Webinar: Reporting Matters 2019 - The State of Play
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To celebrate the launch of the 2019 Reporting matters, CDSB, WBCSD and Radley Yeldar will discuss the main findings of the report and what it means for corporate reporting moving forward.
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Webinar: Reporting Matters 2019 - The State of Play
- 1. November 19 | Tweet @CDSBGlobal Reporting Matters Webinar: The State of Play in 2019 Moderated by: Lesley McKenna, Climate Disclosure Standards Board Andy Beanland, Director, Redefining Value, WBCSD Ashleigh Gay Director of Sustainability Strategy Radley Yeldar Austin Kennedy, Manager, Redefining Value, WBCSD David Astley, Senior Technical Officer, CDSB
- 2. As global business faces new and complex challenges and opportunities, our science- based approach and targeted business solutions aim to scale up business impact. WBCSD’s Approach We target the realization of the Sustainable Development Goals (SDGs) through six work programs to achieve systems transformation. 2
- 3. Business decision-making Investor decision-makingExternal disclosure We aim to improve internal processes to incorporate hidden costs and benefits as they relate to environmental, social and governance (ESG) issues Projects: • Enterprise Risk Management • Governance & Internal Oversight • Assess & Manage Performance (upcoming): • Measurement & Valuation • Integrated Performance Management We help companies communicate decision- useful information on growth prospects, risks and how both are managed for a more accurate valuation by market participants Projects: • Reporting matters • The Reporting Exchange • Purpose-driven Disclosure • Assurance & Internal Controls • TCFD Preparer Forums We help companies demonstrate the investment case for inclusive, sustainable business practices to their internal teams and external stakeholders, help them take advantage of emerging financing mechanisms, and mobilize their own investments Project: • Aligning Retirement Assets We have created solutions
- 4. We exist to create a world that believes in business. Ashleigh Gay Director of Sustainability Strategy RY x WBCSD x CDSB
- 5. 5RY x WBCSD x CDSB Our sustainability offer Sustainability strategy Sustainability reporting Sustainability engagement We combine sustainability expertise with creative communications to drive real change. 32 years’ experience 100 + awards in 2018 220 experts 107 clients
- 6. November 19 | Tweet @CDSBGlobal To provide decision-useful environmental information to markets via the mainstream corporate report
- 7. November 19 | Tweet @CDSBGlobal CDSB vision Companies reporting climate change and environmental information with the same rigour, quality, and value as financial information. This facilitates a world whereby decisions and actions contribute to more sustainable economic, social and environmental systems.
- 8. November 19 | Tweet @CDSBGlobal Working together.
- 9. | redefining value www.reportingexchange.com WBCSD collaboration with CDSB The Reporting Exchange is the global resource for sustainability reporting. We aim to Help business understand what, where and how to report sustainability information; and Provide the evidence base for harmonization and alignment of corporate reporting on ESG. The platform covers 71 countries and 2000+ reporting provisions making it the most complete source of information on ESG disclosure requirements. Winner of ISAR Honors Award 2018
- 10. 10 Reporting matters WBCSD analyzes the fullest source of sustainability information from each member each year against a framework and uses the resulting data in two ways: • For members: We provide confidential scoring dashboards with analysis and anonymized peer group data. We offer confidential feedback sessions to explain our findings to all members. • For the public: We compile the overall results and publish an annual overview of reporting trends within our membership, showcasing good practice examples and providing high level recommendations on reporting. WBCSD developed Reporting matters in partnership with Radley Yeldar to help improve the effectiveness of sustainability reporting. You can learn more in our 2019 publication and access past publications and additional resources online.
- 11. November 19 | Tweet @CDSBGlobal Producing Reporting Matters.
- 12. 12 The evaluation framework We seek a holistic view of the primary source of ESG disclosure that considers a range of audience needs. The framework has 18 indicators that contribute to the overall score plus an additional SDG indicator that does not contribute to the overall score.
- 13. RY x WBCSD x CDSB Corporate reporting is the most trusted source of information 13 But, only 1 in 10 people read reports in detail
- 14. 14 Reporting matters looks at the role of experience in reporting. Accessibility Story & messaging Navigation & flow Compelling design
- 15. November 19 | Tweet @CDSBGlobal Key Findings.
- 16. 16 Key findings Spanning 159 leading companies from 19 supersectors and 34 countries, this year’s research points to continued progress in corporate environmental, social and governance (ESG) reporting and disclosure as well as a continued movement towards digital reporting.
- 17. RY x WBCSD x CDSB 17 12% average improvement in experience overall Plenty of room for improvement on story and messaging 23% of members provide a digital reporting experience
- 18. RY x WBCSD x CDSB 18 Downloadable PDF remains the most common reporting format. Of those who have digital content, 72% are using video, audio and other interactive elements. 1/3 of all reports reviewed have customizable content.
- 19. 19 Digital deep dive • First, it impacts the process of producing, aggregating and analyzing sustainability data internally (horizontal axis). • Secondly, it impacts how companies are communicating their sustainability approach to external audiences (vertical axis). Sustainability reporting and technology are converging. This convergence impacts companies in two ways. You can learn more in the Digital deep dive.
- 20. November 19 | Tweet @CDSBGlobal Integrating SDGs.
- 21. 21 How we incorporated the SDGs Our evaluation framework has 18 indicators that contribute to the overall score plus an additional SDG indicator that does not contribute to the overall score but does appear on personalized scoring dashboards sent to each member company. o Prioritize specific SDGs o Align priority SDGs with strategy, materiality, value chain impacts at a target level o Use case studies to demonstrate evidence of activities o Demonstrate executive leadership o Measure contributions to priority SDGs using KPIs and SMART targets. Refined approach o Reviewed 159 members sustainability, integrated or combined reports and scored on a 0 to 4 scale using the SDG criteria. o About 80 feedback sessions planned or executed in FY19 to date. Reviewed reports and feedback o Conducted additional data collection and analysis to inform ways to integrate the SDGs into the evaluation framework moving forward. Additional data collection
- 22. 22 SDGs findings Nearly all (96%) of reports reviewed reference the SDGs The vast majority of members reference specific goals in their report (84%). There remains significant regional variations in reporting activities related to the SDGs. • 20% discuss Target-level SDG information • 47% reference SDGs in leadership statements • About a quarter reference a prioritization process that ties to strategy and the materiality assessment • Reports rarely align key performance indicators • Very few make reference to Enterprise Risk Management and human rights in relation to the SDGs
- 23. November 19 | Tweet @CDSBGlobal Harmonisation & Alignment.
- 24. November 19 | Tweet @CDSBGlobal What we set out to do Why? •Effective disclosure of ESG information key to catalysing capital allocations towards sustainable future •ESG reporting landscape confused and impeding disclosure – growing number of calls for harmonisation •Key question, though, is where do we start? 24 Explore and attempt to understand the current state of alignment
- 25. November 19 | Tweet @CDSBGlobal What we have done 25 Analysed a wealth of data captured by different WBCSD projects Reporting Exchange Indicator Library Reporting matters Over 1000 reporting requirements from 60 countries Over 1000 unique indicators from nine key standards Over 2500 material disclosed by nearly 150 companies
- 26. November 19 | Tweet @CDSBGlobal What we found • Evidence of agreement between regulators, standard setters and companies on 30 key ESG issues –Basis for improving the reporting landscape • Identified 10 further emergent issues from corporate disclosures –Areas for development work by regulators and standard setters • Considerable agreement between these 40 ESG issues and existing research/methods –Particularly pronounced from investor perspective • Evidence of alignment is, however, surface level –Regulation and indicators diverge between themselves in terms of methods, scope and applicability 26 There is alignment on key ESG issues – “30 + 10”
- 27. November 19 | Tweet @CDSBGlobal 27 Environmental Biodiversity Efficiency Energy use Forests* GHG emissions Incidents Other effluents Other emissions Renewables Resource reuse/recycling Resource sourcing Resource use Social Compensation and benefits Diversity* Employee health & safety Engagement* Engagement and consultation* Fair disclosure, marketing and advertising Health & safety Human rights* Other services and benefits Privacy and security* Quality* Recruitment and retention Satisfaction* Training and development Governance Anti-corruption and bribery Financial and business reporting Political contributions Regulatory and legal challenges Risk management and internal control Economic Business model and innovation* Supply chain* Cont. Treatment and discharge Treatment, disposal and storage Waste reuse/recycling Waste type Water quality Water reuse/recycling Water use
- 28. November 19 | Tweet @CDSBGlobal What this means Regulators and standard setters • Comparable and representative requirements for 30 key issues • Clearly aligned methods and metrics • Consistency in channel of disclosure and approach to company applicability • Update requirements to better represent 10 emergent issues identified by companies 28 Calls to action for regulators and standard setters, companies and investors Companies • Ensure materiality is central to reporting • Use standards and frameworks appropriately and effectively • Use existing aligned indicators Investors • Clearly communicate what is most valuable in decision-making
- 29. November 19 | Tweet @CDSBGlobal Sustainability Strategies.
- 30. 30 Strategy & targets deep dive • Among companies that defined strategy expiration, 2020 was a more common expiration date with companies headquartered in North America (64%) and Europe (58%). • In Asia (29%) and Latin America (25%), more companies have strategies set to expire later, typically 2025 or 2030. • North American headquartered companies were the least likely to provide details of a future strategy with just a third of companies doing so, despite having the highest levels of strategy expiring by 2020. We also collected a range of data alongside our standard review process to provide a snapshot of the current state of reporting on strategy and targets – and to consider what is to come. You can learn more in the Strategy & targets deep dive.
- 31. RY x WBCSD x CDSB 31 Of the companies that define the expiration date of their strategy, 51% expire in 2020 62% of companies show the link between their sustainability strategy and their business model 27% of companies link their sustainability strategy to their purpose
- 32. November 19 | Tweet @CDSBGlobal Recommendations.
- 33. November 19 | Tweet @CDSBGlobal Questions? Andy Beanland, Director, Redefining Value, WBCSD beanland@wbcsd.org Ashleigh Gay Director of Sustainability Strategy Radley Yeldar A.Gay@ry.com Austin Kennedy, Manager, Redefining Value, WBCSD Kennedy@wbcsd.org David Astley, Senior Technical Officer, CDSB David.Astley@cdsb.net With the contribution of the LIFE Programme of the European Union. Hosted by CDP Europe.
Notes de l'éditeur
- To start of the discussion, I think it would be beneficial for our audience to hear a brief overview of each of the organisations. Andy over to you.
- For those of you that haven’t heard of RY, we are an integrated communications agency with a dedicated sustainability practice At the start of the year we launched our new vision which is to help create a world that believes in business which fits nicely with what we do in sustainability [Change slide]
- Our sustainability practice covers three areas of sustainability including strategy, reporting and engagement campaigns and to do this work we draw on the creative and digital And in the last twelve months we’ve worked for clients including The Lego Group, VF Corporation, Mondi and more.
- At Climate Disclosure Standards Board CDSB, we have been thinking about how to integrate climate risk and opportunity into the annual report and accounts with the same rigour as financial information since 2007. CDSB was set up in Davos at the World Economic Forum in the absence of a globally accepted accounting framework for climate-related financial disclosures by a visionary group of business and environmental NGOs that saw the link between climate change and financial performance. Our mission is to provide decision useful environmental information to markets via the mainstream corporate report. We achieve this by offering a companies the CDSB framework to report this information.
- Here you can see our vision which ultimately boils down to making sure that decisions and actions contribute to more sustainable economic, social and environmental systems.
- Before, we dive into Reporting matters, I’m sure our audience are keen to understand how all three organisations work together. ANDY How did WBCSD’s relationship with CDSB come about and why WBCSD start reporting matters?
- Austin and Ashleigh, to produce Reporting matters, you analyse sustainability, integrated or combined reports from your member companies and also look at report experience and why it’s important. Can you tell us more about the process? (2 minutes)
- Austin will talk and then direct to Ashleigh: Each year we work with the Reporting matters team to ensure the criteria reflects best practice which results in some incremental changes to the criteria each year We also work with the team to do cross checks on the scoring and join a handful of the feedback sessions with WBCSD members In 2017 we overhauled the experience criteria to reflect the growing demand for sustainability information from generalist and specialist audiences and the need to adapt reporting to reflect this If we move to the next slide, I’ll explain why it’s important to consider the role of experience in reporting Lesley switch slide.
- At RY we recently surveyed over 1000 people with a working interest in corporate reporting to understand what they think about the state of play This research isn’t launched yet, it’s coming soon, but the key headless show why it’s important to think about the role of experience in reporting We found that for these people, corporate reporting is the most trusted source of information BUT only 1 in 10 are reading the report in detail….so 90% of people are skim reading SWITCH SLIDE
- I mentioned that in 2017 we revised the criteria which covers 4 areas Accessibility is about making sure the report is easily accessible to as many people as possible. It considers if the report is easy to find on a company website and if a range of formats are used to support the main report for example video, infographics etc Story and messaging is about the overarching red thread throughout the report. If 90% of people are skim-reading reports, what’s the overarching message you want them to take away? We find that defining this message at the start of a reporting process makes for a much smoother project for reporting teams and a better quality product at the end Navigation and flow looks at does the report unfold in a logical order – so is there a clear line of sight between the outside world, how its impacting a company and the relative performance….we also look to make sure the report is easy to navigate for the people that are coming for a specific piece of data or information And finally, compelling design…so much time and effort goes into the data and content in reports but the best reports use design to help tell the story. Ultimately, the design should reflect the brand and support the content and the overarching message…
- Very interesting. Now let’s talk about this years report. Austin and Ashleigh, What were the key headlines from the 2019 findings? (5 minutes) –
- Austin and set up for Ashleigh by indicating that Ashleigh will speak to the next slide
- Ashleigh – Across the experience criteria this year we found that there was a 12% improvement in experience overall There’s still plenty of room for improvement on story and messaging which is one of the hardest areas to get right We also found that 23% of members are providing a digital reporting experience Digital reporting is an area that’s intrigued the team for some time so this year we produced a separate digital deep dive report to see how this is playing out across member companies SWITCH SLIDE
- Ash – found in digital We found that the downloadable PDF remains the most common reporting format which reflects the need to have one source of the truth when it comes to reporting Of those who have digital content, 72% are using video, audio and other interactive elements A third of all reports reviewed have some sort of customisable content showing that reporting is no longer a one-way communication activity I’ll pass over now to Austin who is going to provide further context around our digital deep dive
- Austin, To what extent to you look to see how companies are integrating SDGs into their reporting? (5 minutes)
- SDG criteria was included on the Reporting matters dashboard for the first time in 2018. In 2018, we received significant feedback from members, so for 2019 we refined our approach to focus on the following Prioritize specific SDGs for your company based on a thorough analysis of how your organization has the potential to contribute to the realization of this agenda both through enhancing positive impacts and mitigating negative impacts on people and planet; Align priority SDGs with strategy, materiality and value chain impacts – preferably at a target level; Use concise, outcome-driven case studies to demonstrate evidence of activities and collaboration; Demonstrate clear executive leadership in driving the SDG agenda; and Measure your concrete contribution to key SDGs using KPIs and specific, measurable, achievable, realistic and time-bound (SMART) targets.
- Nearly all reports reviewed reference the SDGs in some way. Vast majority reference specific goals Typically, six to 10 Goals are referenced (35% of reports). Less than a third of reports (29%) prioritize five or fewer Goals. For the third straight year, the most commonly referenced Goals were SDG 13 (87%), 12 (81%) and 8 (76%). Goals 14 (32%), 1 (34%), 16 (38%), 2 (41%) and 10 (41%) continue to be underrepresented, relative to the others. Significant regional variation in reporting activities related to the SDGs European HQ’d companies are twice as likely to score 3 or 4 than Asian or American HQ’d companies. Of those that reference SDGs: 20% discuss Target-level SDG information, with the remainder of disclosures focusing on Goal-level information. 47% include them in leadership statements, but only 20% of these leadership statements provide detailed discussion on the SDGs. About a quarter reference a prioritization process (26%), ties to strategy (25%) and ties to the materiality assessment process (24%). Reports rarely align key performance indicators (KPIs) (6%) and targets (15%) to the SDGs. Very few (1-2%) make reference to Enterprise Risk Management (ERM) and human rights in relation to the SDGs. Broad conclusions 1. Companies are still getting to grips with how they look to strategically integrate and communicate around the SDG agenda
- Now if we turn the conversation to the research with CDSB on regarding harmonisation and alignment. David, could you tell us what you think is a suitable approach for alignment of the reporting landscape? (5 minutes) – David
- Sustainability strategies are expiring in 2020. Austin and Ashleigh, what are their strategies beyond that? Have they defined their strategies beyond that and where are the opportunities? (5 minutes) – Austin
- Austin to indicate next slide and set up for Ashleigh to comment on opportunities
- When we look to where the opportunities ahead for companies – the big focus is on action. We have limited time left to get this right so we must see change In our experience, this comes down to how well integrated the strategy is into the core business, the culture and This year we found that more than half of companies show the link between their sustainability strategy and their business model And, less than a third are showing how this ladders up to an overarching purpose beyond making money for shareholders
- And that brings us to the final section on recommendations for reporting improvement. Just a reminder that we will host Q&A with our experts after this so please do continue to put your questions in the chat function. Now back to the recommendations. Andy, Ashleigh, Austin, David it would be great if you could succinctly summarise your suggestions for improving corporate reporting practices. Andy, perhaps you can start us off with your recommendations for governance and risk. Andy – Governance and Risk Austin – Assurance, Materiality Ash – Strategy, Digital David – Alignment / Indicators / TCFD
- RY - How can companies balance communications challenges of specialists and generalists who are not so focussed on the detail? General - What are the first steps a company could take to develop the strategy post 2020?