Global Compact Reporting

Torbjörn Westman &

Jenny Fransson

November 4, 2014

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Business participants in the UN Global Compact commit to make the Global Compact ten principles part of their business strategies and day-to-day operations

Human RightsLabour

EnvironmentAnti-corruption

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Companies also commit to issue an annual Communication on Progress (COP)

A COP is a public disclosure to stakeholders (e.g., investors, consumers, civil society, governments, etc.) on progress made in implementing the ten principles of the UN Global Compact, and in supporting broader UN development goals

The COP is frequently the most visible expression of a participant's commitment to the Global Compact and its principles

Violations of the COP policy (e.g., failure to issue a COP) will change a participant’s status to non-communicating and can eventually lead to the expulsion of the participant

All business participants are required to post their COP on the Global Compact website and to share it widely with their stakeholders

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The overall COP format is flexible, but there are some requirements

The COP must contain the following three elements:

― A statement by the chief executive expressing continued support for the Global Compact and renewing the participant's ongoing commitment to the initiative and its principles

― A description of practical actions (i.e., disclosure of any relevant policies, procedures, activities) that the company has taken (or plans to undertake) to implement the Global Compact principles in each of the four issue areas (human rights, labour, environment, anti-corruption)

― A measurement of outcomes (i.e., the degree to which targets/performance indicators were met, or other qualitative or quantitative measurements of results)

Business participants’ COPs are classified in one of three categories, based on a self-assessment of the COP’s content; GC Learner, GC Active or GC Advanced COP

The Global Compact promotes a number of resources that provide insight and guidance for companies to meet the COP requirement

Sustainability Reporting Guidelines from Global Reporting Initiative is one of the resources promoted by Global Compact for participants to use as basis for their COP

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Making the Connection - Using GRI's Guidelines to Create a COP

The guide is produced by the Global Compact in partnership with the Global Reporting Initiative (GRI)

It describes how to use the GRI Sustainability Reporting Guidelines to prepare a Communication on Progress (COP)

The guide addresses:

― How to fulfill the elements of the GC Active and GC Advanced levels of the UN Global Compact differentiation program

― How to meet the requirements to be 'in accordance' with G4

― It also includes detailed cross-referencing between GRI indicators and GC Advanced criteria

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What is Global Reporting Initiative?

Global Reporting Initiative (GRI) started as an

initiative by the UN in 1997 and has developed

sustainability reporting guidelines ever since. In

May 2013, the fourth generation of guidelines

(GRI G4) was launched.

GRI G4 consists of:

― Principles for defining report content; stakeholder inclusiveness, sustainability context, materiality och completeness

― Principles for defining report quality; balance, comparability, accuracy, timeliness, clarity och reliability

― General standard disclosures

― Specific standard disclosures

― Sector supplements

Companies can chose to report on two ”in

accordance levels”; Core or Comprehensive”

Materiality is central in GRI G4

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Materiality is central in GRI G4

Materiality means that the sustainability report should cover aspects that reflect the organizations significant economic, environmental and social impacts and/or substantively influence the assessments and decisions of stakeholders

The identification of material aspects are based on the organizations sustainability context, i.e. the organization’s performance in the wider context of sustainability, and stakeholder inclusiveness, i.e. the organization should identify its stakeholders and explain how it has responded to their reasonable expectations and interests

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Defining material Aspects and Boundaries - process overview

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TThe guidance document “Making the Connection” provides guidance on what GRI indicators that covers each of the principles – but relevance for the organization is still crucial

© 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.