-ship and audited the proportions of equity held by its members

For more information on this initiative please contact Alison Ramsden at alisonramsdenpwczacom

PwC Russia ndash Delivering Sustainability to an Emerging Market

By Douglas Grier

This issue of The Corporate Responsi-bility Report profiles the Sustainable Business Solutions (SBS) Russia prac-tice Based in Moscow the practice was established three years ago and is the first sustainability practice of any Big 4 Firm in Russia Despite being a small practice SBS Russiarsquos six practitioners have a broad range of core skills and client experience that is supplemented by members from the Global SBS network living and working in Russia

Since the break up of the Soviet Union in 1991 the Russian Federation has evolved from a centrally planned economy to the (relatively) free-market situation we see today A period of privatisation in the early nineties transferred whole towns and cities into private hands The economy is still very much based on extractive industries often located in desolate and remote regions of the country These cities are essentially ldquoone industry townsrdquo where the local infrastructure was only devel-oped to support the local mine refinery or mill With privatisation these social assets and towns became the responsi-bility of the new owners

Todayrsquos Russia is one of change as we are increasingly seeing more companies moving from their former ldquostate-ownedrdquo operating models in a bid to become more transparent by shedding past inefficiencies and becoming major players on the world stage With more and more capital raised through IPOs on foreign markets and more western companies looking for business ven-tures in Russia PwC Russia anticipates a significant rise in demand for the solutions offered by SBS in the immedi-ate term

Initially demand will be driven by those companies seeking to move beyond the borders of Russia whether they are seeking new investors looking to expand and purchase foreign compa-nies or looking to sell their goods or

services outside the borders of Russia Similarly PwCrsquos international clients looking to invest in emerging markets such as Russia will require advice on managing risks in an unfamiliar territory With this in mind our solutions focus is on the following core competencies

bull Reporting and Assurance of Non-Financial Information

bull Strategic Compliance Management

bull Management Systems ndash Environment Quality Health and Safety Food Safety

bull Supply Chain Risk Management

bull Climate Change and Emissions Trading Services

Although the market is not as mature as in other countries ISO management systems are becoming the norm for many Russian companies SBS Russia has a foothold in this highly compe- titive market allowing us to expand our practice and influence Certification is provided by PwCrsquos Canadian firm in a successful working relationship built over the past couple of years The strategy is to work with the larger com-panies who intend not only to achieve certification but who also understand that these management systems can add real value to their company In Russia ISO clients include large international and Russian companies in the energy beverage and forestry sectors

Another successful SBS Russia partnership is with the Cyprus firm Industry specific seminars aimed at quality environmental health and safety specialists have been held for the pharmaceutical and the food and beverage sectors with more planned for the energy and banking sectors As a result of these efforts proposals have been requested for major advisory projects and in the short term several major international companies have requested training SBS Russia feels that training is also an important way to showcase PwCrsquos expertise to potential clients

Alison Ramsden Director South Africa

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 17

A recent development in the ISO practice is the recent certification of Svetlana Slotina as a Food Safety Management Systems Auditor This is the first certification of its kind in the SBS Global network We are hopeful that other territories may be able to leverage Svetlanarsquos specialization in their territories especially those in the EU who are required to meet stringent food safety requirements

A second core competency of the practice is Reporting and Assurance of Non-Financial Information Many Russian companies today are interes-ted in communicating their sustaina-bility achievements but are uncertain about an approach PwC Russiarsquos key client in this area is Norilsk Nickel one of the largest companies in Russia supplying 20 of the worldrsquos nickel Mark Thompson (a former SBS UK practitioner) lead the advisory team in developing a reporting framework for the Company Dr Thomas Scheiwiller and David Pritchett of PwC Switzerland lead the assurance side This was Norilskrsquos first stand alone social report and they were keen to report using international frameworks such as GRI and information from the International Council on Mining and Metals (ICMM) and the International Labour Organiza-tion (ILO) The teams made several trips to the main production facility at Norilsk 500km north of the Arctic Circle where a unique community of 250000 people is based around the companyrsquos various mining and refining

activities Norilsk is committed to achieving global leadership and top management is strongly supportive of the effort The teams recently made successful presentations to the companyrsquos Executive Board and Board of Directors

Over the past year SBS Russia has been involved in many seminars and conferences both external and internal In July of 2004 practitioners from 10 territories lead by Dr Thomas Scheiwiller traveled to Moscow for an AA1000 course delivered by Account-Ability This was an excellent opportunity for our SBS Global network to meet each other and to learn more about what is happening in other territories Apart from this conferences have been co-sponsored in Moscow and Yekaterinburg (focused on the mining and metals industry) SBS Russia also co-presented at a World Bank-spon-sored training week in Vienna Austria PwC Russiarsquos practitioners also participate at other events enhancing our role as thought leaders in the Russian territory

Work in EHS and Reputation Transaction Support is a significant solution offering of SBS Russia under the umbrella of Strategic Compliance Management In Februrary 2004 one of the first major projects involved a team from the US UK and Russia The team delivered an extensive program of site visits to the clientrsquos facilities in Russia and Eastern Europe Recently there is a notable

upturn in demand for these services as more and more foreign companies look to purchase assets or develop business relationships in Russia

In the future we expect climate change services to grow although the rate and timing of this is currently unclear We expect some companies will recognise the benefits of inventorying their greenhouse gas emissions now once access to a market is gained Using expertise from the SBS Global network we expect to be well posi-tioned In addition Russian companies preparing to take part in Joint Imple-mentation projects is something we will be exploring with our client base and other potential partners over the coming months

SBS Russia is entering into a key deve-lopment phase Commitments from both the local firm and the SBS Leadership have recognised Russiarsquos potential as strategically important Moving forward the Russian practice will leverage the SBS Global networkrsquos knowledge and experience in pursuing clear and substantial opportunities in Russia

Douglas Grier Senior Consultant Russia

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005

The Corporate Responsibility Report volume 3 September 2005 18

The 2005 Sustainability Yearbook is a comprehensive annual publication on sustainability trends and corporate sus-tainability performance from 60 industry sectors PricewaterhouseCoopers and Sustainable Asset Management (SAM) teamed up to present insights from SAMrsquos annual sustainability assessment of over 1400 global companies

The Yearbook provides an overview of SAMrsquos research methodology relevant sustainability trends statistics on industries and the issues based on the SAM Corporate Sustainability Assess-ment 2004 This publication also

provides an introduction to PwCrsquos ValueReporting Frameworktrade the unique approach to managing and communicating corporate performance in financial and non-financial areas

For further information or to download this publication please visit

httpwwwpwccomExtwebmanis-suensfdocidE0F8F1B2DD9A59FC85256D870055B55D

For further information on ValueReport-ing please visit their site at wwwvaluereportingcom

The Sustainability Yearbook 2005

Date Event Organizer Location Event Focus URL

Sept 8 ndash 9 6th International Sustainability Leadership Symposium

The Sustainability Forum Zurich

Zurich Switzerland

Market value of reputation ndash includes key drivers the management and measurement of reputation

httptsfwebdirektdesiteaspnid=1462amplid=0ampsid=ampbkey=0ampdex=1

Sept 9 7th Annual SAI Conference

Social Accountability International

Harvard Club ndash New York NY USA

ldquoBeyond Compliance Innovative Strategies for Responsible Sourcingrdquo ndash latest developments where supply chain management and work-place accountability intersect

httpwwwsa-intlorgconference indexhtm

Sept 11 ndash 13 10th International Business Forum 2005

InWestUnited Nations Global Compact

New York NY USA

Private sector contributions to achieve the Millennium Development Goals

httpwwwbusinessandmdgsorg

Sept 25 ndash 29 18th World Petroleum Congress

World Petroleum Congress

Johannesburg South Africa

Shaping the Energy Future ndash key issues and challenges fac-ing the global energy industry

httpwww18wpccomregisterhtml

Oct 3 ndash 5 Reinventing Accountability for the 21st Century ndash Annual Conference 2005

AccountAbility London UK Innovative approaches to building accountable leader-ship and organizations in the 21st century

httpwwwaccountabilityorgukuploadstorecmsdocsA2120Event20Brochure20320to205th20October2005pdf

Oct 17 ndash 19 The 2005 Enterprise Risk Management Conference How to Execute ERM in Your Company

The Conference Board

New York NY USA

Managing and coordinating risk management roles tools amp techniques to build a sustainable ERM program Integrate ERM into strategy and to improve performance

httpwwwconference-boardorgconferencesconferencecfmid=960

Oct 18 ndash 19 The New Role for Business in Developing Countries

The Ethical Corporation

London UK Human Rights Access to Healthcare and Finance Cor-ruption the Supply Chain etc

httpwwwethicalcorpcombusinessindexshtml

Nov 1 ndash 3 BSR Annual Conference 2005 ndash ldquoQuestioning Assumptions ndash Changing Frameworksrdquo

Business for Social Responsibility (BSR)

Washington DC USA

Assumptions underpinning current trends Reflect on the next generation of approaches and models for mainstreaming CSR and partnering with the public sector and civil society

httpwwwbsrorgBSRConferences2005indexcfm

Nov 2 ndash 4 Triple Bottom Line Investing Conference 2005

Brooklyn Bridge Frankfurt Germany

Largest international sustain-able investment conference

httpwwwtbliorgcontentpdftbli2005brochurepdf

Calendar of Major 2005 SustainabilityCSR Related Conferences amp Events June ndash December 2005