stefan crets tbli
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Getting management right to allow accurate assessment of future value
Stefan CretsExecutive DirectorCSR Europe
2013: unique convergence in Europe
This material may not be reprinted or redistributed without the express written consent of CSR Europe
• Increase in number of companies reporting• Level playing field but sufficient flexibility • Stronger link to what really matters
• Materiality• Impact• Market value & growth
How to make ensure companies are ready ?
How to support the link to management
performance ?
Integrated Performance as a focus
Virtuous cycle of an integrated approach
Integrated Performance reflects the true market value of a company because the real company value is expressed in both financial and non-financial performance
Management
Performance
Reporting
Materiality Analysis /
Due Diligence
Challenges of Better Integration of Financial and Non-Financial Performance
1. Materiality assessment2. Maturity of management3. Integration of management4. Good story telling for better evaluation
4
1. Materiality = Defining Relevant Sustainability Areas to Manage and Report for Business Benefit
Key Success Factors- Informing corporate strategy not only
reporting- Instrumental in setting sustainability
context & identifying risks and opportunities
- Dynamic and evolutionary process- Incorporates short, medium and long-
term view of social, environmental, governance issues impacting business
- It must build on reliable, evidence-based data, observations and conclusions
- Multi-stakeholder engagement is key to success & to avoid myopic view of impacts
Challenges for Companies• Issue identification
• Issue Prioritisation
• Strategic Use
• Review of Materiality Assessment
The real challenge: quantity and quality
This material may not be reprinted or redistributed without the express written consent of CSR Europe
(1) Increase in the number of companies reporting in Europe
Current0
5,000
10,000
15,000
20,000
(2) Focus on maturity and integration of the management of ESG factors, within companies and within the supply chain
Maturity Integration0
25
50
75
100
4661
%
= degree to which KPIs, targets, performance
management & transparency are developed
= degree to which ESG management is linked to
core strategy & management processes
0 1 2 3
Five factors of maturity
Carbon emissions
Employee engagement
Waste manage-ment
Customer satis-faction
Supply chain management
Public percep-tion
Ethical integrity
Innovation
Targets related to non-financial KPIs
Results linked to existing business man-agement model
Results linked to perfor-mance man-agement
Results re-ported exter-nally
Source: VNFP Project 2012, CSR Europe
Average score, n=19
Non-financial KPIs in place
HQ, Affiliates, Supply ChainHQ, AffiliatesHQNone of the
operations
2. Maturity: KPIs and reporting but less targets and link to business
This material may not be reprinted or redistributed without the express written consent of CSR Europe
3. Integration: linked to strategy but not really to business
Integration0%
100%
61%
Integration of NFP Management
CSR fully integ-rated
CSR not integ-rated
Average percentage, n=18
Source: VNFP Project 2012, CSR Europe
Integration is the degree to which non-financial performance is linked to the core strategy & management processes of the business
Five drivers of integration
1. Strategy and decision-making
Centralised and coordinated CSR strategy and objectives, feeding into the core business strategy.
2. Management model CSR is part of your management processes
3. Organisational structure
Direct involvement of executives and strategic divisions in CSR decision-making/corporate planning
4. CollaborationIntensive cooperation between operational divisions to implement CSR strategy
5. Stakeholder engagement
Capacity to gather and bring on board stakeholder expectations
This material may not be reprinted or redistributed without the express written consent of CSR Europe
4. Good story telling for better evaluation
• Context is king• Not every performance aspect is
quantifiable• Reliable and robust datasets on
non-financial performance• Communicate strategic goals and
targets on material non-financial areas
• Define communications format according to habits of stakeholders targetedhow do investors read sustainability reports?
9
Good story telling for better evaluation
• Clarity on expectations – from investors towards companies
• Good understanding of sector risks • Define how to bring it into
conversations, how to communicate
10
Conclusion
For better risk assessment and value-setting over the mid-term: – Prepare robust and credible materiality
assessment for strategic use– Ensure material financial and non-financial issues
are managed in a mature way– Integrate non-financial management into the
standard business processes– Communicate with audiences in ways appropriate
for them to understand and use your story
11
European Action Plan on Integrated Performance and Reporting
MISSIONTo equip companies, governments, investors, analysts and financial markets in Europe with the knowledge and tools to enhance integrated performance through efficient management and reporting with a view to improve business performance and to comply with legislation.
THE WORKBased on the activities of existing frameworks and networks (such as GRI, IIRC, WBCSD, CDSB, etc.) develop capacity building and awareness raising instruments to support companies, governments, associations, investors, analysts and financial markets and contribute to European monitoring of integrated performance and reporting.
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