THE BDO ESG UNIVERSE VISION/ACTIVITIES/CAPABILITIES/SERVICES/ CLIENTS & RESOURCES
NOVEMBER 2020
Prepared by: Henning Dräger BDO Global ESG Lead [email protected] BDO USA, LLP, a Delawar e limited liability par tner ship, is the U.S. member of BDO Inter national Limited, a UK company limited +380by guar antee, 50 and for 452 ms par t of2037 the inter national BDO networ k of independent member fir ms. E
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2 CONTENT.
❑BDO's ESG approach...... p5
❑The Global ESG Market and BDO's ESG capabilities...... p9
❑ESG Groups across our network...... p28
3 BDO'S ESG
APPROACH; VISION; & STRATEGY.
4 WHAT WE MEAN BY ESG?
Measuring BDO's ESG performance means using material Environmental, Social and Governance factors in order to assess how far advanced we are towards being sustainable. By using BDO relevant industry ESG benchmarks, global policy frameworks including the UN SDGs and taking a science-based approach to setting ESG targets e.g. Net Zero Carbon targets against Intergovernmental Panel on Climate Change (IPCC) recommendations we aim to follow and adopt to evolving best international practice. Our approach to measure, manage and improve BDO's ESG performance will require access to reliable and comparable data on material metrics before we can move on to report our progress and set performance targets aligned with our ambitions.
ESG factors (not exhaustive)
Our environmental contribution to climate change through our greenhouse gas emissions, waste management processes and energy efficiency practices.
Managing social issues including human rights, labor standards, diversity and inclusion policies, workplace health and safety.
Our governance approach to risk management (BDO and client considerations), lobbying, conflict of interest, corruption and bribery, demonstrating public trust and interest and tax disclosure.
5 OUR ESG VISION, PURPOSE & VALUES. VISION We believe it is essential for the global economy and its diverse stakeholders to become more sustainable, equitable and cooperative. ESG performance management and reporting is part of this journey that when realized will enable greater transparency, performance comparability and trust among companies and their stakeholders. BDO wants to be part of the solutio n towards a more sustainable, ESG led future both inside our global network, when advising clients and in partnership with our stakeholders.
PURPOSE We want to be a Responsible Challenger finding smarter, unconventional ways to reduce our client's ESG risks and realize value across their strategic roadmaps, operational processes, policies and procedures, supply chains, stakeholder partnerships and innovation capabilities. We aim to apply the same rigor to our own network's ESG strategy, processes, procedures and stakeholder communication. By challenging our status quo daily, making brave decisions and investments to minimize our negative impacts while amplifying our positive contributions we act as a Responsible Challenger who is always willing to learn from and share best- practice ESG insights with our stakeholders.
VALUES • We have a positive, sustainable and measurable impact in the world • We aim to listen first, reflect and then offer our perspective • We take our work seriously but not ourselves • We encourage and embrace diverse perspectives • We are agile and entrepreneurial • We are partnership based and invest in strong relationships • We aim to think and act as a Network. We do accept, support and share material national differences 6 in ESG approaches and solutions. OUR ESG STRATEGY.
BDO is proud to aim towards being the recognized ESG leader among global second-tier peers including Grant Thornton, RSM and Baker Tilly. BDO Global Strategic ESG Framework We are currently discussing the development of a strategic ESG framework ("the framework)" for our network allowing us to integrate material ESG issues e.g. Net Zero Carbon and waste reduction targets; diversity and inclusion metrics Focal ESG issues and governance mechanisms into our corporate strategy. The framework, once Climate complete, will allow our day-to-day business decisions at global level to People increasingly take ESG into account. The United Nations 17 Sustainable Governance Development Goals (UN SDGs) will act as a motivating backdrop in the development of our framework. We firmly believe that embracing ESG leads to Data security better choices and more value for our clients, employees and key stakeholders. etc The
The ESG framework will be created in full consultation with our firms and lead Leading global to identifying the final material areas to focus on in 2021. We aim to produce second-tier ESG tangible results around each focal area and ultimately reach the goals we have champion set. Doing so also challenges us to increase our global coordination in our activities on ESG.
7 THE GLOBAL ESG MARKET & ESG CAPABILITIES ACROSS OUR GLOBAL NETWORK
8 PLAYERS IN THE GLOBAL ESG SERVICES MARKET.
SERVICE PROVIDERS ERM, Big 4, GT, SOFTWARE VENDORS Accenture, Arcadis, Mott Microsoft, SAP, Oracle, McDonald, Amazon, Climate Earth, CA, AECOM, Atos, McKinsey, Joule X, Ricardo, IBM, Cap Gemini, Veolia, IBM, Infosys, Salesforce, Logica, Bureau Veritas, MetricStream HP, Ramboll Group
HARDWARE VENDORS INDUSTRIAL COMPANIES Acer, AMD, Intel, Cisco, General Electric, Johnson Lenovo, Toshiba, EMC, Controls, Siemens, Dell, Apple, Logitech, Schneider Electric, AT&T, Samsung, Asus, Honeywell, 3M, Hitachi, Fujitsu, Vestas Toyota
9 Source: BDO Ukraine and Vedantix Sustainability ESG Services Survey 2019 VALUE OF THE GLOBAL ESG SERVICES MARKET.
SERVICE PROVIDERS
INDUSTRIAL COMPANIES HARDWARE VENDORS Big projects e.g. mobility Energy efficiency, IT 2019 infrastructure 2019 market infrastructure, market value: integration, drone value: renewable energy, data USD 20bn delivery networks, USD 500bn+ storage, industrial Industry 4.0, Industrial AI ecology solutions application
10 Source: BDO Ukraine and Vedantix Sustainability ESG Services Survey 2019 BDO FIRMS DELIVERING ACTIVE ESG SERVICES.**
#24 firms
France > Guernsey > Switzerland > Hong Kong > Israel > Australia > Germany > Norway > Brazil > UK > Sweden > Italy > Ukraine > South Africa > Malaysia > Netherlands > India > Greece > Singapore > Jordan > New Zealand > Mauritius > Azerbaijan > Costa Rica
11 ** Based on monthy monitoring by the Global Office and ESG Working Group + suite of ESG services varies ESG SERVICES INDUSTRY COVERAGE.
Fishing & Farming Oil & gas Renewable energy Coal
Chemicals Metals & mining Construction materials Paper & Pulp
Industrial services Transportation Textiles and Apparel Hotels & Entertainment
Retail Banking & Financial Insurance Healthcare Services
Pharmaceuticals Telecommunication Software & IT services Utilities
Business support services Aerospace & Defense Automotive Tobacco
12 ESG SERVICES AND CAPABILITIES - REPORTING.
ESG Service ESG service breakdown Key ESG standards & benchmarks used Leading BDO firms
REPORTING Report delivery and advisory • GRI Standards; • Italy in the following areas: • UN Global Compact; • Israel >Scope< • UN SDGs; • Ukraine • Sustainability • AccountAbility1000; • Norway • Internal • CSR • ISO 26000: Social Responsibility; • France • Integrated Reporting • Integrated Reporting Framework; • External • Impact Reporting • Dow Jones Sustainability Assessment; • Carbon • CDP; • Voluntary • Water • Sustainability Accounting Standards Board; • Ecological Footprinting • Climate Disclosures Standards Board; • Compliance • Transparency Reporting • EU Non-Financial Reporting Directive; • ESG Risk Reporting • ISO 14001: Environmental Management Systems; • Marketing/PR • Product Life Cycle • Principles for Responsible Investment; • COSO ESG Enterprise Risk Management Guidance • Technical • ISO 14064-1: Greenhouse Gases • ISO 14040: Life cycle assessment • Benchmarking • SA 8000 Standard of decent work
13 CASE STUDIES - REPORTING.
14 BDO ISRAEL – MIZRAHI- TEFAHOT BANK
Corporate Social Responsibility Report of the LEUMI Group for 2019.
Writing the Group Corporate Social Responsibility Report, in according to the Global Reporting Initiative (GRI) standards under the Comprehensive reporting option. The report also contains reporting in accordance with the principles of the UN Global Compact (UNGC) Initiative. The corporate social responsibility strategy focus process for the Bank’s business operations includes adapting the structure of the Report to Bank Leumi’s business strategy and to the spirit of its operations.
The content of the work, included: - Identifying the bank material topics and creating its Materiality Matrix; - Gathering relevant information on the year 2019; - Creating a SDG’s matrix based on the company's activity in 2019; - Writing and the report; - Accompanying the bank in the external GRI assurance process.
15 BDO UKRAINE – KYIV CARDBOARD & PAPER MILL
• Delivered Ukraine's first Paper & Pulp industry 2018 Sustainability report against GRI-Standards (data collection, interviews, visuals, writing the report)
• The report established a Sustainability benchmark for KCPM's environmental and social data and was submitted to relevant national and local environmental and health & safety regulators alongside legally required information
• The report was used as evidence of Sustainability performance data in several European Union tenders and played a part in securing contracts in 5 new markets
• Conducting a key stakeholder survey following the report's publication found that 86% of community partners (NGOs, social and environmental projects); 79 percent of employees, 75% percent of suppliers and 72% of local government agencies were satisfied to very satisfied with the report.
16 ESG SERVICES AND CAPABILITIES - AUDIT.
ESG Service ESG service breakdown Key ESG standards & benchmarks used Leading BDO firms AUDIT • Italy • Limited assurance • ISAE 3000 (revised) Assurance Engagements • Israel >Scope< Other Than Audits or Reviews of Historical • Netherlands • Reasonable assurance Financial Information • Germany • Internal • Ukraine controls and • Attestation • ISAE 3410 Assurance Engagements on • France data check Greenhouse Gas Statements • Guernsey • Industry or function specific audit • External or benchmarking e.g. energy, • ISO 14001: Environmental Management report Greenhouse Gas Emissions, human Systems verification and labour rights, supply chain • SA 8000 Standard of decent work • Compliance • Green Bond Audit • ISO 14040: Life cycle assessment • Benchmark against industry peers
17 CASE STUDIES - AUDIT.
18 BDO ISRAEL – ISRAEL AEROSPACE INDUSTRIES LTD.
Independent Limited assurance Report to the 2019 Sustainability Report.
Provide limited assurance on the specified parts in the report regarding the information presented on IAI 2019 Sustainability Report for the year ended 31 December 2019.
Our responsibility is to provide a limited assurance engagement and to express a conclusion based on the work performed. We conducted this project in accordance with International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with applicable ethical requirements, including independence requirements, and that we plan and perform the engagement to obtain limited assurance about whether the Report is free from material misstatement. A limited assurance engagement, regarding data and information in the specified parts on the sustainability report, consists of making interviews and inquiries, primarily of persons responsible for the preparation of information presented in the report, and applying analytical and other evidence gathering procedures, as appropriate.
These procedures included: • Examination of the specified parts in the report, for the purpose of performing a limited assurance, based on public information sources, knowledge of IAI business and other comparative information of similar organizations. • Inquiries of management to gain an understanding of IAI processes for determining the material issues for IAI key stakeholder groups. • Inquiries of management to gain an understanding regarding the specified parts. • Interviews with senior management and relevant staff at group level and selected business unit level concerning corporate r esponsibility strategy and policies for specified parts, and the implementation of these across the business. • Interviews with relevant staff at corporate and business unit level responsible for providing the information in the Report . • Visits to the IAI’s sites on the basis of a risk analysis including the consideration of both quantitative and qualitative criteria regarding the specified parts.
19 BDO GERMANY – SOFTWARE AG.
Limited Non-Financial Assurance Statement as part of the company's 2019 Annual Report
As part of the 2019 audit, BDO Germany provided a Non-Financial Statement for fiscal 2019 was audited with a limited scope.
The Non-Financial Statement is based on the (revised) ISAE 3000 Standard and review the following key non-financial information:
• Stakeholder engagement • Materiality analysis • Code of Global Business and Ethics Conduct • Supplier Code of Conduct • Substantial risks and Key Performance Indicators • Human Rights and Child Labor Due Diligence • Equal opportunity processes • Corruption and anti-competitive behavior policies • Environmental performance • Customer satisfaction and data protection
20 ESGESG Service SERVICESESG AND service CAPABILITIES breakdown -KeyADVISORY. ESG standards & benchmarks used Leading BDO firms ADVISORY • Italy • ESG Due Diligence analysis • Task Force on Climate-related Financial • Ukraine >Scope< Disclosures (TCFD) • Israel • Balanced Sustainability scorecard • Norway • Internal development • ISO 14040: Life Cycle Assessment • Jordan • Germany • External • ESG maturity analysis Tool • Global Footprinting Network
• Voluntary • Product Life Cycle Analysis • ISO 13.020.30 Environmental Impact Assessment • Regulated • UN SDG Smart Sustainable Cities Tool • CDP carbon and water benchmarks • Technical • Environmental Impact Analysis (EIA) • UN SDGs business analysis and reporting • Benchmarking • Public Sector tools e.g. Traffic framework Management software • BREEAM Sustainability Assessment • Climate change resilience and scenario Method for Infrastructure and Buildings planning (science based/Net Zero Carbon targets)
21 CASE STUDIES - ADVISORY.
22 BDO ISRAEL – LEUMI BANK.
Gender equality and employment diversity
The bank wanted to improve its performances in employment diversity.
The content of the work, included: 1. A benchmark that content: • The bank’s Survey of ESG material issues • Investor Reviews – reflecting the indicators in the employment diversity and the promotion of gender equality 2. The bank's performance 3. Introducing initiatives to promote diversity in employment and gender equality - a benchmark from around the world 4. Recommendations (what can the bank do in order to improve)
23 | ESG DUE DILIGENCE BDO ITALY - MARANGONI ESG Due Dilligence
ESG DD on Marangoni Group (buy side), together with BDO professionals focused on the traditional Due Diligence package (eg. Financial, Fiscal, Legal).
Our approach is carried out in the 3 following steps:
Preliminary ESG DD report analysis
On site verification
ADDED VALUE
This ESG DD activity, made the customer understand how, in addition to the vertical analysis of the environmental issues/aspects due to the nature of the industry (tires), it were strongly necessary to consider the other two aspects of sustainability: social and governance issues, because strongly requested from clients, investors and Institution (SDGs).
At the same time, we have noticed a good governance and proactive environmental management (mandatory and voluntary, thanks to ISO 14001 standard and EMAS scheme). All these elements worked together to achieve an improvement and better understanding of operational value, but above all the ability to develop sustainable products (sustainable innovation) in line with emerging trends. | ESG DUE DILIGENCE BDO ITALY – ALUMINIUM COMPANIES ESG DUE DILLIGENCE
ESG DD for a Group of aluminum processing companies for the acquiring party (buy side).
We immediately realized the absence of numerous and material risk factors concerning: ✓ health & Safety and human rights management ✓ raw materials supply chain and ESG risks ✓ circular economy impact on the business model ✓ physical risks associated with natural disasters ✓ transitional risks (include policy changes, reputational impacts, and shifts in market preferences, norms and technology) ✓ environmental management systems ✓ ESG governance
The added value provided by this ESG DD activity, was to point out that it is unthinkable for the buyer to proceed without doing an in-depth and complete analysis. Consequently, we evaluated: • higher costs associated with the management of ESG risks • potential and concrete losses related to sanctions and accidents • missed sales to customers interested in sustainable products • key ESG opportunities/efficiencies for improvement We have further highlighted how a lack of attention to aspects, such as those related to the circular economy and carbon management, could have consequences to the brand reputation. BDO NORWAY - STATSBYGG
26 ESG SERVICES AND PROFITABILITY.
The following firms confirm that the ESG services/practices are profitable:**
UKRAINE ITALY ISRAEL
27 ** This list will be updated as more firms report on their financial position regarding ESG services. ESG GROUPS & ACTIVITIES ACROSS OUR NETWORK.
28 ESG GROUPS AND RESOURCES.
Global Leadership Team The ESG WG represents almost all firms providing ESG ESG Working Group BDO Public Sector Group services and is responsible for the overall BDO ESG strategy, ESG Champions tool and services development as well as thought leadership. The group reports to Chris Smith and Trond-Morten Lindberg.
Chair: Morten Thuve Chris Smith Chair: Henning Dräger The Public Sector Group, Financial Serices Group, Natural 60 firms Trond-Morten Lindberg 28 colleagues; 20 firms Resources Group and ESG services firms (inside and outside the ESG WG) collaborate on projects, tenders and general information exchange.
Firms with Natural Resources Group Finance Services Group ESG services BDOWorld links
https://bdoworld.sharepoint.com/sites/ESG Chair: Sherif Andrawes & https://bdoworld.sharepoint.com/sites/PublicSector Chair: Gebhard Zemke 24 firms Catrherine Bell 84 firms https://bdoworld.sharepoint.com/sites/NaturalResources 72 firms https://bdoworld.sharepoint.com/sites/FinancialServices
29 BDO ESG WORKING GROUP – YOUR FIRST PORT OF CALL.
Henning Dräger; Your ESG Working Group Global ESG Lead & WG Chair
Belgium I Brazil I Canada I Finland I France I Germany I Global Office – Public Sector Industry Group I Guernsey I Hong Kong & Macao I Israel I Italy I Mexico I Netherlands I Norway I South Africa I Sri Lanka & Maldives I UK I Ukraine I USA
We look forward to connect with you! [email protected] +380 50 452 2037
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