Trends in Corporate Social Responsibility Reporting Arjan de Draaijer KPMG Global Sustainability ServicesTM

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

Sustainable Development and Companies “Sustainable development comprises economic and social development that protect and enhance the natural environment and social equity” Sustainable Development Contribution of companies Creating value by responding to society’s needs Corporate Social Responsibility

Corporate Social Responsibility: Main Elements Company Strategy & Management Dialogue Stakeholders Economic Social Transparancy Accountability Business Principles Increased pressure on companies to be accountable and transparent about CSR developments. Stakeholders are asking for dialogue and communication. - Stakeholders expect a company to be transparent and accountable. To protect and enhance a good CI and to reduce risks accountability (measuring, checking what you’re doing) and transparency (disclosure, tell the outside world) are important. E.g. issues like transparency abut redundancies, spills, Shell is first to tell how many bribery & corruption cases occurred. Redrawn because it does nit indicate anything!! Reporting is a mean of communicating about the issues of CSR. Other forms could be internet, speeches, sponsoring etc. E.g. social value issues: supply chain management; how are labour conditions checked in the supply chain; Stakeholders are also deciding what issues a company is reporting on. Annual CSR Report Environmental Communication

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

Top 100 companies in 19 countries (total 1900 companies) Companies with Annual CSR Reports 4th KPMG International Survey on Corporate Sustainability Reporting (2002) 28% Every 3 years the GSS sets out a international survey, worldwide to show the trends and developments in reporting & verification. General trends are: more & more CSR reports (not only environment) More reports throughout the world, published, becoming mainstream not longer restricted to sectors with high environmental impact in Western countries. 28% out of 11 countries is 310 companies. Japanese companies publish the most environmental, HSE or CSR reports (72%) Top 100 companies in 19 countries (total 1900 companies) CSR Report Environment, Health & Safety Report

CSR Reporting by Industry Sector 6% 9% 12% 15% 24% 25% 33% 37% 38% 43% 45% 46% 50% 30% 0% 10% 20% 40% 60% Other service Construction & building materials Finance, securities & insurance Trade & retail Metals, engineering & other manuafacturing Food & beverage Electronics & computers Automotive Pharmaceuticals Mining Transport Oil & gas Forestry, pulp & paper Chemicals & synthetics Communications and media Utilities 28% These are part of the top 100 companies. Utilities: energy, water companies. Communications: telecommunications Pick out Japanese industry: Pharmaceuticals Automotive Electronics & computers These are all in the mid cap therefore reporting is important. General: industries with the highest environmental impact still tend to report more. They are often manufacturing related and stakeholder pressure. Source: KPMG International Survey on Corporate Sustainability Reporting 2002

CSR Corporate Reporting Trends From environmental reports to integrated CSR reports (including social issues) 10% of top 100 companies report on CSR Use of criteria and standards GRI AA1000s (Global Compact) Stakeholder involvement Issue identification Stakeholder dialogue Interviews in the report Voorbeelden van rapporten meenemen! General focus: more transparent: telling also what went wrong, not so good. Targets setting other forms: Philips puts details on the internet, not all information is put in the report More balance: Shell, Use of criteria: Philips, Heineken, DSM, ING More and other forms of assurance More involvement of stakeholders and communication

CSR Corporate Reporting Trends Assurance External credibility Internal performance improvement tool Other forms of reporting Internet based Separate specialist and general audience reports Local reports Regional differences Asia: product focus, mainly environmental US: focus on philanthropy, corporate governance Europe: stakeholder focus, integration in core business Latin America: mix, emerging

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

Growing Number of NGO’s and Consumer Organisations Nr of NGO’s Year Source: Echo research ……critically monitoring company behaviour

Brand / Reputation is at Stake

Transparancy : Response to Growing Distrust “Involve me” High “Prove it to me” Trust “Show me” “Tell me” Low General message: Trend towards more transparency. Trust of stakeholders in companies is diminishing. Not only NGO’s also the shareholders increasingly demands transparency (SOX) E.g. Enron Customers: GM food, openness and communication about it. Government: reporting, developing of laws: no trust that companies will do themselves. Low Transparency High To obtain the trust of stakeholders, companies must become more transparent

External Drivers for CSR Reporting Business issue Risk management Supply chain requirement Laws and Regulations Number of countries require mandatory reporting Financial Sector Pressure Sustainability Indexes (DJSI, FTSE) SRI Mainstream investors (increasingly)

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

The CSR Report: Snapshot of the CSR Performance Principles Policy defined Policy communicated Policy implemented Best practices Performance data ‘Impact data’ Environmental CSR Issues in the Report Social Economic Maturity of CSR Issues

The External Benefits are only the Tip of the Iceberg Credibility towards stakeholders Shows leadership of company Information for financial sector

Internal Benefits of CSR Reporting Raises awareness Increases employee motivation Stimulates evaluating existing practices Continuous improvement Identifies information for benchmarking purposes Provides (additional) management information Alignment of vision and practices Contributes to achieving objectives/targets Provides starting point for strategy development

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

CSR Reporting in Practice Outside in Study External Standards Benchmark Competitors Stakeholder Analysis Develop Sustainability Report Sustainability report Develop Framework Data Collection Writing Process Verfication Develop Launching plan Accompanying Launching Plan Inside out Internal Survey

Balanced Reporting: The Key to Succes Stakeholder’s view on Company high Underappreciation CSR leaders CSR Performance balance Overappreciation low high CSR Communication

Become a respected business partner……………. ……….through balanced CSR reporting

Contents The Main Elements of Corporate Social Responsibility Corporate Social Responsibility Reporting Trends External Drivers for CSR Reporting Internal benefits of CSR Reporting CSR Reporting in Practice Q&A

Questions? Arjan de Draaijer DeDraaijer.Arjan@KPMG.nl KPMG’s Global Sustainability Services TM Arjan de Draaijer DeDraaijer.Arjan@KPMG.nl