Quarterly Global Market Scan
The EU Non-Financial Reporting Directive -what does it mean for my company?
22 April 2016
Agenda
Time Description
15:00-15:05 Opening by Sabine Content, GRI Deputy Director Corporate &
Stakeholder Relations
15:05 – 15:25 Bernd Kasemir, Sustainserv Managing Partner –
Overview of the EU NFR Directive (Scope, main disclosures
timeline, EC consultation on non-binding guidelines)
15:25 – 15:40 Wim Bartels, KPMG Partner & Global Head of Sustainability
Reporting and Assurance –
Next steps for companies, overview of reporting practices
15:40 – 15:55 Q&A
15:55 – 16:00 Closing, Sabine Content
The EU Non-Financial Reporting Directive – what does it mean for
your company?
Key points on the EU NFR
Directive
Bernd Kasemir, Managing Partner Sustainserv
GRI GOLD Community webinar, April 22, 2016
Brief introduction
5
Managing partner at Sustainserv, an international sustainability management
consultancy with offices in Zurich and Boston
Support for our clients: strategy, KPI’s, communication, change management
15 years in business, GRI Training Partner, more than 200 CSR reports
GRI GOLD Community webinar, April 22, 2016
Table of contents
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Goals of NFR Directive
Implementation in national law
Close link to financial reporting
Content of «non-financial statement»
Methods for reporting
Timeline
Key drivers for reporting
Questions for you to consider
GRI GOLD Community webinar, April 22, 2016
Goals of the NFR Directive
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EU Directive 2014/95/EU on Non-Financial Reporting (aka CSR Directive)
Aims to “raise to a similar high level across all Member States the transparency of the
social and environmental information provided by undertakings in all sectors”
Amends earlier Directive (2013/34/EU) that regulates financial reporting and mainly
targets companies of more than 250 employees
To avoid undue burden on smaller companies, limited to stock-listed companies,
banks and insurances of more than 500 employees. But Member States can expand
scope.
GRI GOLD Community webinar, April 22, 2016
Implementation on national level
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Implementation (transposition) to national law required until December 2016
Example Denmark
Law published
While early estimates of companies directly affected across the EU are at about 6,000 companies, more than 1,000 will be covered in Denmark alone
Key reason: lowering of threshold to 250 employees
Example Germany
Draft legislation in consultation process by Federal Ministry for Justice and Consumer Protection
Draft very close to EU Directive requirements
Possible extension of scope: GmbH & Co KG’s (limited liability companies) and cooperatives could be included
GRI GOLD Community webinar, April 22, 2016
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Some examples for national implementation
GRI GOLD Community webinar, April 22, 2016
✓ (✓)(✓) - (1) - (2)
(1) 2012: Grenelle II
(2) 2013: UK Companies Act:
Mandatory Greenhouse Gas Reporting
Close link to financial report obligations
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Management report specified as the default part of corporate reporting where non-financial statement should be included.
Member States may allow companies to issue the non-financial statement as a separate report, if
it is published together with the management report, and
covers the same financial year as the management report.
For example, the German draft legislation allows this option
Statutory audit firm will have to check whether non-financial statement has been provided
Not required by NFR Directive that content to checked as well, but
member states may require that the information is verified by an independent assurance provider.
Subsidiaries have to report unless they are covered in consolidated management report of parent company meeting the requirements
GRI GOLD Community webinar, April 22, 2016
Content of non-financial statement
11GRI GOLD Community webinar, April 22, 2016
Suggestions (should, may, could) and as appropriate/necessary
Environmental Employee/social H. rights/anti-corrupt.
Environmental impacts Ensure gender equality Prevention h.r. abuse
Health & safety impacts ILO conventions Instruments to fight
Energy use Working conditions - corruption
- Renewable energy Health & safety at work - bribery
- Non-renewable energy Social dialogue
GHG emissions Worker consultation
Water use Trade union rights
Air pollution Community dialogue
- For large undertakings also diversity policies for supervisory and
executive bodies (as part of corporate governance statement)
Methods for reporting
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Materiality (as appropriate/to the extent necessary)
EU Commission consultation on their upcoming non-binding guidelines on
methodology for reporting closed last week
Included question of materiality approach vs. comprehensive list of KPI’s
Frameworks to use
No specific reporting framework mandatory
Directive suggests that companies may rely on ISO 26000 or the GRI guidelines
in addition to a number of EU, UN, ILO, OECD and national frameworks.
GRI GOLD Community webinar, April 22, 2016
Timeline
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Timeline for implementation in national law
Required by December 6, 2016
Timeline for reporting by companies
Financial year starting January 1, 2017
Or financial year starting during calendar year 2017
GRI GOLD Community webinar, April 22, 2016
Key drivers for reporting
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Responsibility at the top
Collective responsibility by members of the “administrative, management and supervisory bodies” that annual financial statement, management report, corporate governance statement (if separate) and the non-financial statement (if separate) are drawn up and published in accordance with the requirements.
Comply or explain
Non-financial (environmental, social/employee, human-rights, anti-corruption andanti-bribery) policies to be described.
Or to be disclosed that there are no policies, and why.
Indirect mandate:
Reporting companies required to disclose principle non-financial risks “where relevant and proportionate” of its “business relationships”
Possibly main impact of the directive. If you are supplier to large companies that have to report, you’ll likely receive disclosure requests from them down the road.
GRI GOLD Community webinar, April 22, 2016
Questions for you to considerAlso Q&A discussion at the end of this webinar
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Are you covered directly?
Do you expect supply chain pressure for disclosure?
Are you supplier to large companies likely to be covered?
Have your customers already asked you for environmental and social information
(RFP’s etc.)?
Would you have policies and metrics in place to respond if needed?
Have you done a materiality assessment to understand what to focus on?
If you would report due to legal requirements of supply chain pressure
Would it be best for you to “reduce to the max”?
Would it be best for you to use this as an opportunity for market differentiation?
GRI GOLD Community webinar, April 22, 2016
Thank you!
Sustainserv, Inc.
31 State Street, 10th Floor
Boston MA 02109
USA
T +1 617 330 5001
Sustainserv GmbH
Gartenstrasse 16
8002 Zurich
Switzerland
T +41 44 500 53 00
www.sustainserv.com
Implications of the NFI Directive for your company: a big opportunityWim Bartels, Global Head of Sustainability Assurance & Reporting at KPMG
—
22 April 2016
18
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
The opportunities from the NFI Directive• Integrating your (CSR) reporting in mainstream reporting
• Connecting CSR issues to the business model
• Focusing on the financially material CSR issues that matter to strategy
• Redefining the value of CSR to the business
• Further strengthening systems and controls
19
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Base: N100 companies
Source: KPMG Survey of Corporate Responsibility Reporting 2015
4%
20%
51%
56%
2008 2011 2013 2015
Integrating CSR into mainstream reporting
20
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Connecting CSR to the business model
Business model
Source: KPN Annual Report, 2015
21
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Focusing on financially material issues that matter to strategy
Risks related to CSR matters
Source: AkzoNobel Annual Report 2015
22
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Redefining the value of CSR to the business
Policies & outcome of policies, including KPIs
Source: Unilever Annual Accounts 2015
23
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
Further strengtheningsystems and controls
2. Risk Assessment
3. Control activities
4. Information
& communication
5.Monitoring
1. Control environment
24
c o l o u r
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
• Have we considered to include the material CSR information in the annual report and decided about its
placement?
• Is our business model sufficiently explained in the annual report – and how could a visualization of our
business model assist in better understanding the relevance of CSR for our business?
• How could we further strengthen the integration of CSR risks into our risk management processes to better
inform and connect to strategy?
• To what extent do the CSR aspects defined inspire to redefine the value of CSR to our business and the
purpose of our company?
• Are we sufficiently comfortable that the relevant KPIs for our CSR issues are properly embedded in internal
control and reporting processes to deliver reliable outputs?
Questions for you toconsider
KPMG on social media KPMG app
© 2016 KPMG Staffing & Facility Services B.V., registered with the trade register in the Netherlands under number 33263682, is a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks of KPMG International.
Thank you
Linkage document
https://www.globalreporting.or
g/resourcelibrary/GRI_G4_EU
%20Directive_Linkage.pdf
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