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Framework Contract for projects relating to Evaluation and Impact Assessment activities of Directorate General for Internal Market and Services

Disclosure of non-financial information by Companies Final report December 2011

P O Box 159 Sevenoaks Kent TN14 5WT United Kingdom Tel/fax: +44 (1959) 525122 Web site: www.cses.co.uk

http://www.cses.co.uk/

Draft Final Report - Disclosure of non-financial information by companies

Contents

SECTION PAGE

Summary i

1. Introduction and Background 1

1.1 Introduction 1.2 Background to the Study 1.3 Methodological Approach 1.4 Contents of this report

1 1 2 2

2. Analysis of Reports 4

2.1 Introduction 2.2 Characteristics of the sample of reports 2.3 Overall report details 2.4 Preparation of the report 2.5 Publication 2.6 Reporting Frameworks 2.7 Governance and principles 2.8 Contents of the reports

4 4 6 8 12 14 14 17

3. Costs and benefits 22

3.1 Introduction 3.2 Costs 3.3 Benefits

22 23 27

4. Conclusions 32

4.1 Report Analysis 4.2 Costs and Benefits

32 32

APPENDICES PAGE

A. Company reports analysed 33

B. Overview of Reporting Standards 35

C. Costing template 37

D. Report analysis template 43

E. Overview of Performance Indicators and Standards 46

F. Glossary 49

Final Report - Disclosure of non-financial information by companies

Summary

1. Introduction

This study into the disclosure of non-financial information by companies has two key objectives:

• to provide data and analysis on current non-financial reporting practices; • to assess the costs and benefits associated with requiring mandatory

disclosure of non-financial information.

The study is based on an analysis of published non-financial reports by 71 companies in eight countries - Germany, Denmark, Spain, France, Italy, the Netherlands, Poland and the UK. In terms of sectors, the selected companies include banking and financial services, food and agriculture, textile, consumer goods, extractive and other sectors. 58 of the companies have more than 250 employees and 13 have less than 250 employees.

In addition to the analysis of the published reports, the companies in the sample were approached to provide data on their costs and on the benefits of non-financial reports. 23 of the companies provided detailed information. The study was carried out between July and November 2011.

2. Background

There is an increasing trend for businesses to produce information on social, environmental and sustainable aspects of their operations. The disclosure of such non-financial information usually takes place through Sustainability or Corporate Social Responsibility reports. Although guidelines exist for the production of such reporting, and legal requirements can be found in some countries, their use is often optional.

Companies may find it in their interest to disclose voluntarily certain non-financial information, particularly if it is designed as part of a package to improve their credibility and acceptance in key markets, or if it enables them to undertake business more successfully. In sectors dominated by large multinational enterprises, disclosure of such information may be seen as an important business driver.

Within the EU, company reporting is covered by the 4th and 7th Company Law Directives. These Directives provide a set of minimum disclosures, supplemented in each Member State by national requirements. The 4th Company Law Directive allows extensive exemptions from disclosures for SMEs.

The focus of those Directives is on financial disclosure. But in the context of their annual report companies are required to disclose “....where appropriate, non-financial key performance indicators relevant to the particular business, including information relating to environmental and employee matters” 1. With a view to improving the transparency of the non-financial disclosure system and the ways in which enterprises currently release such information, DG Internal Market and Services have sought stakeholders' views on the existing EU regime on non-financial disclosure in a public consultation running from November 2010 to January 2011.

3. Analysis of reports

The main features of the 71 reports analysed as part of the study are shown below. We consider first the general features of the reports, and then their contents

1 4th Company Law Directive 78/660/EEC art 46(1)


Summary

ii

Length

Spanning from 4 pages to over 300 pages, there are huge variations in the length of reports. The most typical report length is between 25 and 100 pages (39 reports). The longest reports, usually from larger companies, contain more than 200 pages (9 reports). Most of the long reports come from large companies whereas small companies prepare shorter reports.

Availability of contact information

Guidelines for non-financial reporting, such as GRI guidelines, suggest that reports should contain a contact point for feedback or suggestions. In a large number of cases there was no information directly available in the report providing names or contact details of individuals in charge of CSR or sustainability matters within the company. In many instances, the report offered a general email address for further information.

Body responsible for preparation

In larger companies it is common practice to have a specific oversight body to take responsibility for the company’s work on CSR or sustainability issues. Such a body might be a CSR governance committee or similar, which would be closely involved in determining the contents of non-financial reports. These committees could be identified in 34 of the 71 companies analysed.

Report signatories

It is general practice for non-financial reports to contain a statement from a senior decision-maker of the organisation, e.g. the CEO, the Chair or similar. The vast majority of the reports we examined provided such a statement (56 reports) and were signed by a senior company representative.

External assurance

Many organisations enhance the overall integrity and credibility of a CSR report by the use of external assurance in addition to existing internal control procedures. Our research showed that just fewer than half the larger companies obtained some form of external assurance. Very few small companies did so.

Report discussion

10 of the 58 large listed companies included their CSR report with their annual financial report and one quarter of large companies discussed the CSR report at their AGM. Very few non-listed companies discussed the report at the AGM.

Publication

Reports are almost always published on the company website, and sometimes printed (two thirds of cases) or put on the GRI database (29 out of 71). Three quarters of reports are published in English and a third published reports in more than one language

Frameworks used

Of the 71 companies that were analysed, a large majority made use of some kind of international or national framework for developing their reports (57 companies). In most cases it was the GRI Reporting Framework that was employed (47 firms), although 19 of these also took account of other standards.

Report contents – governance and principles


Summary

iii

The table below shows that most companies include a statement of objectives and a senior management statement, that about two thirds refer to an external standard but only one third have a feedback mechanism for suggestions

Figure 1 – Report contents in respect of governance and principles

0 10 20 30 40 50 60

Senior management statement

Statement of objectives

Use of external charters

Suggestions feedback mechanism

46

49

39

23

8

11

9

2

54

60

48

25

All firms SMEs Large firms

Areas of activity covered by reports

An analysis of the contents of reports showed that almost all reports covered environmental issues (64 of the 71 reports). Many included sections on labour and employment (57 reports) and the company’s engagement with the local community and society generally (55 reports). Only about half the reports considered the economic impact of the company (33 reports) or human rights (33 reports). Details, and an analysis between large and small companies, are shown below.

Figure 2 – Areas of activity covered by reports

0 10 20 30 40 50 60 70

Economic Impact

Environmental

Labour and employment

Human Rights

Society and Community

Product Responsibility

30

53

48

27

48

43

3

11

9

6

7

9

33

64

57

33

55

52



Summary

iv

4. Costs of non-financial reporting

The study used a template or questionnaire to ask about the current costs of collecting and reporting of non-financial information. We asked for information on the additional cost of non-financial reports over and above existing system costs. The aspects of work to be costed included

• Drafting the report • External assurance • Publication • Additional data collection costs • Annual costs such as training • Any other costs.

The major costs appear to be the costs of report drafting – and much will depend on the complexity of the company. Substantial costs can also be incurred on publication depending on the strategy, and external assurance if used. Other areas of costs are smaller.

Cost ranges for larger and smaller companies are summarised in the two tables below. The cost ranges represent the middle half of companies who responded – the interquartile range. Using the high and low points of each element, the costs of non-financial reporting for large companies is in the range of €155000 to €604000 and for smaller companies in the range of €8000 to €25000. A company seeking to provide a minimal report may be expected to come in at the lower end of the range, and a very small company might well be able to come in below the range shown.

Figure 3 – Cost range for larger companies (€ 000)

Figure 4 – cost range for smaller companies (€ 000)

Expressed as a cost per employee, the reporting costs for smaller companies (€68 to €212) are substantially higher than those for larger companies (€3 to €13).


Summary

v

5. Benefits of non-financial reporting

We asked the companies whose reports are analysed to provide information on what they saw as the principal benefits of non-financial reporting. First, companies were asked to indicate in their own words what they saw as the main benefits of non-financial reporting. They were then asked a series of prompted statements covering benefits both externally and internally. Finally, companies were asked if they made a quantified assessment of the benefits of non-financial reporting and to provide details of their assessment.

Figure 5 below shows the response by large firms and SMEs to prompted statements. The statements which companies thought were very important were “It enhances the company’s credibility” and “It improves transparency of reporting”. The brand image of products was also important. The statement which attracted least support was the suggestion that non-financial reporting would lead to increased sales. Large firms and SMEs had similar responses to the statements.

Details of responses by larger and smaller companies are shown in the charts below

Figure 5 – Internal benefits for large firms and SMEs

0

2

4

6

8

10

12

14

It enhances the company’s credibility

It enhances our ability to do

business

It improves the brand image of

our products

It is likely to lead to

increased sales

It enables us to attract better

employees

It improves transparency of

reporting

13

7

9

3

5

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4

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5 5

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Nº

Large firms

Very important Important Slightly important Not important


Summary

vi

0

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6



business


our products


increased sales


employees


reporting

5

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3 3

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2

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00

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Nº

SMEs


As far as internal benefits are concerned, identifying and control risks seemed to be important or very important to all companies. Improvement of the internal culture was also thought to be important but a few companies thought that this benefit was only slightly important.

Finally, we asked companies whether they had sought to quantify the benefits from non-financial reporting. Of the 20 companies responding, only 3 had tried to quantify the benefits of non-financial reporting.

Of those 3, only one had arrived at a financial estimate of the benefits of non-financial reporting. This company had a non-financial reporting cost in the mid range of larger companies (€300000) and reported they had identified efficiency savings of €80 million. However, it was not clear that all those benefits could be attributed to the preparation of non financial reports.

Final Report - Disclosure of non-financial information by companies Section

Introduction & Background 1

1

1.1 Introduction

This document sets out the final report for the study “Disclosure of non-financial information by Companies” carried out for DG MARKT under the Framework Contract for projects relating to Evaluation and Impact Assessment activities of Directorate-General for Internal Market and Services. In this section, we set out the objectives and provide a short background of the study followed by an overview of the contents of the final report.

The study has two key objectives:

• to provide data and analysis on current non-financial reporting practices; • to assess the costs and benefits associated with requiring mandatory disclosure of non-

financial information.

In respect of the first objective, the study analyses the contents of the non-financial reports produced by a sample of 71 companies. The terms of reference suggested that a representative sample of companies of varied sizes should be selected across different sectors in 8 Member States ( Germany, Denmark, Spain, France, Italy, the Netherlands, Poland and the UK). In terms of sectors, the selected companies include banking and financial services, food and agriculture, textile, consumer goods, extractive and other sectors.

In respect of the second objective the study sought to obtain the following data:

• Costs including internal company changes such as data collection, internal processing and consolidation, staff training/education, development of specific tools or potential third party verification.

• On the benefits side, positive effects relating to increased transparency, reputation, branding, credibility, ability for both consumers and investors to assess companies' performance and risks should be considered.

The use of a calculation method along the lines of the Standard Cost Model2 adopted by the Commission for the measurement of such costs was required.

The report is designed to provide a series of data and other information which the Commission would be able to take into account in a possible impact assessment to be issued in Spring 2012.

1.2 Background to the study

There is an increasing trend for businesses to produce information on social, environmental and sustainable aspects of their operations. The disclosure of such non-financial information usually takes place through Sustainability or Corporate Social Responsibility reports. Although guidelines exist for the production of such reporting, and legal requirements can be found in some countries, their use is often optional and the disclosure of non-financial information is mandatory only in limited cases.

Companies may find it in their interest to disclose voluntarily certain non-financial information, particularly if it is designed as part of a package to improve their credibility and acceptance in key markets, or if it enables them to undertake business more successfully. In sectors dominated by large multinational enterprises, disclosure of such information may be seen as an important business driver.

There are a number of international frameworks providing guidelines for disclosure. Amongst these the most widely used are the Global Reporting Initiative (GRI) applied by some 1,600 2 Annexes to Impact Assessment Guidelines. 2009. Chapter 10 Assessing administrative costs

imposed by EU legislation. pp. 45-59 http://ec.europa.eu/governance/impact/commission_guidelines/docs/iag_2009_annex_en.pdf

http://ec.europa.eu/governance/impact/commission_guidelines/docs/iag_2009_annex_en.pdf



2

companies worldwide and the UN Global Compact. Other guidelines include the ones provided by the OECD to governments and multinational enterprises and the guidance linked to ISO 2600 on social responsibility, among others. All of these guidelines are voluntary and aim to encourage the implementation of best practice. More details of international frameworks are provided in Appendix B.

Within the EU, company reporting is covered by the 4th and 7th Company Law Directives. These Directives provide a set of minimum disclosures, supplemented in each Member State by national requirements. The 4th Company Law Directive allows extensive exemptions from disclosures for SMEs.

The focus of those Directives is on financial disclosure. But in the context of their annual report companies are required to disclose “....where appropriate, non-financial key performance indicators relevant to the particular business, including information relating to environmental and employee matters” 3.

There is therefore a statutory requirement for some form of reporting, although clearly the requirements are written in general terms.

Current EU initiatives

With a view to improving the transparency of the non-financial disclosure system and the ways in which enterprises currently release such information, DG Internal Market and Services have sought stakeholders' views on the existing EU regime on non-financial disclosure in a public consultation running from November 2010 to January 2011. The consultation obtained responses from a wide range of stakeholders in the Member States who expressed mixed opinions regarding the existing policy. However, a key message was that better disclosure of non-financial information is needed in order to increase the number of European enterprises that fully integrate sustainability and responsibility into their core strategies and operations in a more transparent way.

As the terms of reference indicate, further initiatives were planned including a Communication in the field in October 2011 and an impact assessment in 2012.

1.3 Methodological approach

The study has been carried out over a period of four months running from the end of June 2011 to November 2011.

An Inception report was submitted and discussed with the Commission in mid-July 2011 to agree on the methodology, the company sample and the key research tools consisting of the report analysis template and the cost-benefit questionnaire. During the fieldwork phase, the analysis of reports from the 71 companies in the sample was carried out by a group of analysts and initial contacts were taken with the companies by telephone and email to alert them to the online survey on costs and benefits. The fieldwork was affected to some extent by the holiday period. A short description of the methodology used for selecting companies in the sample and for the analysis of company reports and the assessment of costs and benefits is included at the beginning of the sections dealing with these issues (sections 2 & 3).

This study is based on a limited sample of companies. To be able to gross up the results for companies in Europe as a whole, a statistically representative sample would be needed.

1.4 Contents of this report

Other than the introduction and background material presented in section 1, the final report contains the following:

3 4th Company Law Directive 78/660/EEC art 46(1)



3

• Section 2 - contains the analysis of the selected company reports divided up according to the main issues in the report analysis template.

• Section 3 - analysing the results of the online survey on cost-benefits associated with the disclosure of non-financial information.

• Section 4 – presents a series of conclusions having emerged from the research • Appendices – A: Company reports in analysis; B: Overview of Reporting Standards; C:

Costing template; D: Report analysis template; E: Overview of the Use of Performance Indicators F Glossary


Analysis of Reports 2

4

This section contains the results of the analysis of the selected company reports.

2.1 Introduction

The first main objective for the current study was “to provide data and analysis on current non-financial reporting practices” based on a sample of reports from a representative group of companies across the EU, covering differing sectors and sizes.

Sample selection

For the selection of the sample of companies the following considerations were taken into account: • the terms of reference requested that the involvement of eight Member States: Germany,

Denmark, Spain, France, Italy, the Netherlands, Poland and the UK; • a minimum of eight companies in each of these countries should be selected for the sample; • the companies should either to be headquartered in Europe or have their principal stock

exchange listing in Europe; • a variety of different sectors should be covered including banking and financial services, food

and agriculture, textile, consumer goods, extractive and other sectors, as proposed in the terms of reference;

• a mix of small, medium-sized and large companies should be represented.

The companies were selected using published surveys of non-financial disclosure reports and also by reviewing lists of companies involved in CSR initiatives such as those published by GRI and UN Global Compact.

It proved difficult to identify small and medium-sized companies who reported on their engagement in CSR, sustainability or similar matters in the form of a formal report on non-financial issues. Typically, smaller firms would have a dedicated section on their website showcasing their activities, for instance with reference to the various social commitments or adherence to health and safety or environmental standards.

After some changes to the initial proposal, a company sample including a total of 71 firms was finally agreed with the Commission. A list of the selected companies is contained in Appendix A.

The company reports were analysed using a standard template agreed with the Commission. The template included the following main categories of activity (or reporting): Economic impact; Environment; Labour and employment; Human rights; Society and community; and Product responsibility. The template contained information on qualitative aspects such as the title and size of the report, the relevant contact persons, use of reporting standards or guidance, existence of company statements and external assurance and, for each of the major categories of non-financial reporting above, an analysis of the type of information and indicators provided, followed by an overall assessment of the report. The template can be found in Appendix D.

Below we begin by examining the characteristics of the company sample. We then consider the general trends noted within each of the areas that the template covered.

2.2 Characteristics of the sample of companies

The sample of 71 companies is relatively evenly spread across the 8 member States and different sectors. The table below shows the sample divided up by sector and size of the company.

Company analysis by sector

A Sectoral analysis of companies by NACE code is shown below. We also show large firms and SMEs separately.



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Table 2.1: Company Sample by Sector and Size

Sector (according to NACE)

Large firms

SMEs All firms

B - Mining and quarrying 4 0 4 C - Manufacturing 25 4 29 D - Electricity, gas, steam and air conditioning supply 5 0 5 E - Water supply; sewerage; waste management and remediation activities 1 0 1 F - Construction 2 2 4 G - Wholesale and retail trade; repair of motor vehicles and motorcycles 4 3 7 H - Transporting and storage 2 0 2 I - Accommodation and food service activities 0 1 1 J - Information and communication 1 1 2 K - Financial and insurance activities 11 0 11 L - Real estate activities 2 0 2 N - Administrative and support service activities 0 2 2 R - Arts, entertainment and recreation 1 0 1 Total 58 13 71 Note: SMEs are defined as companies with less than 250 employees for the purposes of the above table,

A more detailed table showing the company distribution by country can be found in Appendix A.

Company Size

In terms of size, the sample spans from very small companies with less than 10 staff to multinationals with more than 100,000 employees.

Figure 2.1: Number of companies by size (number of employees)

457

6

13

>5000 500-5000 250-500 <250



6

As can be observed, only 13 companies in the sample are SMEs, corresponding to about one fifth, whereas there is a total of 58 large companies. These have been divided into three categories, as their size varies significantly: 250-500 employees, 500-5,000 employees and more than 5,000 employees which was by far the most represented category with 45 firms.

In terms of turnover, the difference in size between the companies in the sample were just as stark, with some smaller firms achieving an annual turnover of less than €1 million and several multinationals reaching between €50,000-100,000 million. For many of the smallest firms, where we did not have access to full annual reports, we were not able to identify their annual turnover.

2.3 Overall report details

We begin by examining overall qualitative aspects of the reports, such as the title, their size and the year of publication.

Report title

A majority of the reports that were analysed either used the title ‘Sustainability Report’ or a variant including the word ‘sustainable’ (27 of the 71 reports). All the same, there were also many that employed the title ‘Corporate Social Responsibility/CSR Report’ or a similar name involving ‘responsibility’ (22 of the 71 reports). In 10 cases, the non-financial information was presented as part of the companies’ Annual Reports and the report title reflected this with names such as ‘Integrated Annual Report’ or ‘Economic, Environmental and Social Performance’. The remaining reports had titles like ‘Code of Ethics or Conduct’, ‘Environmental Report or Performance’ and ‘Social Report’.

Length of report

Spanning from 4 pages to over 300 pages, there are huge variations in the length of company reports. The table below divides the size of reports into a couple of broad categorises to give an overall impression of report size variation. As can be seen, the most typical report lengths were between 26 and 100 pages (39 reports in total). That said, there were some very long reports in the sample with 9 reports containing more than 200 pages. These were mainly to be found among the very large companies. A cross-tabulation between company size and report length can be found in Figure 2.4 on the next page.

Figure 2.2: Size of the analysed reports

9

10

21

18

11 2

>200 pages 100- 199 pages 51 - 100 pages

26 - 50 pages <25 pages n/a

Note : the n/a entries refer to reports that only existed in webpages



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Only 11 companies in total offered a summary of their reports, with most of these to be found in the UK. Some reports are of such limited length that it would obviously not be useful to provide a summary, but even for some of the longer reports, where a brief overview of the main issues might have been helpful, this was not provided.

Length of report compared to company size

When examining the relationship between the size of a company and the length of their report, the following situation emerged.

Figure 2.3: Cross-tabulation between company size and report length

02468

10121416

6

2

5

1

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113

21

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108

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<250 empl 250-500 empl 500-5000 empl >5000 empl

As might be expected, report length appears to be very much determined by the size of the company in question. The reports of the smallest companies are much shorter with nearly half of these reports being under 25 pages, whereas extensive reports of more than 200 pages are principally found among the largest firms. This group also displays the greatest fluctuations in report size.

Year of publication

The vast majority of the reports that were analysed concerned the year 2010 (53 reports or ¾ of all), and were thus published at some stage in 2011. Most reports covered the calendar year, although in some cases where the financial year runs for a different period, notably in the UK (April-March), reports tended to follow this period instead.

The remainder mostly concerned 2009, although there were a few earlier reports and a couple of cases, mostly the smallest companies, without any information about the period in question.

The template also investigated when a company had published its first non-financial report. In about a third of cases, we could not uncover any information on this point, but where the information was available, there was a good spread to be found between companies who had been involved in non-financial reporting for a while, some dating back to the 1990’s, and companies whose first report this was. The figure below illustrates the spread:



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Figure 2.4: Year of first non-financial report

6

17

1210

26

1990s 2000 - 07 2008-09 2010 n/a

Availability of contact information

In a large number of cases there was no information directly available in the report providing names or contact details of individuals in charge of CSR or sustainability matters within the company. In many instances, the report offered a general email address for further information, such as corporate.communication@, media.relations@, or in some cases CSR@ or sustainability@.

In order to be able to contact the right people within companies to discuss the part of the assignment aimed at examining the costs and benefits of non-financial reporting and invite them to take part in the online survey, it was therefore necessary to scrutinize company websites or contact the switchboards. In a number of such cases, where we were not able to identify a specific name, companies were unwilling to put us through to the relevant department or person, or indeed were reluctant to provide any further help.

2.4 Preparation of the report

The analysis template went on to look at the nature of report preparation in further detail, investigating who took responsibility for the report and its development within the company, as well as externally. This part of the template also examined whether there were links between non-financial and annual reporting, both in terms of the actual publications produced and in relation to the Annual General Meeting.

Body responsible for preparation

In larger companies it appears to be normal practice to put in place a specific oversight body to take responsibility for the company’s engagement in CSR or sustainability issues, such as a CSR governance committee or similar. Such bodies would typically be closely involved in determining the contents of non-financial reports. The analysis template looked at whether the companies under review had set up this type of body, and if so, specify the nature of it, or indicate where in the company structure the responsibility for the reporting lay.

In around half of the companies in the sample (34 of 71), there was either no information available or it was confirmed that a specific body did not exist. These often the smaller companies.

Where a specific oversight body did exist, they were typically referred to as either ‘CSR’. ‘sustainability’ or ‘ethics’ boards, councils or committees (15 cases). For a number of firms the overall responsibility appeared to lay with the senior management board supported by a



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specialised department or director in charge of CSR, sustainability, health & safety or environment.

Figure 2.5: Existence of oversight body (CSR Committee or similar)

22

15

34

Sustainablity/CSR committee Man. Board+department n/a

Report signatories

It appears to be general practice for non-financial reports to contain a statement from the most senior decision-maker of the organisation, e.g. the CEO, the Chair or similar. The vast majority of the reports we examined provided such a statement (56 reports or four-fifth of all) signed by a senior company representative as the figure below shows.

Figure 2.6: Is the report signed?

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Large firms SMEs All firms

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56

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Yes No

However, if we examine only the small and medium-sized companies, the proportion of reports presenting a signed statement drops to less than two-thirds (8 of 13 SMEs).

In most cases, it was the Chief Executive Officer (CEO) who signed the report (36 of the 56 signed reports), either on his own or together with another key executive. The Chairman of the Board signed in 25 cases of the 56 signed reports, whereas we found that the Chief Financial Officer signed in only a few cases. The category ‘Other’ mostly referred to the Managing



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Director. In a number of instances, reports were signed by two of the senior decision-makers, which accounts for the higher number of signatories than shown in the previous figure.

Figure 2.7: Who signs the reports

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Chair CEO CFO Other

Note: The total amounts to more than the number of signed reports (56) as there were frequently several executives who signed the same report

There is not much difference to be spotted in the case of the SMEs, when it comes to the CEO taking responsibility for signing the report . However, the report is less often signed by the Chair.

External assurance

To enhance the credibility of their non-financial reporting, many companies - especially the larger ones - choose to include an assurance report prepared by an external firm, sometimes the company’s auditors. Reporting standards typically recommend such external assurance, either in a limited or a complete form, but they also give companies the choice of carrying out self-declaration.

The objective of the external assurance would normally be to verify the processes (but not all data) used to compile the information and the indicators provided in the report and to certify that these are in accordance with the chosen standards or criteria. A number of assurances are carried out in accordance with the International Standard on Assurance Engagement (ISAE) 3000. The assurance process would usually involve an assessment of the systems, procedures and controls in place for data processing; interviews with staff responsible for compiling and analysing the data and with the various divisions involved in CSR; site visits (if applicable) to assess whether data collection and reporting procedures were adhered to and understood; and finally assessment of the reliability, objectivity, understandability and presentation of the provided information.

The nature of the review of non-financial reports varies materially from that carried out on the financial reports. In respect of the financial reports the duties of the auditors are set out in the 4th and 7th Company Law Directives and in national legislation implementing the Directives. The resulting audit report includes an opinion on whether the financial statements present a true and fair view of the state of affairs of company. There is no equivalent detailed legislative requirement for non-financial data.



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Our research showed that more than half of the companies looked at (43 of 71 firms chose not to submit their reports to any external audit or assurance procedures. Some of these went for a self-declaration status, others simply did not adhere to international standards. The remaining firms (28 in total) who did have their reports signed off by external auditors, often used one of the major international audit firms, although a few companies chose other organisations to provide assurance – an example is a firm of property consultants.

Figure 2.8: Use of external audit or assurance

05

1015202530354045


27

1

2831

12

43

Yes No

As the chart illustrates, the picture changes significantly when we look at small and medium-sized businesses. Among the 13 SMEs, there was only one example of a report receiving external assurance. If we isolate the 58 large companies, the rate of external assurance rises to nearly half (27 of 58 companies).

Relationship with the financial report

Ten of the companies whose reports we analysed had chosen to incorporate their non-financial disclosure in their Annual Reports, corresponding to one seventh of the total. These were typically very large companies as could probably be expected. There were no examples of SMEs including non-financial reporting in their annual reports.

Figure 2.9: CSR Reporting included in annual financial reports

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However, the vast majority of companies in the sample (61 firms) preferred to publish their non-financial disclosures in a separate report.

Inclusion in Annual company meetings

Another related issue concerned the question of whether non-financial reports were the subject of discussion at the Annual General Meeting of the companies in question.

We checked the agendas or minutes of the Annual General Meetings of the listed companies in the sample that provide such information publicly in order to examine whether there was mention of their non-financial reports in any way. This automatically excluded SMEs and non-listed companies.

Figure 2.10: Discussed CSR report at AGM

18

39

12 2

Non-listed company No Yes No information

The examination showed that only very few companies include any reference to their corporate responsibility or sustainability efforts in the context of their AGM, with as little as 12 companies who appear to have done so (corresponding to about one sixth of the full sample and a quarter of the listed companies (51 in total).

2.5 Publication

We now look at the way in which companies published their non-financial reports.

Type of publication

As the following figure illustrates, all companies in the sample (except one) made their reports available on the Internet. There were some differences in the way this was done, with most companies providing hyperlinks to a pdf-file of the report, whereas others offered an online ‘brochure-format’ allowing you to browse through the document by turning the pages. However, a large proportion of the firms we looked at (47 in total) had also chosen to produce a paper version of their publication. Finally, it transpired that 28 companies were registered in the GRI database, corresponding to more than a third of all.



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Figure 2.11: Ways of publishing reports (All companies)

0

10

20

30

40

50

60

70


40

7

4750

13

63

27

2

29

Paper Internet GRI database

Note: the figure includes multiple entries for each company

Report Languages

In terms of the language used for non-financial reporting, a majority of companies published their reports in English (53 reports or three quarters), as the table below illustrates. Of these, the reports published by UK companies only accounted for around 17%..An interesting finding was that not all companies report in their national language; only 43 of the 71 companies did so. As the total of these two figures illustrates (96), there was a certain degree of ‘overlap’ with 25 companies who published in two languages (English and their national language). A very small group produced the report in even more languages, but we have not taken account of them here.

Figure 2.12: Report language

0

10

20

30

40

50

60


34

9

43

50

3

53

23

2

25

National English Both

Note: DE, DK, ES, FR, IT, NL, PL (UK not included)



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2.6 Reporting Frameworks

Many organisations that publish non-financial reports look for outside assistance on how to structure their disclosure of such information. Schemes like the Global Reporting Initiative (GRI) or the UN Global Compact constitute some of the most used frameworks that exist.

Framework used

A large majority of the 71 companies in the sample made use of some kind of international or national framework for developing their reports (57 firms in total). In most cases (47 firms) it was the GRI Reporting Framework that was employed, either on its own (28 firms) or combined with another framework (19 firms). Nearly all of those using GRI, 43 in total, were large firms.

10 companies used other frameworks only , bringing the total number of firms in the sample using frameworks other than GRI to 29. In most cases this was the UN Global Compact, although some companies made reference to various national frameworks, often related to the environment. It is interesting to note that in the case of SMEs only, the proportion of firms using other frameworks rose to nearly two-thirds (8 out of 13 firms) .

14 companies in total did not refer to having used any particular frameworks in drafting their report. The figure below gives an overview of the distribution of responses and contrasts the overall position (full sample) with the position for large firms and SMEs.

Figure 2.13: Frameworks used to draft report

0

5

10

15

20

25

30


26

2

28

17

2

19

46

1011

3

14

GRI only Both GRI and other Other only None

2.7 Governance and Principles

In order to illustrate the degree to which information on governance and management principles was released in the reports under review, we investigated the occurrence of a number of different elements, including the following:

• ‘Senior management statement’ – does the report include a short introduction from the chief executive or chairman explaining the company’s main principles regarding CSR, sustainability, etc. and giving a brief overview of the contents;

• ‘Statement of objectives’ - does the report clarify the company’s goals and objectives for the following period in order to improve their performance;



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• ‘Use of external charters’ - is there reference to any charters defining the way in which the company deals with CSR/sustainability/environment, etc.;

• ‘Feedback mechanisms’ – is there any specification of systems in place to report back to senior management on non-financial issues.

The figure below gives an overview of how often each of these components were included in the 71 reports. Figure 2.14: Report content in the field of governance (positive responses)

0 10 20 30 40 50 60




Suggestions feedback mechanism

46

49

39

23

8

11

9

2

54

60

48

25



More than three-quarters of companies (54 of the 71 in total) included a statement from senior management in their disclosure reports, as it also transpired earlier in this report (see section 2.4 ‘Report Signatories’). As this type of reporting is about promoting the company’s commitment and principles to the outside world, this is not surprising. However, the proportion of SMEs who included such a statement is quite a bit lower than the overall picture (61% versus 76%). The management statements typically set out the principal values of the company and their main CSR-related commitments, sometimes accompanied by a brief overview of the types of actions that had been accomplished in the field. Developments since the last reporting period were usually highlighted, and the company’s compliance with any reporting frameworks would mostly be stated.


Most reports (60 of 71 reports ) stated the objectives to be met in the following reporting period. The proportion of SMEs including such objectives was the same as for all firms.

The quality of these objective statements varied.. In many reports, past achievements and future objectives within each of the relevant activity areas were set out in road maps or other table format indicating the goals, the target date, the milestones or actions undertaken and the status or degree of fulfilment. In some cases these tables were linked with measurable performance indicators – but this was not always the case. One might expect the largest companies with well defined management and governance structures to be the ones presenting their future objectives in the CSR field in the most comprehensive way, but some of the reports of smaller firms were significantly clearer in setting out their strategy and goals. An example hereof was a small



16

software company with less than 50 employees, adhering to UN Global Compact, who in spite of limiting their report to 10 pages managed to set out a very clear presentation of their main achievements for 2010 and their goals for 2011 for each of the policy areas reported on.

Examples of objective statements are shown in the table below, grouped under some of the main themes such as customer relations, relations with suppliers and partners, employees, the wider community, the environment, risk avoidance and the firm’s work in the CSR field.

Examples of objectives used

Customer relations – Renew brand value; Measure customer satisfaction and loyalty; Develop a range of innovative products to promote financial inclusion for the most disadvantaged groups; Promote listening and dialogue initiatives in order to understand the needs along the customer’s entire life cycle. Relations with suppliers/partners – Better manage and monitor relations with suppliers and cooperative partners; Create measurable value into daily operations through feedback from structured stakeholder dialogue; Qualify suppliers also on the basis of environmental and social requisites. Employee relations – Organise a ‘People Survey’ of workforce worldwide; Improve employee engagement; Conduct global ‘Talent Management Programme’; Increase the current investment in People Care by 20%; Reduce the number of days absence due to accidents at work by 50% (the long-term target is nil critical accidents). Relations to wider community – Put in place Responsible Investment Policy; Sign up to UN Programme of Responsible Investment; step up our efforts to increase the positive impact we have on society; Take continuous steps that add value to all stakeholders in order to realise our vision of creating Favourite Meeting Places; Be a key player in the development of the communities in which our factories are located. Environmental record – Prepare CO2 products lifecycle analyses from production to disposal; Reduce CO2 emissions over 5 years; Sign up to Greenhouse Accounts; increase efforts regarding animal welfare; Establish an international project team to work on making new buildings energy neutral as of 2020; Maximise energy efficiency and minimise CO2 emissions; Install 10 more solar panels to supply water heaters. Risk avoidance - Combine sound equity and return on capital with a low risk profile of the commercial bank business model. CSR activities - Gradually increase level of CSR reporting within GRI; Add more indicators to our reporting; Aim to have reports verified by independent third party; Establish series of KPI & targets for sustainability; Enhance the measurability and manageability of CSR within our organisation; Implement a CSR performance management approach throughout the group and help Business Units to align while respecting local laws and regulations.


The analysis looked at whether companies included a reference to any externally developed economic, environmental and social charters, principles or other initiatives that they subscribe to or endorse. Such charters might include international schemes like ‘Caring for the Climate’ (UN), BSR (‘the Business of a Better World’), ‘Greenhouse Gas Account’, ‘Forum for the Future’ or



17

national charters, for example those issued by ADEME (the French environment and energy agency). A number of companies also referred to various certification systems, such as ISO 14001 on environmental issues, OHSAS 18001 on health & safety, or FSC certification (Forest Stewardship Council) which would then equally be included in this part of the template4.

Of the 71 companies in the sample, 48 made reference to using external charters or principles. The proportion of large firms in relation to SMEs was about 4 to 1, corresponding approximately to their respective representation in the full sample5.

Feedback mechanisms

Another element to judge how companies in the sample dealt with managing their internal CSR systems was to include a question in the analysis template on whether non-financial reports made reference to any mechanisms or procedures in place to provide feedback to senior management on the various activities to do with corporate responsibility in its different forms.

As figure 2.15 shows, details of feedback mechanisms to report back to senior management were only provided in about one third of reports (25 of the 71 reports), For SME reports, the proportion was even smaller (2 out of 13 reports). The fact that reports do not mention specific feedback mechanism does of course not necessarily mean that they do not exist. The existence of internal mechanisms to provide feedback to senior management is very much related to the question dealt with earlier concerning specific oversight bodies. To recapitulate, that analysis showed that 22 companies had put in place specific bodies to manage their CSR work, but that another 15 firms had established structures whereby the management board would be supported by a specialised department or director responsible for CSR, It is likely that these procedures would also involve some kind of feedback mechanism.

2.8 Content of the reports

International reporting frameworks typically provide guidance on the basic content that should appear as part of the reporting on non-financial performance, not only in terms of the overall structure of reports but also with regard to the various subject areas to be discussed. In line with the nature of corporate social responsibility, subject areas would usually concern activities related to the environment, employee matters, engagement in society or market-oriented issues related to products and their quality, pricing or sourcing.

As described in section 2.1 the report analysis template included the following main policy areas: Economic impact, Environment, Labour and employment, Human rights, Society and community and Product responsibility.

Figure 2.16 below shows the frequency with which each of the listed policy areas was dealt with by the companies under review.

4 It should be specified that compliance with specific environmental schemes falls outside the scope of this exercise. 5 The results have to be treated with some caution because there was some overlap between the use of reporting standards and external charters



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Figure 2.15: Areas of activity covered by the reports

0 10 20 30 40 50 60 70

Economic Impact

Environmental


Human Rights

Society and Community


30

53

48

27

48

43

3

11

9

6

7

9

33

64

57

33

55

52


As the figure shows, the three topics with the highest occurrence are environmental, employment-related and social or society-related issues.

The ‘Environment’ comes top of the list with 64 of the 71 companies reporting on this activity followed by ‘Labour and employment’ with 57 firms. Engagement in ‘Society and Community’ follows closely with 55 firms and ‘Product responsibility’ with 52 firms. For most policy areas, the proportion of SMEs that report in these fields is slightly lower than is the case for all companies.

Less than half of all organisations reported on ‘Human Rights’ and ‘Economic impact’ respectively (33 firms for each topic),

Other policy areas covered

The businesses in the sample did not restrict themselves to reporting on the above list of policy areas, especially not those who did not adhere to the most common international frameworks. A number of other topics were dealt with in the reports, with health and safety and anti-corruption being among the most frequently covered. A number of HR-related issues also came up, such as diversity, personnel care and development, drugs and alcohol, or on a totally different agenda, relations with customers and suppliers and disaster response.

Performance Indicators

Frameworks generally encourage reporting organisations to use predetermined, measurable indicators to illustrate their performance. Our analysis showed that nearly all companies in the sample had taken this advice onboard and around 90% used some kind of indicator system in their reporting. Nonetheless, there were quite significant variations in the use of quantifiable indicators, with some presenting extremely clear overviews and tables of their goals coupled with quantifiable indicators and others who set theirs out in less easily understandable ways. . A large proportion, but by no means all, of the firms that adhere to GRI have adopted their performance indicator framework using some or all of the suggested indicators in their reporting. Others have



19

chosen different international or national frameworks, and some have created their own approach to performance indicators. In a few cases, there was no evidence of indicators at all.

The following chart examines the application of performance indicators in the reports of the companies under revision. As can be seen, it distinguishes between the use of indicators based on international frameworks, companies using their own indicator system or those who do not use indicators.

Figure 2.16: Use of key performance indicators (KPIs) in non-financial reporting

0 10 20 30 40 50 60

None

Own KPIs

International KPI framework

3

21

45

2

5

8

5

26

53


Note: the chart includes multiple entries for each company

The chart illustrates that a majority of firms in the sample use some type of indicator system in their non-financial reporting. There were only 5 companies that did not use any indicators at all. 53 of the 71 firms use various international indicator frameworks. A third of analysed companies (26 in total) appear to have created their own performance indicators. It is important to note, though, that most companies have used a combination of different indicator frameworks (either combining international frameworks or mixing these with their own indicators). That said, as was the case when examining the use of CSR frameworks in section 2.6, there were also those who applied national systems (19 large firms and 5 small ones).

Many of the 53 companies that employed international indicator frameworks presented their indicators in the form of the suggested GRI index which gives an overview of the indicators used, the respective degree of fulfilment and where in the report each indicator has been discussed.

The way in which indicator sets were presented in different reports varied enormously, not only in terms of the number of indicators applied, but also the choice and clarity of the presentation. 7 companies used the full GRI indicator set consisting of 79 KPIs, but typically firms would tailor indicator frameworks to their needs and activities. It should also be clarified that the above statistics take equal account of indicators that were fully and partially reported on.

In terms of the types of performance indicators that were employed, these reflect the different areas of activity typically covered by non-financial reporting, e.g. environment, employment, society, etc. In order to illustrate the use of performance indicators within each of these separate fields of CSR commitment, we have chosen to use the same classification as discussed in section



20

2.8 above6. In the following chart we look at the occurrence of indicators within each of the chosen categories.

Figure 2.17: Use of indicators within different areas of activity

0 10 20 30 40 50 60 70

Other


Society

Human Rights

Labour and Empkloyees

Environment

Economic

12

44

47

35

54

54

41

0

8

4

5

8

10

4

12

52

51

40

62

64

45


As might be expected, the result of this exercise closely mirrors what came out in section 2.8 in relation to the frequency with which companies reported on each of the different areas of activity. With 64 firms using indicators related to the ‘Environment’, this was the most frequently used type of indicators, often relating to energy and water consumption, greenhouse gas and other emissions and the level of waste.

This area was closely followed by the use of ‘Labour/Employment’ indicators with 62 firms. Here the most frequently used indicators concerned occupational health and safety, diversity and equal opportunities and staff training. Indicators related to ‘Society’ and ‘Product responsibility’ were slightly less employed, with 51 and 52 companies, respectively, using them. The number of schemes to support local communities or schools were often used as a ‘society’ indicator and anti-corruption measures also figured frequently in this category. With regard to ‘Products’ it was often the health & safety impacts on consumers/customers that were mentioned, as well as labelling of products and services and the compliance with various legislation and frameworks.

In terms of the more specific performance indicators that were applied in the different areas of activity, the following table give an overview:

6 Areas of activity: Economic impact; Environmental; Labour & Employment; Human Rights; Society & Community; Product Responsibility.



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Examples of Performance Indicators used Economic impact

Increase in level of responsible investment; International expansion allowing for economic and social benefits for local people; Creation and redistribution of economic value; Understanding significant indirect economic impacts; Use of local suppliers; Decrease in transportation costs being embedded in local community; Improve placing in Dow Jones Sustainability Index; Development initiative to support economic growth in local communities

Environmental Reduction of ecological footprint; Reduction of energy consumption (through conservation); Improvement of energy efficiency; Reduction water consumption; Improvement of water quality; Reduction of greenhouse gas emissions; Reduction in waste production; Reduction of packaging; Reduce emissions of noxious chemicals; Make all sites 100% water sustainable; Increase in number of ISO-14001 compliant sites; Energy neutrality by certain date; Sourcing all ingredients locally; Increase in use of solar energy; Increase in use of sea freight; Targets on recycling

Labour & employment

Targets on gender and age distribution; Increase in number of women in management; Improvement of diversity representative of local communities; Publish Diversity Position Statement; Improving daily staff well-being; Improvement of Leadership; Introduction of performance management system; Introduction of Career Development Programme; Increase in level of employee training; Reduction of absenteeism; Monitoring of employee turnover; Providing a healthy and safe working environment; Reduction of number of accidents; Improve the level of Communication; Improvement in staff satisfaction survey

Human Rights

Measures taken to contribute to the elimination of child labour; Code of Conduct based on Universal Declaration on Human Rights; Supporting UN Global Compact; Commitment to the non-employment of minors and any form of illegal employment; Initiatives with International Federation for Human Rights

Society & Community

Organisation of community projects through specific initiative ("Supporting Life"); Employees volunteering in local communities and donating to local charities; Cultivate more ecological and responsible partnerships; Organising contribution to local school programmes; Organising workshops for local hotels/caterers to make them more ecologically aware; Ensure responsible land use and limit closures; Reduce number of legal actions

Product liability Increase number of organic own-brand products and fair trade products; Health and safety of products and services assessed for improvements; Suppliers Code of Conduct; Screening/Auditing of suppliers; Registration of suppliers on special platform; Monitoring working conditions of suppliers; Introduction of Food Safety & Quality system based on ISO 9001 norm; Providing customers with healthy choices; Use of fresh, local ingredients; Reduction in number of written complaints; Scheme for drivers to behave cost-efficiently (safety, fuel efficiency, speed)

As mentioned previously, there were quite large differences between companies in terms of the number of indicators applied within each subject area. A more detailed overview of the use of performance indicators can be found in Appendix E.


Costs and benefits 3

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This section sets out the data concerning costs and benefits which were collected from the online survey questionnaire.

3.1 Introduction

This section of our report deals with the costs and benefits to companies of mandatory disclosure of non-financial reporting. A costing template or questionnaire was drafted to obtain cost data from companies, about the costs of their current non-financial reporting. Without firm details of possible mandatory reporting, it has been necessary to cost the existing voluntary reporting.

The template could also be completed either as a result of an interview with the company concerned, or could be completed on line. The questionnaire is shown in Appendix C.

In the questionnaire we asked for an analysis of the costs of collecting and reporting of non-financial information. The aspects of work to be costed included:

• Drafting the report • External assurance • Publication • Additional data collection costs • Annual costs such as training • Any other costs

We asked companies to estimate the incremental cost over and above costs already incurred as part of their existing accounting and reporting systems. The classification of costs used the standard cost model. With regard to benefits to companies, the report analysis template asked both about internal and external benefits. We also asked companies to explain the benefits in their own words, and inquired whether they had sought to quantify any benefits.

The data for this section has been obtained from companies whose reports have been analysed in section 2 above. The companies have been approached to identify the right contacts responsible for CSR matters and these contacts were emailed, telephoned and requested to provide data. A letter of introduction from the Commission was supplied in this context. Follow-up discussions and conversations have also taken place. Typically, there were between 4 and 8 contacts with each company.

Of the 71 companies approached for detailed costs, the following reactions were received:

Table 3.1 – responses to survey

Information included in this report 23 Willing to provide data but not yet received 10 Refusals 10 No clear response 28 Total 71 In each case we asked separately for the amount of internal staff time that was spent and cash costs including the costs of any external services. The objective was to set out a range of standard costs for each of the areas listed above. The information in this section is based on the responses of 23 companies, 18 larger and 5 smaller.

In presenting the costs, we have excluded companies reporting exceptionally low or high costs. Unless indicated otherwise, we have presented an interquartile range, which of course excludes the highest and lowest costs. The interquartile range contains the middle 50% of response values.



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Staff costs have been costed using an hourly rate for professional staff of €227 per day. This is based on standardised ESTAT data (the four-yearly Labour cost survey and the annual updates of labour cost (ALC) statistics) and includes an allowance for overhead costs.

3.2 Costs

We now consider each of the areas of costs as set out above.

Report drafting

The first area of direct costs covers the drafting of the report. The cost elements included under this heading are

• Internal staff costs for drafting the report and processing data. This area of costs assumes that the raw data has already been obtained, either from existing systems, or new data. The cost of obtaining new data is considered in subsequent pages.

• External costs in respect of processing data, drafting the report or designing the report. • Any other costs for report drafting

Looking first at internal costs, larger companies reported a range of between 80 and 480 days to draft the report. At the average cost rate for professional staff referred to above, the costs of internal staff for report drafting range between €18,000 and €109,000. Smaller companies took 15 to 20 days, at a cost of between €3000 and €5000. Much depends on the approach taken and the complexity of the company. Two companies identified internal processing costs in excess of €1 million where there were particularly complex system requirements – but for most companies processing costs were negligible and included in staff time.

In respect of external costs, most companies incur costs on report design. These costs vary between €10,000 and €100,000 for larger companies and between €1000 and €2000 for smaller companies.

In addition, there are other external costs. Ten companies incurred external processing costs, the largest amount being €97,000. For most companies the costs were much lower, under €20,000.

Adding together the staff costs and other costs, we arrive at a range of between €91,000 and €331,000 for report drafting by larger companies (the highest and lowest quartile are excluded), and €9000 and €12,000 for smaller companies. These ranges are also shown in figure 2.1 below.

Figure 3.1 – Cost range for report drafting (in 1,000 €)

Publication

The second area of costs is in respect of publication. Costs include staff costs, the cost of putting the report on the internet and the costs of printed versions of the report.

Excluding the outliers, larger companies spent between 2 and 50 staff days on publication, whilst smaller companies spent approximately 2 days. Staff costs for larger companies ranged up to €11,000 whilst for smaller companies costs were under €1000.

The level of publishing costs depends considerably on the strategy that is taken by the company. In respect of printing, some companies print very few reports, if any. For example one



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commented “We publish our report on our web site. People can ask for a hard copy however we do try to de-motivate this.” On the other hand, one company spent €192,000 in printing sufficient reports to send to every shareholder, and others spent over €100,000. So there is a wide range of costs of the ring from less than €1000 up to the €192,000 referred to above. Small companies tend to incur little print cost.

The other cost in respect of publishing relates to placing the report on the website. Again several companies reported very little expenditure, for example where a pdf copy of the report was put up on the website. Others created special web pages. Another set up a special blogsite. Excluding outliers, costs ranged from €10,000 to €35,000, although costs can go much higher. There is therefore a wide range of costs between small amounts up to the two larger amounts shown above. Small company costs are under €1000.

In summary the costs of publishing reports for large companies varied between €34,000 and €131,000, but it will be appreciated that much depends on the publishing policy that a company decides to adopt. Small companies incur under €1000 in costs for publishing. These ranges are shown in figure 2.2 below.

Figure 3.2 – Cost range for report publication (in 1,000 €)

Additional data

Companies were asked if they incurred expenditure on collecting new data specifically for the non-financial reports. Most large companies incur such costs.

Figure 3.3 -Number of companies incurring costs in acquiring additional data

Larger companies spent between 35 and 100 days on collecting new data, a cost of between €8000 and €23,000. Outliers have been excluded. There were no substantial external costs for most companies, although a few incurred costs (one in excess of €1 million). But for most companies the costs of collecting new data are much less than the costs of drafting reports, with the implication that most data in reports comes from existing sources. Small companies spend only a small amount on new data collection.



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External assurance

Some companies ask an external organisation to provide an assurance report on the company’s non-financial report. Typically, the external report is provided by the company’s auditors, or by another specialist body. For example one of the property company reports that were reviewed included an assurance report by the firm of property consultants. More information on the scope of assurance is contained in section 2 of this report.

Companies are required to report the cost of the audit of their financial accounts (but not the costs of review of non-financial data). In some cases the company has not been able to separate out the costs of financial review from non-financial review. However where these costs have been separated, large companies reported costs of the order of €22,000 to €114,000. Smaller companies do not usually ask for external assurance.

Figure 3.4 – Cost range for external assurance (in 1,000 €)

Training costs

We asked companies whether they incurred training costs or other annual costs. Where companies incur training costs, the time spent and the costs are small.

Excluding outliers, four companies spent up to 18 days on staff training. Ten other companies either reported that no time was spent on training, or that training was on the job. In four cases there had been some external costs of up to €5000.

Accordingly, for this element, in summary large companies can be estimated to spend between 0 and €5000 on training, whilst smaller companies can be estimated to spend up to one day. (€200)

One off costs

We also asked for details of any other costs including one off costs. One company reported system set up costs of €300,000 and a year of staff work, but most companies reported that there were no other costs, or that other costs were not separately identifiable.

Summary of costs

The table below summarises each of the cost headings, divided between large and smaller companies.

Table 3.2– Costs summary (€)

Cost heading Large companies Small companies Notes

Low High Low High

Report drafting €91000 €331000 €9000 €12000 Depends on the complexity of the company. Small companies can produce a short report for much less

Publication €34000 €131,000 negligible €1000 Depends on the



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publication strategy used – a high number of printed reports, or a special website means high costs

External assurance

€22,000 €114,000 nil nil Typically large companies only

Additional data €8000 €23000 negligible negligible Typically large companies only

Training etc €0 €5000 negligible negligible Typically large companies only

Accordingly, the major costs appear to be the costs of report drafting – and much will depend on the complexity of the company. Substantial costs can also be incurred on publication depending on the strategy, and external assurance if used. Other areas of costs are smaller.

To arrive at a total cost for the process of non financial reporting, we have summed the cost ranges of the individual elements shown above7. Cost ranges for large and smaller companies are summarised in the two tables below. Using the high and low points of each element, the costs of non-financial reporting for large companies is in the range of €155,000 to €604,000 and for smaller companies in the range of €8000 to €25,000. A company seeking to provide a minimal report may be expected to come in at the lower end of the range, and a very small company might well be able to come in below the range shown.

Figure 3.5– Cost range for larger companies (in 1,000 €)

7 An alternative would have been to take the interquartile range of total costs incurred by each company. Whilst this might have resulted in tighter cost ranges, the approach we have used ensures that more data is used.



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Figure 3.6– Cost range for SMEs (in 1,000 €)

Costs in relation to staff numbers

We can express the costs shown above in relation to staff numbers. Information on staff numbers is available for most companies, whilst other data such as turnover is less relevant for financial institutions. The larger companies analysed above had median staff numbers of 48,000 (average 63,600) and the smaller companies had median staff numbers of 118 (average 141).

Using the median staff number, the low and high total costs of non-financial reporting are as follows:

Table 3.3– Cost per employee of non-financial disclosure (€ per employee)

Low High Large firms 3 13 SMEs 68 212


3.3 Benefits

We now consider the benefits of non-financial reporting to companies.

Benefits of non-financial reporting

We asked the companies whose reports are analysed in the earlier sections of this report to provide information on what they saw as the principal benefits of non-financial reporting. First, companies were asked to indicate in their own words what they saw as the main benefits of non-financial reporting. They were then asked a series of prompted statements covering benefits both externally and internally. Finally, companies were asked if they made a quantified assessment of the benefits of non-financial reporting and to provide details of their assessment.

Companies’ description of benefits

We start off by analysing companies’ own description of the main benefits of non-financial reporting. Edited comments from companies are reproduced below. The names of companies have been removed and responses have been grouped with examples of comments under the main themes mentioned which included:

• Increasing confidence in the company • Improving the brand image • Risk avoidance • Internal staff relationships



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• Environmental issues • Attracting new employees

.

Company description of benefits

Increasing confidence in the company “Provides confidence to stakeholders,” “Trust from Institutional Investors “ Improving the brand image “gives more "love values" to our brand” “. Building brand favourability amongst opinion formers” “the possibility of improving brand image and credibility at the same time that we do business and increase our sales” Risk avoidance “Focus on non financial risks and provide information for stakeholders on how non financial areas of business are managed” “. It also serves to determine the degree of non-financial risk management related to the activity and therefore improves the sustainability in the medium/long term business plan.” “reducing risks as for 'responsible game'” “Less vulnerability risk “ Internal staff relationships “. Internally, it creates a circle of complicity in the people which make up the company focused on excellence in the different approaches to balance between economic, social and environmental aspects.” Better integration of the Group and Team building” Environmental issues “create a transparent reporting of our environmental status” increasing attention to the social and environmental impacts of its business operations, in particular by ensuring sustainable product innovation, and building a sustainability reporting system that is consistent across the Group Attracting new employees “making as a more attractive employer”.” It is also important form the HR point of view that it helps to attract the best employees in the sector”

It will be seen that there is quite a wide range of comments covering both internal and external factors, but with a theme of improving the company’s image and the image of its products and brands.

Prompted description of benefits

We then asked companies to say whether they obtained certain benefits. Companies were given a list of possible benefits, both external to the company and internal. The first question asked companies to assess the benefits of non-financial reporting to the company’s external image.

The results are shown in the figure below. Separate results are provided for SMEs and large companies but the pattern for both groups is similar.



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Figure 3.7- Assessment of the benefits of non-financial reporting to external image

0

2

4

6

8

10

12

14



business


our products


increased sales


employees


reporting

13

7

9

3

5

16

4

8

5 5

10

10

2

3

7

2

00 0 0

1

0 0

Nº

Large firms


0

1

2

3

4

5

6



business


our products


increased sales


employees


reporting

5

2

3

0

1

4

0

2 2

3 3

1

0 0 0

2

1

00

1

0 0 0 0

Nº

SMEs




30

Figure 3.7 above shows the response by large firms and SMEs to prompted statements. The statements which companies thought were very important were “It enhances the company’s credibility” and “It improves transparency of reporting”. The brand image of products was also important. The statement which attracted least support was the suggestion that non-financial reporting would lead to increased sales.. These responses to a prompted list of benefits appear generally consistent with the open-ended responses described earlier, although staff issues appear to have somewhat greater importance in the open-ended responses.

Companies were also able to supply alternative answers and in one case a company suggested that the ability to react with stakeholders was particularly important.

Finally, we asked about an assessment of the benefits of non-financial reporting to the company’s internal management.

Figure 3.8: Assessment of the benefits of non-financial reporting to internal management.

Of the two options prompted, identifying and control risks seemed to be important or very important to all companies. Improvement of the internal culture was also thought to be important but a few companies thought that this benefit was only slightly important.



31

Quantification of benefits by companies

Finally, we asked companies whether they had sought to quantify the benefits from non-financial reporting. Of the 20 companies responding, only 3 had tried to quantify these benefits.

Of those 3, only one had arrived at a financial estimate of the benefits of non-financial reporting. This company had a non-financial reporting cost in the mid range of larger companies (€300,000) and reported they had identified efficiency savings of €80 million. Whilst the company’s work on non-financial reporting contributed to this saving, it was unclear of the extent to which other factors were relevant

When prompted for comments on the quantification of benefits, one company said that while they have not tried to quantify the benefits, being the best regarded company of their sector was particularly important to them and was helped by their policy on non-financial reporting.


Conclusions 4

32

This section summarises the principal conclusions of the report, covering both the detailed analysis of reports and costs and benefits

. 4.1 Analysis of reports

The non-financial reports of a sample of 71 companies from 8 Member States (DE, DK, ES, FR, IT, NL, PL, UK) were analysed to provide data on reporting practices in the field of corporate responsibility. Less than a fifth of the companies in the sample were SMEs, as they are less likely to produce formal non-financial reporting. The sample represented a wide variety of industry sectors with ‘food and drink’, ‘retail’, ‘energy’, ‘banking’, ‘chemicals’ and ‘insurance’ being among those most frequently appearing.

Reports were typically referred to as Sustainability or CSR reports and were most often between 25 and 100 pages long. Large company reports were longer than those produced by smaller companies. English was by far the most frequently used reporting language (and practically all reports were published online. although two-thirds were also circulated on paper. In most cases reports were signed by a senior company representative (CEO or Chair).

A large majority of companies (made use of a framework for developing their reports, with the GRI Reporting Framework being the most frequently employed. It tended to be larger firms mainly who followed the GRI format.

Less than half the reports contained some form of external assurance. It was particularly the largest companies who chose to obtain such assurance. When it came to internal supervision, around a fifth of companies had a specific oversight body in place, others relied on the board to take responsibility in collaboration with a specific department, but nearly half of companies did not refer to any separate supervisory body.

In relation to the policy areas covered by non-financial reporting, there was a clear preference among the companies in the sample to report on the ‘Environment’ followed by ‘Labour and employment’, ‘Society and Community’ and ‘Product responsibility” Only half the reports considered the economic impact of the company, or human rights.

The use of quantifiable indicators varied significantly, with 47 firms using the indicator system proposed by GRI. In terms of the types of indicators used, a large majority of firms employ environmental indicators, closely followed by labour-related indicators.

3.4 Costs and benefits

The major costs of non-financial reporting appear to be the costs of report drafting – and much will depend on the complexity of the company. Substantial costs can also be incurred on publication depending on the strategy, and external assurance if used. Other areas of costs are smaller.

Using the high and low points of each element, the costs of non-financial reporting for large companies is in the range of €155,000 to €604,000 and for smaller companies in the range of €8000 to €25,000. A company seeking to provide a minimal report may be expected to come in at the lower end of the range, and a very small company might well be able to come in below the range shown.


In respect of benefits, few companies have carried out work to quantify the benefits of non-financial reporting. Rather, the main benefits are seen as a wish to report transparently and to improve the credibility of a company. The brand image of products was also important. The option which attracted least support was the suggestion that non-financial reporting would lead to increased sales. Identifying and controlling risk was also seen as important.

Final Report - Disclosure of non-financial information by companies Appendix

Company reports analysed A

33

Sample of Companies involved in the Analysis of Reports

Germany (9) Sector Size RWE D35- Electricity, gas, steam & air-con. supply (energy) L - >5,000 Merck KGaA C21- Manufacture of pharmaceutical products/prep’s (pharmaceuticals) L - >5,000 Siemens C27- Manufacture of electrical equipment (electrical equipment) L - >5,000 BASF C20- Manufacture of chemicals/chemical products (chemicals) L - >5,000 Bosch C20- Manufacture of chemicals/chemical products (chemicals) L - >5,000 Henkel C20.4 - Manufacture of soap, detergents, cleaning, polishing preparations,

perfumes, toilet preparations (chemicals) L - >5,000

Voelkel C10 & C11-Manufacture of food products & beverages (food/drink) M - <250 Triple innova N82.9 - Other business support service activities (business support) S - <250 Hakro Active G47 - Retail trade, except of motor vehicles and motorcycle (retail) S - <250 Denmark (8) Sector Size Egetæpper C13 - Manufacture of textiles (textiles) L - 250-500 Maersk H - Transporting & storage (transport) L - >5,000 Palsgaard C10 & C11- Manufacture of food products & beverages (food/drink) L - 250-500 Tryg K65 - Insurance, reinsurance and pension funding (insurance) L - >5,000 Novo Nordisk C21- Manufacture of pharmaceutical products/prep’s (pharmaceuticals) L - >5,000 Dalum Papir C17.1 – Manufacture of pulp, paper and paperboard (paper) L - 250-500 Siteimprove J62- Computer programming, consultancy &related services (computing) S - <250 Rice G47 - Retail trade, except of motor vehicles and motorcycle (retail) M - <250 Spain (10) Sector Size Campofrigo C10 & C11- Manufacture of food products & beverages (food/drink) L - >5,000 NH Hotele I55.1-Hotels and similar accommodation (hotels) L - >5,000 BBVA Group K64 - Financial service activities, except insurance & pensions (banking) L - >5,000 Gas Fenosa B6- Extraction of crude petroleum and natural gas (extractive) L - >5,000 Endesa D35- Electricity, gas, steam & air-con. supply (energy) L - >5,000 Aceites Toledo C10 & C11 - Manufacture of food products & beverages (food/drink) L - >5,000 Abengoa D35- Electricity, gas, steam & air-con. supply (energy) L - >5,000 Iberdrola D35- Electricity, gas, steam & air-con. supply (energy) L - >5,000 Javierra F41 & F42 - Construction of building & civil engineering (construction) S - <250 Gaursa Auto G47 - Retail trade, except of motor vehicles and motorcycle (retail) S - <250 France (8) Sector Size Givaudan C20.4 - Manufacture of soap, detergents, cleaning, polishing preparations,

perfumes, toilet preparations (chemicals) L - >5,000

Danone C10 & C11 – Manufacture of food products & beverages (food/drink) L - >5,000 Airbus F41 & F42 - Construction of building & civil engineering (construction) L - >5,000 Michelin C22 – Manufacture of rubber and plastic products (rubber) L - >5,000 Carrefour G47 - Retail trade, except of motor vehicles and motorcycle (retail) L - >5,000 Azura-Disma C10 & C11 – Manufacture of food products & beverages (food/drink) L - >5,000 Moulin Roque C10 & C11 – Manufacture of food products & beverages (food/drink) M - <250 Groupe Burlat C18 – Printing and reproduction of recorded media (printing) S - <250 Italy (10) Sector Size Barilla C10 & C11 – Manufacture of food products & beverages (food/drink) L - >5,000 Indesit C27.5 - Manufacture of domestic appliances (domestic appliances) L - >5,000 Luxottica G47 - Retail trade, except of motor vehicles and motorcycle (retail) L - >5,000 Assicurazione Gen. K65 - Insurance, reinsurance and pension funding (insurance) L - >5,000 De Longhi C27.5 - Manufacture of domestic appliances (domestic appliances) L - >5,000 Intesa Sanpaolo K64 - Financial service activities, except insurance & pensions (banking) L - >5,000 Enel D35- Electricity, gas, steam & air-con. supply (energy) L - >5,000 Conad C10 & C11 – Manufacture of food products & beverages (food/drink) L - >5,000 Faram SpA F41.1- Development of building projects (construction) M - <250 Neatec J62- Computer programming, consultancy &related services (computing) M - <250 Netherlands (9) Sector Size ABN Amro K64 - Financial service activities, except insurance & pensions (banking) L - >5,000 ING K65 - Insurance, reinsurance and pension funding (insurance) L - >5,000


Company reports analysed A

34

FrieslandCamp C10 & C11 – Manufacture of food products & beverages (food/drink) L - >5,000 Aegon K65 - Insurance, reinsurance and pension funding (insurance) L - >5,000 Akzo Nobel C20 - Manufacture of chemicals/chemical products (chemicals) L - >5,000 Royal DSM C10 & C11- Manufacture of food products & beverages (food/drink) L - >5,000 TNT Express H53- Postal and courier activities (postal) L - >5,000 Corio L68 - Real estate activities (real estate) L - 250-500 Gulpener Bier C11 - Manufacture of beverages (food/drink) S - <250 Poland (8) Sector Size PKN Orlen B- Mining and quarrying (extractive) L - >5,000 PGNIG B- Mining and quarrying (extractive) L - >5,000 Totalizator R92 – Gambling and betting activities (gambling) L - 250-500 Polpharma C21-Manufacture of pharmaceutical products/prep’s (pharmaceuticals) L - >5,000 Budmiex F41 & F42 - Construction of building & civil engineering (construction) L - >5,000 Piwowarska C10 & C11- Manufacture of food products & beverages (food/drink) L - >5,000 Gospodarstwa K64 - Financial service activities, except insurance & pensions (banking) L - >5,000 PZU K65 - Insurance, reinsurance and pension funding (insurance) L - >5,000 UK (9) Sector Size Rolls Royce C29 – Manufacture other transport equipment (transport equipment) L - >5,000 Tesco G47 - Retail trade, except of motor vehicles and motorcycle (retail) L - >5,000 BP D35 - Electricity, gas, steam & air-con. supply (energy) L - >5,000 Servern Trent E - Water supply; sewerage; waste management and remediation activities L - >5,000 M&S G47 - Retail trade, except of motor vehicles and motorcycle (retail) L - >5,000 Barclays K64 - Financial service activities, except insurance & pensions (banking) L - >5,000 Rio Tinto B- Mining and quarrying (extractive) L - >5,000 Segro L68 - Real estate activities (real estate) L - 250-500 Sustainable. Events N82.9 - Other business support service activities (business support) S - <250


Overview of Reporting Standards B

35

There are in a number of sets of international guidelines for disclosure. Amongst these are: OECD guidelines for Multinational Enterprises - The Guidelines are recommendations addressed by governments to multinational enterprises operating in or from adhering countries. The latest edition8 of the guidelines extends to some 80 pages. They provide voluntary principles and frameworks for responsible business conduct in areas such as employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition, and taxation. The guidelines also provide advice on implementation A comparison of a slightly earlier version of OECD guidelines9 and GRI guidelines, shown below, is also published by OECD. There is now a partnership between OECD and GRI Global Reporting Initiative - The Sustainability Reporting Framework provides guidance on how organizations can disclose their sustainability performance. It consists of the Sustainability Reporting Guidelines, Sector Supplements and the Technical Protocol. There are in addition sector supplements dealing with electrical utilities, financial services, food processing, mining and metals and NGOs. Other sector supplements are being prepared or piloted. It is understood that 1600 companies worldwide report using GRI standards The key parts of the Sustainability Reporting Framework are as follows. The text is based on GRI’s description of the framework

The Sustainability Reporting Guidelines feature Performance Indicators and Management Disclosures that organizations can adopt voluntarily. The G3.1 Guidelines10 are the latest and most complete version of GRI's G3 Sustainability Reporting Guidelines. These Guidelines are based on G3 but contain expanded guidance on local community impacts, human rights and gender. Sector Supplements - Sector Supplements are tailored versions of the Sustainability Reporting Guidelines that cover sector specific issues. The Technical Protocol The Technical Protocol provides process guidance on how to define the content of a sustainability report..

There are a number of other guidelines, generally concentrating on specific aspects of non financial reporting, brought together by the UN compact - The United Nations Global Compact11 is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. The UN Global Compact is based on ten principles derived from other material including

8 OECD Guidelines for Multinational Enterprises retrieved at http://www.oecd.org/dataoecd/43/29/48004323.pdf 9 Synergies between the OECD Guidelines for Multinational Enterprises and the GRI 2002 Sustainability Reporting Guidelines retrieved at http://www.oecd.org/dataoecd/25/26/35150230.pdf 10 http://www.globalreporting.org/ReportingFramework/G31Guidelines/ 11 http://www.unglobalcompact.org/

http://www.oecd.org/dataoecd/43/29/48004323.pdf

http://www.oecd.org/dataoecd/25/26/35150230.pdf

http://www.globalreporting.org/ReportingFramework/G31Guidelines/

http://www.unglobalcompact.org/


Overview of Reporting Standards B

36

• The Universal Declaration of Human Rights • The International Labour Organization's Declaration on Fundamental Principles and

Rights at Work • The Rio Declaration on Environment and Development • The United Nations Convention Against Corruption

ISO 26000 - The International Standard ISO 26000:2010, Guidance on social responsibility, provides guidance on reporting social responsibility. It is a non mandatory standard aimed at all types of organisation to encourage the implementation of best practice in social responsibility worldwide It is described by ISO as follows ISO 26000:2010 provides guidance to all types of organizations, regardless of their size or location, on:

• concepts, terms and definitions related to social responsibility; • the background, trends and characteristics of social responsibility; • principles and practices relating to social responsibility; • the core subjects and issues of social responsibility; • integrating, implementing and promoting socially responsible behaviour throughout the

organization and, through its policies and practices, within its sphere of influence; • identifying and engaging with stakeholders; and • communicating commitments, performance and other information related to social

responsibility.

ISO also publish other standards including, notably, ISO 14001 first published in 1996. ISO 14001 specifies the requirements for an environmental management system. It applies to those environmental aspects which the organization has control and over which it can be expected to have an influence. Organisations can obtain external ISO 14001 certification.

ILO Core Conventions – Eight ILO Conventions have been identified by the ILO's Governing Body as being fundamental to the rights of human beings at work, irrespective of levels of development of individual member States. The conventions cover the following areas Forced Labour 1930 Freedom of Association and Protection of the Right to Organize 1948 Right to Organize and Collective Bargaining 1949 Equal remuneration 1951 Abolition of Forced Labour 1957 Discrimination (Employment and Occupation) 1958 Minimum Age Convention 1973 Elimination of the Worst Forms of Child Labour 1999 There are a large number of other initiatives including those by the World Bank Group and accountancy bodies and standard setters. For example, IFAC (the International Federation of Accountants) has published a sustainability framework. There are also efforts to integrate the various guidelines


Costing template C

37

NON FINANCIAL REPORTING – COSTING TEMPLATE

INTRODUCTION

There is an increasing trend for businesses to produce information on social, economic and environmental issues. Such information may be provided as part of the annual company financial statements, or may be published as a separate stand alone document such as a corporate social responsibility report. The European Commission (DG Internal Market and Services) have sought stakeholders' views on the existing EU regime on non-financial (CSR) disclosure with a view to improving existing policy. A public consultation (running from November 2010 to January 2011) was launched in order to gather stakeholders' views on ways to improve the disclosure by enterprises of non-financial information (e.g. social and environmental). The consultation obtained responses from a wide range of stakeholders in the Member States who expressed mixed views regarding existing non-financial disclosure policy. However, a key message was that better disclosure of non-financial information is needed in order to increase the number of European enterprises that fully integrate sustainability and responsibility into their core strategies and operations in a more transparent way. The Commission would now like to obtain data on the costs and benefits of disclosure of non financial information. The purpose of this questionnaire is to ask about the administrative costs and benefits of disclosure of non-financial information

CURRENCY

Q01 Please tick the currency that you would prefer to use for completion of this questionnaire EUR DKK GBP PLN Currency

ANALYSIS AND DRAFTING

We would like to ask about the time spent, and any related costs on the analysis and drafting of reports. Q02 Please provide an estimate of the number of person months of employees time spent on analysis and report drafting Estimate (person months) Don’t know Employee time

Q03 Please provide an estimate of any external or internal costs incurred on analysis and report drafting. Please provide an estimate to the nearest thousand. Nil Estimated cost

to nearest Don’t know


Costing template C

38

thousand Internal processing costs External processing costs External report design External report drafting Other ( please specify)

ADVICE AND ASSURANCE

In some instances, companies will obtain assurance services, or other consulting services in connection with non-financial reports. Please only include services (and costs) not listed elsewhere in this questionnaire. Q04 Please provide an estimate of any external or internal costs incurred on advice and assurance in connection with the report drafting. Please provide an estimate to the nearest thousand Nil Estimated cost

to nearest thousand

Don’t know

External report drafting Other (please specify)

PUBLICATION AND DISSEMINATION

We would now like to ask about the costs of publication and dissemination of the reports. This could include the printing of hard copy reports, the preparation and maintenance of websites and other related aspects. Q05 Please provide an estimate of the number of person months of employees time spent on publication and dissemination Estimate (person months) Don’t know Employee time

Q06 Please provide an estimate of any external or internal costs incurred spent on publication and dissemination. Please provide an estimate to the nearest thousand. Nil Estimated cost

to nearest thousand

Don’t know

Publication of hard copy reports Websites etc Other ( please specify)


Costing template C

39

Q07 Please give a short description of how you publicize and disseminate your non-financial reports

COSTS OF NEW DATA COLLECTION

We now ask about the first of the areas of costs, the collection of additional data. Please do not include data already available within the company, or collected by existing reporting requirements. Q08 Do you collect additional data specifically for the purposes of non-financial reporting? Yes No – please go to next section Don’t know – please go to next section Q09 Please provide an estimate of the number of number of person months of employees time spent on the collection of additional data specifically for the purposes of non financial reporting Estimate (person

months) Don’t know

Employee time

Q10 Please provide an estimate of any external costs incurred on the collection of additional data specifically for the purposes of non-financial reporting. Please provide an estimate to the nearest thousand Nil Estimated cost

to nearest thousand

Don’t know

External data collection costs

OTHER ANNUAL COSTS

Please now estimate any other annual costs. These costs might include staff training and any other regular cost. Q11 Please provide an estimate of the number of number of person months of employees time spent on training or other annual costs? Estimate (person


Training Other (please specify) Q12 Please provide an estimate of any other external or internal costs incurred on training or other annual costs? Please provide an estimate to the nearest thousand. Nil Estimated cost Don’t know


Costing template C

40

to nearest thousand

External training Other external Other internal

TRANSITIONAL COSTS

Are you able to make an estimate of any ‘one-off’ costs that you might have incurred in setting up your systems and procedures for non-financial reporting? For example, you might have incurred costs on new systems Q13 Please provide an estimate of the number of number of person months of employees time spent on a ‘one-off’ basis in connection with setting up and new procedures or systems for non financial reporting Estimate (person


Employee time

Q14 Please provide an estimate of any external or internal costs incurred on a ‘one-off’ basis . Please provide an estimate to the nearest thousand. Nil Estimated cost

to nearest thousand

Don’t know

Other internal costs External costs

BENEFITS

We would now like to ask about the benefits of non-financial reporting. Please provide a brief note on what you see as the main reason for carrying out non-financial reporting, followed by an estimation of the importance of certain areas of benefit, both externally and internally to your company. Finally, we ask if you are able to quantify the benefits from non-financial reporting Q15 Please set out what your company sees as the main benefits of carrying out non-financial reporting


Costing template C

41

Q16 This question asks you to give an assessment of the benefits of non-financial reporting to your company’s external image. Please say how important each of those areas are to your company Not

important Slightly important

Important Very important

Don’t know


It enhances our ability to do business

It improves the brand image of our products

It is likely to lead to increased sales

It enables us to attract better employees

It improves transparency of reporting

Other (please specify)

Q17 This question asks you to give an assessment of the benefits of non-financial reporting to your company’s internal management. Please estimate how important each of those areas are to your company Not

important Slightly important

Important Very important

Don’t know

It enables us to identify and control risks

It improves the internal culture of the company

Other (please specify)

Q18 We now ask about any quantified benefits. Have you sought to quantify the benefits from non-financial reporting? Yes No – please go to next section Don’t know – please go to next section Q19 If yes, please explain what benefits have been quantified and the amount of benefit


Costing template C

42

CONTACT DETAILS

Q20 Please provide your contact details so that we can discuss any issues if needed Company name

Contact name

Position

Telephone

Email


Report analysis template D

43

REPORT ANALYSIS TEMPLATE

GENERAL COMPANY INFORMATION Company name Principal activity Member State of HQ Turnover (€m) Number of employees Balance sheet totals (€m) Size (S,M,L)

OVERALL REPORT INFORMATION Report title URL Contact for queries (email) Contact Name/phone Year of publication Period covered Year of first report No.of pages (full version) No.of pages (summary) If no summary mark n/a Yes No Notes External audit or assurance? (Please specify what kind of assurance)

Included in financial reports? Report on AGM agenda? Is the report signed Chair CEO CFO Other (specify) Report signatories

Describe body responsible for oversight (eg CSR governance committee)

GRI Other (specify) None

Report standards or reference to other frameworks



44

National (specify) EN DE FR

Other(s) (specify)

Report language(s) Database registration Paper Internet GRI Other (specify) Report publication (full) Report publication (summary)

REPORT CONTENTS

GOVERNANCE AND PRINCIPLES

Does the report contain the following Yes No Included elsewhere (specify) Senior management statement


Use of external charters Suggestions feedback mechanism Other (specify)

ASPECTS COVERED

Covered?

Quantified Performance indicators No Yes - describe key indicator (s) Economic impact

Environmental


Human Rights



45

Society and community

Product responsibility

Health and safety

Other (specify):

QUALITATIVE ASSESSMENT OF REPORT

Notes Reasoned opinion of quality of report

OTHER RELEVANT ISSUES


Overview of Performance Indicators and Standards E

46

The table below shows the main performance indicators used by companies in the sample. In some cases, performance indicators may be contained in the text of the report or included separately so this table provides an overall view

Reporting standard Perfroamce indicators

GRI UN G C Nat/ other Own None Economic 9

Environ-ment

30

Labour/ Employees

14

Human rights

9

Society 8

Product respons.

9 Other

A+ √ all 19/30 2/14 4/9 6/8 5/9 EU 16 of 30 B+ √ all all all all all all A+ √ √ 7/9 18/30 6/14 6/9 6/8 4/9 A+ √ √ all 28/30 all 8/9 6/8 4/9 √ 6/9 10/30 1/14 1/8 B √ √ 7/9 20/30 13/14 7/9 6/8 5/9 √ √ √ √ √ B 5/9 13/30 2/14 5/9 5/8 5/9 √ √ √ √ C √ 1/9 13/30 5/14 2/9

C+ √ √ √ √ No clear GRI Index

√ 1/9 11/30 2/14 1/8 2/9 FP4 √ √ 2/9 4/30 6/14 4/9 2/8 1/9 √ 5/9 16/30 10/14 3/9 5/8 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

A+ √ 8/9 16/30 9/14 6/9 6/8 7/9 A+ √ √ 8/9 9/30 9/14 6/9 6/8 4/9 FS1-16



47

A+ √ all 28/30 all all all all EU1-30 A+ √ √ all 29/30 all all all all EU 23 of 30 √ √ √ √ √ √ √

A+ √ √ 4/9 all all 8/9 7/8 all A+ √ √ all all all all all all A √ √ all 26/30 all all all all √ √ C 2/9 11/30 5/14 2/9 1/8 1/9

B+ √ √ all all 13/14 all all all B+ √ 4/9 14/30 4/14 4/8 2/9 √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

A+ √ all all all all all all √

√ (A+?) √ √ √ √ √ √ √ √ No clear GRI Index

√ A+ √ all all all all all all A+ √ 6/9 28/30 all 8/9 all all √ √ √ √ √ √ √ √ √ √ √ √ √ √ C √ √ √ √ √ √ √ √ √ √ √ B √ √ √ √ √ √



48

√ √ √ √ √ √ √ √ √ √ √ √ √

A+ √ √ 5/9 17/30 9/14 6/9 5/8 3/9 A+ √ 7/9 16/30 9/14 6/9 6/8 4/9 LT1-17 √ √ √ √ √ √ √ √ √ √ √ all 16/30 10/14 3/9 2/8 2/9 √ 3/9 9/30 7/14 1/9 2/8 2/9 EU5 of 30

B+ 3/9 3/30 8/14 3/9 4/8 6/9

√ √ √ √ √ 2/9 3/30 5/14 √ 13/30 8/14 1/9 1/8 3/9 C 2/9 2/30 5/14 1/9 √ 8/9 5/30 10/14 7/9 7/8 7/9 FS 5 of 16

B+ 6/9 9/30 9/14 2/9 5/8 3/9 FS 10 of 16 A+ PIECA √ √ √ √

In line with C Plan A √ √ √

A+ √ ICMM 8/9 16/30 8/14 6/9 7/8 4/9 MM 10 of 11 DEFRA √ √ √ √ √ √ √ √ √ √ √ √ B 6/9 6/30 6/14 1/9 2/8 1/9

√ √ √ √ √ 41 34 24 26 5 45 64 62 40 51 52 12


Glossary F

49

ADEME Agence de l'Environnement et de la Maîtrise de l'Energie – French Environment and Energy Agency

AGM Annual General Meeting of a company’s shareholders CEO Chief Executive Officer CFO Chief Financial Officer CSR Corporate Social Responsibility EMAS Eco-Management and Audit Scheme ESTAT European Statistics (ESTAT) Code of Practice External assurance The audit of a non-financial report by an independent third party, such

as a consultancy or auditing firm External charter An externally developed economic, environmental and social initiatives,

principles or schemes that companies might subscribe to or endorse that affect their CSR work. The report analysis template used for this job includes a section on External Charters.

Feedback mechanism System in place in a company (or organisation) to provide data and

feedback to senior management on issues to do with sustainability and CSR.

GRI Content Index Matrix proposed by GRI listing the different standard areas of non-

financial disclosure. The index provides a quick overview of what has been reported and which indicators have been used

.IFAC International Federation of Accountants ILO International Labour Organisation Inter-quartile range The interquartile range is the distance between the 75th percentile and

the 25th percentile. The IQR is essentially the range of the middle 50% of the data. Because it uses the middle 50%, the IQR is not affected by outliers or extreme values

ISO 14000 International Standard on Environmental Management ISO 26000 The International Standard ISO 26000:2010, Guidance on social

responsibility KPI Key Performance Indicator - Qualitative or quantitative information

about results or outcomes associated with the company that is comparable and demonstrates change over time.

NACE codes Statistical Classification of Economic Activities in the EU (Nomenclature statistique des Activités économiques dans la Communauté Européenne), is a European industry standard classification system consisting of a 6 digit code.


Glossary F

50

OECD Organisation for Economic Co-operation and Development Outliers A statistical term for an observation that is numerically distant from the

rest of the data. Self-declaration In accordance with the GRI Reporting Framework, report makers

(companies) can chose to carry out their own assessment of their report’s contents based on the criteria provided by the GRI application levels (A, B, C). They can request that the GRI check their self-declaration.

SME Small and Medium sized enterprises Standard cost model A universally agreed framework or methodology that defines and

quantifies administrative burdens for businesses. UN Global Compact United Nations Global Compact - Strategic policy initiative for

businesses committed to aligning their operations with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.

http://en.wikipedia.org/wiki/Statistics

http://en.wikipedia.org/wiki/Data_set

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