Annelisa Grigg, Director of Corporate Affairs, Fauna & Flora International

1. Delivering Corporate Reporting RequirementsBiodiversity Performance MeasuresSetting Targets – Delivering Outcomes Annelisa Grigg, Director of Corporate Affairs, Fauna & Flora International Royal Geographic Society 11th November 2005

2. Overview • What are corporate reporting requirements? • Common concerns • Current standards for corporate reporting • GRI (multistakeholder) • EBI (multistakeholder) • Biodiversity benchmark (investor) • Approaching the development of biodiversity indicators

3. Corporate Reporting Requirements • Legislative (environmental and financial) • Stakeholder driven: • Customers • Employees • Management (senior, middle, site, divisional, head office) • Media • NGOs • Local communities • Shareholders

4. Is biodiversity really different? • Perception as not material at head office level or not a risk to the company • Complex issue • Lack of clarity over boundaries (indirect versus direct impacts) • Confusion over definitions • Subjective and concerns regarding credibility • Lack of expertise for measurement • Cost versus benefit • Largely site level impacts

5. Reporting and related initiatives • Investment indices (e.g. DJSI, FTSE4Good) & Operating and Financial Review • Specific focus on biodiversity (Insight Investment, VBDO, F&C) • Global Reporting Initiative • The Energy and Biodiversity Initiative • ICMM Good Practice Guide • England Biodiversity Strategy

6. Operating & Financial Review • “how a company, that is a heavy user of natural resources, which may become scarce or the price of which may change significantly, is intending to reduce its dependency on such resources” • “an explanation of the risk management approaches employed by a company to assess the operational impact on biodiversity where failure to avoid or mitigate damage would put development consents at risk”

7. Global Reporting Initiative • Multi-stakeholder process to develop and disseminate globally applicable Sustainability Reporting Guidelines. • Voluntary guidelines for reporting on the economic, environmental, and social dimensions of their activities, products, and services. • Representatives from business, accountancy, investment, environmental, human rights, research and labour organisations. • Currently reviewing the Sustainability Reporting Guidelines through the G3 process

8. The G3 process Aims to: Increase and progress the robustness of the GRI reporting framework • Work stream recruiting, research and drafting (October 2004 – October 2005): Draft indicators produced for consideration of Advisory Groups on a range of topics, including biodiversity • Synthesis (Nov. 2005 – Dec. 2005): Consolidation of work streams output into the first draft of the G3 Guidelines. • Public Comment (Jan. 2006 – March 2006) : The draft Guidelines will be posted for a 90-day public comment period. • Finalisation (April 2006 – June 2006): Review and adjustment in response to public comment

9. 2002 GRI Biodiversity Indicators • EN6. Location and size of land owned, leased, or managed in biodiversity-rich habitats. • EN7. Description of the major impacts on biodiversity associated with activities and/or products and services in terrestrial, freshwater, and marine environments. • EN23. Total amount of land owned, leased, or managed for production activities or extractive use. • EN24. Amount of impermeable surface as a percentage of land purchased or leased. • EN25. Impacts of activities and operations on protected and sensitive areas. • EN26. Changes to natural habitats resulting from activities and operations and percentage of habitat protected or restored. EN27. Objectives, programmes, and targets for protecting and restoring native ecosystems and species in degraded areas. • EN28. Number of IUCN Red List species with habitats in areas affected by operations. • EN29. Business units currently operating or planning operations in or around protected or sensitive areas.

10. Explanatory notes • Indicator EN6 sets the baseline for organisational reporting on biodiversity by demanding “Location and size of land in protected areas” (where are the actual or possible impacts). • The impact of organisational activities on protected areas is described under EN7 and specified by EN28 demanding information on the “Number of IUCN Red List species with habitats in areas affected by operations” (what are the impacts) • EN27 asks for “Programmes for managing impacts on biodiversity” covering programmes to protect habitats and species and those aiming for the restoration of habitats and/or the re-introduction of native species. • Finally, indicator EN26 quantitatively measures the success of protection programmes by questioning the number and size of habitats protected and restored during the reporting period.

11. Limitations • One size fits all doesn’t necessarily work – what about supply chain impacts? • Sector or technical supplements may be the solution • Guidance in GRI limited and therefore consistency of data quality and therefore reliability may be an issue • Lack of connections between indicators means coherent risk picture not available • Simply won’t go far enough for best practice companies

12. The Energy and Biodiversity Initiative Multi-stakeholder partnership designed to produce practical guidelines, tools and models to improve the environmental performance of energy operations, minimize harm to biodiversity, and maximize opportunities for conservation wherever oil and gas resources are developed. Members: BP, Statoil, Chevron Texaco, Shell, FFI, Conservation International, Smithsonian Institute, The Nature Conservancy

13. Measuring Impacts and Actions on Biodiversity Biodiversity indicators • Indicators can measure and monitor impacts on species, habitats and ecosystems, as well as management commitment and process, impact reduction and positive action • Biodiversity has no single all-purpose indicator; rather a common methodology can be used to develop indicators for each project • Biodiversity indicators will not be necessary for every project or activity • Indicators are not an end in themselves, but an input into an adaptive management system

14. 1. Desktop Assessment 2. Establishing a Baseline 3. Focusing on Significant Impacts 6. Generating Company-Level Indicators 5. Choosing Site-Level Indicators 4. Generating List of Potential Site-Level Indicators 7. Monitoring of Impacts 8. Reporting Performance 9. Reviewing and Modifying Activity Measuring Impacts and Actions on Biodiversity Developing biodiversity indicators

15. Measuring Impacts and Actions on Biodiversity Examples of biodiversity indicators • Corporate management:Biodiversity elements included in management system; corporate/business unit budget allocation for biodiversity; sites with biodiversity action plans; ongoing biodiversity conservation projects, at site or collaborations at company level • Species:Globally threatened and data deficient species in area; restricted-range species; invasive non-native species that are threatening to ecosystems, habitats or species; species used by local populations • Habitat:Operational site overlap with conservation priority areas containing globally threatened or restricted-range species; amount of land within the operational site that has a management plan with a biodiversity conservation focus; contribution to habitat conservation

16. The Biodiversity Benchmark • Framework describing best practice in the management of biodiversity by companies produced by Insight Investment and Fauna & Flora International. • First conducted in 2003 for 22 companies in the extractive industry, repeated in 2005 for 36 companies with support from Dutch NGO, VBDO • Includes 34 standard and 7 leadership aspects of management. • Establishes criteria for different scores on each aspect, so each company can be marked on the quality of cradle to grave management of biodiversity.

17. Biodiversity Benchmark Elements of the biodiversity benchmark: • Governance structures • Policy and strategy • Management and implementation • Assurance and reporting New section for 2005 on leadership.

18. Governance structures • Responsibilities for biodiversity performance assigned at all levels including 1) Group / Divisional level and 2) Site level. • Risk management Implications of key biodiversity impacts and issues factored into risk evaluation within the lifecycle of operations and supply chain. • Stakeholder engagement to inform understanding of biodiversity issues and impacts at local and global level. • Integration biodiversity integrated into corporate decision-making.

19. Policy and strategy • Policy commitment to: • understand, avoid, minimise and mitigate impact throughout life cycle of operations (across value chain and temporally) • contribute to legal & policy framework • work in partnership • offset impact • integrate into core business processes • monitor & report • continuous improvement • Strategy to drive biodiversity performance: • vision, SMART objectives and targets

20. Management and implementation • Environmental management system includes consideration of biodiversity • Site selection tool to ensure biodiversity factored into initial decision on siting of new locations / activities • Environmental and social impact assessments (ESIA) for any new capital project and any substantial modification of existing projects • Biodiversity Action Plans at site level for all sites of high biodiversity value or risk of significant impact on biodiversity. • Partnerships partners involved in setting vision and goals; designed to support corporate goals and NBSAP and other national/ community biodiversity priorities; measurable outcomes are reported • Competency & Employee awareness

21. Assurance and reporting • Internal and external audits: to determine extent policy and procedures at site and corporate level, progress against BAPs or site management plans, to determine whether information used is complete, accurate and reliable. • Key performance indicators: Qualitative indicators (measures effectiveness of management systems e.g. proportion of BAPs in place at high risk sites), quantitative/outcome indicators (for example catastrophic event recorded, reclassification of location as site of special conservation (e.g. SSSI, IUCN protected areas) • Sensitive sites: Commitment to understand and manage impact on sensitive sites, disclosure of key operations in/adjacent to sensitive sites

22. Leadership • Level of conservation activity commensurate with risk exposure • Activities undertaken to address causes of biodiversity loss external to the company where such losses have the potential to undermine the company's biodiversity risk management activities • Clarity on third party involvement e.g. joint venture and contractors • Closure or sale managed to protect reputation by ensuring biodiversity management continues • Where the legal and civil society framework is weak and there is a risk of biodiversity risk management activities failing as a result, the company has identified this • Company tracks emerging issues linked to biodiversity risk and opportunities and shares knowledge/information with conservation community

23. Methodology • Information from publicly available corporate literature matched against benchmark criteria for initial results. • Initial results sent to each company for correction and addition of supplementary information which is not in the public domain. • Discussions/meetings with companies for any necessary clarification. • Benchmark results finalised. General report published. • Specific results sent to each company together with “engagement” letter requesting changes in governance, policy/strategy, management and disclosure.

24. Biodiversity benchmark 2004 • Scored 22 extractive and utility companies’ management of biodiversity on 27 issues under:

25. Biodiversity benchmark 2004 scores

26. Biodiversity benchmark 2005 • Scored 36 extractive and utility companies’ management of biodiversity on same issues as 2004 and on a new “leadership section”. • Initial results based on publicly available data, companies currently submitting supplementary information for analysis. • Initial engagement results: average % score increase from 2004 (reported, unweighted scores)  Mining companies: 43%  Oil and gas companies: 94%  Utility companies: 16%

27. Key recommendations for reporting • cite the application of the Group policy on Health, Safety and Environment to biodiversity • outline the broad elements and timelines for the biodiversity strategy • summarise the management tools that address biodiversity • report your progress against the targets in the strategy and respective key performance indicators • list any operations that are in or near particularly sensitive sites and summarise the steps you are taking to manage your impacts there • explain the extent to which these various activities fall within the auditing procedures.

28. Developing biodiversity indicators • Identify the goals against which you are reporting • Define your audience, information needs and levels of reporting • Accept that indicators will be different according to the site concerned and group level indicators may be more process driven • Develop a process and document it to ensure standardised reporting, as far as is possible • Standard measurement procedures and sampling techniques • Guidance on boundaries, frequency of reporting, units • Consider a broad framework of criteria against which biodiversity can be reported