Sustainability Reporting
Sustainability Reporting Strategy Creating impact through transparency Sustainability Reporting Strategy | Creating impact through transparency Sustainability Reporting Strategy | Creating impact through transparency
Staying ahead in making sustainability tangible
Many stakeholders, including governments, financial regulators, and stock exchanges are paying more attention to the performance of What are the benefits of sustainability reporting? They can also build trust and credibility with a growing organisations in view of their non-financial impacts. We cannot manage what we do not seek to number of internal and external stakeholders that understand. Sustainability reporting conveys demand greater insights into how an organisation What is sustainability reporting? Why is sustainability reporting important? disclosures of an organisation’s negative impacts in manages risks and opportunities related to material, A sustainability report is a report published by an organisation on Multiple market developments and heightened regulatory and addition to its positive impacts on the environment, environmental, social, and governance matters. its material non-financial performance information, incorporating legal scrutiny indicate that the transparency and accuracy of society, and economy. Environmental, Social, and Governance (ESG) concerns. sustainability reporting is increasingly important. In addition Below are some of the key drivers of value creation to NGOs and consumers, regulator and investors increasingly As sustainability reporting continues to mature and and protection to support your sustainability reporting A sustainability report is the critical first step in implementing demand the communication of a thorough sustainability evolve, organisations can gain a better understanding strategy and help your organisation to communicate a strategy that can help an organisation to set goals, measure assessment and management of related risks and opportunities. of how sustainability issues impact their business sustainability performance to the stakeholders. performance, manage sustainability-related impacts and risks, and and where opportunities for competitiveness and understand how it drives value for its stakeholders. An increasing amount of financial instruments and business shareholder value can be found. partners demand a clear assessment and articulation of the company’s sustainability performance. Six key drivers of value creation and protection to support your organisation’s sustainability reporting strategy
Examples of market drivers in the sustainability reporting landscape Innovation and National policies and regulations/ stock Standard-setting and reporting initiatives: opportunity creation exchange listing rules: • Global Reporting Initiative (GRI) Standards Exploring innovative • Bursa Malaysia published sustainability • Sustainability Accounting Standards Board (SASB) technologies and reporting guides for companies to adopt Task business models that Force on Climate-Related Financial Disclosures • International
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Towards a more holistic sustainability approach
Success factors • Identify your organisation’s business opportunities generated with the information disclosed; The structure for continuous improvement We help organisations develop their sustainability and integrated reports whilst providing insights into developing their • Advise on engagement strategies with buyers, investors, sustainability strategy. insurers, and lenders;
• Align your website and other public information with the report. We also advise clients on ways to improve the credibility and reliability of their sustainability disclosures by providing both internal and external assurance on sustainability reports, greenhouse gas (GHG) statements and other forms of non-financial information in accordance with standards such as the International Standard on Assurance Engagements (ISAE) 3000. Success factors • Benchmark your sustainability reporting against local and international industry best practices, as well as sustainability-related standards and frameworks; Success factors • Assess the ‘assurance readiness’ of your internal • Assess the quality of your sustainability reporting systems and procedures pertaining to sustainability based on reporting requirements that are relevant to data reporting; your country and industry;
• Provide improvement recommendations to increase • Identify areas for improvement and recommended Final confidence and simplify the data collection and actions in your sustainability reporting. report reporting process; leverage • Apply a risk-based, value-adding approach Current in accordance with the ISAE 3000 to provide state assessment Success factors independent limited assurance of selected indicators • Define the sustainability purpose of your organisation of your sustainability reporting. Assurance optional • Align vision of Board of Directors and Senior Management
• Create market and competitive outlook to inform strategy Success factors • Assist in generating the report blueprint and develop the key content of sustainability reporting Strategy Success factors as per relevant reporting requirements, as well as alignment • Advise on stakeholder engagement strategies and sustainability-related standards and frameworks; assessments, including engagement measurement Report • Prepare a sustainability reporting roadmap to development and design services; increase your reporting maturity over time; • Engage your internal and external stakeholders • Analyse financial and non-financial drivers of value through a variety of channels such as workshops and creation and work towards adopting
• Analyse results generated from stakeholder engagement. Stakeholder engagement Success factors Success factors • Provide guidance on data collection as per relevant Data • Combining results from current state assessment and reporting requirements as well as sustainability- collection stakeholder engagement to identify sustainability areas that your related standards and frameworks based on the organisation will be prioritising moving forward; prioritised material areas; • Review existing materiality matrix to incorporate changes in • Prepare data collection templates, procedures, and Materiality assessment prioritised material areas; training to improve efficiency and understanding of data collection processes; • Develop materiality matrix and KPIs tailored to your organisation based on identified sustainability-related matters; • Review effectiveness of internal business policies and procedures for gathering and reporting • Align your materiality matrix with your organisation’s overall sustainability performance data. business strategies.
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Driving sustainability performance
Examples of financial value and incentives for strategic sustainability reporting
ESG/ Sustainability Linked Loans1 Consumers’ call for sustainable sourcing, The roadmap towards strategic outcomes ESG or sustainability linked loans are financial manufacturing and products The journey towards sustainability leadership goes through maturity phases and can be reflected in sustainability reporting. A report instruments that look to improve the borrower’s An increasing number of companies around the should be considered a strategic instrument to improve mission-critical relationships and open new doors for improving business sustainability profile by aligning loan terms to world are generating significant shares of their performance. the borrower’s performance against the relevant revenues from sustainable products or services, indicators. especially those that focus on sustainable living and The sustainability linked loan product enables are produced sustainably. Champion Practitioner lenders to incentivise the sustainability performance Pioneer Navigator Observer of the borrower. Brands are looking into their supply chains to ensure Sustainability is part sustainable manners in producing their products. Starting to understand Recognise the importance Sustainability is a driver of of the core value and Culture Sustainability is cost underlying risks in ESG of ESG and putting in The key components of these products are: ESG evaluations and assessments are conducted to business performance incorporated in business areas resources build transparency in their suppliers. Suppliers with model • Relationship to Borrower’s Overall Corporate sustainable practices will have a reliable and loyal Social Responsibility (CSR) Strategy Having a CSR team focusing Having a CSR team rolling Having a board level Having a Chief Sustainability relationship with these buyers. on reporting and data Governance Operational units delivery out projects and setting committee and an Officer to oversee relevant • Target Setting – Measuring the Sustainability of collection. Reporting will get targets improving cycle matters through BOD for finalisation the Borrower Strategic reporting is one of the easiest way foe vendors to show their efforts in sustainable • Reporting management. Having a sustainable Staying in compliance with Having multiple project Establishing short-term ESG business roll-put plan. Action local environmental and Establishing ESG Policy covering different aspects projects Utilising sustainable finance labour laws and regulations of ESG tools to support transition What others have to say about sustainability reporting
Setting short-term ESG Setting long-term ESG Joining international ESG "Over time, companies and countries "Our consumers are very sensitive to social and Targets No ESG target Evaluating possible targets targets targets and roll-out plan initiatives that do not respond to stakeholders and environmental issues... We have actively engaged with address sustainability risks will encounter them on these issues in the last ten years, and they Integrating stakeholder Extending ESG No ESG requirement for Setting compliance Setting ESG performance Supply Chain concerns in ESG supply management to the entire growing skepticism from the markets, and have become very aware as consumers. They especially suppliers thresholds for suppliers requirements for suppliers chain management value chain in turn, a higher cost of capital. Companies ask for information on environmental policies, workers' and countries that champion transparency rights and product safety .” Reporting annually with Reporting annually and Report is assured by No disclosure or not Reporting regularly on alignment with international and demonstrate their responsiveness Reporting extensively on all aspect of 3rd party (e.g. through reporting regularly selective ESG topics standards. Disclosing 3-year to stakeholders, by contrast, will attract Walter Dondi, Director of Co-op Adriatica (Italy's ESG. Disclosing targets ISAE3000 or AA1000) history data on targets investment more effectively, including largest retailer)1 higher-quality, more patient capital.“
Becoming a Champion – The benefits of strategic sustainability reporting Larry FInk, CEO at Blackrock "Investors want to see balanced reporting Traditional CSR Report Strategic Sustainability Report that showcases a company’s targets and • Report on selective topics with limited information • Report extensively on all material ESG aspects “The importance of investor engagement to drive progress against the SDGs. Companies • Top-down sustainability strategy, roadmap, and roll-put plan disclosure cannot be overstated. Climate change, water should consider risk factors and impacts • No relation to strategic objectives and no targets • Clear yearly goals, KPIs and track record security and deforestation present material risks to on people and the society in a focused • Focus on philanthropy work (charity runs, blood • Focus on environmental and social risk management and investments, and companies that are failing to disclose manner and strive to put out concise, donations, etc.) opportunity recognition their impact risk trailing behind their competitors in consistent, current and comparable data.“ • Reporting for compliance with listing regulations • Long-lasting relationships with business partners based on their access to capital.” transparency and accountability Tim Mohin, CEO of Global Reporting Emily Kreps, Global Director of Capital Markets at CDP Initiative For investors/financiers, a good corporate sustainability report can Across ASEAN, seven stock exchanges demand help them to: some form of sustainability reporting, mostly on • Identify investment opportunities that are resilient and future- mandatory basis. “Far from perceiving sustainability as "People are going to want, and be able, to find out about oriented or adjust interest rates for sustainable finance instruments a costly inconvenience, supply chain the citizenship of a brand, whether it is doing the right • Assess the impact made through their investments in your company 14 members of the G20 and 32 of the 52 leaders are using it to their advantage.” things socially, economically and environmentally.” largest economies have at least one regulation For buyers, a good corporate sustainability report can help to: covering an aspect of environmental, social, and • Understand the measures you take to address material risks Miguel Cossio, Senior Principal Analyst Mike Clasper, President of Business Development, Proctor governance disclosure • Understand the indirect impact they could make through partnering at Gartner and Gamble (Europe)2 with your firm • Assess the reputation risk they enter by working with your Sources organisation 1 https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/LMASustainabilityLinkedLoanPrinciples-270919.pdf 2 https://www.csr-company.com/resources-corner/words/memorable-quotes-ethics-csr-and-sustainability 06 07 Sustainability Reporting Strategy | Creating impact through transparency Sustainability Reporting Strategy | Creating impact through transparency
Active collaboration Our recognitions
Our participations in global sustainability standards • Number 1 in consulting service providers based on revenue by ALM Intelligence and Gartner Deloitte maintains active involvement in the public discourse on sustainability issues through collaboration with • Global leader in supply chain risk management consulting based on capabilities by ALM Intelligence leading global institutions that are dedicated to finding and promoting solutions to sustainability challenges. • Global leader in performance management consulting based on capabilities by ALM Intelligence
• Global leader in strategic risk consulting based on breadth and depth of capabilities by ALM Intelligence
Global Reporting Initiative • Leader in Asia Pacific in business consulting services based on capability and strategy by IDC GRI Deloitte has been an organisational stakeholder since its inception in 2004, and two Deloitte partners are members of the governance structure. Integrated solutions The Deloitte Sustainability Reporting Strategy brochure is part of a series of brochures that Deloitte has developed to offer targeted solutions to companies and organisations in Southeast Asia. The other complementary offerings are: International Integrated Reporting Council IIRC Deloitte Global Advisor is a Council Member and Deloitte has provided secondments.
Sustainability Accounting Standards Board SASB Deloitte has provided funding and a secondment, participated in industry working groups, and has a seat on the Assurance Task Force.
United Nations Global Compact UNGC Deloitte was a founding signatory in 2000 with several high impact pro-bono projects and secondments.
World Business Council for Sustainable Development WBCSD Deloitte was a founding member in 1995 and has been actively involved in many working groups and projects through the years.
Agenda 2030: Creating legacy, Sustainability Risk Management: Social Responsibility in Business: Formerly the Carbon Disclosure Project prosperity and continuity for your Powering performance for Focus on Human Rights CDP Deloitte is a past global and U.S. sponsor of CDP Water Disclosure and has developed business responsible growth reports to Investor and Supplier questionnaires on CDP Climate Change.
Global Initiative for Sustainability Ratings GISR Deloitte has provided funding and a secondment, participated in industry working groups, and has a seat on the Assurance Task Force.
The Prince’s Accounting for Sustainability Project AS4 Deloitte has provided secondments.
08 09 Contact us
Cheryl Khor Partner Deloitte Risk Advisory Asia Pacific [email protected]
Rui Figueiredo Director Deloitte Risk Advisory [email protected]
Samuel Sin Yee Ooi Senior Manager Deloitte Risk Advisory [email protected]
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