Non Financial reporting: What differences accross European countries? October 3rd 2019 Table Context and methodology Major findings Conclusions © 2019 Property of EY & Associés Context and methodology 3 © 2019 Property of EY & Associés Context and methodology Information collected in 12 countries • Revised NF Reporting Directive project • French initiative for a non financial standard at European 8 countries with detailed results level following Mr de Cambourg report on representative sample of companies FRANCE SPAIN ITALY PORTUGAL GERMANY BELGIUM NETHERLANDS GREECE 4 countries with information on the EU directive local transposition UK SWEDEN FINLAND DENMARK 4 © 2019 Property of EY & Associés Context and methodology Information collected from 156 European NF Statements in 11 countries • Data collected among annual and sustainability reports from 156 European companies and compared to the 102 French DPEF (SBF120) Number of companies included in the European analysis : 156 FRANCE SPAIN ITALY NETHERLANDS GERMANY BELGIUM PORTUGAL 102 31 16 17 20 20 18 FINLAND GREECE UK SWEDEN DENMARK 19 12 3 n.a n.a 5 © 2019 Property of EY & Associés Major findings 6 © 2019 Property of EY & Associés Shared sustainability topics open the way for a non-financial standard at European level 12 material topics on average in Talent management, health and safety comparison with 10 in France Climate change and management • Shared topics across countries of resources allowing alignment of non-financial reporting despite diversity of approaches, materiality or CSR risks Responsible supply chain, human rights assessment • Alignment of the number of material Ethic and corruption topics covered Customer satisfaction, innovation and • New topics on responsible supply products chain, customer satisfaction and products • Philanthropy developed in most countries but less covered in France Philanthropy and community 7 © 2019 Property of EY & Associés Shared sustainability topics: focus on CO2 emissions reporting ACS Group Schneider Electric • Most companies report on CO2 emissions on scope 1, 2 and 3 • Often based on Intesa Sanpaolo GRI standards and CDP Signify requirements • Often quantitative objectives set to support carbon UCB reduction strategies 8 © 2019 Property of EY & Associés Materiality analysis is a common practice across European countries CSR risks are mainly covered by qualitative information on mitigation measures France: 75% of DPEF are based on a CSR risks analysis Rest of Europe: 90% of companies use materiality analysis to address material issues FRANCE SPAIN ITALY NETHERLANDS GERMANY BELGIUM PORTUGAL GREECE Materiality analysis CSR risks assessment Legend: Always Almost always Sometimes Almost never 9 © 2019 Property of EY & Associés There is a growing trend to link materiality topics with the SDGs but lack of quantitative analysis of impacts Intesa Sanpaolo Solvay 10 NN Group © 2019 Property of EY & Associés Efforts have been observed to present the business model but still progress to be made on the content France, Spain, Italy and Belgium: 100% of companies present a business model Rest of Europe: 75% of companies present a business model FRANCE SPAIN ITALY NETHERLANDS GERMANY BELGIUM PORTUGAL GREECE Presented Infographic form Legend: Always Almost always Sometimes Almost never 11 © 2019 Property of EY & Associés More and more companies set quantitative objectives on material sustainability topics but still progress to be made on the relevance of the KPIs France: 75% of companies have quantitative objectives Rest of Europe: 62% of companies have quantitative objectives FRANCE SPAIN ITALY NETHERLANDS GERMANY BELGIUM PORTUGAL GREECE Quantitative Objectives KPIs Intensity ratio and no absolute values Legend: Always Almost always Sometimes Almost never 12 © 2019 Property of EY & Associés The NF Statement is gradually replacing the sustainability report Growing trend toward integrated The NF Statement is mostly reporting of financial and non- published in Annual reports across financial information all countries FRANCE UK NETHERLANDS ITALY The business model is often published in the first part of the Separate NF statement or a stand- Annual Report in the Group’s alone sustainability reports still presentation chapter exist in some countries: 65% of companies in France 44% in the rest of Europe SPAIN ITALY BELGIUM PORTUGAL GERMANY 13 © 2019 Property of EY & Associés There is still need for more synthesis and prioritisation of non financial information 51 pages in France on average (4 pages increase vs. Grenelle 2) 43 pages on average in other European Countries 18 pages on average in Germany because of country guidelines (Nachhaltigkeitsrat) Still existing need to work on synthetic NF Statement focused on material sustainability issues Need to reconcile synthetic non financial information focused on material issues and non-financial rating agencies expectations 14 © 2019 Property of EY & Associés Example of Germany’s guidelines for synthetic sustainability reporting GERMANY Checklist on all sustainability matters Comply or explain logic “The declaration of conformity is composed of descriptive sections of texts and performance indicators that are backed up by figures. It should be as long as necessary and as short as possible in order to draw readers’ attention to the essentials. By way of orientation, the short reports on the individual criteria should be between 500 and 3,000 characters long” 15 © 2019 Property of EY & Associés Focus on the UK Strategic report The non financial reporting is already covered by the strategic report UK Dedicated NF statement chapter in the strategic report included in the annual report • The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 enforced the strategic report • It should: • highlight linkage between the content elements • be focused on materiality • be concise • have a forward looking orientation • The NF Statement has been included in the strategic report 16 © 2019 Property of EY & Associés Only France, Spain and Italy have additional verification requirements Other countries have frequent voluntary verification practices Mandatory reliability check by a third independant party Mandatory presence check + market practice of voluntary reliability check by a third party* Mandatory presence check** * NL: mandatory check of presence and consistency ** Possible occasional voluntary verification © 2019 Property of EY & Associés Mandatory verification: France is the only country where it is common practice to have observations in the verifier’s report FRANCE SPAIN ITALY Standards and Company specific common by law suitable criteria reporting protocols practice More than 50% with Almost no observations observations Qualification or Almost no observations observations in the Mostly on policies and verifier's report due diligence on CSR Mostly on missing risks required information Mainly Statutory Verification by Statutory auditor Statutory auditor auditor Accounting brands 18 © 2019 Property of EY & Associés Voluntary verification: There is a Diversity of standards used to verify the NFS but prevalence of the GRI NETHERLANDS* GERMANY BELGIUM PORTUGAL DANEMARK Standards and suitable criteria Qualification or Almost no Almost no Almost no Almost no Almost no observations in the observations observations observations observations observations verifier's report Statutory auditor Statutory auditor Statutory auditor Statutory auditor Statutory auditor Verification by Or Accounting firms * NL: mandatory check of presence and consistency 19 © 2019 Property of EY & Associés French company specific reporting protocol… Calculation methodology Detailed definitions for each sub indicators with : - Definitions - Inclusions - Exclusions - Examples 20 © 2019 Property of EY & Associés …Compared to GRI global reporting guidelines Calculation methodology Guidelines on each disclosure 21 © 2019 Property of EY & Associés Conclusions 22 © 2019 Property of EY & Associés Key messages on European reporting following EU Directive on non financial reporting There are numerous shared practices in Europe on sustainability reporting: 1 • Large use of materiality analysis to identify NF topics that matter • Shared material topics and similar average number of material topics identified • Similar NF Statements in terms of form There is a need for harmonisation on sustainability verification in order to get comparable data: 2 • Numerous countries with different voluntary verification schemes • Need for more precise and common suitable criteria Are we going towards a possible common standard ? • Some shared topics with the same level of reporting such as CO2 emissions 3 (scope 1, 2, and 3) or Accident rate • Complemented by Industry specific requirements 23 © 2019 Property of EY & Associés Appendix 24 © 2019 Property of EY & Associés Annex Companies included in the study ACCOR France CREDIT MUTUEL France KLEPIERRE France SANOFI France ADP France DANONE France KORIAN France SCHNEIDER ELECTRIC France AIR FRANCE -KLM France DASSAULT AVIATION France LA POSTE France SCOR France AIR LIQUIDE France DASSAULT SYSTEMES France LAGARDERE France SOCIETE GENERALE France ALSTOM France EDENRED France LEGRAND France SODEXO France ALTEN France EDF France L'OREAL France SOPRA STERIA GROUP France ALTRAN TECHN France EIFFAGE France LVMH France SPIE France ARKEMA France ELIOR GROUP France MAISONS DU MONDE France SUEZ France ATOS France ELIS France MERCIALYS France TARKETT France AUCHAN France ENGIE France METROPOLE TV France TECHNICOLOR