Voluntary Reporting of Sustainability-Related Information*

1. Voluntary Reporting of Sustainability-Related Information* Samuel GähwilerJune 2005

2. Objectives • Communicate the current Voluntary Reporting landscape • Experience in the private sector with enterprise reporting and environmental monitoring activities by public institutions • PwC Reporting & Assurance experiences and service offering • Proposal to encourage Voluntary Reporting in EECCA

3. 1. Current landscape Voluntary Reporting

4. Sector reporting Sarbanes Oxley guidelines OFR Development of reporting Demand for greater accountability AA1000AS relevance and completeness standards Better understanding of value drivers Stakeholder quality of information Pressure transparency IFAC • • • Low value High value unspecific, broad assurance specific assurance to international standards Degree of definition of assurance • scope of assurance (subject matter) • use of reporting standards and criteria • clarity regarding level of assurance and related work effort Overview Evolution of Reporting and Assurance

5. Reporting Reports

6. Reporting Reports

7. Reporting Global Trends Survey of sustainability-related reporting trends in the FTSE 100 & 250*, and 100 largest companies in the Fortune 500** • Increasing number of reporters of environmental, social and ethical information* • 84 of the FTSE 100 companies produce sustainability-related reports (132 / FTSE 250) • Five years ago the number of FTSE 250 reporters was 30 and ten years ago only 6 • Regional differences in number of reporters* • 22 of the S&P Top 50 produce sustainability-related reports (40 of top 50 European companies) • Sectoral differences are also apparent* • The leisure, hotels, software and computer services sector are laggards in sustainability reporting • Increased consideration of GRI Guidelines when reporting** • Of the ten leading reporters in the survey, almost three-quarters comment that they have taken the GRI guidelines into consideration when reporting */**: Source: www.ft.com 11.09.2003

8. Reporting Global Drivers • Financial Perspective • Growing evidence for link between financial and sustainability performance; more knowledge on effects of intangible value drivers • Financial Indexes: DJSI, FTSE4Good (Stock Market Indices, Rating Agencies) • Sustainability Investors such as Pension Funds and other Institutional Investors • Shareholder activism • Corporate Governance and stock listing requirements • EU IV Directive on Accounting & Reporting (to be confirmed) • Stakeholder Perspective • Standards such as GRI Global Reporting Initiative, AA1000, OECD Guidelines for Multinational Enterprises, United Nations Global Compact Principles • Erosion of public trust due to corporate scandals, need for greater corporate accountability • Peer Pressure • Within Industry • Within Territory

9. PRESSURES FOR CHANGE • Social and Environmental Reporting Stakes Raised • The Canadian Government has urged all listed companies to start reporting on their social and environmental performance. A letter was issued to the 1341 companies listed on the Toronto Stock Exchange stating that they should begin reporting if they are not amongst the estimated 100 businesses already doing so. • The letter emphasizes that social and environmental reporting is vital in allowing investors, employees, consumers and regulators to make informed decisions about a company. • At present social and environmental reporting is voluntary in Canada. Whilst the letter does not mention any sanctions that will be imposed on companies which fail to comply with the reporting requirements, the letter does suggest that the government may consider enforcing some form of regulation in the future. Source: http://www.ethicalperformance.com, March 5, 2004

10. Reporting Territory Drivers • Regulation • Denmark: The Law on Annual Accounts (2001) and the Law on Green Accounts (1996) • France: Law no.2001-420 related to New Economic Regulations (2001), Decree 2002-221 • Norway: The Accounting Act (1999) • Sweden: The Annual Accounts Act (1999) • The Netherlands: The Environmental Protection Act (1997) • Soft Regulation, Stock Listing Requirements, Standards • Australia: Public Environmental Reporting Framework (2000) • Denmark: Social-ethical Accounts (2001) • EU: Green Paper “Promoting a European Framework for Corporate Social Responsibility” (2002) • Japan: Environmental Reporting Guidelines / Environmental Performance Indicators (2001) • South Africa: King II Report on Corporate Governance (2002) • UK: OFR, DTI “Accounting for People” (2003)

11. 2. Enterprise reporting and environmental monitoring activities by public institutions Linkage Experience of the private sector Image from Brandsite

12. Linkage between the enterprise data collection and reporting, and environmental monitoring activities by public institutions • Site-Level (international companies) – Generally separate reporting lines and different requirements (parallel reporting). The site has requirements for statistic and compliance reporting from the local and the national administration, reporting requirements from the company, stakeholders and investors – Data source is generally the same, data aggregation is different (e.g. CO2 conversion factor, VOC Mass-balance) Corporate-Level • The data collected from the sites is used for statistic reporting (e.g. CO2) • The data collected from the sites is used for internal monitoring and support management decision-making • The consistency check of the different reporting lines are generally part of an external Assurance

13. The experience of the private sector in adapting to various data collection and reporting environmental requirements • Internal Reporting: – Site-Level: Increasing and different reporting requirements to satisfy the corporate reporting requirements, but with focus on local and regional reporting definitions – Corporate-Level: The reporting guidelines and reporting standards play an important role in the definition of the reporting parameters (e.g. water consumption according to GRI) • External Reporting: – Site-Level: Parameters, conversion factors follows the definition of national regulatory reporting (site-level environmental reports are generally rare) – Corporate-Level: Parameters, conversion factors follows the company reporting definitions which are often based on reporting guidelines, reporting standards or EU legislation (e.g. GRI, OECD Guidelines, sector specific guidelines)

14. 3. PwC’s Expertise Reporting

15. PwC Services PwC International Relationships • CSR Europe - Board member • ESRA - Management Committee and Jury Member of the European Sustainability Reporting Award Scheme • FEE - Active members in the Sustainability Working Group of the European Federation of Accountants • GRI – Charter sponsor of the Global Reporting Initiative and active involvement in many GRI working groups • ISEA - Council Member of the International Institute for Social and Ethical Accountability (AccountAbility) - AA1000AS training as well as various other co-operations • WBCSD - Member of the World Business Council for Sustainable Development where Sam DiPiazza co-chairs a working group on Accountability & Reporting

16. PwC Services PwC Service Offering Overview • Communications Planning and Strategy • Governance, Systems and Processes for Communications • Content Development • Analysis and Feedback • Assurance • * All parts of the service offering may be applied to both internal as well as external reporting and communications

17. Case Studies Selection of Reporting Engagements • USA, Global Food & Beverage Company • GRI assessment • Switzerland, Pharmaceutical Company • Assurance of Corporate Citizenship reporting • Denmark, Ministry of Environment • Green accounts reporting • Russia, Norilsk Nickel • Assurance of social report

18. Case Studies

19. Selected PwC Projects in Russia • Framework for Social Report • Assurance on Social Report • Assurance on Social Report – Sakhalin Island Operations • Environmental Management Systems Audits • Environmental Training • Environmental Management Systems Audits • Environmental Training • Supply chain audits – Health and Safety, workplace conditions • Audits - Health and Safety, workplace conditions • Environmental Management Systems Audits • Environmental Training

20. 4. Voluntary Reporting in EECCA Proposals

21. Proposals Encouraging Reporting in EECCA • Using sustainability related business platforms • Discuss and encourage corporate reporting (e.g. Responsible Business Forum event in Poland 2003 (PwC presented reporting landscape, business case for reporting…outcome: if the government support it, companies will invest) • Public sector driven Workshops: – raise awareness of the importance of voluntary reporting – disseminate best practice • Participation in developing guidance documents • Assessment of voluntary reporting in EECCA: – assess the current status of voluntary reporting – identify obstacles to voluntary reporting – recommend initiatives to encourage more voluntary reporting • Existing PwC Environmental reporting services,ISO 14001 / OHSAS 18001 / AA1000

22. Thomas ScheiwillerPartnerXLOS Sustainability Leadership Team Zurich, Switzerland phone +41 1 630 28 10e-mail thomas.scheiwiller@ch.pwc.com Samuel GähwilerSenior ConsultantSustainability Team Switzerland Zurich, Switzerland phone +41 1 630 27 93e-mailsamuel.gaehwiler@ch.pwc.com © 2004 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. *connectedthinking is a trademark of PricewaterhouseCoopers.