Sustainability Reporting Trends

Retail Industry Leaders Association (RILA)

October 12 14 2011October 12-14, 2011

Mike WallaceDirector, Focal Point USAGlobal Reporting Initiativewallace@globalreporting.org+1 212 339 0356

Venue, Date

+1 212 339 0356

What is the current a s e cu esituation?

Range of Terminologyg gy• CSR - Corporate Social Responsibility• CC - Corporate Citizenshipp p• SD - Sustainable Development• ES - Environmental Sustainability• BE - Business Ethics • CE - Corporate Ethics

CG C t G• CG - Corporate Governance• ESG - Environmental, Social & Governance• IR Integrated reporting• IR - Integrated reporting

What is your “Footprint”?What is your Footprint ?

Wh ll ?Who really cares?

Increasing Stakeholders and Demand

Modern DDue

Diligence

H d GRI h l ?How does GRI help?

GRI’s Vision & Mission

Vision A sustainable global economy where organizationsA sustainable global economy where organizations manage their economic, environmental, social and governance performance and impacts responsibly g p p p yand report transparently.

Mi iMissionTo make sustainability reporting standard practice by providing guidance and support to organizationsproviding guidance and support to organizations.

The GRI GuidelinesEnvironmental• EN 3 - Direct energy consumption by primary

energy sourceLaborLabor• LA 7 - Rates of injury, occupational diseases, lost

days and absenteeism, and number of work related fatalities by region.

Human Rights• HR 4 - Total number of incidents of discrimination

and actions takenProduct ResponsibilityProduct Responsibility• PR 6 - Programs for adherence to laws, standards,

and voluntary codes related to marketing communications, including advertising, promotion, ad sponsorshipad sponsorship.

Economic• EC 4 – Significant financial assistance received

from government.

Wh t i ?What are we seeing?

GRI Reporting Trends1818

1600

1800

2000Year # of

reportsGrowth rate

1999 11

US Reporters in 1999•Bristol-Myers Squibb•GM

1116

1491

1200

1400

1600

2000 44 300%

2001 122 177%

2002 139 14%

•GM•P&G•Sunoco

709800

10002003 166 20%

2004 274 65%

2005 373 36%

2006 516 38%

139 166

274373

516

200

400

6002006 516 38%

2007 709 37%

2008 1116 58%

2009 1491 34%

11 44122 139 166

0

200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2010 1818 22%

586 first-time reporters in 2010

G2 G3

GRI Reports by Region 2010*

O i Af iOceania4%

Africa3%

Europe

Northern America

14%Europe

45%

Latin America14%

Asia20%

14%

20%

GRI Reports by Sector 2010*300

250

300

150

200

50

100

0

50

Wh th R t ?Who are these Reporters?

GRI Reports Listhttp://www.globalreporting.org/GRIReports/GRIReportsList/

GRI Reporters (North American Sample)( p )

US Business Roundtable• ABB• Accenture

• ITTJohnson & Johnson April 2009Accenture

• Abbott• Alcoa • American Electric Power • AT&T• CB Richard Ellis Group Inc.

Johnson & Johnson Johnson ControlLife Technologies Corp McKesson Corp.Merck Motorola

April 2009

p• CH2MHill Companies, Ltd.• Chevron • Chubb • Citi • Coca-Cola

NexTera (Formerly FPL) Office Depot Owens Corning PepsiCoPfizer

• Conoco Philips • Cummins • Darden • Deloitte • Dow Chemical

PraxairProctor & Gamble Co. RyderSara Lee SAP USA

April 2010

• Duke Energy • DuPont • Eastman Kodak Co. • EMC• Exxon Mobil

F t M M

SAS Southern Company Siemens CorpTarget Corporation Tyco UAL C ti• Freeport McMoran

• General Electric • General Motors • HSBC• IBM

International Paper

UAL Corporation WeyerhauserWhirlpool Corporation Williams Xerox

• International Paper

Reporting Trends p gTextile and Apparel Sector

GRI Reports List ReviewOrganization Country Region Sector

Teijin Japan Asia Textiles and ApparelAdidas Germany Europe Textiles and ApparelNike United States of America Northern America Textiles and ApparelPuma Germany Europe Textiles and ApparelInterface United States of America Northern America Textiles and ApparelThe Timberland Company United States of America Northern America Textiles and ApparelAksa Akrilik Turkey Asia Textiles and ApparelGrupo Cortefiel Spain Europe Textiles and ApparelTOPKAPI IPLIK SAN. ve TIC. Turkey Asia Textiles and ApparelArt on Stitch Thailand Asia Textiles and ApparelEcologic Designs United States of America Northern America Textiles and ApparelImpahla Clothing South Africa Africa Textiles and ApparelLindex Sw eden Europe Textiles and ApparelLiupanshui Minyiyuan Business and Trade Company Ltd.

China Asia Textiles and Apparel

Shunde Hengfa Knitting Garment China Asia Textiles and ApparelSuzi Products South Africa Africa Textiles and ApparelVimal Clothing South Africa Africa Textiles and ApparelCentral Textiles Group China Asia Textiles and ApparelDelta Galil Israel Asia Textiles and ApparelDelta Galil Israel Asia Textiles and ApparelLindström Oy Finland Europe Textiles and ApparelDesigual Spain Europe Textiles and ApparelGildan Canada Northern America Textiles and ApparelGoLite LLC United States of America Northern America Textiles and ApparelMarui Group Japan Asia Textiles and ApparelMilteks Turkey Asia Textiles and ApparelPhillips-Van Heusen (PVH) United States of America Northern America Textiles and ApparelPhillips-Van Heusen (PVH) United States of America Northern America Textiles and ApparelSLN Tekstil ve Moda San.Tic.Ltd.Sti. Turkey Asia Textiles and ApparelSree Santhosh Garments (SSG) India Asia Textiles and ApparelSw itcher Sw itzerland Europe Textiles and ApparelTubas Textile Turkey Asia Textiles and ApparelCALIDA Sw itzerland Europe Textiles and ApparelCELTIC ESTORES, S.L Spain Europe Textiles and ApparelHansoll Textile Republic of Korea Asia Textiles and ApparelHansoll Textile Republic of Korea Asia Textiles and Apparel

GRI Global Reporting by Regionp g y gTextile and Apparel Companies Breakdown by Region

R t il B kd b R iRetailers Breakdown by Region

Example of Global Reporters

Example of North American Reporters

What does a GRI Report a does a G epolook like?

“The GRI offers a comprehensive framework for reporting a company’s impacts and activities”Nike FY04 Report

“We developed this report with reference to the Global Reporting

Nike FY04 Report

reference to the Global Reporting Initiative’s third generation of indicators. Based upon our assessment of Reporting and the GRI it i b liGRI criteria, we believe our reporting achieves B-level application of the GRI.” Nike FY07-09 Report

“...the Global Reporting Initiative (GRI), arguably the world’s most credible and trusted framework for

t ibilit ti ”corporate responsibility reporting” GoLite Website

“In 2005 and 2006, Gap Inc. Participated in the GRI’s working group to develop an A l d F t S tApparel and Footwear Sector Supplement that would introduce a reporting framework specific to the a e o spec c o eissues in our industry. The GRI’s new G3 guidelines and the draft GRI Apparel and footwear Sector Supplementfootwear Sector Supplement helped guide us throughout the development of this Report” GAP 2005 Reportp

“At Target, we recognize the a ge , e ecog e eGRI index as one of the most credible and widely used reporting standards, and believe it helps bringand believe it helps bring focus to our continued and evolving work as a responsible corporate p pcitizen” Target Website

“The framework we have used to measure and report our results phas been adopted from the Global Reporting Initiative (GRI) G3Guidelines” HBC Report 2010

How can you make the o ca you a e ebusiness case?

As a buyer, what information do you expect?

When you buy a house, a car, a product or iservice . . .

Wh t i f ti d d ?What information do you deserve?

D t it t b f l & bl ?Do you want it to be useful & comparable?

Shareholder Initiatives & Coalitions• Principles for Responsible Investment (PRI) [2006]

– Currently represents over $22 Trillion in investment capital– 800+ signatories

• Investor Network on Climate Risk (INCR) [2003]– Currently represents over $9 Trillion in investment capital

90+ members– 90+ members

• Carbon Disclosure Project (CDP) [2002]– Currently represents over $71 Trillion in investment capital– act on behalf of 551 institutional investors

• Institutional Investors Group on Climate Change (IIGCC) [2001]– Currently represents $6 Trillion in investment capital– 70 members

• Interfaith Center on Corporate Responsibility (ICCR) [1972]– Currently represents over $100 Billion– 300 members

Signatories to the UN PRI (US)800+ international signatories800 international signatories

PARTIAL LIST OF ASSET OWNERS (200):

• AFL-CIO Reserve Fund / AFL-CIO Staff Retirement PlanC lPERS / C lSTRS• CalPERS / CalSTRS

• Connecticut Retirement Plans and Trust Funds (CRPTF)• General Board of Pension and Health Benefits United Methodist Church• Illinois State Board of Investments• Los Angeles County Employees Retirement Association (LACERA)• Maryland State Retirement and Pension SystemMaryland State Retirement and Pension System• New York City Employees Retirement System / New York State Local

Retirement System• SEIU Pension Plans Master Trust• SEIU Pension Plans Master Trust• State Universities Retirement System of Illinois• Teachers' Retirement System of the City of New York

C f C• Universal Health Care Foundation of Connecticut

Signatories to the UN PRI (US) 800+ international signatories

PARTIAL LIST OF INVESTMENT MANAGERS:

800 international signatories

• BlackRock• Calvert Investments • CBRE Investors

• Boston Trust• Capital Group International

• Domini Social Investments• JPMorgan Asset Management• Kohlberg Kravis Roberts & Co, LLP

K ll & C

• Clear Bridge Advisors• MFS Investment

Management Principal Global Investors• Krull & Company

• Northern Trust Global Investments• Prudential Real Estate Investors

Russell Investments

• Principal Global Investors • T. Rowe Price• Tower Capital Asset

Management LP• Russell Investments• TD Asset Management Inc.• The Townsend Group• TIAA - CREF

Management LP

TIAA CREF

How would you conduct ydue diligence?

Can any of this really beCan any of this really be measured?measured?

Analysis of Tech Sector

A lApple x x 7.95 

CA ‐‐‐

Dell x x x x 6.14

EMC x 6.86

Fujitsu x ‐‐‐

HP x x x 7.74

Intel x x x x 7.96

IBM x x x 7 60IBM x x x 7.60

Microsoft x x x x 6.54

Toshiba ‐‐‐

Based on 2010 information

Analysis of Tech Sector

Company Corporate Governance

SocialEnvironment Overall 2010

ESG Scored hi l k h ld

Governance ESG ScoreLeadership Employees Stakeholders

Apple 28 3 11 7 14 63

CA, Inc. 25 4 14 16 9 68

Dell 27 8 16 8 21 80

EMC 26 5 19 12 14 76

Fujitsu 13 7 10 10 18 58

HP 26 8 16 10 25 85HP 26 8 16 10 25 85

Intel n/a n/a n/a n/a n/a n/a

IBM 24 9 20 12 20 85

Microsoft 29 7 15 17 15 83

Toshiba 19 7 13 10 18 67

Maximum Score 30 10 30 15 30 115

Based on 2010 information

Market Evolution

300,000+ data terminals globallyglobally

5,000+ companies and climbing

Sustainability Aspects• Emissions • Energy Consumption• Human Rights• Policies

Board Make Up• Board Make-Up

Built around GRI

ESG Disclosure Score Company Name  Environmental Disclosure 

ScoreSocial Disclosure Score Governance Disclosure

ScoreOverall ESG 

Disclosure Score 

2010 2009 2010 2009 2010 2009 2010 2009

Apple ‐‐‐ 12.40 ‐‐‐ 8.77 ‐‐‐ 51.79 ‐‐‐ 20.66

CA, Inc. n\a n\a 3.51 3.51 46.43 46.43 11.57 11.57

37 98 40 31 29 82 38 60 51 79 57 14 39 26 43 80Dell 37.98 40.31 29.82 38.60 51.79 57.14 39.26 43.80

EMC ‐‐‐ 54.26 ‐‐‐ 42.11 ‐‐‐ 66.07 ‐‐‐ 54.13

Fujitsu 55.04 55.04 47.37 45.61 57.14 57.14 53.72 53.31

HP ‐‐‐ 44.19 ‐‐‐ 43.86 ‐‐‐ 57.14 ‐‐‐ 47.11

Intel ‐‐‐ 46.51 ‐‐‐ 50.88 ‐‐‐ 75.00 ‐‐‐ 54.13

41 09 40 35 51 79 43 39IBM ‐‐‐ 41.09 ‐‐‐ 40.35 ‐‐‐ 51.79 ‐‐‐ 43.39

Microsoft 11.63 n\a 36.84 14.04 57.14 46.43 28.10 14.05

Toshiba 53.49 56.59 36.84 36.84 53.57 51.79 49.59 50.83

Environmental CriteriaCompanyNames 

Environmental Disclosure  

Score

Total Energy Consumption

(Mwh)

Total GHG Emission(Th Tonnes)  

Water Consumption(Thousands of cubic 

meters)

Total Waste(Thousands of metric 

tons)

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Apple ‐‐‐ 12.40 ‐‐‐ n/a ‐‐‐ 9542.00 ‐‐‐ n/a ‐‐‐ n/a

CA Inc n/a n/a ‐‐‐ ‐‐‐ n/a n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐CA, Inc. n/a n/a ‐‐‐ ‐‐‐ n/a n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Dell 37.98 40.31 676.00 619.90 366.19 406.25 1596.00 1683.00 52.61 100.00

EMC ‐‐‐ 54.26 ‐‐‐ 932.51 ‐‐‐ 386.26 ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Fujitsu 55.04 55.04 6638.90 7713.89 273.00 428.00 23106.00 24569.00 32.44 29.71

HP ‐‐‐ 44.19 ‐‐‐ 4046.00 ‐‐‐ 1951.00 ‐‐‐ 7647.00 ‐‐‐ 124.48

Intel ‐‐‐ 46.51 ‐‐‐ 5110.00 ‐‐‐ n/a ‐‐‐ 30379.32 ‐‐‐ 44.48

IBM ‐‐‐ 41.09 ‐‐‐ 6323.06 ‐‐‐ n/a ‐‐‐ ‐‐‐ ‐‐‐ 87.33

Microsoft 11.63 n/a ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐

Toshiba 53.49 56.59 15398.33 15856.11 3078.00 3435.00 52930.00 55800.00 2610.00 291.00

Social & GovernanceCompany Social Disclosure Score Governance Disclosure scoreCompany

NameSocial Disclosure Score Governance Disclosure score

2010

2009

% Employees Unionized

Community Spending

(Mn $) 2010

2009

% IndependentDirectors

% Women on Board

Scor

e2

Scor

e 2 ( $)

Scor

e2

Scor

e 2

2010 2009 2010 2009 2010 2009 2010 2009

Apple ‐‐‐ 8.77 ‐‐‐ ‐‐‐ ‐‐‐ ‐‐‐ 51.79 ‐‐‐ 85.71 ‐‐‐ ‐‐‐Apple

CA, Inc. 3.51 3.51 ‐‐‐ ‐‐‐ n/a n/a 46.43 46.43 88.89 90.00 22.22 20.00

Dell 29.82 38.60 ‐‐‐ ‐‐‐ 27.43 40.89 51.79 57.14 81.82 83.33 ‐‐‐ ‐‐‐

EMC ‐‐‐ 42.11 ‐‐‐ 0.00 ‐‐‐ ‐‐‐ ‐‐‐ 66.07 ‐‐‐ 82.00 ‐‐‐ 9.00

Fujitsu 47.37 45.61 46.97 50.35 50.00 20.00 57.14 57.14 30.00 30.00 10.00 0.00

HP ‐‐‐ 43.86 ‐‐‐ ‐‐‐ n/a 52.20 ‐‐‐ 57.14 ‐‐‐ 90.91 ‐‐‐ 18.19

I t l 50 88 n/a 100 00 75 00 90 91 27 00Intel ‐‐‐ 50.88 ‐‐‐ ‐‐‐ n/a 100.00 ‐‐‐ 75.00 ‐‐‐ 90.91 ‐‐‐ 27.00

IBM ‐‐‐ 40.35 ‐‐‐ ‐‐‐ n/a 185.90 ‐‐‐ 51.79 ‐‐‐ 92.86 ‐‐‐ 21.42

Microsoft 36.84 14.04 0.00 0.00 687.50 516.90 57.14 46.43 78.00 80.00 22.22 20.00

T hib 36 84 36 84 189 00 3000 00 53 57 51 79 28 57 28 57 0 00 0 00Toshiba 36.84 36.84 ‐‐‐ ‐‐‐ 189.00 3000.00 53.57 51.79 28.57 28.57 0.00 0.00

Bloomberg Survey

“With over 300,000 users, the Bloomberg Professional service provides a great opportunity and platform for you to share i f ti ith t d t ti linformation with current and potential investors concerning your Sustainability or Corporate Social Responsibility program.”

“Our survey is based on the guiding principles of the GRI framework.”

Sustainability PerformanceSource: Bloomberg

NASDAQ OMX Sustainability Index

Bloomberg – Reporters vs. Non

Sustainability PerformanceGRI Reporters Presence:

• 95% of the Dow Jones Sustainability Index

78% f th FTSE4G d• 78% of the FTSE4Good

• 70% of the Global 100• 70% of the Global 100

• 70% of the NASDAQ OMX CRD Sustainability Index

GRI Developments & Trends

• Government Uptake

• Supply Chain

• Financial Markets, Private Equity & Exchanges

• Integrated Reporting

• G4 Development

Global Regulatory Review"M t ki t i bilit"More governments are making sustainability

reporting mandatory.“

• 142 regulatory instruments addressing• 142 regulatory instruments addressing sustainability reporting exist in over 30 countries

• 65% are classified as mandatory, the rest voluntary

• United States• WH CEQ - EO 13514• USPS, US Army, etc….• GSA• Department of State• SEC

Business Transparency on

New Legislation

Trafficking and Slavery ActNew Legislation

There are only a few months left before California’s Transparency in Supply Chains legislation goes into effect in January 2012.

Who will this affect?The legislation (SB657 for short) impacts all retailers operating in California that generate over 100 million in annual gross receiptsCalifornia that generate over 100 million in annual gross receipts.

What does it require?It requires “conspicuous” public disclosure of the actions companies are taking to prevent Human Trafficking and modern day slavery in their supply chains.

Supply Chain Ripple

Customer

TrainingTraining

Suppliers

GRI Stakeholders

Mainstream Uptake

May 2010 January 2011May 2010 January 2011

International Integrated Reporting Committee (IIRC)Committee (IIRC)

http://theiirc.org

Early Adopters of Integrated ReportingReporting

Continuous Improvement:Co uous p o e eG4 Development

G4 Development Process

Consensus Based Approach:Consensus Based Approach:• Call for Sustainability Reporting Topics (closed)• Registration for Public Comment gPeriod (closed)• Open Public Comment Period (90-day - through Nov. 24, 2011)

How can GRI support your efforts?

GRI PublicationsGRI Guidelines & Template:

GRI Learning Publications:

Research and Development PublicationsResearch and Development Publications…

GRI Publications• GRI’s research & development publication seriesseries

• Linkage documents

Sector SupplementsAvailable: Pilot Version:

Electric Utilities

Financial Services

Airport Operators

Construction & Real 

Automotive

Logistics and 

Food Processing

Estate

Event Organizers*

Transportation

Public Agency

Mining & Metals Media* Telecommunications

NGO Oil & Gas* Apparel and Footwear

* Under Development

Certified Training Partnersg

Over 60 certified training partners globallyOver 60 certified training partners globallyOver 5000 people trained 

North America PartnersNorth America Partners

www.brownflynn.com http://isosgroup.com/ www.leadcanada.net

GRI Certified Software & Tools PProgram

• PE International    

• SAP                      

• S2D2                      

• Microsoft                

• EnviroCIP

• Enablon

• CSRware• CSRware

• CA Inc

• Tofuture Oy

• CSR Nordic ApS

• SRI World Group

• Oracle America

Organizational Stakeholders

Thank you

Mike WallaceDirector, Focal Point USAGlobal Reporting Initiative

wallace@globalreporting.org+1 212 339 0356+1 212 339 0356Twitter: M_A_WallaceLinked In: http://www linkedin com/in/mikewallace

Venue, Date

http://www.linkedin.com/in/mikewallace