Reporting
matters

Improving the effectiveness of reporting
WBCSD Baseline report 2013

In partnership with

CompletenessMateriality

Governance andaccountability

Management
approach

Performance

Trends andprospects

Contents

Introduction

In this report

SectionIntroduction
01 Welcome to our first report
02 why does reporting matter?
06 what matters?

In summary

1

2

In summary
09 what did we do?
10 what did we find? In numbers

Detailed findiNGS

SectionSectionDetailed findings
14 Criteria in detail
Section4

Appendix
53 GLOSSARY oF terms
55 Acknowledgments
56 About the research partners

This project is a joint collaboration
between WBCSD and Radley Yeldar
See page 56 for more information

Appendix3This publication, the first suchendeavor by the WBCSD, reflects
extensive research conducted by
us in partnership with Radley Yeldar,
to understand the state of reporting
across WBCSD members, and to
identify best practice and areasof improvement so that reporting
can become truly effective.
As a former CEO of a publicly-traded
company, I am all too aware that abusiness needs accurate, reliable andtimely information to monitor its activities,
and ensure effective decision making andefficient management. Such processes area significant investment in any organization.
Transparent disclosure is vital to keep
investors and other stakeholders informed.
However, despite best efforts to makereporting engaging, there is no guaranteethat the information reported will be readand used by the intended stakeholder.
2013 has been a milestone year forsustainability and corporate reporting,with developments that include: the
Global Reporting Initiative (GRI) G4
Guidelines; the long-awaited draft Integrated
Reporting Framework; the emergence of
the Sustainability Accounting Standards
Board (SASB) in the US; and the increasing
recognition of The Economics of Ecosystems

Sustainability reporting has come a longway since the first publications. Fifteen years
ago, it might have been enough to tick theboxes on accident frequency, employee
satisfaction and heart-warming storiesof philanthropic activities. However, thisapproach no longer cuts it when it comesto showing why sustainability matters andwhat level of performance an organization
has achieved.
This publication, which we will issue
annually, aims to engage with businesses
and the standard setters in progressing thequality of non-financial reporting, so thatit progressively reflects a company’s true
performance and impact while providing
information that meets the decision-making
needs of key stakeholders.
Ultimately, the WBCSD aims to be the leading
voice of business that will support companies
in scaling up true value-adding businesssolutions and in creating the conditions
where more sustainable companies will
succeed and be recognized. Improving theeffectiveness of non-financial reporting will
be a key enabler to achieve this.
I hope you find it useful.

Peter Bakker
President and CEO

In summary

The voice of progressive businesses needs
to be heard, which is why the WBCSD is
now involved in the reporting agenda.
We believe that reporting practices needto change to ensure that businesses are
truly valued on what is important, thatstakeholders have timely information, andthat reports are read and used by investors
and other stakeholders.

Detailed findiNGS

and Biodiversity (TEEB) for business coalition
as the key multi-stakeholder platform forcollaboration on natural capital accounting
and valuation.

Appendix

Welcometo our first report

Introduction

01
reporting matters

Information is the lifeblood of markets. Imperfect information leads to misallocationof resources and poor decision-making. That is why so much effort is still invested in
evolving corporate reporting – more than a century after public company directors
were first required to account to their shareholders for their financial stewardship.

In summary
Detailed findiNGS
Appendix

Why doesreportingmatter?

Introduction

02
reporting matters

This report demonstrates that informationon companies’ interactions with society andthe environment has come a long way sinceinitial attempts to quantify environmental
performance and to communicate
corporate social responsibility. Non-financial
reporting is concerned with value, risk
and opportunity – the central concernsof management and investors.
It has grown rapidly over the past 15 years
because value is now perceived much more
broadly than in the past. Financial value isstill central and financial capital remains at
the heart of business and markets. But it isclear that focusing solely on financial capital
results in a very narrow picture of how
companies relate to the world around them.
Every business also relies on human, social,

Regulations are
increasing globally
The volume of policy and regulation aroundorganizational reporting is increasing
globally. For example, several governments
and stock exchanges have introduced
new corporate governance and disclosure
requirements. The ‘report or explain’
principle is spreading, with initiatives
adoption by the São Paulo stock exchange
in 2012 and incorporation in 2013 in theEuropean Union proposal for accounting
legislation to improve non-financial anddiversity disclosures by large companies.
Companies listed on the Johannesburg stock
exchange have been required to produce
a third-party assured integrated reportsince 2010 and in the same year the US
SEC issued interpretive guidance on climatechange risk disclosure In 2012, the Securities
and Exchange Board of India mandated the
top 100 listed companies to submit BusinessResponsibility Reports as part of theirannual reports.

Imperfect information
leads to misallocationof resources and poor
decision-making.

Detailed findiNGS

Done well, it allows companies to report
its true performance and impact rather thanthe partial picture contained in financial
accounts. As such, it is key to changing theway investors value businesses and allocate
financial capital, and therefore key tosustainable development.

manufactured and natural capital to provide
the people, relationships and resources
without which financial capital is impotent.
Reporting on these capitals discloses how
a business uses them to create value.

AppendixNon-financial reporting is
the latest major development
making corporate disclosure
more relevant and more useful.
It helps investors make better
judgments about a companies’
performance and prospects
while keeping other interested
stakeholders informed
and engaged.

In summary

Introduction

03
reporting matters

Understanding the importance of nonfinancial capital has also fuelled a rashof initiatives to improve the quality
and relevance of reporting. In 2013 theInternational Integrated Reporting Council(IIRC) published a draft framework for
integrating sustainability into annualcompany reports. IIRC brings together
investors, companies, the accounting
profession and others concerned withcorporate reporting. It explicitly recognizes
the multi-capital concept as one of its
fundamental principles.
Also in 2013 the Global Reporting Initiative,
which has been instrumental in developing
sustainability reporting for more than adecade, issued the fourth generation (G4) of
its Guidelines which help companies identify
the topics they should communicate on.

Companies factoringsustainability issues intobusiness strategies will
ultimately outperform.

A demand from investors
Investors are starting to back the drive forcompanies to recognize and respond to
the risks and opportunities in sustainability.
More than 1,000 asset owners andinvestment managers are membersof the United Nations Principles for
Responsible Investment (PRI). They speakfor US$35 trillion – serious money that istaking sustainability seriously as a businessand investment issue.

Detailed findiNGS

Voluntary initiatives on the rise

In the US, the Sustainability AccountingStandards Board (SASB) published its
Conceptual Framework. SASB is developing
sector-specific guidance on including
sustainability content in mandatory filings
to the Securities and Exchange Commission(SEC). SASB standards will help companies
address material issues in ways that areauditable and useful for investors andbridge the gap in US legislation about
the materiality of ESG issues.

AppendixMore such measures can be expected as
regulators focus on sustainability reportingas part of the transition to a green economy
acknowledged at the Rio +20 conference.

In summary

Introduction

04
reporting mattersEffective non-financial reporting will provide
this evidence. It can also drive companies
to identify value opportunities. The 100+
companies in the IIRC pilot program
concluded that the trials had helped toprovide a clearer view of their businessmodel and the importance of the various
forms of capital. Ultimately they said it led
to better business decisions, which is thefundamental purpose.

The pressing environmental and social
issues the world is now seeing means thatbusinesses need to act now to transformsustainability reporting so that it meetsthese needs. Engage with peers and theleading thinkers who are pushing thisconcept forward. Integrate sustainability
into business thinking. And tell the world
what you have done in ways that engage,
inform, and stimulate action.

The WBCSD response
The WBCSD will provide the collective
business voice, supporting learning anddoing as part of our Action2020 programto scale up sustainable business solutions.
This report is an important step, providing
the detailed analysis to guide sustainability
reporting in the right direction and help
our members to meet investors’ needs.

Detailed findiNGS

PRI members believe that the companies
factoring these issues into businessstrategies will ultimately outperform.
They want to see evidence in corporate
reporting that managements understandthis and are responding appropriately.

business strategies that create sustainableoutcomes. Those investment flows will resultin scaling up innovations that are essential tomeet the challenges of the coming decades.

Appendix

They do not see sustainability as a magicbullet to transform investment performance.
But investors with a medium to long-term
perspective know that companies facesignificant risks and opportunities fromresource constraints, demographic changes,
poverty, climate change and other major
global developments.

In summary

Introduction

05
reporting matters

Better decision-making is also the aimof WBCSD. We want companies to makedecisions that advance sustainability as
well as business success. And we want
to see reporting that fully reflects suchdecisions so that investors can support

Tell the world
what you havedone in ways thatengage, inform, andstimulate action.

What matters?

In summary

Effective reporting rests on the dynamic interplay of three things. Firstly, getting yourthinking straight so that you focus on the right issues and have a clear plan. Secondly,
taking action on the issues that matter and managing those issues. And thirdly,
understanding your audience and their information needs. Together, these factors
can help drive sustainable performance and underpin WBCSD’s Action2020.

Trends &prospects

Materiality

Completeness

Reporting demands a strategic
thinking process to establish arobust approach to material issues.
Ideally this should take sustainability
to the heart of your business.

Detailed findiNGS

THINKING
Targets &commitments

Introduction

06
reporting matters

Strategy &drivers

BalanceThis dynamic process
underpins WBCSD’s
Action2020.

Governance &accountability

Performance

Information
presentation

ACTIONS

EXPERIENCE

Reports provide an opportunity totell your stakeholders what you aredoing to manage material impacts,
how you are performing and what
your plans for the future are.

Reports that focus on the reader
and their needs are more likely to beremembered. So remember to think
about their experience and how
information is communicated.

Stakeholder
engagement

ConcisenessContent
architecturePartnerships &collaborations

Management
approach

Accessibility
Evidence ofactivities

AppendixLine of sightUnderstanding your audiences

Reporting matters to...

Thinking and doing is only part of thestory. Different stakeholders demanddifferent things from sustainability reports.
So think about each stakeholder as an
audience and what really matters to them.

Investors because they want to understandhow companies are managing risk and creating
growth opportunities from sustainability

Introduction

07
reporting matters

In summary

NGOs because they want to scrutinize company
activities and performance for further direct
engagement
Customers because they need to understandhow their suppliers are managing risk
Employees because they are increasingly concerned
about finding employers who share their values
and world view

Detailed findiNGS

Suppliers because it provides insight into the issues
that their customer’s prioritize
Local communities because they want to understandhow the company is managing local impacts at
a corporate level
Regulators because they need to enforce regulations
to ensure complianceAppendix

Consumers who want information about the socialand environmental impacts of the products they
buy and the companies they buy from.

CompletenessMateriality

Strategy andbusiness case

Stakeholder
engagement

Governance andaccountability

Management
approach

Evidence ofactivities

Content
architecture

Performance

Trends andprospects

Targets andcommitments

Information
presentation

Partnership andcollaborations

Line of sightCompletenessM

Governance andaccountability

MaConciseness

Performance

1
2

3

T
p

08
reporting matters

Introduction

2

IN SUMMARY

Appendix

Detailed findiNGS

In summary

IN THIS SECTION
09 what did we do?
10 what did we find? in numbers

CompletenessMateriality

Strategy andbusiness case

Stakeholder
engagement

Governance andaccountability

Management
approach

Evidence ofactivities

Content
architecture

Performance

Trends andprospects

Targets andcommitments

Information
presentation

1
2

3

What did we do?
Reporting Matters 2013 is one of the largest independent surveys of corporate
sustainability reporting covering more than 20 sectors and 30 countries. We hope
it will benefit both WBCSD members as well as the wider corporate community.
Below is a summary of how we conducted this review.

1

In summary

PurposeWe started this review because we believe those companies which take sustainability
seriously will outperform their peers and should be rewarded by capital markets asa result. Non-financial reporting can play a key role in supporting this transition.

Criteria development2
Detailed findiNGS

The WBCSD partnered with Radley Yeldar (RY) in conducting this review. We
adapted RY’s tried and tested methodology to reflect the global nature of the
WBCSD’s members, and we developed 12 content criteria and five experience
criteria we believe are the necessary ingredients to produce an effective report.

Research

3

Introduction

09
reporting matters

We located, were possible, the sustainability, combined or integrated reports of 175
member companies via their websites or directly from the companies. Each report
was then systematically reviewed against the defined criteria and then subjected toa quality review process to ensure completeness, objectivity, fairness and consistency.

The review of all reports took 12 weeks to complete, after which a thoroughanalysis was undertaken to identify trends and commonalities. We also
identified companies that best represented the content or experience criteria.

4

Launch5

The launch of this first annual Reporting Matters 2013 review is designed toinspire member companies to improve the use and effectiveness of reportingby highlighting the need for certain focus areas to be improved, and to get
inspiration from those members that already displayed a mastery in one ormore areas of sustainability reporting.

Engagement
Sustainability is a journey not a destination, and reporting is the means bywhich a company ensures it is on the right path and making progress. We
hope this review engages members to re-evaluate their reporting practices
and disciplines. The review of WBCSD members sustainability reporting
will take place annually.

7

Linking Reporting Matters 2013
to the bigger picture
The WBCSD’s Action2020 initiative aims to inspire member companies
to scale up sustainable business solutions. Reporting Matters 2013 sets abaseline from which companies can measure their future performance.

6

Appendix

Analysis

10reporting matters

By analyzing 175 sustainability reports and aggregating data across a rangeof measurable topics, we have identified some interesting trends that show
the state of reporting within WBCSD’s membership but also highlight futurechallenges and opportunities.
How much is enough?

Defining materiality, or what is important to a business,
is key to scaling up solutions. Our research shows
however that only 21 WBCSD members (less than
12% of all reports reviewed) limit their reporting tothose sustainability issues considered to be material
to the business.

Stand-alone sustainability PDF reports vary significantly
in length with the average being 98 pages. The shortest
report we reviewed was 16 pages, while the longest was
780 pages. This wide range of report lengths is perhaps
reflective of the differing functions and expectationsof sustainability reporting at organizational level.

This helps to explain why the Global Reporting Initiative(GRI), the International Integrated Reporting Council(IIRC) and the Sustainability Accounting Standards
Board (SASB) developed guidelines and frameworks
in 2013 to help companies clarify what is material forreporting purposes.

There is, however, no significant correlation between
report length and sector, region, or maturity ofreporting, suggesting that the increasing length ofreports is a universal challenge faced by companies.
Reporting against guidelines such as the GRI has no
significant impact on the size of the report.

We also found that there is only a weak correlation
between report length and the sophistication of acompany’s overall materiality process. This suggeststhat even the most advanced reporters are not always
using materiality to make their reporting more concise.

When combined with the annual report, the amountof sustainability content disclosed is generally lessthan a stand-alone report.

Materiality

Number of pages

AppendixA

Detailed findiNGS

What is material?

18

B

In summary

Introduction

What did we find?
In numbers

16

13
12

12

11

11

11

7

7

5
4
3
2
1

A Report wider than material issues

154

11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 101-110 111-120 121-130 131-140 141-150 >151

B Report focused on material issues only

21

Number of pages

Our research shows that almost 75% of the reports
reviewed follow the GRI reporting guidelines, with54 companies self-declaring to the highest level under
GRI G3.1 (A+). The cement sector was the biggest userof the GRI guidelines with all reports (12 companies)
using the guidelines.
We have found companies that use the GRI guidelinesscore slightly better in both our content and experience
criteria than those who do not. We also found that there
is no correlation between the use of the GRI guidelines
and report length.

What is the status of
integrated reporting?
The majority of WBCSD members (80%) produce a
stand-alone sustainability report – that is the fullest sourceof sustainability information is separate from any otherreport, such as an annual report.
We found that 21 companies (12% of reports reviewed)
disclose environment, social and governance matters intheir annual report or produce a combined report and 14
companies (8%) issue a report they define as ‘integrated’
although this is not necessarily what it is called. A small
number of companies produce a supplementary integrated
or combined report in addition to a sustainability report.

GRI application levels
64

Appendix

Whether it’s called an annual or combined report, or defined
as an integrated report, we see only one of these typesof reports in the top 10 reporters with only five in the top
quartile. Our analysis shows that self-declared integrated
reports on average scored slightly higher than stand-alone
sustainability reports against our content criteria.

Report distribution
A

64

B
56

54

48

C
40

32
27

24
17

16

8

6

0 No GRI
application
level

A+

A

4
B+

B

C+

Detailed findiNGS

How are the GRI guidelines being used?

In summary

Introduction

11reporting matters

3

A Integrated Reports

8%C

B Combined Reports

12%

C Sustainability Reports

80%

12
reporting matters

How quickly are reports
being published?

As we outlined above, a reasonably small number ofcompanies are using ‘Integrated Report’ as their title.
However, the majority of companies that are combining
their financial and non-financial reporting do so under
the term ‘Annual Report’.

We noted that 109 reports (almost 60% of all members)
specify a reporting publication date. Based on this,the average time period between year-end and the
publication date is approximately six months. We also
found that annual reports and integrated reports tend
to be issued more quickly on average than stand-alone
reports within a one- to three-month period.

Detailed findiNGS

The vast majority of WBCSD members produce anannual sustainability report (or equivalent). However,nine WBCSD members have either not yet issued
a report or not produced one since 2010. If the last
published report was 2010 or before, we excluded
it from our research.

Title of report

Time between reporting period and publication

Appendix

Since the early 1990s, the titles of sustainability reports
have evolved to reflect the increasing sophisticationof companies’ approaches to non-financial reporting.
In our research, the majority of reports are titled‘Sustainability’ with ‘Corporate Responsibility’, CSR
and ‘Citizenship’ making up the rest. Interestingly,
CSR is used more by Asian-based businesses thanother regions.

In summary

What are they calling it?

Introduction

What did we find?
In numbers

100

66

49
42

26

15

18
14
10

Sustainability
ReportAnnualReportCSR Report

Other

CR Report

7
Integrated
Report3
One to threemonthsFour to six
monthsSeven to ninemonthsTen to twelve
monthsNot knownIn summary

Introduction

13
reporting matters

Who’s validating performance?

Detailed findiNGS

Our research found that 112 companies (more than
60% of total reports reviewed) have some formof assurance on their sustainability disclosures.
The dominant form of external assurance is limited
assurance with only four companies having reasonableassurance (recognized as the most extensive form ofassurance) on their entire report. 21 companies use
a combination of limited and reasonable assurance.

Appendix

We found that 39 companies do not engage external
assurance providers but use their internal audit function
for assurance purposes. 24 companies do not have any
assurance provision.

Assurance
A
C

87

B
21

A External assurance

112

B Internal audit assurance

39

C No assurance

24

4
Limited assurance only

Limited and reasonableassurance

Reasonable assurance only

Detailed findings
This section looks at key findings for each of the content and experience criteria.
It recommends actions companies can implement, illustrated through examples
from the reports reviewed.

In summary

3

Introduction

14reporting matters

See page 16 for more information

Materiality
See page 18 for more information

Strategy & drivers
See page 20 for more information

Governance & accountability
See page 22 for more information

Management approach
See page 24 for more information

Evidence of activities
See page 26 for more information

PerformanceSee page 28 for more information

Trends & prospects
See page 30 for more information

Targets & commitments
See page 32 for more information

Stakeholder engagement
See page 34 for more information

Partnerships & collaborations
See page 36 for more information

BalanceSee page 38 for more information

Content architecture
See page 40 for more information

Line of sightSee page 42 for more information

Accessibility
See page 44 for more information

Information presentation
See page 46 for more information

ConcisenessSee page 48 for more information

AppendixCompleteness

Detailed findiNGS

IN THIS SECTION

Detailed findiNGS

In summary

Introduction

15
reporting matters

Completeness

Appendix

Governance andaccountability

Performance

CompletenessKey findings

Key recommendations>> The most effective reporters cast a wider net in termsof scope and boundaries. They consider sustainability
impacts outside of the company’s direct operations thatare material to the business and stakeholders. They also
provide evidence to show they are engaging with suppliersand customers to address material risks and opportunities
identified along the value chain.

>> Adopt a value chain approach to reflect a wider picture ofmaterial impacts. Often the biggest risks and opportunities
occur outside of a company’s direct control and require
upstream and downstream actions in partnership withothers to be effectively addressed.

>> Furthermore, reporting scope and boundaries are more
often than not loosely defined and say little about theactual boundaries of the report. For example, they rarely
say whether joint ventures or subsidiaries are included
or excluded.
>> In some cases, the title year does not match the actual
reporting period, which may cause confusion for the reader.

>> Use your value chain to inform target setting on yourmaterial impacts as well as to structure the whole report.
>> Ensure the reporting period is reflected accurately in thetitle of the report and aim to shorten timing between
the reporting period and the publishing date. Also clearlystate report scope and boundaries so that there is absolute
clarity over what is in and out of scope.

Appendix>> While a majority of companies discuss at least somesustainability impacts beyond direct operations, many
do not provide a comprehensive description of thevalue chain at all.

>> Include a clear description or graphical representationof your company’s value chain.

Detailed findiNGS

In summary

Completeness describes the report’s scope and boundaries, and reporting of
performance and targets for material issues within those scope and boundaries.
It requires an understanding of the company’s ‘value chain’, and in particularmaterial impacts that go beyond the company’s direct operations.

Introduction

16
reporting mattersFibria’s report is an excellent example of the use of effective graphicalrepresentation of its value chain. This description indicates all the positive
and negative sustainability impacts at each major step of the businessmodel from forest management to production and sale.
This value-chain approach then guides the structure of the rest of the report.
Impacts are followed up throughout the report demonstrating a strategic
approach to corporate sustainability.

BASF SEBASF Report 2012
BASF’s report presents a clear narrative of the company’s value chain
describing sustainability impacts at each stage of the production process.
 aterial issues are considered along the entire value chain and the reportMdiscusses activities that go beyond direct operations: supply, transport,
production, storage, distribution and consumption. This results in a very
complete overview of BASF’s overall impact.
For example, BASF strives to quantify its impact along the value chain
through its corporate carbon footprint. This analysis allows to evaluate
the company’s direct and indirect CO2 emissions on the material topic
of climate protection for each stage of the value chain.

Henkel AG & Co
Sustainability Report 2012
The company utilizes its website to present a graphical representation ofits value chain accompanied by a description of each material activity, while
the report is used to explain in further detail specific processes, namely the
supply chain and innovation processes, as well as illustrate how negativevalue-chain impacts are minimized and positive ones maximized.
The reporting scope and organizational boundary are clear and accessible.
The report also provides some background about material business segments
such as ‘Laundry and Home Care’, ‘Beauty Care and Adhesive Technologies’,
as well as the 54 countries where Henkel has production sites.

In summary

Sustainability Report 2012

Detailed findiNGS

Fibria Celulose SA

Appendix

In practiceIntroduction

17
reporting matters

Key findings

Key recommendations>> The most effective reporters provide a clear descriptionof the materiality process applied, including stakeholder
involvement as well as outcomes from this process.

>> Implement a transparent, inclusive and robust materiality
process involving your company’s key external and internal
stakeholders to gain insight on the relative importance ofsustainability risks and opportunities facing the company.

>> Furthermore, they present industry specific issues in amateriality matrix, which in turn describes their relative
importance for the company and its key stakeholders.
>> Many reporters do not however explicitly identify material
issues but instead provide only a generic description ofimportant issues. Furthermore, regional interpretations andcontext on material issues, such as water scarcity, are rarely
incorporated into the analyses.
>> In some instances, if reporters describe their material
issues, they do not describe the process to define the mostand least material issues, or show how they were identified
in the first place.

>> Clearly define and describe the materiality process andpresent the outcomes of the materiality analysis. A matrix
is an effective way to do this, provided it has enough detail
to illustrate the hierarchy of prioritized issues, including
those identified as not material.
>> Structure the report around the outcomes of themateriality process, or at least clearly direct readers towhere they can find more detail on your material issues.
This will help with the drafting of the report as well as
improve the reader’s experience.
>> Where possible, consider external assurance for both theprocess and the outcomes of the materiality analysis toreinforce the report’s credibility.

In summary
Detailed findiNGS

A materiality process is used to identify and prioritize the most significant
environmental, social and economic risks and opportunities – from the perspectiveof the company and its key stakeholders. It is an essential component of any report,
and if used comprehensively, can help focus a company’s strategic approach tosustainability and reporting. It can also guide investment andresource allocation decisions.

Appendix

Materiality

Introduction

18
reporting matters

In practice
Nestlé SA
Creating Shared Value and meeting our commitments 2012

Introduction

19
reporting matters

The materiality matrix displays changes in relevance of impacts of material
issues over time – a feature that is unique and insightful. The report also
includes a detailed description of how the issues have been prioritized
as well as the new issues added in comparison to prior years.

Sompo Japan Insurance Inc.
Corporate Responsibility Communication 2012
Sompo’s report includes a comprehensive matrix that displays all the issues
that are material to the company. Sompo also explains how the mappingof issues was conducted through stakeholder engagement and the core
themes of ISO 26000.

Detailed findiNGS

This interactive matrix includes color coding, which is used throughout thereport, to visually categorize the different material issues by themes.

In summary

The report presents an interactive matrix that allows the reader to choose
any material issue of interest and then be directed to a more detailed
description of the selected issues.

Following further engagement with experts and critical evaluation,
the matrix is then narrowed down to five color-coded key issues.

Appendix

The report is entirely structured around the outcomes of the matrix.

Public Power Corporation S.A.
Corporate Social Responsibility 2011
PPC presents a comprehensive table outlining the magnitude of risks for aseries of key issues identified by the company and prioritized in light of the
impact these issues could have on both the company and stakeholders.
Material issues are then illustrated in a matrix, accounting for likelihoodand degree of impact according to five different levels of importance.
Moreover, stakeholder involvement in the materiality process isdemonstrated by a section explaining how each stakeholder group
was consulted on key issues and the way in which PPC responded.

Strategy & drivers

Key recommendations>> The most effective reporters disclose a business strategy
that links to positive sustainability outcomes, such as the
management or avoidance of sustainability risks or thedevelopment of opportunities through innovation. The
strategy is supported by a detailed implementation plan.

>> Identify the key sustainability outcomes your businesswants to achieve and link these to your core businessstrategy. Describe how your business strategy and businessmodel have been adapted to support these outcomes.

>> Additionally, the most effective reporters define a specificbusiness case for sustainability, referencing drivers suchas cost savings, reputational benefits, and employee
retention, as well as wider societal needs.
>> Many reporters however do not establish a clear link
between sustainability and their core business nor
do they define a company-specific business case.
>> Many reports do not include a sustainability visionand consequently do not communicate a clear senseof direction or purpose.

>> Avoid limiting your sustainability outcomes to downsiderisk management but aim to show how the strategy drives
commercial value as well as sustainable outcomes, forexample through innovation.
>> Articulate a clear business case that is specific to yourbusiness and external environment and reference key
drivers such as cost savings, alongside expected benefits.
>> Show how your strategy addresses wider societal issues suchas resource constraints and environmental degradation,
income inequality and human health and wellbeing issues.
>> Talk about what kind of business you want to be or
become. This will help readers understand your purpose
beyond generating financial value.

Appendix

Key findings

Detailed findiNGS

In summary

A sustainability strategy is a clearly-articulated approach or plan to address material
financial, environmental, social and governance risks and opportunities. It shouldlink to a vision, a mission and provide an explanation of how the strategy will bedelivered, including milestones and targets.

Introduction

20
reporting matters

In practiceUnilever plc
Progress Report 2012

Introduction

21
reporting matters

ACCIONA SA
Sustainability Report 2012
The report shows that the company has devised a medium-term (up to2015) ‘Sustainability Master Plan’ (SMP 2015) consisting of nine areas
around which the report is structured.
The SMP 2015 is directly linked to ACCIONA’s vision to meet the challengeof achieving sustainable development and ACCIONA’s mission to be aleader in sustainability.
ACCIONA’s report shows how strategic sustainability priorities are
established in line with the priorities of the business resulting in a truly
integrated approach.

Svenska Cellulosa AB, SCA
Sustainability Report 2012
SCA’s report shows how the company has taken a holistic approach tostrategy by linking sustainability to financial performance and value creation
for people and nature.
SCA clearly articulates its business case for sustainability, which drives
cost-efficiency and increases productivity. This is consistently shown
throughout the report with performance metrics and targets.
Trends and prospects influence the development of SCA’s sustainability
strategy and are the drivers of short and long-term sustainable growth.

Detailed findiNGS

Unilever’s strategic approach considers both sustainability risks
and opportunities.

Appendix

The strategy is fully integrated into the business model focused on threegoals to be achieved by 2020. These are supported by seven commitments
underpinned by well-defined targets.

In summary

The report defines an embedded strategy entitled ‘The Sustainable Living
Plan’, which emphasizes the long-term focus of Unilever’s strategy andan overarching systemic journey to sustainability outcomes.

Governance & accountability

Key findings

Key recommendations>> The most effective reporters demonstrate how thecompany has integrated sustainability governanceinto its overall corporate governance structure, suchas through board-level committees. Furthermore,evidence of this structure is provided beyond thecorporate function and typically includes regional
and local governance arrangements.

>> Describe how the governance of sustainability is structured
and strive to have this embedded in the overall governanceof the organization. Ensure there is a clear description of
any board committee that has sustainability oversight.
Refer to the frequency of sustainability committee
meetings, topics discussed and key outcomes.

>> However, some reports do not describe the company’s
leadership commitment to sustainability beyond the chief
executive’s statement.
>> Few reporters provide details on how the board or senior
executives are remunerated or incentivized following
achievement of sustainability goals or targets.
>> Most companies opt for internal assurance through theirinternal audit function. If external assurance is obtained,
it is more likely to be limited than reasonable.

>> Explain your local sustainability governance arrangements
and how they feed into the overall governance structure.
>> Consider introducing other forms of external accountability
such as stakeholder panels to challenge and provide external
scrutiny on your strategy, performance and reporting.
>> Consider the effectiveness of your assurance processes anddescribe them fully in your report. Effective reporting has
a combined approach to assurance with both internal andexternal assurance providers working in collaboration.
>> If external assurance is not used explain why. If it is,then define the role and scope of the external assurance
provider, its independence, engagement boundaries
and the key findings of their report.

Appendix>> Additionally, the most effective reporters include
specific details on the governance activities of the board
committees, including key decisions, actions and outcomesfrom meetings, and sustainability responsibilities ofcommittee members.

Detailed findiNGS

In summary

Governance and accountability focuses on how a company defines its
management responsibility and oversight for sustainability activities andperformance. Sustainability governance should be an integral part ofthe overall corporate governance structure as it demonstrates that thecompany’s leadership is taking sustainability seriously.

Introduction

22
reporting matters

In practiceRoyal DSM N.V.
Integrated Annual Report 2012

Introduction

23
reporting matters

The report provides transparent information on how board-level incentives
are linked to sustainability. Sustainability is an integrated part of the
remuneration of DSM managing board.

Vedanta Resources plc
Sustainable Development Report 2011/12
The company’s report includes an easy-to-follow graphic illustration of
the governance committee’s structure together with its members andtheir responsibilities.
The report outlines the various activities performed by the company’s
governance committee with responsibility for sustainability as well as their
newly approved sustainability policies related to the business activities
of Vedanta.
Additional information on remuneration and incentives for board members
and senior executives is clearly referenced to the annual report.
The company has also appointed a chief sustainability officer who regularly
updates the governance committee on best practices and industry-specificbenchmarks.

Ford Motor Company
Sustainability 2012/13
The governance disclosures demonstrate the company’s dedication tosustainability beyond its sustainability team. The narrative describes how
Ford is striving to integrate sustainability philosophy across the entire
company from the core of the company to all its business operations.
Ford formed its ‘Sustainable Development Committee’ in 2008, reflecting
the company’s commitment to address sustainability responsibilities, risks
and challenges facing the company.
The report also describes remuneration of all employees, not just of board
members, and how compensation is based on sustainability achievements.

Detailed findiNGS

Moreover, the company has established an external sustainability advisoryboard that consists of sustainability experts or thought leaders and advises
DSM on complex sustainability issues.

Appendix

It also describes how sustainability is addressed at the regional level throughinternal sustainability networks in a number of emerging economies.

In summary

DSM’s annual report provides a detailed description of how sustainability
governance is organized at the corporate level and supported by the
corporate sustainability department under the lead of the CEO.

Key findings

Key recommendations>> The most effective reporters describe in sufficient detailthe systems and processes put in place to manage material
issues and how engagement with employees, suppliersand customers supports implementation.

>> Describe the tools, systems, controls, processes andframeworks that guide implementation of your strategy.
An exhaustive list is not necessary, but you should aim toprovide a fair and balanced overview of your management
approach, including areas of improvement and plans
to improve.

>> While some companies explain their management
approach, there is often limited information provided on
the tools, systems, processes and frameworks that guidestrategy implementation.
>> The same applies to information on systems, processes andcontrols over reporting and disclosure. Very few companies
describe their internal reporting and data collection
processes and frequency.
>> Furthermore, some companies do not provide enoughinformation on engagement with employees, suppliersand customers, meaning there is limited insight on
how they are influencing material impacts beyond theirdirect operations.

>> Show how you are engaging with your employees,
suppliers and customers on a systematic basis to build
capacity and encourage bottom-up action, innovation,and increased awareness.
>> Show how sustainability is embedded in corporate andoperational functions beyond the sustainability team –and how sustainability is part of everybody’s responsibility.
>> Provide information on your data collection processes andinternal controls. In addition, consider assurance for key
performance indicators that measure progress against yourmaterial issues, and the underlying data processes thatgenerate these.

In summary
Detailed findiNGSManagement approach describes the systems, controls and processes in placeacross the organization to manage and monitor material issues. It can include
the deployment of frameworks, guidelines, tools, internationally-recognizedmanagement systems and certifications, as well as stakeholder engagement
activities focused on facilitating implementation by employees, suppliersand customers.

Appendix

Management approach

Introduction

24
reporting matters

Annual Report 2012
In line with the outcomes of the materiality analysis, the report describes indetail the management systems in place. These include certified managerial
systems (e.g. ISO 14001), internally developed systems (e.g. EDP’s occupational
health and safety management system based on the OHSAS 18001 standard)
and other externally-developed frameworks (e.g. the European EcoManagement and Audit Scheme and the Greenhouse Gas Protocol).
EDP demonstrates the implementation of a good management approachthrough the involvement of internal and external stakeholders.
For example, customers’ awareness is raised through the promotion of
new energy efficient technologies and employees are encouraged to get
involved in the innovation process by directly participating in theassessment of new ideas.
Reasonable and limited external assurances support the robustness of datacollection processes in place.

General Electric Company (GE)2012 Sustainable Growth Report
In addition to using certified management systems, the reporter has
developed a variety of tools and resources for its research and design
specialists and takes targeted Life Cycle Management approaches tothis end.

In summary

Energias de Portugal S.A. (EDP)

Detailed findiNGS

In practiceIntroduction

25
reporting matters

GE’s report describes in detail the processes in place for data inventory,
which includes guidance documents for the company’s operations andextensive training on inventory processes (e.g. water, GHG emissions).

Siemens AG
Sustainability Report 2012
The reporter adopts a holistic approach to environmental protection that
goes beyond manufacturing to address all phases of the product life cycle,
including procurement, sales and services, use, disposal and recycling. Thisapproach is being implemented through an internal environmental standard
that defines requirements for each of these steps.
Siemens engages with its suppliers, customers and employees in theimplementation of its systems and processes: the company facilitatesknowledge transfers with suppliers through capacity building; it raises
customers’ awareness by making information available as to how to deal
with the products at the end of their use; and it also explores avenues
with employees to encourage innovation by using an Internet-based idea
competition and social media platform.

Appendix

GE raises awareness by adopting a collaborative working method with its
employees, suppliers and consumers to identify strategies for end-of-life
product reclaim and reuse.

Evidence of activities

Key recommendations>> The most effective reporters focus on strategic
sustainability activities that address material issues during
the reporting year and demonstrate the organization’s
management approach in action.

>> Include more specific narrative on strategic sustainability
activities that address material issues during thereporting year.

>> While some reports include relevant and compellingcase studies that bring to life sustainability activities andillustrate actions and outcomes, many do not use casestudies to their full potential and rely on anecdotal andnon-strategic evidence of activities.
>> Some reporters however rely heavily on evidence ofactivities that fall outside of the reporting period, or thatprovide limited information on new or existing initiatives
and their progress.

>> Illustrate sustainability activities through relevant andcompelling case studies focusing on material issues, linked
to a wider strategic program or management action andfocused on outcomes.
>> Provide appropriate background on the development ofstrategic programs and initiatives over time but focus onachievements and progress during the reporting year.
>> Show how disclosed management processes and tools
support the implementation of strategic programs
and initiatives.

Appendix

Key findings

Detailed findiNGS

In summary

Evidence of activities involves reporting on sustainability activities such as strategic
programs and initiatives that occur during the reporting year, or progress ofexisting sustainability activities. It helps link management approaches to actions
and performance and can substantiate statements and claims.

Introduction

26
reporting matters

In practice
Lafarge SA
Sustainability Report 2012

Introduction

27
reporting matters

EDF Group
Activity and Sustainable Development 2012
EDF’s report includes narrative describing the many sustainability activities
and initiatives undertaken by the company during the reporting period,
often in a historical context.
Material issues are approached from a case-study perspective with astrong focus on outcomes that advance sustainable development within
the company and beyond.

Detailed findiNGS

Lafarge uses its website to post additional case studies classified according
to the three pillars of sustainable development – environment, economics
and society – and following a consistent structure: objectives, summary,
results, prospects, total cost and people concerned. These are also available
in audio format.

In summary

The company uses concise case studies that are color-coded andprominently displayed in boxes. Case studies are differentiated fromthe main narrative and anecdotes.

Appendix

EDF’s case studies and various sustainability activities are made visual
through compelling photography.

Anglo American plc
Sustainable Development Report 2012
The report uses case studies to provide a detailed explanation of specificmanagement systems or programs and their benefits. Case studies include
stakeholders’ quotes to illustrate the collaborative approach of their report.
Each case study is relevant because it always deals with a material issue.
As a result, case studies are consistently used in every section of the report.
For increased reader awareness, Anglo American provides evidenceof particular activities addressing the complex political regimes andemployment situations in countries such as Brazil and South Africa.
The report gives further insight into the company’s overall impact on
the environment and communities, by referencing additional casestudies online.

Key findings

Key recommendations>> The most effective reporters have KPIs in place for all material
issues, clearly distinguishing them from other non-materialindicators. For each KPI where performance information isreported, data is usually presented over at least a two-yeartime scale and a description of the performance trend isgiven for context.

>> Ensure you develop at least one KPI per material issue
and track progress over time to make performancetrends visible – at least every two years but ideallymore frequently. If a sector has developed a standard
set of KPIs, these should be followed to allow for
performance comparability.

>> Some reporters do not provide KPIs for all material
issues, which can either be explained by the absence ofa materiality process, or the large quantity of material
issues identified which makes it difficult to provide acomprehensive set of KPIs.

>> The accompanying narrative should be specific andbalanced, especially where performance has been below
your expectations.

>> Some companies disclose data at a corporate level only,
which can hide significant regional and segmental
variations. This is particularly important in some cases
to determine real progress.
>> Most companies focus on KPIs that measure absolutes,
for example the quantity of resources consumed or
the number of people trained. However, few measure
the outcomes of management interventions or theeffectiveness of management processes. Even fewer stillshow an understanding of context in the reporting of KPIs.

>> Clearly distinguish material KPIs from your otherindicators and consider ways to make these more
outcome focused. Align KPIs as much as possible withyour financial statements by using the same material
reporting segments, which can be geographical and/or product specific.
>> Whenever possible contextualize material KPIs by relatingthem to ecological limits, planetary boundaries, social
concerns or geographies. This may help to improveoutcome measurement.

In summary
Detailed findiNGS

Measuring and monitoring performance is critical to demonstrating progress.
Specific and measurable key performance indicators (KPIs) should be reported
for all material issues, and distinguished from other indicators. KPIs help toincrease comparability with competitors over time, and provide accountability
so that performance trends can be monitored and corrective actions
taken when required.

Appendix

Performance

Introduction

28
reporting matters

In practice
SABMiller plc
Sustainable Development Report 2012

Introduction

29
reporting matters

SABMiller has developed an effective Sustainability Assessment Matrix tool
to monitor performance against each of the priorities in all the countriesof operations.
Compelling interactive tools are available on the company’s websitethat can provide further detail to interested parties.

CEMEX
2012 Sustainable Development Report
CEMEX’s report employs at least one KPI to measure and monitor every
material issue the company has identified. It clearly differentiates material
KPIs from other indicators and displays the distinction prominently
in a performance table at the beginning of the report.

Detailed findiNGS

The disclosure includes five performance thresholds: minimum standard,
progressing, developing leadership, best practice and leading edge.

In summary

The report includes KPIs for all material issues that are presented
as 10 sustainable development priorities.

Performance over time and progress is displayed in the table while
performance trends are thoroughly discussed throughout the report.

Appendix

CEMEX’s report is supplemented by a downloadable document whichcontains a detailed results list of the company’s KPIs.

Schneider Electric SA
2012/2013 Strategy and Sustainability highlights
Schneider strives to achieve its ‘Planet, Profit, People’ objectives and has
identified relevant KPIs for each pillar.
The company created a ‘Society and Planet Barometer’ in 2005 asa tool to measure its sustainability performance. The scorecard also
allows for transparent communication of the company’s progress
to its many stakeholders.
The internally developed scorecard framework includes results for allmaterial KPIs, as well as an aggregated trend overall. These are released
on a quarterly basis and are published in a specialized scorecard newsletter.

Trends & prospects

Key recommendations>> The most effective reporters discuss relevant trends andprospects, and demonstrate an understanding of how
these might impact their business model and strategy,
for example by creating new risks or market opportunities.

>> Carry out a wide and thorough analysis of trends
and prospects and link results to your enterprise risk
management processes.

>> Some reporters however do not provide an in-depth
and forward-looking analysis of trends and prospects andinstead focus their forward-looking narrative exclusively
on targets.
>> Where trends and prospects are included, the narrative isoften generic and does not provide sufficient strategic insight.

>> In the report, discuss your corporate response to thesetrends and prospects, including how these vary by regionand operating division.
>> Describe the trends and prospects in the context ofyour commercial strategy by explaining how they could
create risk or opportunity, and how the company plansto address these.
>> Use trend and prospect analysis to inform your company’s
long-term vision for integrating sustainability into businessmodels and strategies.

Appendix

Key findings

Detailed findiNGS

In summary

Trends and prospects are actual and potential changes to a company’s operating
environment that could impact its strategy and performance. They can include
societal, environmental, regulatory and commercial risks and opportunities.
Anticipating and responding to trends and prospects can drive resilience andcompetitiveness and may help set the direction for a long-term sustainability vision.

Introduction

30
reporting matters

In practiceFord Motor Company
Blueprint for Sustainability 2012/13

Introduction

31
reporting matters

Svenska Cellulosa AB SCA
Sustainability Report 2012
The company’s report dedicates two pages to global trends and recognizes
the opportunities to be seized from an aging population, a higher standardof living, water shortage, and changed consumer behaviors.
The report takes into account market trends, such as forest productcertified by the Forest Stewardship Council (FSC), when introducing
new or updated products.
SCA actively participates in EU Climate Policy through the EU Emission
Trading Scheme. As a result of the impacts on emission allocations, thereport explains how the promotion of renewable energy and production
could represent a competitive advantage in the future.

BMW Group
Sustainable Value Report 2012
BMW offers an overview of the current risks and the volatility of the markets
worldwide. It describes global trends (e.g. urbanization and climatechange) and assesses their impact on the company.
The report subsequently discusses market trends such as customer
mobility requirements.
BMW refines its strategy to deal with uncertainties related to market
places and the constantly changing regulations that directly affect it.

Detailed findiNGS

The report includes a thorough discussion on regulations in which
the company participates through legislation development.

Appendix

It discusses trends and prospects in many different respects in bothdeveloped and emerging economies. For example, the company is creating
new innovative mobility solutions to meet the growing demand in
emerging economies.

In summary

Ford’s report acknowledges diverse challenges affecting its business
operations and regards sustainability as an opportunity for future growth.

Targets & commitments

Key recommendations>> The most effective reporters set ambitious overarching
aspirational objectives for each material issue, which
are supported by more specific and measurable targets.

>> Ensure every material issue has a measurable target, ideally
addressing those direct impacts within the operationsof the business, as well as the impacts of customers andsuppliers in the wider value chain where material.

>> Effective reports show a clear linkage between
performance targets and KPIs, and outline specificmanagement actions to support the delivery of these.
>> However, some companies’ targets are not specific enoughand have a short-term focus, typically one to two years.
>> Some companies do not report on progress against theirtargets and there is often limited discussion on how targets
will be delivered.

>> Set medium and long-term along with short-term targets
so that the reader can see a clear path towards improved
performance. For the most material issues, consider
setting stretch targets, which require a response beyond
business-as-usual. These targets can help to invigorate andmobilize employees to go the extra mile thus helping theorganization to scale up solutions.
>> Report the plans that have been developed toachieve targets, including resource requirements andorganizational changes needed. This will improvetransparency, internal accountability and authority.
>> Report on progress and the level of achievement against
past targets, regardless of poor performance. This will
help deliver a more balanced report.

Appendix

Key findings

Detailed findiNGS

In summary

Targets and commitments are specific and measurable performance goals or
management actions that a company aims to achieve over a given period, ideallyfor each material issue. They are critical to delivering a company’s strategy andenable annual reporting on progress. They are increasingly combined with more
aspirational, long-term objectives and stretch targets.

Introduction

32
reporting matters

The report displays past and future targets along with strategic objectives
in a single and impressive table that clearly indicates their level ofachievement according to three thresholds: fully achieved, partiallyachieved and not achieved.
The table also includes short and long-term targets which are consistently
measurable and all linked to material issues.
More specifically, long-term targets are discussed in every section of thereport and can be quickly identified throughout the narrative because
they are represented by icons.

Lafarge SA
Sustainability Report 2012
Lafarge clearly discloses their level of achievement for past targets.
For each target, the company gives an explanation on the rationale for
its ambitions against which change and progress are measured.
In addition to short-term targets, the company has built on its program
to develop ‘Sustainability Ambitions 2020’, which are incorporated
throughout the report.
Lafarge provides detailed discussions on how it plans to achieve its targets.
For example, it states the company’s reorganizations to develop people andimprove efficiency, and it explains that the company moved to a risk-based
approach to strengthen local health.

The Procter & Gamble Company
2012 Sustainability Report
The PG report has a strong future focus, prominently displaying long-termtargets (up to 2020) for each focus area. Moreover, their report links
every 2020 goal to a vision and includes some medium-term targets(up to 2015).
At the beginning of the report and every new section thereafter, thereport transparently discloses progress against targets set in 2007.
Targets are often accompanied by a description of activities undertakenin the reporting period. This gives an insight into how the company
tackles challenges.

In summary

Sustainability Report 2012

Detailed findiNGS

Fibria Celulose SA

Appendix

In practiceIntroduction

33
reporting matters

Stakeholder engagement

Key recommendations>> The most effective reports provide details on a strategic
stakeholder engagement plan, as well as ongoing dayto-day engagement with key stakeholders, including
communities, employees, NGOs, investors and customers.

>> Provide information on your approach to stakeholder
engagement including channels used to engage
your stakeholders, key topics of engagement for eachstakeholder group and outcomes from engagement
activities. In particular, discuss whether the issues
and opportunities offered by the stakeholders haveinformed any changes to your sustainability strategy
or management approach.

>> Additionally, they provide information on the outcomesof engagement and how this has influenced, if at all, theirsustainability strategy and activities.
>> Some reporters however provide limited evidence of their
engagement activities with stakeholders, focusing insteadon the means of engagement rather than the outcomesof engagement.

>> Where a significant stakeholder concern has been raisedby multiple groups, for instance in relation to perceived
or known controversial activities, discuss these concerns inan open and transparent way and invite further dialogue
so that you can develop an appropriate response.
>> Consider how third-party opinion can increase the strengthof stakeholder input in your report, for instance throughstakeholder panels, balanced quotes and interviews.

Appendix

Key findings

Detailed findiNGS

In summary

Stakeholder engagement is an open dialogue process with those people orgroups who are influenced or impacted by a company’s activities, now and in the
future. Engagement can take various forms, from day-to-day, business-as-usualengagement, to more strategic and planned engagements such as surveys,
forums and other stakeholder dialogues.

Introduction

34
reporting matters

In practiceSGS SA
Sustainability Report 2012

Introduction

35
reporting matters

Particular attention is given to the company’s employees. SGS has
introduced a Sustainability Engagement Index to measure the levelof employee awareness and their involvement in the company’ssustainability approach.

Kimberly-Clark Corporation2012 Sustainability Report
The report provides credible, often critical, stakeholder quotes throughout
their report.
The report includes a comprehensive table that identifies key stakeholders
groups, the issues of relevance to them and examples of various
engagement channels.

Detailed findiNGS

The report identifies all key stakeholder groups as well as other stakeholders
who are influenced and affected by the company’s operations. Each of thegroups is then specifically addressed and the outcomes of engagement aresummarized in a separate box.

In summary

The report provides a comprehensive table with extensive evidenceof various stakeholder engagement activities.

Appendix

There is evidence in both the report and the assurance statementthat stakeholder views have been listened to and acted upon.

Duke Energy Corporation2012 Sustainability Report
The company demonstrates a dedicated stakeholder approach, which
is described in the CEO’s statement where each stakeholder group isaddressed in turn. The report highlights how employees are strongly
committed to sustainability and growth.
Starting from 2012, a ‘What it includes’ section was added to each of the
key focus areas described in the report. The purpose of this new addition
is to further clarify the company’s activities to its diverse stakeholders whose
concerns will also be reported on in the future.

Partnerships & collaborations

Key recommendations>> The most effective reporters highlight strategic
partnerships and collaborations that address material
issues, and help to implement the company’ssustainability strategy.

>> Focus on those strategic partnerships and collaborations
that address material issues for reporting purposes only.
This will help ensure that partnerships are connected tobusiness activities.

>> The most engaging reports provide details on the
expected benefits of partnerships and collaborations
for the business as well as for relevant stakeholders.

>> Explain the strategic objectives in establishing partnerships
and collaborations with specific stakeholders anddemonstrate how these relationships create synergy andgenerate value for the business by setting and monitoring
indicators to evaluate outcomes, cost impacts and benefits
at the outset.

>> Companies however do not always consistently focus onestablishing partnerships which are strategic and that havethe potential to deliver the biggest value for the businessby being closely aligned with the overall sustainability
strategy. Such partnerships are typically philanthropic
and not linked to core strategy.

>> Diversify partnerships and collaboration with different
stakeholders ranging from cross-industry collaborations
to NGOs, local communities and governments.

Appendix

Key findings

Detailed findiNGS

In summary

Appropriate and strategic partnerships and collaborations can help accelerate action
and scale up solutions by combining expertise, resources and networks across key
stakeholders who share a common goal. Partnerships and collaborations should
focus on addressing a company’s material issues and support the implementationof a company’s sustainability strategy.

Introduction

36
reporting matters

Partnerships are one of the three ways used to implement Nestlé’s visionof ‘Creating Shared Value’. As a result, the reporter provides a very detailed
account of strategic partnerships at a local and global level in a variety ofareas to address material issues.
For example, the company engages in partnerships with the International
Federation of Red Cross and the Ivory Coast Red Cross on the importanceof hand washing. Engagement with communities takes the form ofprogramme activities and dialogue with farmers. With respect togovernmental partnerships, the company collaborates with theInter-American Development Bank on upgrading the coffee value chain
in Haiti, and with the Malaysian government to protect water resources.

Vodafone Group plc
Sustainability Report 2012/13
There is a strong partnership-oriented focus to Vodafone’s report, which
demonstrates how the company delivers ‘transformational solutions’.
The narrative provides a compelling explanation of how Vodafone ispartnering with others to develop and scale up solutions such as extending
access to its mobile payment platform in emerging markets.
Vodafone also explains the roles of the different partners involved in the
project and highlights how collaboration creates value for both customers
and the company by extending access to emerging markets. Throughcase studies, it further illustrates specific outcomes resulting fromfocused collaborations.

Veolia Environnement SA
2012 CSR Performance Digest
Through focused partnerships, the company advances best practice inits core business activities, namely energy efficiency, water and waste
management, it constantly evaluates its performance and shares the resultswith its partners.
Through operational and R&D partnerships with universities or start-ups, oreven some of its key suppliers, the company works on the best solutions toimprove the environmental and social performance of its solutions and services.
Through commercial partnerships with its customers, Veolia co-creates
solutions to their sustainable issues, enhancing their process performancethrough the optimization of their energy, water and waste footprint.
Veolia also aims to contribute in progressing the UN Millennium Development
Goals, for example, through the development of subsidized connection
programs with innovative financing arrangements in partnership with
contracting authorities that are specifically created to help low-income
households have access to basic services like drinking water and sanitation.

In summary

Creating Shared Value and meeting our commitments 2012

Detailed findiNGS

Nestlé SA

Appendix

In practiceIntroduction

37
reporting matters

Balance

Key findings

Key recommendations>> The most effective reporters disclose sustainability risks
that pose a threat to the company and its profitability.

>> Use the report to describe all the material risks andchallenges that have emerged during the reporting
period as well as those that might emerge in the near
future. Engage with and involve the organization’s risk
management function to help inform your narrativeon these issues.

>> Some reporters however do not disclose informationon the challenges they have encountered and focus
exclusively on positive stories and performance.
>> Some companies do not respond to major stakeholders’concerns through their reporting. This can undermine
the credibility of the report and may harm reputation.

>> Provide details on missed targets and areas of poor
performance including context and corrective measures
to ensure a balanced report.
>> Demonstrate through the report how you haveengaged with stakeholders to respond to concerns
on material issues.
>> Disclose the nature and amount of fines paid and noncompliance incidents, what caused them and what actions
are being taken to prevent them in the future, as well as
any settled or ongoing litigation. For the latter, involvethe legal and finance functions to ensure consistency
with other corporate reporting disclosures.

Appendix>> Effective and credible reports are balanced in the way
they disclose progress on performance, including missed
targets and areas of poor performance, and provide
context and corrective measures.

Detailed findiNGS

In summary

A balanced report is transparent about risks, successes, failures, challenges andopportunities that a company faces now and in the future. The report shouldreflect positive as well as negative performance over the reporting period to enable
a complete and unbiased assessment by the reader.

Introduction

38
reporting matters

In practice
Norsk Hydro ASA
Annual Report 2012

Introduction

39
reporting matters

The Coca-Cola Company
2011/2012 Sustainability Report
The report is transparent about the challenges that the company, its
independent bottlers and its brand face. Large sections of the report
are dedicated entirely to addressing negative perceptions of the business.
The Coca-Cola Company is transparent about the events that haveundermined progress and slowed the company’s path to attaincertain goals.
The report discusses in detail existing global health problems and resource
scarcities, and describes how the company is combating these to be part ofthe solution, including through several function-specific reports like climatechange, water and obesity.

Vale SA
Sustainability Report 2012
The company openly discusses the legal actions that it faces, as well as
the fines they had to pay in 2012. The report outlines how top leadershipis addressing these legal issues.
A detailed narrative is provided with regard to fatalities as well as onother difficulties that Vale has experienced during the reporting period.

Detailed findiNGS

The company recognizes the detrimental effects it has on somecommunities with whom it has initiated dialogue to find ways of addressing
their concerns.

Appendix

Norsk Hydro includes critical third-party commentary that adds a
different perspective and informs the company on the expectations
from outside stakeholders.

In summary

The report includes a compelling discussion on diverse projects that focus
on environmentally sound and commercially-affordable ways of dealing
with negative externalities.

Content architecture

Key recommendations>> The most effective reports use a consistent layout
throughout, which helps readers find the information theyneed quickly and easily. They also use devices to promotenavigation around the report. Our review shows thatthese reports service both deep-dive and skim-readersequally well.

>> Consider different report readers’ needs, especially those
who will engage with the content in detail and those more
likely to skim read or only want the big picture. Ideally
your content should work on both levels.

>> Some reporters do not adopt a consistent information
hierarchy, which means that information is not organized
and is difficult to locate, read and understand.
>> Many reporters do not use the content index to its fullpotential and do not incorporate interactive functionality
into their PDF reports.

>> Use a consistent layout for similar sections, including
headings, sub headings so there is a clear content
hierarchy. Also use introductory paragraphs to deliver key
messages. This will help enhance the reader’s experienceand will improve their engagement with the content
together with helping them determine what they want
to focus on.
>> Create a comprehensive content index to promote
full visibility of the report and its content.
>> Incorporate interactive functionality into the PDF report,such as horizontal or vertical tabs, to help readers move
between sections and find content outside of the report.

Appendix

Key findings

Detailed findiNGS

In summary

Content architecture refers to the layout, structure and ease of navigation
throughout a report from the reader’s perspective. These features improvethe users’ understanding of the content and bring coherence to a report.

Introduction

40
reporting matters

In practice
The Procter & Gamble Company
2012 Sustainability Report

Introduction

41
reporting matters

PG’s report makes key information easy to find. This is facilitated bycolor-coding, and a very useful navigation index functionality that instantly
directs the reader to sections of interest.

Holcim Ltd
Corporate Sustainable Development Report 2011
The report offers an original approach to thematic issues. Each sectionof the report deals with a sustainability challenge and adopts a consistent
structure. A Q&A format is followed by further details on theimplementation of the challenge.

Detailed findiNGS

Every section begins with an introductory paragraph followed by results
related to their 2020 goals. Issues are then consistently related to thecompany’s vision and progress.

In summary

The company presents an engaging and well-structured reportwith great interactive features that facilitate the reader experience.

The questions are defined by members of the external report review panel
representing different stakeholders and the topline responses originate
directly from members of Holcim’s executive committee.

BP plcSustainability Review 2012
The BP report establishes a hierarchy of information throughout the
document. Dividers between the different sections of the report containan overview of goals and key figures while the sub-sections consistently
include a small introductory paragraph.
Moreover, the report clearly differentiates between types of content(e.g. charts, stakeholders’ commentary, case studies, critical questions).
Information is optimized through referencing within and outside the report
and the report uses adequate interactive search features.

Appendix

The Q&A format always contains graphs to illustrate key data while thesecond part of the section always includes a case study.

Line of sight

Key recommendations>> The most effective reporters manage to show theconnectivity of their strategic approach through an
overarching strategy section, which graphically shows
the connections. Furthermore, they use cross references
to show how these elements relate to each other.

>> Graphically show how your material issues relate to big
picture goals (where these exist) and in turn how these areunderpinned by targets and KPIs. Use this to summarize
your strategic approach and to direct readers to moredetailed content elsewhere in the report.

>> Only a few reporters demonstrate such a sophisticatedapproach to line-of-sight reporting across strategic
elements, with most companies reporting in
discrete sections.

>> Consider other areas where line of sight connections canbe reinforced, for example by showing links between
megatrends and your material issues and associated risks
and opportunities, as well as how your corporate strategy,
vision or mission relates to your sustainability strategy.

>> While most companies use cross-referencing to improveline-of-sight, often this is only partial which makes thecontent seem fragmented.

>> Ensure connections are made across related issues andcontent by cross-referencing and by using linking devices
such as color coding and icons. This will enhance cohesion
between different sections.

Appendix

Key findings

Detailed findiNGS

In summary

Clear line of sight – how key aspects of reported content are connected – involves
understanding how important strategic elements, such as big picture goals,
material issues, targets or actions, KPIs and performance intersect or overlap.
Drawing these connections enhances the reader’s understanding
about how key strategic aspects are inter-related.

Introduction

42
reporting matters

In practiceUnilever plc
Progress Report 2012

Introduction

43
reporting matters

Each section of the report links back to the ‘Sustainable Living Plan’and gives more detail on each of the outlined strategy pillars.

Hankook Tire
CSR Report 2011/12
The report visualizes the company’s integrated CSR management system
as a circular diagram which is first introduced at the beginning of thereport. The illustration summarizes Hankook’s key areas of focus
highlighting these different components in appropriate colors.

Detailed findiNGS

The diagram at the beginning of the report gives a complete overview of
the company’s strategy, activities, goals and indicators in one diagram thatis entitled the ‘Sustainable Living Plan’.

In summary

The report unfolds in a clear and logical order demonstrating strong
coherence between the different sections.

Appendix

Each new section of the report refers to the circular diagram highlighting
the relevant focus area of the CSR management system underconsideration and applies consistent color-coding.

GS Caltex
2011 Sustainability Report
The report starts with the description of the materiality process, stakeholder
dialogue and the prioritization process that leads to the identification of the four
key strategic areas. The rest of the report is explicitly structured around these.
The material issues to be discussed in the respective sections are outlined at the
beginning of each chapter and cross-referenced to the materiality table.
This feature facilitates the user experience and enhances line-of-sight connections.

Accessibility

Key findings

Key recommendations>> The most effective reporters direct readers to theirreports from the homepage of the corporate website.

>> Post the report on the website homepage or at least
display a link prominently in relevant sections of thewebsite (e.g. under sections on sustainability, investor
relations or ‘About us’). All supporting information for thereport such as summary reports and press releases shouldbe easily accessible as well.

>> Some reporters do not however offer easy access to theirreports from the website homepage and have only PDF
format available.
>> The GRI index is not always used to its full potential, withreaders often directed to broad sections within a reportrather than specific pages.

>> Always have a PDF report available for download and makeuse of other formats which best meet stakeholder needs.
>> Alternative formats should be used where there is audience
demand. As part of a stakeholder engagement process
consider asking which formats they prefer.
>> For those reports that self-declare GRI application levels,
include a GRI index within, or alongside, the report andindex accurately so that those who want to access detailed
information can find it easily.

Appendix>> Reporters provide multiple formats that suit different
stakeholders’ needs, including summary reports, data centres
and downloadable excel spreadsheets, video case studies,interviews and online HTML reports for casual browsing.

Detailed findiNGS

In summary

Accessibility refers to the ease of finding the fullest source of reported
information from the homepage of the corporate website as well as theavailability of information in multiple reporting formats suitable for different
readers. Accessibility is an extremely important experience criteria as it’s
the first contact with the reader.

Introduction

44
reporting matters

Sustainability Report 2012
The useful features of Daimler’s report are contained in the online version,
which incorporates key figure tools that allow readers to create bespoke
tables and charts to suit their needs. The interactive version of the reportsupplements the PDF with more in-depth information.
The website features a search function, which offers another option
to access the report from the homepage. The GRI index can be foundin the interactive report and can be downloaded as a separate file.

Kimberly-Clark Corporation2012 Sustainability Report
The report’s availability in multiple formats is to be praised.
The interactive online report acts in support of the PDF version andcontains a color-coded ‘build your own report’ function, which enables
the user to download particular information tailored to his or her needs.
Data and performance highlights are also clearly displayed.

In summary

Daimler AG

Detailed findiNGS

In practiceIntroduction

45
reporting matters

Appendix

In addition, Kimberley Clark’s report contains a GRI index which links
to more detailed documents and improves visibility of the GRI indicators
to which it refers in every section.

Henkel AG & Co
Sustainability Report 2012
The sustainability report is clearly posted on the website homepage.
The link directly opens Henkel’s microsite, which gives access to multiple
formats: a hard copy of the report can be ordered while the PDF reportand data excel files can be downloaded.
Moreover, the online report includes links to videos that offer an alternative
way to find out more about the sustainability activities of the reporter.

Information presentation

Key findings

Key recommendations>> The most effective reporters make use of typography
and font size to support key messages and improve user
navigation by color-coding key sections. They also use
photography, illustrations and infographics to good effectand where appropriate, to communicate information in
an interesting and compelling way.

>> Incorporate clear and compelling information presentation
throughout your report to improve understanding ofcomplex issues and communicate core messages in avisually-appealing way.

>> Some charts and visuals are so complex that they defeat
their initial purpose, leading to confusion rather than
improving understanding.

>> Ensure photography is appropriate and consistentthroughout, and reinforces your key messaging.
Avoid over-used stock images where possible.
>> Where your brand allows, introduce color-coding anduse graphic dividers to help with navigation. This will
make the report easy to navigate.
>> Avoid cramming too much information on one pageand make a good use of white spaces to reduce
information overload.

Appendix>> Some reports however tend to pack too much information
on to a single page in an effort to demonstratecomprehensiveness and reduce page count.

>> Ensure that the use of infographic elements simplifies
your content, ideally so that a layperson can understand it.

Detailed findiNGS

In summary

Information presentation involves the use of design to convey simplicity andimprove understanding. It can include infographics to simplify complex content,
typographic styles to emphasize key messaging, as well as photography andillustrations to support written content. Getting the balance right on
information presentation can improve the reader’s understanding of content.

Introduction

46
reporting matters

In practice
CEMEX2012 Sustainable Development Report

Introduction

47
reporting matters

L’Oréal SA
Sustainable Development Report 2012
In line with its know-how, the reporter uses an elegant design andappropriate photography of people and products to give an overview
of the different sustainable initiatives developed by brands that belong
to the company.

Detailed findiNGS

Each graphic divider adopts a new color and contains a message-led
typographic element, which matches the title of the section and enhances
the message across the report.

In summary

The company conveys a strong message throughout the report. Various
features and a compelling design are used to communicate information.

Appendix

The report contains a variety of design elements that facilitate navigationand engage the reader. Color coding and graphic dividers are used
to differentiate the sections while relevant icons are used throughout
the report.

Schneider Electric SA
2012–2013 Strategy and Sustainability Highlights
The report employs an engaging design, which places an emphasis on key
numbers and stakeholders’ quotes. Navigation of the report is facilitatedby the use of colors to highlight stakeholders’ quotes in all sections of
the report.
Schneider Electric succeeds in giving a comprehensive overview of its
performance and a better insight into its activities through appropriate
illustration and compelling graphics.

ConcisenessKey recommendations>> The most effective reporters produce reports that aremeaningful and relevant to the reader while being succinct
and focused. Summary documents are sometimes used toprovide an even more concise overview of performance.

>> Understand your audiences’ information requirements
and ensure reports meet their needs.

>> Often, despite their length, reports do not provide
sufficient information on material issues and othercritical aspects of effective reporting.
>> Some reports are not easy to read because of the choiceof language and use of long, detailed sentences.

>> Focus reporting on your material issues and avoid
unnecessary disclosures on less important issues.
>> Agree on word limits for key sections and ensure reportcontributors are properly briefed so that they understandhow much detail is needed.
>> Appoint an editor to take overall responsibility forensuring conciseness and focused disclosure.

Appendix

Key findings

Detailed findiNGS

In summary

Conciseness implies focusing on the most relevant information and messages,
and prioritizing quality over quantity. It is one of the most challenging criteria to
get right. If a report can be drafted in a concise manner, it can avoid unnecessary
disclosure, improve coherence while reducing information
overload for readers.

Introduction

48
reporting matters

In practice
Sasol Limited
Sustainable Development Report 2012

Introduction

49
reporting matters

Sasol demonstrates best practice by supplementing the full PDF reportwith a comprehensive summary report that compiles key highlightsfrom the reporting year.

SABMiller plc
Sustainable Development Report 2012
SAB Miller publishes a report written in simple English, with crisp sentences andbullet points presenting content information in a more comprehensive way.
The priority issues identified by management are consistently reported
on, ensuring that the narrative included is relevant.

Detailed findiNGS

The report avoids over-disclosure or general discussions not directly related
to the company’s activities. Furthermore, the reader is advised to visit thecompany’s website for more detailed content.

In summary

The company produces a concise report that is completely focusedon the material issues and is structured around these.

Appendix

There is a compelling summary report that comes with the full online version.

Siemens AG
Sustainability Report 2012
The Siemens report presents a good example of a company that has succeededwith the conciseness criteria – the company discloses the right amountof information without undermining materiality.
The reporter wisely uses tools such as cross-referencing and searchfunctionalities to direct the reader to the company’s website in order to find out
more on specific topics. This contributes to the reasonable length of the report.

>> Materiality, context and measurable KPIs areunder-utilized and require more attention>> The connection between sustainability projects
and performance to value creation needs to bemade more explicit>> Validation of performance to reinforce thecredibility of the report could be smarter>> Combined or self-declared integrated reports
are gaining popularity: one in five reports
reviewed for Reporting Matters combines ESG
disclosures with the annual report>> It is important to understand who theintended report has been written for as thereader’s experience matters. Reports get read
if they are concise and to the point, are easy
to navigate, are informative and unfold ina clear and logical order and>> Non-financial reporting is a very diverse world
with multiple formats and titles being used.
Length of reports vary a lot, and there is a wide
range of options in terms of reporting frequency
and boundaries setting.

Reporting Matters aims to establish a baseline ofperformance across the sustainability reporting
practice of the WBCSD’s membership that can:a) inform recommendations for improvement; b) draw
a line in the sand from which improvement can bemeasured; and c) offer a pool of inspiring examples
that could stimulate best practice sharing and support
engagement with a view to addressing business needs
and challenges.

Detailed findiNGS

This first edition of Reporting
Matters produced someinteresting findings:

The majority of WBCSD members do report on theirsustainability performance, and invest significant
resources in producing relevant data. However, thisis often done without clearly understanding if theirdisclosures are actually being used and by whom.
Just one-third of CEOs running public companies
believe their share price currently includes value
directly attributable to sustainability initiatives andperformance1. We hope this report will help companies
better understand what others are doing that could,
in turn, improve the value of their own reporting.

Appendix

Corporate sustainability performance needs to be measurable, comparable
and linked to scientific environmental, social and governance (ESG) priorities.
Effective reporting processes and communications can play an importantrole in driving this evolution, by helping to improve risk identificationand performance management internally, as well as contribute to better
valuation of companies through external disclosures.

In summary

Reflections and next steps

Introduction

50
reporting matters

Our focus is to contribute to improving the effectivenessof non-financial reporting through engagement withbusiness and other stakeholders on the corporate
reporting scene to help address questions such as:1

 he UN Global Compact – Accenture CEO studyTon Sustainability 2013, September 2013

>> How to select from multiple formats the onethat will most effectively reach and engage
the relevant audience? How much informationis enough?
>> How can non-financial reporting improve theflow of information for better decision making
and appropriate allocation of resources?
>> How can non-financial reporting be made more
effective as a change management tool? How
can it help scale up sustainable solutions, drive
more integration inside companies and impulse
a new corporate valuation model?

Ultimately, the WBCSD aims to help companies improvethe effectiveness of non-financial reporting as a key
enabler to scale up solutions to the global priorities
identified in the WBCSD’s Action2020 initiative andprogress towards our Vision2050 ideals of true cost,true profit and true value.
This is one of the largest independent surveys ofcorporate sustainability reporting that has been
undertaken covering more than 20 sectors and
30 countries. We hope it will benefit both WBCSD
members as well as the wider corporate community.
We welcome all comments, questions and opinions.

AppendixMoving forward, the recently-created WBCSD financial
capital focus area will work with WBCSD members onchanging ‘the rules of the game’ through engagementwith reporting, valuation, materiality and assurance
standard setters; developing tools for integrationof sustainability into risk management frameworks
and valuation models; exploring the role of taxation
incentives for behavior change; and build the capacity
within the finance functions of companies, theinvestment community and regulators to implementa revised reporting framework.

In summary>> How to identify issues material to a business,develop indicators fully aligned with strategic
goals and corporate values, get best practiceon data management?

In addition, WBCSD will produce a quarterly Reporting
Matters update providing the latest news on major
developments taking place in non-financial reporting,trends in corporate practice together with announcing
the latest reports being published as well as relevant
thought piece and trainings.

Detailed findiNGS>> How to maximize the chance that reports
will be read and understood by the intended
audience? How to engage externally andinternally on the sustainability journeyand outcomes?

Introduction

51
reporting matters

Just one third of CEOs
running public companies
believe their share pricecurrently includes value
directly attributable tosustainability initiatives
and performance.

52
reporting matters

Introduction

4

Appendix

Appendix

Detailed findiNGS

In summary

IN THIS SECTION
53 Glossary OF TERMS
55 Acknowledgments
56 ABOUT THE RESEARCH PARTNERS

CompletenessMateriality

Strategy andbusiness case

Stakeholder
engagement

Governance andaccountability

Management
approach

Evidence ofactivities

Content
architecture

Performance

Trends andprospects

Targets andcommitments

Information
presentation

1
2

3

Glossary of terms
Assurance

Financial capital

The term usually describes the methods and processes employedby an assurance provider to evaluate an organization’s public
disclosures about its performance as well as underlying systems,
data and processes against suitable criteria and standards in order
to increase the credibility of public disclosure. Assurance includes
the communication of the results of the assurance process in anassurance statement.

The pool of fund that is 1) available to an organization for use in
the production of goods or the provision of services 2) obtained
through financing, such as debt, equity or grants, or generated
through operations or investments.

External assurance: Assurance performed by a person froman organization independent of the company.

Case study
Case studies in the context of a sustainability report is a narrativedescription (which may be supported by quantified evidence) of
an aspect of the sustainability strategy in action to allow the reader
to understand the impacts and effects of the strategy. Case studies
should be balanced and add value to the readers understandingof the businesses strategy.

Combined report
A report that merges the contents of a sustainability report (i.e.
environmental and social disclosure) with traditional annual report(i.e. financial disclosure); sustainability information is generally
only included in a designated chapter of the combined report.

Disclosure
Over-disclosure: extensive amount of information on the material
issues identified and/or irrelevant information that is not related
to the company’s material issues.
Under-disclosure: significant lack of information on the material
issues identified.

Enterprise risk management (ERM)
ERM is the consideration of risk from the overall organizational
perspective. With ERM, all types of uncertainty are consideredfrom all parts of the organization. The objective of consolidating
information on risks is to allow consistent decision-making across allrisk categories. Regulators are increasingly expecting organizations
to take an integrated approach to governance, risk and compliance.

Extra financial information
Information incorporating a wide range of issues existing beyond
the traditional variables that are considered as part of investment
decision-making processes. Extra-financial ESG (environmental,social and governance) factors can be quantitative or qualitativeand include sustainable, ethical and corporate governance issues
such as managing the company’s carbon footprint and ensuring
there are systems in place to ensure accountability.

GRI G4: the most up-to-date version of the GRI Guidelines
launched in April 2013. The main differences with the G3.1
version include: a greater focus on materiality and supply chain
impacts; the replacement of application levels (ABC) by two ‘inaccordance’ levels (‘core’ and ‘comprehensive’); the introductionof new standard disclosures on governance; and the requirement
to describe the process used to define the boundary of impact foreach material issue.
Application levels: indicate the extent to which the G3 or G3.1
Guidelines have been applied in sustainability reporting. They
communicate which parts of the Framework have been addressed
and which set of disclosures. Application level aim to reflect thedegree of transparency against the GRI Guidelines in reporting.

GovernanceInternal governance: the existence of robust government
arrangements including a clear organizational structure, welldefined lines of responsibility, effective risk management processes,
control mechanisms and remuneration policies.
External governance: external stakeholders play an important rolein ensuring proper corporate governance processes in a businessorganization. Some of the key external corporate governancecontrols include government regulations, media exposure, market
competition, takeover activities, public release and assessmentof financial statements.

Human capital
People’s competencies, capabilities and experience, and theirmotivations to innovate.

Impacts
Direct impacts result from business activities that are owned
or controlled by the company.
Indirect impacts are impacts on the environment and society fromupstream and downstream activities which are not a direct result of
the company’s project/operations sometimes referred to as secondor third level impacts.

Integrated report
A concise communication about how an organization’s strategy,
governance, performance and prospects, in the context of its
external environment, that leads to the creation of value in the
short, medium and long term. An integrated report should
be prepared in accordance with the International Integrated
Reporting Council’s Framework.

In summary

GRI G3: the G3 Guidelines are made up of two parts. Part 1– Reporting Principles and Guidance features guidance on how
to report. Part 2 – Standard Disclosures features guidance on whatshould be reported, in the form of Disclosures on Management
Approach and Performance Indicators.

Detailed findiNGS

Limited assurance: The nature, timing and extent of proceduresfor gathering sufficient appropriate evidence in a limited assurance
engagement are deliberately limited relative to a reasonableassurance engagement.

GRI Guidelines

Appendix

Reasonable assurance: Reasonable assurance is a concept relating toaccumulating evidence necessary for the practitioner to conclude
in relation to the subject matter information taken as a whole.
To be in a position to express a conclusion in the positive form
required in a reasonable assurance engagement, it is necessary forthe practitioner to obtain sufficient appropriate evidence as partof an iterative, systematic engagement process.

Introduction

53
reporting matters

Internal auditing

Social capitalInternal auditing is an independent, objective assurance andconsulting activity designed to add value and improve anorganization’s operations. It helps an organization accomplish its
objective by bringing a systematic, disciplined approach to evaluate
and improve the effectiveness of risk management, control andgovernance processes.

The institutions and the relationships within and between
communities, groups of stakeholders and other networks, and theability to share information to enhance individual and collective
well-being.

Manufactured capital
Manufactured physical objects (as distinct from natural physicalobjects) that are available to an organization for use in the
production of goods or the provision of services (e.g. buildings,
equipment, infrastructure).

Material Key Performance Indicator (KPI)
A quantifiable indicator that a company uses to measure andcompare its performance on the identified material issues interms of meeting specific targets and goals.

Scope and boundaries‘Scope’ is defined as the range of sustainability topics addressedin a report.
‘Boundary’ is defined as the range of entities (e.g. subsidiaries, joint
ventures, sub-contracted operations, etc.) whose performance isrepresented by the report. In setting the boundary for its report,
an organization must consider the range of entities over which it
exercises control (often referred to as the ‘organizational boundary’, andusually linked to definitions used in financial reporting) and overwhich it exercises influence (often called the ‘operational boundary’).

Sustainable value chain approach
A sustainable value chain approach is the methodology employed
by a business to describe how it has scoped, documented andassessed the impact of its value chain on its sustainability performance.
It enables both business and society to better understand andaddress the environmental and social challenges associatedwith the life cycle of products and services.

Value chain
Value chain is the terminology used to describe the upstream anddownstream life cycle of a
product, process or service, including material sourcing, production,
consumption and disposal/recycling processes.
Upstream activities include operations that relate to the initialstages of producing a good or service, i.e. material sourcing,material processing, supplier activities.
Downstream activities include operations that relate to processing
the materials into a finished product and delivering it to the end user,
i.e. transportation, distribution and consumption.

In summary– Air, water, land, minerals and forests– Biodiversity and eco-system healthA stretch target is one that the organization cannot achieve simply
by working a little harder or a little smarter. To achieve a stretch
target, people have to invent new strategies, new incentives – entirely
new ways of achieving their purpose.1

Detailed findiNGS

Natural capital is the value of nature to people, society, businesses andthe economy. It is all renewables and non-renewable environmental
resources and processes that provide goods or services that support
the past, current or future prosperity of an organization. It includes:

Stretch targets

Appendix

Natural capital

Introduction

54
reporting matters

Scope levels
Scope 1: All direct GHG emissions.
Scope 2: Indirect GHG emissions from consumption of purchased
electricity, heat or steam.
Scope 3: Other indirect emissions, such as the extraction andproduction of purchased materials and fuels, transport-related
activities in vehicles not owned or controlled by the reporting
entity, electricity-related activities (e.g. transmission anddistribution losses) not covered in Scope 2, outsourced activities,
waste disposal, etc.

1

 ww.hks.harvard.edu/thebehnreport/All%20Issues/December2011.pdf
w(accessed 25 October 2013)

This report is the product of a 9 month project which is ongoing. We would liketo thank all the people who contributed to shaping this project in particular,
the following people have been instrumental in delivering this report:
WBCSD Financial Capital teamRadley Yeldar teamRodney Irwin, Managing director

Jonny McCaig, Lead consultant

Anne-Leonore Boffi, Program manager

Ben Richards, Consultant

Michael Martin, Designer

Kira Bailey, Programme manager

Anais Blasco, Research analyst

Kim Probets, Lead designer

Sonja Hawkins, Research analyst

Jevon Downer, Designer

In summary

Acknowledgments

Introduction

55
reporting matters

Appendix

Detailed findiNGS

Natalia Krylova, Research analyst

Disclaimer
This publication is released in the name of the WBCSD. It does not howevernecessarily mean that every member company agrees with every word.
This publication has been prepared for general guidance on matters of interest only, anddoes not constitute professional advice. You should not act upon the information containedin this publication without obtaining specific professional advice. No representation or
warranty (express or implied) is given as to the accuracy or completeness of the information
contained in this publication, and, to the extent permitted by law, the WBCSD, its members,
employees and agents do not accept or assume any liability, responsibility or duty of care
for any consequences of you or anyone else acting, or refraining to act, in reliance on theinformation contained in this publication or for any decision based on it.
This publication is a joint initiative between the WBCSD and Radley Yeldar.

About the World Business Council for
Sustainable Development (WBCSD)
www.wbcsd.org

About Radley Yeldar

The World Business Council for Sustainable
Development is a CEO-led organization of forwardthinking companies that galvanizes the global
business community to create a sustainable future
for business, society and the environment. Together
with its members, the Council applies its respectedthought leadership and effective advocacy to generate
constructive solutions and take shared action.

We’re a creative communications business, helping you
tell your story simply, in one clear voice, by whatevermeans works best.

The WBCSD provides a forum for its 200 member
companies – which represent all business sectors, allcontinents and combined revenue of more than
US$7 trillion – to share best practices on sustainable
development issues and to develop innovative tools thatchange the status quo. The Council also benefits froma network of 60 national and regional business councils
and partner organizations, a majority of which are based
in developing countries.

How do we do this? Well, we bring together our
specialists to help you talk with people inside andoutside your organization. We ask the right questions.
We offer unexpected insights. We deliver the rightpractical solutions. In this way, we help our clients keep
valuable conversations going with all sorts of people,
from customers to shareholders to staff.
The relationships that develop as a result tend to bemeaningful and enduring. That’s because we believe
in delivering authenticity and clarity. You won’t everhear us, for instance, spouting jargon or consultancy
mumbo-jumbo.
We’ve been working this way since we started in 1986.
And we’ve grown every single year since then.

Appendix

Leveraging its strong relationships with stakeholders
as the leading advocate for business, the Council helps
drive debate and policy change in favor of sustainable
development solutions.

www.ry.com

In summary

This project is a joint collaboration between WBCSD and Radley Yeldar

Detailed findiNGS

About the research partners

Introduction

56
reporting matters

Introduction
In summary
Detailed findiNGS
Appendix
Copyright © WBCSD, November 2013This report has been printed on Edixion Challenger Offset
which is FSC® certified and made from 100% Elemental
Chlorine Free (ECF) pulp. The mill and the printer are bothcertified to ISO 14001 environmental management system
and registered to EMAS the eco management Audit Scheme.
ISBN: 978-2-940521-12-8

DLTA Complex,
South Block, 1st Floor,
1 Africa Avenue,
New Delhi, 110 029,
India,
T +91 11 3352 1527

Appendix

Detailed findiNGS

E-mail info@wbcsd.org

In summary

1500 K Street NW,
Suite 850,
Washington, DC 20005,
US,
T +1 202 383 9505

Introduction

World Business Council for
Sustainable Development
4, chemin de Conches,
CH-1231 Conches-Geneva,
Switzerland,
T +41 (0)22 839 31 00

www.wbcsd.org