Sustainability Reporting, CSR and Business Ethics

in Israel

Liad Ortar

Structure of presentation:

• Corporate Philanthropy – religious sources and actual response

• The definition of a corporation – the legal aspect• CSR guidelines:

• Maala ranking• IS 10000• GRI & sustainability reporting• Mandatory non financial reporting law

proposal

• Another motive from Jewish literature…

"If there be among you a poor man of one of thy brethren

within any of thy gates in thy land which the LORD thy God

giveth thee, thou shalt not harden thine heart, nor shut thine

hand from thy poor brother:

But thou shalt open thine hand wide unto him, and shalt surely

lend him sufficient for his need, in that which he wanteth." –

King James Bible "Authorized Version", Cambridge Edition. Deuteronomy 15:7,8

Two basic principles of Jewish philanthropy:• It is a ‘Mitzva’ (command)• It must be done secretly

One of the results…charity boxes on the streets of Bnei-Brak

Some figures concerning philanthropy in Israel

Survey included 408 not-for-profit organizations with a budget of over 500K NIS

50%

34%

2%2%

7%5%

2011

Government Income from sales and interest

Other transfers From other NGOs

Philantropy from abroad Philantropy from Israelis

27%

71%

2%

2011

Corporations House holds legacies

Distribution of funding sources – total budgetDistribution of funding sources – only Israeli funding sources

To what purpose Israeli corporations donate money to

3%

12%

6%

35%

17%

2%

25%

2011

Sport and culture Education & research Health

Welfare Environment, housing and advocay Religion

Volunteering

• Only 34% (!) of all corporate donations are reported to the tax authorities for recognition as an expense. (Article 46 ? )

"…to operate in accordance with business considerations

in realizing its profits, and within the scope of such

considerations, the interests of its creditors, its employees

and the public may inter alia be taken into account;

similarly, the company may donate a reasonable sum for

a proper object, even if such donation is not within the

scope of business considerations as aforesaid, if a

provision for such is laid down in the articles of

association."

The Israeli Companies Law, Chapter 11(a), p. 9

The goal of the corporation is to…

Corporate Social Responsibility in Israel is well founded in the ‘beyond compliance’ realm with voluntary managerial approaches:

Sustainability Reporting (GRI based) Israeli Standard 10000 (based on ISO

26000)Maala RankingMandatory ESG reporting – law proposal

• 85 Companies participated at the 2015 Maala CSR index

• 78% of them published a sustainability report

The result -

Maala bond – 20 largest traded companies:

Yearly yield

TA100 in comparison to TA Maala index (30 largest traded companies participating in the Maala ranking)

Israeli Standard (IS) 10000–

Guidance on Social Responsibility of Organizations

“Attestation is done after implementation of an intra-organizational process, in which the Social Responsibility system, per the standard requirements, is successfully implemented” (from SII site)

ISO 26000 ?

Still only a managerial guide ?

In 2014 – out of 7 companies holding the IS10000 certificate –non had a sustainability report

8

14

46

8

4

9

0

3

8

9

10

13

19

0

5

10

15

20

25

30

2008 2009 2010 2011 2012 2013 2014

Already reported

First time reporters

Sustainability Reports in Israel

• G3 introduced in 2007 by me with its translation to Hebrew

Although there is a clear increase in the number of sustainability reports being published in Israel, it is a fraction of the total number of large (traded / governmental / private) companies.

The Knesset (the Israeli Parliament)

CSR Law Proposal (Obligatory Reporting) - 2014

• "Large Company" - public or private company that complies with either one of the three following terms:

1. Employs over 250 people2. It’s yearly revenue is at list 25 Million NIS (new Israeli

Shekel)3. The ratio between the highest monthly salary to the

lowest one is larger than 30 times.

Article 6 – Timing of handing in a CSR reportThe report will be handed in by the end of the first quarter of

the financial year and will cover the previous year.

The clerk in charge is allowed, according to the specified conditions, to grand a delay of up to two months in the handing in of the report to the companies requesting in doing so.

The minister is allowed to exempt a company from up to one reporting period, according to the specified conditions.

Article 9 – Penalties

An obligated reporting company that did not hand in its report accordingly will be fined in the rate of 1% of its yearly revenue.

Before executing the fine as specified in article (A), the clerk in charge is allowed to summon for hearing the company's responsible manager.

Any company not handing in a report on time will not be allowed to do any use of the reporting logo until the report is handed in accordingly.

An obligated company not handing in a report will be registered a violating company and this record will be saved to a period of up to seven years.

Workplace Diversity

Yes/NoIs the organization a policy for the advancement of

disadvantaged populations in Israeli society?

AttachmentIf yes, complete and attach the policy document

TextIf no, please explain why there is no such policy

document

Please answer the following questions for each

population group: women, Arabs, ultra orthodox,

people with disabilities, elderly (45+), Ethiopian

PercentageWhat is the percentage of employees in each of these

groups out of the total employees in the organization?

PercentageWhat is the percentage of employees for each of

these groups that were hired by the organization

during the reporting period?

PercentageWhat is the percentage of employees in each of these

groups that hold management positions in the

organization?

PercentageWhat is the percentage of employees in the

organization from each of these groups are earning in

the top fifth (20% upper) of high wage recipients?

We developed in a multi-stakeholders dialogue process a detailed guidelines for non financial reporting.

The world is based on three pillars:

1. On the Bible

2. on the Work

3. And on Charity:

1. In money donations

2. In personal fiscal assistance

3. In one’s speaking out

Liad.ortar@gmail.com