tbli conference nordic 2016 workshop c1 - transparency sandra genee

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TBLI conferenceNORDIC 2016Sandra Genee, Corporate and Stakeholder Relations

The disclosure of meaningful sustainability information is a critical process that provides investors and other stakeholders with a holistic view of an organizations performance, impacts and activities, to inform effective decision-making. This process supports stable and sustainable global capital markets and the transition towards a sustainable global economy.

I would like to compliment the Commission and this Committee on its leadership in bringing this conversation forward. Building on previous Commission leadership on the crucial sustainability issue of climate change, this is the first time the broad area of sustainability disclosures has been tabled as a Concept Release by the Commission. This demonstrates that the Commission is listening to investors as well as other stakeholders about the critical information they need from issuers to make more informed investment and other decisions 1

Investment risks in global markets

2013 Colombia: Coal producer fined $3.6 M for sinking ship dumping 500 tons of coal into sea2015 China: Chad fined CNPC $1.2BN for environmental violations2012 India: company fined $16M for construction without an EIA2014 South Africa: global producer of metals suffers 70% drop in profits due to 5 months of strike2012 Mexico large telco fined $1.2M for personal data privacy violations2013 Brazil: 26 beef produces to be fined $282M for buying cattle raised on illegally deforested areas2013 Turkey: 12 banks fined record $670 M for infringing on competition law2014 Indonesia: Intl. mining giants contract threatened over tax law suit 2015 Germany VW shares drop 23% after emissions scandal2016 Australia: BHP reports $2.2 bn of loss is attributed to Samarco dam disaster

Prioritizing financial performances vs esg performance (eg VW)

To this crowd do the right thingBut the notion that if you accept the fact that the world is changing, taking ESG into account that looking at ESG information as a reflection of risk management, makes financial sense

Through dialogue/ engagement are we able to reduce that risk and reduce risks.Ultimately you do not want to invest in companies that exploit, pollute, Example northern rock engaged because governance was not right, funding model sustainable (Sandra Carlisle) but sold it. Brazilian oil company change of regime/political influence concern corruption, no oversight on company board, pillaging shareholder funds *governance risk. Made decision to sell. to make a calculated well informed well advised risk-return decision

Engage to improve -

ESG issues are material to companies in order to improve risk Material for companies data quality/transparency/materiality different but integration of ESG issues into investment decision-making is easy

Anti savilaakso

Start by taking the example of emerging economies impact of non managing risksThis slide shows a map of the earth, adding one example after another of specific examples of common emerging market sustainability issues arising and having a material impact on a specific company. They all have in common to be non-financial risks, ESGAcronymsCNPC = China National Petroleum Corporation (CNPC)EIA = Environmental Impact Assessment

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investors demanding more information from companies

Sustainability reporting is a critical source of information for the screening process

Facilitator Notes sustainability reports are a critical source of information for the screening process, and investors are increasingly asking for more and more information.Source PwC Sustainability goes mainstream: insight into investor views

Facilitator Notes Sustainability management and reporting is a systematic approach to managing risks and opportunities on these issues. List the main areas it covers (only at the highest level, i.e. governance, economic, environmental, social break down just into the same heading areas as the GRI etc.).

A Standard for non-financial reporting exists the GRIs G4, soon to be GRI Standards

Make a brief awareness introduction to G4 without getting into it (literally just state there is a tool for companies to systematically report against these issues).

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should not be misleading and should provide the complete set of information that is material to any investment or voting decision. In this context, GRI has advocated for many years that organizations should identify their specific material issues based on an established definition and principle-based guidance, and focus their reporting on such issues. Requiring line item disclosures across industries would result in an undue reporting burden and is likely to produce a large quantity of information that is immaterial to investors and other stakeholders. Requiring line item disclosures would also go against what has been emerging as recognized best practice globally. The business models of modern companies are highly diversified and, while industry specific commonalities exist, significant differences, even within industries, are not uncommon. GRI advises that the registrant should itself define which sustainability and public policy issues are material based on an established definition and principle-based guidance and this principle is already embedded in our standards.

should not be misleading and should provide the complete set of information that is material to any investment or voting decision. In this context, GRI has advocated for many years that organizations should identify their specific material issues based on an established definition and principle-based guidance, and focus their reporting on such issues. Requiring line item disclosures across industries would result in an undue reporting burden and is likely to produce a large quantity of information that is immaterial to investors and other stakeholders. Requiring line item disclosures would also go against what has been emerging as recognized best practice globally. The business models of modern companies are highly diversified and, while industry specific commonalities exist, significant differences, even within industries, are not uncommon. GRI advises that the registrant should itself define which sustainability and public policy issues are material based on an established definition and principle-based guidance and this principle is already embedded in our standards. 3

Growth in sustainability reportingData from KPMG Survey on Corporate Responsibility Reporting 2013

Sustain

Today, according to KPMGs 2015 Survey of Corporate Responsibility Reporting, almost three quarters of the largest 100 companies by revenue in each of 45 countries surveyed by KPMG now report on sustainability issues. The current rate of sustainability reporting among the worlds largest 250 companies based on the Fortune Global 500 Ranking, is over 90 per cent.

According to KPMG, GRI provides the most popular voluntary sustainability reporting standards, used by 74% of the Fortune G250; and by 72% of companies reporting on sustainability issues worldwide in standalone sustainability reports. GRIs Standards are used by thousands of organizations across all sectors in over 90 countries. ability reporting continues to grow globally4

Use of Global Reporting Initiative (GRI) Guidelines is almost universal

78 % of the companies that report use or reference GRI Guidelines

82% of the G250 that report use or reference GRI Guidelines

Sustainability Reporting & GRI

Reference: KPMG International Survey of Corporate Responsibility Reporting 2013

We have pioneered sustainability reporting since the late1990s, transforming it from a niche practice to one now adopted by a growing majority of organizations.

GRIs Sustainability Reporting Standards are foundational to this success. With thousands of reporters in over 90 countries, GRI provides the worlds most widely used standards on sustainability reporting and disclosure, enabling businesses, governments, civil society and citizens to make better decisions based on information that matters. In fact, 93% of the worlds largest 250 corporations report on their sustainability performance.

At the last Global Conference in 2013, GRI launched the G4 Guidelines, building on the success of pervious versions.

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GRI Standards enhance the global comparability and quality of sustainability information, resulting in greater transparency on economic, environmental and social impacts

Globally accepted standards create a common language for organizations and stakeholders by which impacts of organizations can be communicated and evaluated GRI Sustainability Reporting StandardsEnhancing comparability & quality

We help businesses, governments and other organizations understand and communicate the impact of business on critical sustainability issues

These issues span climate change, human rights, anti-corruption and many others

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It empowers multiple stakeholder groups in their decision-making, providing them with information about the connectivity of financial and sustainability information

Organizations can have confidence in the robustness of stakeholder participation when considering a wide range of sustainability issues

Robust Multi-Stakeholder ApproachDiverse, global and inclusive

GRIs multi-stakeholder approach adds value to reporting

GRIs network extends across geographies, stakeholder groups and sustainability themes. We work with a global network of thousands of professionals and organizations. We have several official constituency groups we work with to develop new reporting guidance across business, civil societ