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Reporting for Sustainability
                  Presentation to the Michigan Association of CPAs

                     Management Information and Business Show
                                 June 9, Grand Rapids
                                    June 29, Novi




Newport Consulting Group, LLC              2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 0
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 1
A Model for Sustainable Business




                Economic              Environmental                         Social


                                Triple Bottom-line Scorecard




Newport Consulting Group, LLC                 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 2
Corporate Drivers of Sustainability
The Dow Jones Sustainability Index (DJSI) created in 1999 represents over $US 9 billion in total
market capitalization. The DJSI STOXX40 has outperformed the nominal DJ STOXX50 by 7.5% to
date (and up to 15-20% during the period preceding the financial crisis).




                                                                                             The DJSI comprises publicly
                                                                                              traded organizations that
                                                                                             follow the Global Reporting
                                                                                                  Initiative (GRI) for
                                                                                               Sustainability reporting




                                                                                            The investment community is
                                                                                            giving increased weight to
                                                                                            Corporate Sustainability to guide
                                                                                            rating and investment decisions.
Source: SAM Sustainability Annual Review, September 3, 2009

Newport Consulting Group, LLC                                 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 3
Benefits of Corporate Responsibility / Sustainability




                                                       Consumers



        Behave                  To create
        Ethically               value for            Shareholders



                                                        Host
                                                     Governments




Newport Consulting Group, LLC               2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 4
Sustainability in the Boardroom




            According to a survey of
 global CEOs conducted by the UN
 Global compact over 90% of those
 surveyed considered sustainability
 issues either important or very
 important to the future success
 of their business.

           But what does
 sustainability really mean? It
 depends on your framework.




Newport Consulting Group, LLC          2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 5
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 6
Emerging Sustainable Frameworks



 The University of
      Oregon
   Sustainability
    Leadership
    Program is
 tracking over 50
     emerging
    standards,
  guidelines and
frameworks in the
      area of
   sustainability.




Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 7
One Framework – The UN Global Compact




                                1.   Businesses should support and respect the protection of internationally
                                     proclaimed human rights.
                                2.   Make sure that they are not complicit in human rights abuses.
                                3.   Businesses should uphold the freedom of association and the effective
                                     recognition of the right to collective bargaining.
                                4.   The elimination of all forms of forced and compulsory labour.
                                5.   The effective abolition of child labour.
                                6.   The elimination of discrimination in respect of employment and
                                     occupation.
                                7.   Businesses should support a precautionary approach to environmental
                                     challenges.
                                8.   Undertake initiatives to promote greater environmental responsibility.
                                9.   Encourage the development and diffusion of environmentally friendly
                                     technologies.
                            10.      Businesses should work against all forms of corruption, including
                                     extortion and bribery.



Newport Consulting Group, LLC                           2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 8
One Framework - The Natural Step




Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 9
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 10
The Range of Sustainability Documents
One of the challenges in the field of sustainability is the vast reporting and disclosure spectrum that
organizations – from small not-for-profit associations to F1000 global enterprises – may choose from.
 Formality of Statement




                                                       Company
                              UN Global                                                          DJSI / 10K
                                                     Sustainability
                              Compact                                                            Statement
                                                         Plan



                                           Code of                                                        Complex
                                                                           GRI Report
                                           Conduct
                          Simple


                            Statement of             Intra-company                                Sourcing
                              Direction                Scorecards                                  Audits




                                                                              Complexity of Disclosure

Newport Consulting Group, LLC                         2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 11
Statement of Direction
A Statement of Direction – Similar to a 10K President’s Message – is a publically communicated intent
to address particular goals, mandates, or targets. This is generally non-binding and can be confused
with company ―green washing‖ of marketing efforts.




                                                                                                  A Statement of
                                                                                                   Direction is a
                                                                                               document intended
                                                                                                 to convey to the
                                                                                                public, customers,
                                                                                                  shareholders,
                                                                                               analysts and other
                                                                                                 stakeholders the
                                                                                                  position of the
                                                                                               organization and its
                                                                                                      intent.




Newport Consulting Group, LLC                       2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 12
Code of Conduct
A Code of Conduct is a statement of policy which governs how the company will behave inside its
business ecosystem, as well as the individual behavior expectations of its employees and
stakeholders. Codes may be binding from a performance management perspective.




                                                                                       A Code of Conduct is
                                                                                           interpreted by
                                                                                       organizations abiding
                                                                                        by them in the form
                                                                                             of policies,
                                                                                          procedures and
                                                                                             guidelines.




Newport Consulting Group, LLC                      2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 13
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 14
Why consider a reporting approach?
Organizations may have several reasons for implementing a sustainability program. While the initial
or primary focus may be on fixing ―hygiene‖ problems, organizations may exploit the opportunity to
achieve more strategic objectives in corporate sustainability and corporate social responsibility.


                  Problems                                                       Opportunities

 Manual (spreadsheet-based) systems are                  Adopt a more proactive approach to supplier
  siloed, error-prone, and do not reuse data in            management
  enterprise systems
                                                          Anticipate and mitigate risk events; develop
 Roll-up processes to support audits and                  response plans should these events occur
  other reporting needs are cumbersome
                                                          Elevate profile of global corporate citizenship
 Organizational accountabilities for                      and enhance competitive brand position
  sustainability are unclear
                                                          Permeate sustainability initiatives and
 Risk of being out of compliance with                     a culture of social responsibility throughout the
  changing global regulations                              organization
 No systematic way to respond to crisis or               Improve efficiency of adjacent core processes
  other unforeseen event                                   (design, manufacturing, QA)
 No alignment with overall corporate                     Incorporate sustainability in strategic planning
  sustainability goals                                     and enterprise performance management




Newport Consulting Group, LLC                       2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 15
How do you interpret Sustainability?
Sustainability has Three Pillars — we find that while there may be an immediate focus on one key
area of Corporate Sustainability, attention must be given to how reporting and decision-making occurs.
This increases value drivers, reduces redundancy, improves operations, and manages costs.


                                      Target Focus of Sample Fortune 500 CSR Programs
                                           Survey of Selected Cross-section of Industries 2007-2009

                                                Economic and
          Company                                                                          Environmental                      Social Accountability
                                                  Financial
                                                                                                                                Improve the Human
               UPS                         Strengthen the Enterprise                    Protect the Environment
                                                                                                                                    Condition
                                                                                        Minimize Environmental                   Local Community
         Starbucks                         Sustainable Coffee Prices
                                                                                               Impacts                             Engagement
                                             Commitment to Ethical
     Kimberly-Clark                           Business Practices
                                                                                     Environmental Stewardship                   Safety and Health

                                                                                      Eliminate Adverse Impacts
    Lockheed Martin                         Perform with Excellence
                                                                                           from Operations
                                                                                                                              Safety of Every Employee




Generally organizations focus on one particular domain of sustainability which needs
immediate attention, however understanding the strategic interaction of the other Corporate
Sustainability areas is essential and often required by reporting guidelines.

Source: CSR documents from each organization, selected from 2007-9 supplier manuals and other internal corporate documents.

Newport Consulting Group, LLC                                                          2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 16
How do you Enable Sustainability?
 Three aspects of corporate sustainability programs have emerged: (1) development of corporate
 sustainability as a profit-driven strategy, (2) assurance of the actions of the corporate sustainability
 program, and (3) technology enablement of corporate sustainability for reporting and monitoring.

 Development of Sustainability Programs                     Corporate Sustainability Programs
  – Align to “pillars” and determine materiality                      The three “aspects” of program activities

  – Determine strategic orientation
  – Define areas, actions, ownership, roles, viability
                                                                                        Program
 Assurance of Sustainability Programs                                                Development
  –   Confirm roles, metrics, outcomes, ownership
  –   Assure program is “as advertised”
  –   Second-party corporate reporting
                                                                           Monitoring         Governance
  –   Third-party accreditations / certifications
                                                                                    Corporate
                                                                                   Sustainability
 Enablement of Sustainability Programs
  –   Identification of source information
                                                                    Program                                 Program
  –   Definition of reporting cycles, metrics
                                                                   Assurance                               Enablement
  –   Monitoring processes and governance                                               Reporting
  –   Technology platforms, solutions, practices




Newport Consulting Group, LLC                            2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 17
Reporting and GRI3
In 2006, the Global Reporting Initiative (GRI) was created to provide guidelines and audit
recommendations for organizations participating in corporate sustainability reporting (CSR) activities.
These guidelines ensure a level of consistency and governance in the practice of corporate sustainability.

                                                                                                                         How does GRI consider CSR?
                                                                                                                  CSR “involves reporting financial and
                                                                                                                   nonfinancial information to key
                                                                                                                   stakeholders on the company’s
                                                                                                                   operational, social, and environmental
                                                                                                                   activities and its ability to deal with
                                                                                                                   related risks.”
                                                                                                                  Considers the “triple bottom-line” of
                                                                                                                   reporting
                                                                                                                     – Economic Performance
                                                                                                                     – Social Responsibility
                                                                                                                     – Environmental Compliance

                                                                                                                  Considers broader set of stakeholders
                                                                                                                   beyond shareholders
                                                                                                                     –   Financial
                                                                                                                     –   Regulatory
CSR as a practice in accounting areas is still emerging,                                                             –   Political
with general guidelines based on the objectives of the                                                               –   Others based on company program
Corporate Sustainability program.
Sources: The Future of Corporate Sustainability Reporting, The Journal of Accountancy. The American Institute of Certified Public Accountants, 2006.
         Royal Dutch Shell, 2003 Corporate Sustainability Report (courtesy of AICPA).

Newport Consulting Group, LLC                                                             2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 18
Communicating Sustainability Principles
GRI reporting is a function of confirming that program initiatives, principles, and objectives are
tracked, monitored, and reported correctly. Some specific guidelines and a set of broad principles of
GRI have emerged, leaving management free to ―do what you say‖ from an auditor’s point of view as
long as it is verifiable. UPS is an exemplar in this area as shown by their reporting presentation.


                                                                                                                            Areas of CSR program called out,
                                                                                                                            then detailed against Key
                                                                                                                            Performance Indicators (KPIs) in
                                                                                                                            subsequent sections of the
                                                                                                                            sustainability report.



                                                                                                                            Overall graphic, such as a Venn
                                                                                                                            diagram, communicates the areas of
                                                                                                                            importance to various stakeholders.




                                                                                                                            Interactive Web sites allow
                                                                                                                            stakeholders including shareholders
                                                                                                                            to create personalized reports,
                                                                                                                            graphics, and tables.


Source: 2008 Corporate Sustainability Report, United Parcel Service (used with permission). Newport Consulting Group record of client interviews and feedback, 2009.

Newport Consulting Group, LLC                                                             2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 19
Ratings against GRI3
          The GRI3 guideline provides a number of criteria whereby the organization pursues a self-
          assessment, third-party review, and final grading. This is similar to self-reporting, compliance audit
          and certification review followed by audit, assurance and assessment of other management systems.




                                                         Inputs and Outputs for Standard Reporting
              Inputs

                Report Content Guidance           Report Content Principles          Report Quality Principles           Report Boundary Setting

             Profile                           Profile                           Profile                             Profile

             Management Report                 Management Report                 Management Report                   Management Report
Outputs




             Performance Indicators            Performance Indicators            Performance Indicators              Performance Indicators
 Source: GRI3 Standard Guidance Documents, 2006-2010.


    Newport Consulting Group, LLC                                             2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 20
Assurance and Oversight
 AA1000 AS (2008) has emerged as a guidance document in assurance circles with respect to
 sustainability and corporate responsibility programs. This approach considers two levels of assurance
 reporting: (1) dealing with organization behaviors and (2) behaviors in combination with KPIs, metrics.

 Key conclusions provided by assurance activities
  on GRI3 and AA1000 AS (2008)
  – Inclusivity: Does organization X engage with
    stakeholders and involve them in organizational
    decision making?
  – Materiality: Does organization X identify the issues
    relevant and significant to it and its stakeholders and
    include these in its disclosures?
  – Responsiveness: Does organization X respond to
    stakeholder issues and feedback through decisions,
    actions, performance and communication?
  – An assurance statement for a Type 2 assurance
    engagement must also provide conclusions on the
    reliability and accuracy of specified performance
    information.

 Additional observations, comments, and
  recommendations are also provided in the
  assurance report.


Newport Consulting Group, LLC                          2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 21
Considerations for the Public Sector
 ICLEI Five Milestone Approach for municipal and local governments provides a framework for public
 sector organizations to address triple bottom-line initiatives, share best practices, and monitor
 compliance for community outreach programs.

 International council for local environmental
  initiatives (ICLEI)
  – international association of local governments as well as
    national and regional local government organizations who
    have made a commitment to sustainable development
  – ICLEI provides technical consulting, training, and
    information services to build capacity, share knowledge,
    and support local government in the implementation of
    sustainable development at the local level.

 Tools, methods and processes
  –   Clean Air and Climate Protection (CACP)
  –   Data collection templates
  –   Energy management standards
  –   Over 300 local government strategies, KPIs
  –   Knowledge base of best practices




Newport Consulting Group, LLC                       2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 22
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 23
How to Get Started ….
 Sustainability planning and reporting is a multi-year journey. There are several things an organization
 can do to get started which will decrease the ―ramp up‖ time through the use of best practices.

 Educate and Align Stakeholders
  – Agreement on “what is sustainability” and what frameworks apply to your organization
  – Assign budget to introduce sustainable practices, codes, behaviors
     Facilities planning, corporate communications, finance, engineering, etc.

 Craft a “Roll-in Strategy” based on your Culture
  – Creation of a Sustainability Program Office (SPO)
  – Creation of employee-driven “Green Teams”
  – Uber-recycling programs, integrate with lean manufacturing activities
                                                                                                        Remember
 Do some Housekeeping                                                                                 some targets
  – Define what KPIs and targets are realistic.                                                          may be
                                                                                                         binding!
  – Determine who owns what data and information in your organization
  – Figure out how best to report this (centralized vs decentralized)
  – Conduct an initial assessment to know where you stand now.

 Get help if you need it – don’t start something and watch it die!
Newport Consulting Group, LLC                         2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 24
Some Helpful Resources


 Global Reporting Initiative www.globalreporting.org

 Social Accountability International www.sa-intl.org

 Social Fingerprint www.socialfingerprint.org (Reference Code# Newport11R)

 SCORE Assessment Framework
  http://www.axisperformance.com/SCORE_overview.html

 ICLEI – Local Governments for Sustainability www.icleiusa.org

 The Sustainable Enterprise Fieldbook (Wirtenberg)
  www.thesustainableenterprisefieldbook.net

 Cradle to Cradle (McDonough) www.mcdonough.com

 University of Oregon Sustainability Leadership Program
  http://sustain.uoregon.edu/

Newport Consulting Group, LLC              2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 25
Sustainability Defined

  The Landscape of Sustainability Frameworks

  Types of Common Sustainability Documents

  Reporting and Auditing

  Resources and Links

  Summary and Questions



Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 26
7 Key Points to Take Home

1. Sustainability is a growing field of business practice, winners and losers will
   be chosen in part by what organizations decide to do in this field

2. There is a compelling economic and financial incentive for pursuing
   long-term sustainability strategies (5-7% increase in performance)

3. Each organization is different, therefore stakeholders need to
   determine which frameworks, guidelines and approaches are applicable.

4. You can’t do everything – and if you say you will you will be held accountable
   for binding statements. Determine your KPIs and goals realistically.

5. If you are going to embark on GRI3 reporting make sure the benefits outweigh
   the costs (ROI calculation). Plenty of companies “ISO’d themselves out of
   business” – the same can happen with GRI3 reporting.

6. Use assurance services judiciously and at the appropriate program time.

7. Celebrate your accomplishments, use success to create opportunities
   elsewhere inside the organization!
Newport Consulting Group, LLC              2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 27
Your Turn …




                              William Newman, MBA, CMC, SA
                            wnewman@newportconsgroup.com

Newport Consulting Group, LLC             2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 28
William Newman, CMC, MBA, SA
                          Author, professional speaker, writer and consultant - William (“Bill”) Newman serves as
                          Managing Principal of Newport Consulting Group, an independent management consulting
                          firm focused on strategy, operations, risk management, and technology. Mr. Newman has 25
                          years experience in a wide range of operations including manufacturing, IT, R&D, sales,
                          marketing, planning, human capital, service delivery and finance. His expertise spans service,
                          manufacturing (automotive, aerospace, life sciences, high tech, CPG), government, utilities,
                           transportation, and healthcare industries.

                           Mr. Newman’s service area focus is innovation, strategy, market growth entry, program design
                           and oversight, and corporate sustainability. He is a former executive of Volkswagen’s
                           technology division and has served in a number of professional and management positions at
                           Grant Thornton, KPMG/BearingPoint, and Booz & Company. Mr. Newman serves as an
outside advisor to the Sustainability Executive Advisory Council (EAC) of software maker SAP. He is an adjunct
professor at Northwood University in the field of management studies serving the Flint, Lansing and Troy program
centers, as well as a participant of the University of Oregon Sustainability Leadership Program.

Bill was granted the Certified Management Consultant (CMC) designation by the Institute of Management Consultants
in 1995 and has served on the IMC national board of directors and three regional boards across the USA for over 10
years. Mr. Newman is a qualified Trainer / Coach granted by the American Society for Quality (ASQ) since 2000, a
qualified consultant for Social Accountability International (SAI) in SA 8000 for social accountability since 1998 and the
Social Fingerprint® method for business improvement since 2011. Mr. Newman is an member of the Michigan
Association of CPAs (management consulting task force) and a registered expert witness with the Technical Advisory
Services for Attorneys (TASA).

Bill holds a Bachelor’s Degree in Aerospace Engineering with a minor in Economics from the Henry Samueli School of
Engineering at UCLA, and an MBA in Management and minor in International Business from the Conrad Hilton School
of Business at Loyola Marymount University (Los Angeles). Bill and his wife Teresa make their home in southeast
Michigan.


Newport Consulting Group, LLC                                  2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 29
Exhibit – Slide 7




Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 30
Exhibit – Slide 19




Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 31
Exhibit – Slide 20




Newport Consulting Group, LLC   2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 32

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Reporting for Sustainability Management

  • 1. Reporting for Sustainability Presentation to the Michigan Association of CPAs Management Information and Business Show June 9, Grand Rapids June 29, Novi Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 0
  • 2. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 1
  • 3. A Model for Sustainable Business Economic Environmental Social Triple Bottom-line Scorecard Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 2
  • 4. Corporate Drivers of Sustainability The Dow Jones Sustainability Index (DJSI) created in 1999 represents over $US 9 billion in total market capitalization. The DJSI STOXX40 has outperformed the nominal DJ STOXX50 by 7.5% to date (and up to 15-20% during the period preceding the financial crisis). The DJSI comprises publicly traded organizations that follow the Global Reporting Initiative (GRI) for Sustainability reporting The investment community is giving increased weight to Corporate Sustainability to guide rating and investment decisions. Source: SAM Sustainability Annual Review, September 3, 2009 Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 3
  • 5. Benefits of Corporate Responsibility / Sustainability Consumers Behave To create Ethically value for Shareholders Host Governments Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 4
  • 6. Sustainability in the Boardroom According to a survey of global CEOs conducted by the UN Global compact over 90% of those surveyed considered sustainability issues either important or very important to the future success of their business. But what does sustainability really mean? It depends on your framework. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 5
  • 7. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 6
  • 8. Emerging Sustainable Frameworks The University of Oregon Sustainability Leadership Program is tracking over 50 emerging standards, guidelines and frameworks in the area of sustainability. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 7
  • 9. One Framework – The UN Global Compact 1. Businesses should support and respect the protection of internationally proclaimed human rights. 2. Make sure that they are not complicit in human rights abuses. 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. 4. The elimination of all forms of forced and compulsory labour. 5. The effective abolition of child labour. 6. The elimination of discrimination in respect of employment and occupation. 7. Businesses should support a precautionary approach to environmental challenges. 8. Undertake initiatives to promote greater environmental responsibility. 9. Encourage the development and diffusion of environmentally friendly technologies. 10. Businesses should work against all forms of corruption, including extortion and bribery. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 8
  • 10. One Framework - The Natural Step Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 9
  • 11. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 10
  • 12. The Range of Sustainability Documents One of the challenges in the field of sustainability is the vast reporting and disclosure spectrum that organizations – from small not-for-profit associations to F1000 global enterprises – may choose from. Formality of Statement Company UN Global DJSI / 10K Sustainability Compact Statement Plan Code of Complex GRI Report Conduct Simple Statement of Intra-company Sourcing Direction Scorecards Audits Complexity of Disclosure Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 11
  • 13. Statement of Direction A Statement of Direction – Similar to a 10K President’s Message – is a publically communicated intent to address particular goals, mandates, or targets. This is generally non-binding and can be confused with company ―green washing‖ of marketing efforts. A Statement of Direction is a document intended to convey to the public, customers, shareholders, analysts and other stakeholders the position of the organization and its intent. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 12
  • 14. Code of Conduct A Code of Conduct is a statement of policy which governs how the company will behave inside its business ecosystem, as well as the individual behavior expectations of its employees and stakeholders. Codes may be binding from a performance management perspective. A Code of Conduct is interpreted by organizations abiding by them in the form of policies, procedures and guidelines. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 13
  • 15. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 14
  • 16. Why consider a reporting approach? Organizations may have several reasons for implementing a sustainability program. While the initial or primary focus may be on fixing ―hygiene‖ problems, organizations may exploit the opportunity to achieve more strategic objectives in corporate sustainability and corporate social responsibility. Problems Opportunities  Manual (spreadsheet-based) systems are  Adopt a more proactive approach to supplier siloed, error-prone, and do not reuse data in management enterprise systems  Anticipate and mitigate risk events; develop  Roll-up processes to support audits and response plans should these events occur other reporting needs are cumbersome  Elevate profile of global corporate citizenship  Organizational accountabilities for and enhance competitive brand position sustainability are unclear  Permeate sustainability initiatives and  Risk of being out of compliance with a culture of social responsibility throughout the changing global regulations organization  No systematic way to respond to crisis or  Improve efficiency of adjacent core processes other unforeseen event (design, manufacturing, QA)  No alignment with overall corporate  Incorporate sustainability in strategic planning sustainability goals and enterprise performance management Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 15
  • 17. How do you interpret Sustainability? Sustainability has Three Pillars — we find that while there may be an immediate focus on one key area of Corporate Sustainability, attention must be given to how reporting and decision-making occurs. This increases value drivers, reduces redundancy, improves operations, and manages costs. Target Focus of Sample Fortune 500 CSR Programs Survey of Selected Cross-section of Industries 2007-2009 Economic and Company Environmental Social Accountability Financial Improve the Human UPS Strengthen the Enterprise Protect the Environment Condition Minimize Environmental Local Community Starbucks Sustainable Coffee Prices Impacts Engagement Commitment to Ethical Kimberly-Clark Business Practices Environmental Stewardship Safety and Health Eliminate Adverse Impacts Lockheed Martin Perform with Excellence from Operations Safety of Every Employee Generally organizations focus on one particular domain of sustainability which needs immediate attention, however understanding the strategic interaction of the other Corporate Sustainability areas is essential and often required by reporting guidelines. Source: CSR documents from each organization, selected from 2007-9 supplier manuals and other internal corporate documents. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 16
  • 18. How do you Enable Sustainability? Three aspects of corporate sustainability programs have emerged: (1) development of corporate sustainability as a profit-driven strategy, (2) assurance of the actions of the corporate sustainability program, and (3) technology enablement of corporate sustainability for reporting and monitoring.  Development of Sustainability Programs Corporate Sustainability Programs – Align to “pillars” and determine materiality The three “aspects” of program activities – Determine strategic orientation – Define areas, actions, ownership, roles, viability Program  Assurance of Sustainability Programs Development – Confirm roles, metrics, outcomes, ownership – Assure program is “as advertised” – Second-party corporate reporting Monitoring Governance – Third-party accreditations / certifications Corporate Sustainability  Enablement of Sustainability Programs – Identification of source information Program Program – Definition of reporting cycles, metrics Assurance Enablement – Monitoring processes and governance Reporting – Technology platforms, solutions, practices Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 17
  • 19. Reporting and GRI3 In 2006, the Global Reporting Initiative (GRI) was created to provide guidelines and audit recommendations for organizations participating in corporate sustainability reporting (CSR) activities. These guidelines ensure a level of consistency and governance in the practice of corporate sustainability. How does GRI consider CSR?  CSR “involves reporting financial and nonfinancial information to key stakeholders on the company’s operational, social, and environmental activities and its ability to deal with related risks.”  Considers the “triple bottom-line” of reporting – Economic Performance – Social Responsibility – Environmental Compliance  Considers broader set of stakeholders beyond shareholders – Financial – Regulatory CSR as a practice in accounting areas is still emerging, – Political with general guidelines based on the objectives of the – Others based on company program Corporate Sustainability program. Sources: The Future of Corporate Sustainability Reporting, The Journal of Accountancy. The American Institute of Certified Public Accountants, 2006. Royal Dutch Shell, 2003 Corporate Sustainability Report (courtesy of AICPA). Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 18
  • 20. Communicating Sustainability Principles GRI reporting is a function of confirming that program initiatives, principles, and objectives are tracked, monitored, and reported correctly. Some specific guidelines and a set of broad principles of GRI have emerged, leaving management free to ―do what you say‖ from an auditor’s point of view as long as it is verifiable. UPS is an exemplar in this area as shown by their reporting presentation. Areas of CSR program called out, then detailed against Key Performance Indicators (KPIs) in subsequent sections of the sustainability report. Overall graphic, such as a Venn diagram, communicates the areas of importance to various stakeholders. Interactive Web sites allow stakeholders including shareholders to create personalized reports, graphics, and tables. Source: 2008 Corporate Sustainability Report, United Parcel Service (used with permission). Newport Consulting Group record of client interviews and feedback, 2009. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 19
  • 21. Ratings against GRI3 The GRI3 guideline provides a number of criteria whereby the organization pursues a self- assessment, third-party review, and final grading. This is similar to self-reporting, compliance audit and certification review followed by audit, assurance and assessment of other management systems. Inputs and Outputs for Standard Reporting Inputs Report Content Guidance Report Content Principles Report Quality Principles Report Boundary Setting Profile Profile Profile Profile Management Report Management Report Management Report Management Report Outputs Performance Indicators Performance Indicators Performance Indicators Performance Indicators Source: GRI3 Standard Guidance Documents, 2006-2010. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 20
  • 22. Assurance and Oversight AA1000 AS (2008) has emerged as a guidance document in assurance circles with respect to sustainability and corporate responsibility programs. This approach considers two levels of assurance reporting: (1) dealing with organization behaviors and (2) behaviors in combination with KPIs, metrics.  Key conclusions provided by assurance activities on GRI3 and AA1000 AS (2008) – Inclusivity: Does organization X engage with stakeholders and involve them in organizational decision making? – Materiality: Does organization X identify the issues relevant and significant to it and its stakeholders and include these in its disclosures? – Responsiveness: Does organization X respond to stakeholder issues and feedback through decisions, actions, performance and communication? – An assurance statement for a Type 2 assurance engagement must also provide conclusions on the reliability and accuracy of specified performance information.  Additional observations, comments, and recommendations are also provided in the assurance report. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 21
  • 23. Considerations for the Public Sector ICLEI Five Milestone Approach for municipal and local governments provides a framework for public sector organizations to address triple bottom-line initiatives, share best practices, and monitor compliance for community outreach programs.  International council for local environmental initiatives (ICLEI) – international association of local governments as well as national and regional local government organizations who have made a commitment to sustainable development – ICLEI provides technical consulting, training, and information services to build capacity, share knowledge, and support local government in the implementation of sustainable development at the local level.  Tools, methods and processes – Clean Air and Climate Protection (CACP) – Data collection templates – Energy management standards – Over 300 local government strategies, KPIs – Knowledge base of best practices Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 22
  • 24. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 23
  • 25. How to Get Started …. Sustainability planning and reporting is a multi-year journey. There are several things an organization can do to get started which will decrease the ―ramp up‖ time through the use of best practices.  Educate and Align Stakeholders – Agreement on “what is sustainability” and what frameworks apply to your organization – Assign budget to introduce sustainable practices, codes, behaviors Facilities planning, corporate communications, finance, engineering, etc.  Craft a “Roll-in Strategy” based on your Culture – Creation of a Sustainability Program Office (SPO) – Creation of employee-driven “Green Teams” – Uber-recycling programs, integrate with lean manufacturing activities Remember  Do some Housekeeping some targets – Define what KPIs and targets are realistic. may be binding! – Determine who owns what data and information in your organization – Figure out how best to report this (centralized vs decentralized) – Conduct an initial assessment to know where you stand now.  Get help if you need it – don’t start something and watch it die! Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 24
  • 26. Some Helpful Resources  Global Reporting Initiative www.globalreporting.org  Social Accountability International www.sa-intl.org  Social Fingerprint www.socialfingerprint.org (Reference Code# Newport11R)  SCORE Assessment Framework http://www.axisperformance.com/SCORE_overview.html  ICLEI – Local Governments for Sustainability www.icleiusa.org  The Sustainable Enterprise Fieldbook (Wirtenberg) www.thesustainableenterprisefieldbook.net  Cradle to Cradle (McDonough) www.mcdonough.com  University of Oregon Sustainability Leadership Program http://sustain.uoregon.edu/ Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 25
  • 27. Sustainability Defined The Landscape of Sustainability Frameworks Types of Common Sustainability Documents Reporting and Auditing Resources and Links Summary and Questions Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 26
  • 28. 7 Key Points to Take Home 1. Sustainability is a growing field of business practice, winners and losers will be chosen in part by what organizations decide to do in this field 2. There is a compelling economic and financial incentive for pursuing long-term sustainability strategies (5-7% increase in performance) 3. Each organization is different, therefore stakeholders need to determine which frameworks, guidelines and approaches are applicable. 4. You can’t do everything – and if you say you will you will be held accountable for binding statements. Determine your KPIs and goals realistically. 5. If you are going to embark on GRI3 reporting make sure the benefits outweigh the costs (ROI calculation). Plenty of companies “ISO’d themselves out of business” – the same can happen with GRI3 reporting. 6. Use assurance services judiciously and at the appropriate program time. 7. Celebrate your accomplishments, use success to create opportunities elsewhere inside the organization! Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 27
  • 29. Your Turn … William Newman, MBA, CMC, SA wnewman@newportconsgroup.com Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 28
  • 30. William Newman, CMC, MBA, SA Author, professional speaker, writer and consultant - William (“Bill”) Newman serves as Managing Principal of Newport Consulting Group, an independent management consulting firm focused on strategy, operations, risk management, and technology. Mr. Newman has 25 years experience in a wide range of operations including manufacturing, IT, R&D, sales, marketing, planning, human capital, service delivery and finance. His expertise spans service, manufacturing (automotive, aerospace, life sciences, high tech, CPG), government, utilities, transportation, and healthcare industries. Mr. Newman’s service area focus is innovation, strategy, market growth entry, program design and oversight, and corporate sustainability. He is a former executive of Volkswagen’s technology division and has served in a number of professional and management positions at Grant Thornton, KPMG/BearingPoint, and Booz & Company. Mr. Newman serves as an outside advisor to the Sustainability Executive Advisory Council (EAC) of software maker SAP. He is an adjunct professor at Northwood University in the field of management studies serving the Flint, Lansing and Troy program centers, as well as a participant of the University of Oregon Sustainability Leadership Program. Bill was granted the Certified Management Consultant (CMC) designation by the Institute of Management Consultants in 1995 and has served on the IMC national board of directors and three regional boards across the USA for over 10 years. Mr. Newman is a qualified Trainer / Coach granted by the American Society for Quality (ASQ) since 2000, a qualified consultant for Social Accountability International (SAI) in SA 8000 for social accountability since 1998 and the Social Fingerprint® method for business improvement since 2011. Mr. Newman is an member of the Michigan Association of CPAs (management consulting task force) and a registered expert witness with the Technical Advisory Services for Attorneys (TASA). Bill holds a Bachelor’s Degree in Aerospace Engineering with a minor in Economics from the Henry Samueli School of Engineering at UCLA, and an MBA in Management and minor in International Business from the Conrad Hilton School of Business at Loyola Marymount University (Los Angeles). Bill and his wife Teresa make their home in southeast Michigan. Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 29
  • 31. Exhibit – Slide 7 Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 30
  • 32. Exhibit – Slide 19 Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 31
  • 33. Exhibit – Slide 20 Newport Consulting Group, LLC 2011 MACPA MIBS Show Newman - Reporting for Sustainability vF.pptx ■ Page 32