Description
This is a presentation about triple bottom line.
Triple Bottom Line and Global Reporting
Sustainability
Accounting
Reporting Tools
Sustainability
“We do not inherit the earth from our ancestors. We borrow it from our children.”
- David Brower
Sustainability
“We desperately need to recognize that we are the guests not the masters of nature and adopt a new paradigm for development, based on the costs and benefits to all people, and bound by the limits of nature herself rather than the limits of technology and consumerism." - Mikhail Gorbachev - President of Green Cross International
Is sustainability compatible with maximizing long-run financial performance?
“By the 1980s, Nike already had a glowing reputation and spectacular earnings. Far from being a cause for embarrassment, its strategy of outsourcing production to cheap Asian labor was praised as an innovative way to drive down costs, beat the competition, and create shareholder value.” - Lynn Sharp Paine, 2000 Harvard Business School
Is sustainability compatible with maximizing long-run financial performance?
“Prior to the 1990’s, when workers and consumers in industrialized countries awakened to the conditions of workers overseas, it would have been difficult to cite even minimal reputational benefits from such a stance.”
Motivation for Adopting Sustainable Practices PwC 2002 Survey
Source: PriceWaterhouseCoopers,2002 Sustainability Report. August 2002.
Importance of Reporting
• To build trust • To demonstrate clear purpose, vision and mission • To enhance business reputation • To provide information to interested stakeholders • To demonstrate commitment to operate business in a responsible ways • Drive forward change and stimulate dialogue • Reward employee volunteering • To create awareness
The Triple Bottom Line
• Disclosure (reporting) is a key part of doing sustainable business. • Sustainability reporting is broader in scope than traditional financial reporting. • The Triple Bottom Line (TBL) is one way to report on sustainable business activity. • TBL defines sustainability in terms of three separate elements: economic, environmental, and social perspectives of operations.
Three Elements of the Triple Bottom Line
Economy – reflects activities related to shaping demand for products and services, employee compensation, community contributions, local procurement policies, and other monetary issues related to company activities.
Three Elements of the Triple Bottom Line
Society - reflects activities in shaping local, national and international public policy, equality, treatment of minorities, employee issues and public concern. That is, organizational citizenship.
Three Elements of the Triple Bottom Line
Environment – reflects the impact made through processes, products or services that affect the environment. These may include air, water, land, natural resources, flora, fauna and human health.
Example of a Triple Bottom Line Report
• The following TBL report is excerpted from Noranda’s 2002 sustainability report. • The company is a one of the world’s largest producer of zinc, nickel, and other mineral products. Total assets were $8.2 billion in 2003. • Noranda is a Canadian company whose shares are listed on the Toronto and New York Stock Exchanges (NYSE:NRD).
Example of Triple Bottom Line Report Economy
Source: Noranda sustainability report, 2002
Example of Triple Bottom Line Report Society
Source: Noranda sustainability report, 2002
Example of Triple Bottom Line Report Environment
Source: Noranda sustainability report, 2002
Reporting on Sustainability
• Reporting on sustainability is not synonymous with engaging in activities that promote sustainability. • No “GAAP” for reporting on sustainability. • Guidelines have been issued by governmental entities and other groups.
– The Environmental Protection Agency (EPA) – The Global Reporting Initiative (GRI) – ISO 14000 – Neither is reporting on profitability synonymous with being profitable.
• Independent reporting agencies have emerged.
Global Reporting Initiative
• The Global Reporting Initiative (GRI) has emerged as a prominent source of guidance for reporting under the Triple Bottom Line. • The GRI is a collaborating center of the United Nations Environment Program. • The GRI incorporates participation of representatives from business, accountancy, investment, environmental, human rights, research and labor organizations from around the world.
“The GRI is a unique, multistakeholder organization founded on the conviction consistent, regular and comparable reporting, provides transparency and can be a powerful catalyst to improve performance." Judy Henderson, Immediate past-Chair, Board of Directors
About GRI ..
• The Global Reporting Initiative’s (GRI) vision is that reporting on economic, environmental, and social performance by all organizations becomes as routine and comparable as financial reporting. • GRI accomplishes this vision by developing, continually improving, and building capacity around the use of its Sustainability Reporting Framework
• An international network of thousands from business, civil society, labor, and professional institutions create the content of the Reporting Framework in a consensus-seeking process
What it does ?
• Transparency, accountability, reporting and sustainable development. The GRI is a meeting place to converge and accelerate these issues. • The GRI network accomplishes this vision by developing, continuously improving and building capacity around the use of a Sustainability Reporting Framework • To ensure the highest degree of technical quality, credibility, and relevance, the GRI Reporting Framework is developed and continuously improved through intensive multi stakeholder engagement, who together develop and review content for the Reporting Framework. • To-date, nearly 1000 organizations in over 60 countries have declared their use of the GRI Reporting Framework.
The need for GRI…
? To elevate the quality and quantity of sustainability reporting (triple bottom line reporting) ? To provide a common and credible framework for sustainability reports (like the GAAP for financial reports) ? To create a framework like the GAAP ? Issues like corporate governance, citizenship, etc. have moved to the forefront of management policy
Global Reporting Initiative - Group 9
23
The GRI Guidelines..
• present reporting principles and specific content to guide the preparation of sustainability reports • Assist in presenting a balanced and reasonable picture of economic, environmental, and social performance; • promote comparability of sustainability reports, • support benchmarking and assessment of sustainability performance with respect to codes, performance standards, and voluntary initiatives; and • serve as an instrument to facilitate stakeholder engagement.
Guidelines are NOT…
• a code or set of principles of conduct; • a performance standard (e.g., emissions target for a specific pollutant); or • a management system.
Guidelines DO NOT..
• provide instruction for designing an organisation’s internal data management and reporting systems • offer methodologies for preparing reports, or for performing monitoring and verification of such reports
Reporting Principles (Part B)
Content of a report… (Part C)
1. Vision and Strategy 2. Profile 3. Governance structure and Management System 4. GRI Content Index
5. Performance Indicators
Global Reporting Initiative - Group 9
29
“In Accordance” Conditions
Organisations that wish to identify their report as prepared in accordance with the 2002 GRI Guidelines must meet five conditions: 1. Report on the numbered elements in Sections 1 to 3 of Part C. 2. Include a GRI Content Index as specified in Section 4 of Part C. 3. Respond to each core indicator in Section 5 of Part C by either (a) reporting on the indicator or (b) explaining the reason for the omission of each indicator. 4. Ensure that the report is consistent with the principles in Part B of the Guidelines. 5. Include the following statement signed by the board or CEO: “This report has been prepared in accordance with the 2002 GRI Guidelines. It represents a balanced and reasonable presentation of our organisation’s economic, environmental, and social performance.”
Performance indicators
economic
environmental
social
Global Reporting Initiative - Group 9
31
Economic Indicators
?Customer ?Supplier ?Employees ?Suppliers Of Capital
Global Reporting Initiative - Group 9 32
Environmental Indicators
• • • • • • • Water Biodiversity Materials Energy Effluents, waste and emissions Compliance Transports….Etc
Global Reporting Initiative - Group 9 33
Social Indicators
• Human Rights • Society • Product Responsibility • Labour Practises
Global Reporting Initiative - Group 9 34
Benefits of GRI…
? Most comprehensive framework ? Clearer picture of long term prospects ? Comparability and consistency benchmark ? A proactive approach ? anticipates performance ? Strengthening relationship with stakeholders
Global Reporting Initiative - Group 9
Contd…
35
Benefits of GRI (Contd)…
? Linking various organisational functions
? Warnings against potentially damaging situations
? Provides framework for employees
? Reducing volatility and uncertainty to achieve financial stability
Global Reporting Initiative - Group 9 36
Some criticisms of GRI…
? Measurement and calculation of indicators unclear
? Some of the indicators are ambiguous ? GRI organisation is mainly financed by business ? Standards for reporting and not for performance
Global Reporting Initiative - Group 9
37
Dilemmas faced by companies…
? Cost incurred is significant
? Misinterpretation of information
? Pressure from peer companies
? Bias towards reporting on familiar issues
Global Reporting Initiative - Group 9
38
Indian Scenerio
• Loads of report • Only 2 companies as of 2006 “in accordance” with GRI guidelines
doc_835568920.pptx
This is a presentation about triple bottom line.
Triple Bottom Line and Global Reporting
Sustainability
Accounting
Reporting Tools
Sustainability
“We do not inherit the earth from our ancestors. We borrow it from our children.”
- David Brower
Sustainability
“We desperately need to recognize that we are the guests not the masters of nature and adopt a new paradigm for development, based on the costs and benefits to all people, and bound by the limits of nature herself rather than the limits of technology and consumerism." - Mikhail Gorbachev - President of Green Cross International
Is sustainability compatible with maximizing long-run financial performance?
“By the 1980s, Nike already had a glowing reputation and spectacular earnings. Far from being a cause for embarrassment, its strategy of outsourcing production to cheap Asian labor was praised as an innovative way to drive down costs, beat the competition, and create shareholder value.” - Lynn Sharp Paine, 2000 Harvard Business School
Is sustainability compatible with maximizing long-run financial performance?
“Prior to the 1990’s, when workers and consumers in industrialized countries awakened to the conditions of workers overseas, it would have been difficult to cite even minimal reputational benefits from such a stance.”
Motivation for Adopting Sustainable Practices PwC 2002 Survey
Source: PriceWaterhouseCoopers,2002 Sustainability Report. August 2002.
Importance of Reporting
• To build trust • To demonstrate clear purpose, vision and mission • To enhance business reputation • To provide information to interested stakeholders • To demonstrate commitment to operate business in a responsible ways • Drive forward change and stimulate dialogue • Reward employee volunteering • To create awareness
The Triple Bottom Line
• Disclosure (reporting) is a key part of doing sustainable business. • Sustainability reporting is broader in scope than traditional financial reporting. • The Triple Bottom Line (TBL) is one way to report on sustainable business activity. • TBL defines sustainability in terms of three separate elements: economic, environmental, and social perspectives of operations.
Three Elements of the Triple Bottom Line
Economy – reflects activities related to shaping demand for products and services, employee compensation, community contributions, local procurement policies, and other monetary issues related to company activities.
Three Elements of the Triple Bottom Line
Society - reflects activities in shaping local, national and international public policy, equality, treatment of minorities, employee issues and public concern. That is, organizational citizenship.
Three Elements of the Triple Bottom Line
Environment – reflects the impact made through processes, products or services that affect the environment. These may include air, water, land, natural resources, flora, fauna and human health.
Example of a Triple Bottom Line Report
• The following TBL report is excerpted from Noranda’s 2002 sustainability report. • The company is a one of the world’s largest producer of zinc, nickel, and other mineral products. Total assets were $8.2 billion in 2003. • Noranda is a Canadian company whose shares are listed on the Toronto and New York Stock Exchanges (NYSE:NRD).
Example of Triple Bottom Line Report Economy
Source: Noranda sustainability report, 2002
Example of Triple Bottom Line Report Society
Source: Noranda sustainability report, 2002
Example of Triple Bottom Line Report Environment
Source: Noranda sustainability report, 2002
Reporting on Sustainability
• Reporting on sustainability is not synonymous with engaging in activities that promote sustainability. • No “GAAP” for reporting on sustainability. • Guidelines have been issued by governmental entities and other groups.
– The Environmental Protection Agency (EPA) – The Global Reporting Initiative (GRI) – ISO 14000 – Neither is reporting on profitability synonymous with being profitable.
• Independent reporting agencies have emerged.
Global Reporting Initiative
• The Global Reporting Initiative (GRI) has emerged as a prominent source of guidance for reporting under the Triple Bottom Line. • The GRI is a collaborating center of the United Nations Environment Program. • The GRI incorporates participation of representatives from business, accountancy, investment, environmental, human rights, research and labor organizations from around the world.
“The GRI is a unique, multistakeholder organization founded on the conviction consistent, regular and comparable reporting, provides transparency and can be a powerful catalyst to improve performance." Judy Henderson, Immediate past-Chair, Board of Directors
About GRI ..
• The Global Reporting Initiative’s (GRI) vision is that reporting on economic, environmental, and social performance by all organizations becomes as routine and comparable as financial reporting. • GRI accomplishes this vision by developing, continually improving, and building capacity around the use of its Sustainability Reporting Framework
• An international network of thousands from business, civil society, labor, and professional institutions create the content of the Reporting Framework in a consensus-seeking process
What it does ?
• Transparency, accountability, reporting and sustainable development. The GRI is a meeting place to converge and accelerate these issues. • The GRI network accomplishes this vision by developing, continuously improving and building capacity around the use of a Sustainability Reporting Framework • To ensure the highest degree of technical quality, credibility, and relevance, the GRI Reporting Framework is developed and continuously improved through intensive multi stakeholder engagement, who together develop and review content for the Reporting Framework. • To-date, nearly 1000 organizations in over 60 countries have declared their use of the GRI Reporting Framework.
The need for GRI…
? To elevate the quality and quantity of sustainability reporting (triple bottom line reporting) ? To provide a common and credible framework for sustainability reports (like the GAAP for financial reports) ? To create a framework like the GAAP ? Issues like corporate governance, citizenship, etc. have moved to the forefront of management policy
Global Reporting Initiative - Group 9
23
The GRI Guidelines..
• present reporting principles and specific content to guide the preparation of sustainability reports • Assist in presenting a balanced and reasonable picture of economic, environmental, and social performance; • promote comparability of sustainability reports, • support benchmarking and assessment of sustainability performance with respect to codes, performance standards, and voluntary initiatives; and • serve as an instrument to facilitate stakeholder engagement.
Guidelines are NOT…
• a code or set of principles of conduct; • a performance standard (e.g., emissions target for a specific pollutant); or • a management system.
Guidelines DO NOT..
• provide instruction for designing an organisation’s internal data management and reporting systems • offer methodologies for preparing reports, or for performing monitoring and verification of such reports
Reporting Principles (Part B)
Content of a report… (Part C)
1. Vision and Strategy 2. Profile 3. Governance structure and Management System 4. GRI Content Index
5. Performance Indicators
Global Reporting Initiative - Group 9
29
“In Accordance” Conditions
Organisations that wish to identify their report as prepared in accordance with the 2002 GRI Guidelines must meet five conditions: 1. Report on the numbered elements in Sections 1 to 3 of Part C. 2. Include a GRI Content Index as specified in Section 4 of Part C. 3. Respond to each core indicator in Section 5 of Part C by either (a) reporting on the indicator or (b) explaining the reason for the omission of each indicator. 4. Ensure that the report is consistent with the principles in Part B of the Guidelines. 5. Include the following statement signed by the board or CEO: “This report has been prepared in accordance with the 2002 GRI Guidelines. It represents a balanced and reasonable presentation of our organisation’s economic, environmental, and social performance.”
Performance indicators
economic
environmental
social
Global Reporting Initiative - Group 9
31
Economic Indicators
?Customer ?Supplier ?Employees ?Suppliers Of Capital
Global Reporting Initiative - Group 9 32
Environmental Indicators
• • • • • • • Water Biodiversity Materials Energy Effluents, waste and emissions Compliance Transports….Etc
Global Reporting Initiative - Group 9 33
Social Indicators
• Human Rights • Society • Product Responsibility • Labour Practises
Global Reporting Initiative - Group 9 34
Benefits of GRI…
? Most comprehensive framework ? Clearer picture of long term prospects ? Comparability and consistency benchmark ? A proactive approach ? anticipates performance ? Strengthening relationship with stakeholders
Global Reporting Initiative - Group 9
Contd…
35
Benefits of GRI (Contd)…
? Linking various organisational functions
? Warnings against potentially damaging situations
? Provides framework for employees
? Reducing volatility and uncertainty to achieve financial stability
Global Reporting Initiative - Group 9 36
Some criticisms of GRI…
? Measurement and calculation of indicators unclear
? Some of the indicators are ambiguous ? GRI organisation is mainly financed by business ? Standards for reporting and not for performance
Global Reporting Initiative - Group 9
37
Dilemmas faced by companies…
? Cost incurred is significant
? Misinterpretation of information
? Pressure from peer companies
? Bias towards reporting on familiar issues
Global Reporting Initiative - Group 9
38
Indian Scenerio
• Loads of report • Only 2 companies as of 2006 “in accordance” with GRI guidelines
doc_835568920.pptx