Machine Translated by Google Guide to Corporate Social Responsibility Companies and ESG reporting Machine Translated by Google Preamble This guide was developed by the Moroccan Capital Market Authority (AMMC) and the Casablanca Stock Exchange, with the contribution of the General Confederation des Entreprises du Maroc (CGEM) and the Social, Economic and Environmental (CESE). Its objective is to promote the culture of Social Responsibility of Companies (CSR) at the level of publicly traded companies in the Morocco, and prepare them for future ESG reporting obligations that it is planned to put in place. To do this, the guide clarifies a few concepts and presents a practical approach for setting up the CSR approach and ESG reporting. In addition, other market players, in particular investors, will find also in this guide information which is useful to them for better understanding CSR and integrating ESG issues into their scopes of activities. 2|Page Document submitted for consultation-May-June 2017 Machine Translated by Google Summary Part 1: Basic concepts and Moroccan initiatives in terms of sustainable development and CSR............... 4 I. Concepts de base :............................................................................................................................4 1. Sustainable development:.................................. .................................................. ............ 4 2. Corporate Social Responsibility (CSR): ........................................ ................................... 7 3. ESG criteria:.................................................. .................................................. .............................10 4. Responsible investment (RI): ........................................... .................................................. ..11 II. Sustainable development and CSR in Morocco: ........................................... ...........................................15 1. The Constitution of the Kingdom of Morocco:............................... ...........................................15 2. The Economic, Social and Environmental Council (CESE): ..................................... ...................16 3. National Strategy for Sustainable Development (SNDD) .................................. .....................16 4. CSR Label of the CGEM ................................................ ........................................................... ...........................17 5. Initiatives related to the financial market:......................................... ........................................18 Part 2: Implementation of a CSR and ESG Reporting approach.................................... ................................. 21 I. Benefits of CSR and ESG reporting............................................... .................................................21 1. Better risk management and resilience............................................... ........................................21 2. Improved access to markets............................................... .................................................. .......21 3. Motivation and federation of the teams.................................... ..............................................22 4. Competitive advantage and reputation............................................... ............................................23 II. Implementation of a CSR approach within the company: .................................. ........................24 1. CSR in practice: ........................................... .................................................. .....................24 2. Practical implementation of the CSR approach within the company:.................................. ..........26 3. Evaluation of a company's CSR approach: ....................................... ...............................30 III. Communication on CSR through ESG reporting............................................... ...........................31 1. Format de reporting ESG ................................................................................................................31 2. Principles of ESG reporting ...................................... .................................................. ................32 3. Content of the ESG report ............................................ .................................................. ...................33 IV. Recommendations and regulatory approach .............................................. ................................36 1. Best practices and recommendations for the preparation of the ESG report.................................... ..36 2. Regulatory approach: ............................................ .................................................. ..................38 3|Page Document submitted for consultation-May-June 2017 Machine Translated by Google PART 1: BASIC CONCEPTS AND MOROCCAN INITIATIVES IN TERMS OF SUSTAINABLE DEVELOPMENT AND CSR I. Concepts de base : When discussing the extra-financial performance of companies, the terms "sustainable development", "corporate social responsibility", "ESG" and "responsible investment" are often cited. Some of these terms are sometimes used interchangeably although they cover distinct concepts. The theme of this guide cannot therefore be approached without clarifying these different concepts of base. 1. Sustainable development: Sustainable development is a very broad concept. It was defined in 1987 by the United Nations (UN) World Commission on Environment and Development in a report entitled Our Common Future as "development that meets the needs of present without compromising the ability of future generations to meet theirs. This design is the culmination of a progressive awareness of the need to manage human impacts on the planet and preserve the environment. Indeed, the beginnings of this concept appeared at the beginning of the 20th century, then developed to pass from local initiatives on specific subjects to a transversal and universal conception carried by the UN. Sustainable development thus calls, according to the UN, for concerted action to build, for individuals and for the planet, a sustainable and resilient world, where everyone has their place. It is with this in mind that, at a UN summit in September 2015, the leaders of the organization's 193 member countries adopted a new 2030 agenda for sustainable development entitled “Transforming our world: the 2030 Agenda for Sustainable Development”. This universal program, which entered into force on January 1, 2016, is articulated in 17 objectives centered on three fundamental elements which are: economic growth, social inclusion and the protection of the environment. 4|Page Document submitted for consultation-May-June 2017 Machine Translated by Google It should be noted that the Sustainable Development Goals are not legally binding. However, Member States have undertaken to put in place national frameworks for the achievement of these objectives. Thus, the implementation of the program and the objectives of sustainable development should be declined at the level of the different member countries, according to their respective situations and constraints. According to the UN, the Sustainable Development Goals will guide action in the areas following: • Humanity : eradicating poverty and hunger in all their forms and dimensions, and ensuring that all human beings can fulfill their potential in conditions of dignity and equality and in a healthy environment. • The planet : fight against the degradation of the planet, by resorting to sustainable consumption and production patterns, by ensuring the sustainable management of its natural resources and by taking urgent measures to combat climate change, so that can meet the needs of present and future generations. • Prosperity : to ensure that all human beings have a prosperous and fulfilling life and that economic, social and technological progress take place in harmony with nature. • Peace : fostering peaceful, just and inclusive societies, free from fear and violence. Indeed, there can be no sustainable development without peace, nor peace without sustainable development. • Partnerships : mobilizing the means necessary to implement this program through a revitalized global partnership for sustainable development, which will be driven by a strengthened spirit of solidarity, where emphasis will be placed on the needs of the most deprived and of the most vulnerable, involving all countries, all stakeholders and all people. 5|Page Document submitted for consultation-May-June 2017 Machine Translated by Google The Sustainable Development Goals as adopted by the UN are illustrated below1 : Although the different Member States are responsible for setting up national frameworks for implementing the Sustainable Development Goals, it is expected that all stakeholders – governments, civil society, the private sector and other actors – contribute to the implementation of the new program. Indeed, the UN has set up an initiative intended to mobilize organizations in favor of the achievement of the Sustainable Development Goals: the Global Compact. This initiative aims to mobilize organizations in favor of the achievement of the Sustainable Development Goals by inviting them to align their strategies and activities with the following ten principles2 : • Promote and respect the protection of human rights such as internationally proclaimed; • Be careful not to be complicit in human rights violations; 1 Source : http:// www.un.org/ sustainabledevelopment/ fr/ objectifs-de-developpement-durable/ Refer to appendix N°1 for a more detailed description 2 Source : https:// www.unglobalcompact.org/ 6|Page Document submitted for consultation-May-June 2017 Machine Translated by Google • Promote freedom of association and recognize the right to collective bargaining; • Eliminate all forms of forced or compulsory labour; • Abolish child labour; • Eliminate discrimination in employment and work; • Take a precautionary approach to environmental issues; • Undertake initiatives to promote greater accountability in environment; • Encourage the development and dissemination of environmentally friendly technologies the environment ; • Fight against all forms of corruption, including extortion and bribery. The global compact now has more than 12,000 signatory organisations, from 170 countries, of different sectors of activity and sizes. These member organizations undertake to make continuous progress on at least one of the principles listed above and to communicate annually on their progress. To date, 16 Moroccan organizations are members of the Global Compact, including CGEM, Maroclear and 4 public offering companies. 2. Corporate Social Responsibility (CSR): From the middle of the 20th century, the current "Business ethics" emerged in the United States, encouraging business leaders to take into consideration the ethical and moral dimensions in their decisions in addition to the objective of maximizing financial profits. This conception has gradually developed to redefine the role of the company. In fact, rather than limiting itself to maximizing its profits by respecting the laws in force, the company's mission has expanded to include a duty towards society in general in a more "long-termist" approach: the company should take into account the needs of society and future generations by contributing to sustainable development. This dynamic has been driven by the activism of civil society, which is increasingly aware and concerned by the negative impacts of economic activities on the environment and populations. This collective awareness has also prompted nations and international bodies to put in place normative frameworks (definitions, principles and rules) to govern economic development in order to make it more inclusive, equitable and sustainable. Thus, several frameworks, in the form of binding international conventions and voluntary guidelines, are 7|Page Document submitted for consultation-May-June 2017 Machine Translated by Google appeared to formalize the universal principles in the social and environmental fields such as what : • The Tripartite Declaration of the International Labor Organization (ILO); • The ILO-UN initiative for a social protection floor; • The RIO declaration on environment and development; • OECD guidelines; • The UN Guiding Principles on Business and Human Rights. As these standards have been developed and adopted, the concept of CSR has also evolved. In 2010, the International Organization for Standardization3 (ISO), whose 164 members are the national standardization bodies, developed an international benchmark on social responsibility: the ISO 26000 standard. According to the ISO 26000 standard, the social responsibility of organizations is defined as “The Responsibility of an organization vis-à-vis the impacts of its decisions and activities on society and the environment, through ethical and transparent behavior that: • Contributes to sustainable development, including the health and well-being of society; • Takes into account the expectations of stakeholders; • Respects the laws in force while being consistent with international standards of behaviour ; • Is integrated throughout the company and implemented in its relationships”. This standard proposes 7 fundamental principles of social responsibility: • "Accountability" and reporting : the organization must be accountable for its impacts on society, the economy and the environment; • Transparency : the organization must be transparent in its decisions and activities that have an impact on society and the environment; 3 See link in appendix 4 8|Page Document submitted for consultation-May-June 2017 Machine Translated by Google • Ethical behavior : the behavior of the organization must be based on the values of honesty, fairness and integrity. These values involve taking into account people, animals and the environment, as well as a commitment to address the impacts of its activities and decisions on the interests of stakeholders; • Respect for the interests of stakeholders : The organization must respect, take into consider and respond to the interests of its stakeholders; • Compliance with the law : the organization must accept that compliance with the law is mandatory; • Compliance with international standards of behavior : The organization must, while adhering to the principle of respect for the law, respect international standards of behavior; • Respect for human rights : the organization must respect human rights and recognize their importance and universality. Also, the ISO 26000 standard identifies 7 central subjects of social responsibility, namely: • The governance of the organization; • Human rights; • Working relationships and conditions; • The environment; • The fairness of “business” practices; • Consumer issues; • Community involvement and development. The standard provides, for each of these subjects, an analytical framework for evaluating the profile of the organization and identifying priority courses of action. It should be noted that the ISO 26000 standard, unlike other ISO standards, is not certifiable, thus emphasizing the proactive nature of CSR approaches. Thus, CSR is a voluntary and structured approach that allows the company to be part of the objectives of sustainable development and to work towards their achievement. Indeed, each company can, according to its own means, participate in one way or another in achieving the aforementioned objectives. 9|Page Document submitted for consultation-May-June 2017 Machine Translated by Google 3. ESG criteria: ESG is the acronym used by the international financial community to designate the Environmental, Social and Governance (ESG) criteria which generally constitute the three axes of extra-financial analysis. These criteria make it possible to evaluate the CSR approach implemented by the company and its performance in the following three areas: • Environmental : This involves measuring the impact of the company's activity on the environment, particularly with regard to pollution and the use of natural resources; • Social : This component deals with the quality of a company's relations with its employees by measuring indicators relating to the degree of respect for the rights of said employees and the consideration of their needs by the employer; • Governance : This axis concerns the assessment of the way in which a company is effectively managed and controlled through the analysis of the functioning of the various governance bodies and the degree of application of good governance practices to the within these bodies. Furthermore, the ESG analysis is not limited to the three axes listed above, but also extends to the assessment of the quality of the company's relations with its external stakeholders such as its customers, suppliers, society civil or otherwise. To measure the performance of an organization on each of the axes, several indicators can be used according to the profile of the said organization. Transparency being a fundamental principle of CSR and necessary for measuring progress in achieving sustainable development objectives, we now speak of “ESG reporting”. Indeed, several initiatives have emerged to set up normative, binding or voluntary frameworks, to help or oblige organizations to communicate on their CSR performance. Thus, Directive 2014/95/EU4 of the European Parliament obliges certain large companies to include in their management report a non-financial statement including information relating, at least, to environmental, social and personnel issues, respect for human rights and the fight against corruption. 4 See link in appendix 4 10 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google In addition, the “Global Reporting Initiative” (GRI)5 , an independent international organization, offers an internationally recognized ESG reporting framework. Indeed, of the 250 most important companies in the world, 93% communicate on their performance in terms of sustainability and 82% of them do so on the basis of the GRI standard. 4. Responsible Investment (RI): Awareness of the challenges of sustainable development and the need for everyone to adhere to them has spread to the financial markets and the practice of investment. Indeed, investors in the financial market have begun to adopt investment approaches that integrate extra-financial aspects into their strategies traditionally based solely on purely financial criteria. Thus, several new strategies have emerged, including: • Impact investing : which aims to invest with the intention of generating a positive environmental and social impact at the same time as the financial return; • Green investing : seeking to invest in companies or projects with a positive environmental impact (eg renewable energies, depollution, etc.); • Sustainable investing: which seeks to invest in companies that integrate environmental, social and good governance practices into their long-term strategies; • Socially Responsible Investment: or socially responsible investment, it seeks to finance companies and public entities that contribute to sustainable development regardless of their sector of activity. The nuances between these terms are sometimes not very clear, and they are often used interchangeably. However, what these investment approaches have in common is that they seek to reconcile financial return with “moral or ethical return”. This objective is achieved through a negative selection (exclusion of companies that are not eligible with regard to their activity or their ESG performance) or positive (investing in the best performing companies with regard to ESG criteria). In addition, the UN developed, in 2006, 6 principles of responsible investment6 described below. Unlike the above approaches, the responsible investment approach can and should be used even by investors whose only concern is financial return. Indeed, this approach is based on the idea that ignoring ESG factors amounts to ignoring risks and 5 See link in appendix 2 6 See link in appendix 4 11 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google opportunities that can have significant effects on the financial performance of investments. Also, while the aforementioned approaches may target specific themes, responsible investment is a global approach that aims to integrate any information that may be material to the investment. Responsible investment, unlike other approaches, does not require rejecting investments with regard to their sectors of activity or investing in specialized instruments. It simply involves taking ESG criteria into account in investment decision-making, to ensure that all relevant factors are taken into account for the assessment of risk and return. The 6 principles defined by the UN for responsible investment are: • Integrate ESG issues into decision-making and investment analysis processes; • Be an active shareholder and incorporate ESG issues into ESG policies and procedures shareholding; • Require, as far as possible, the entities in which the investment is made to be transparent about ESG issues; • Encourage the adoption and implementation of the principles in the investment sector; • Cooperate to improve the effectiveness of the implementation of the principles; • Report on activities and progress made in implementing the principles. 12 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google At the end of April 2016, ten years after the adoption of the principles of responsible investment, the number of signatory members had reached 1,500 leading institutional investors totaling assets under management of 62 billion US dollars. The graph below illustrates the evolution of the number of signatories and their assets under management7 . 7 Source : unpri.org 13 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Articulation of the different concepts 14 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google II. Sustainable development and CSR in Morocco: The Kingdom of Morocco has long shown its interest in environmental issues and its mobilization in favor of their control by ratifying several international conventions relating to this subject (eg: Marpol Convention for the prevention of pollution by ships in 1973 , Rio convention on biological diversity in 1992, Paris convention on the fight against desertification in 1994…). The kingdom is also a signatory to the main international conventions that affect various aspects of sustainable development: human rights, children's rights, the fight against torture and discrimination, fundamental labor standards of the ILO, guiding principles of OECD, UN Sustainable Development Goals… Furthermore, the kingdom continues to make considerable efforts to implement a sustainable development model. Several initiatives have been launched in this direction, including the national energy transition strategy which aims to increase the share of renewable energies in the kingdom's energy mix to 52% by 2030, the development of codes of good governance practices, the launch of the human development initiative (INDH) in 2005 with a view to combating poverty, precariousness and social exclusion, or the recent law 77-15 prohibiting plastic bags. Also, Morocco hosted in November 2016 the 22nd Conference of the Parties to the United Nations Framework Convention on Climate Change (COP22). The main initiatives and contributions to the establishment of a sustainable development model and CSR approach in Morocco are presented below. 1. The Constitution of the Kingdom of Morocco : The orientation of the Kingdom of Morocco towards sustainable development is reflected in the text and the spirit of its 2011 constitution. Indeed, the latter, in its title relating to fundamental rights and freedoms, assigns to the state the mission to work towards the achievement of sustainable human development, able to allow the consolidation of social justice and the preservation of national natural resources and the rights of future generations. Moreover, the constitution endows the kingdom with various institutions with missions that converge towards the achievement of sustainable development. Indeed, in the title of good governance and in addition to the bodies for the protection and promotion of human rights, three bodies are 15 | Page Document submitted for consultation-May-June 2017 Machine Translated by Google responsible for good governance and regulation, and three other bodies are responsible for promoting human and sustainable development and participatory democracy. Title XI of the constitution is dedicated to the Economic, Social and Environmental Council (CESE). This body carries out advisory missions on economic, social and environmental issues and gives its opinion on the general orientations of the national economy and sustainable development. 2. The Economic, Social and Environmental Council (CESE): In the exercise of its powers, the CESE carries out opinions, studies and research, either at the request of the Government, the House of Representatives or the House of Councilors (referral) or on its own initiative (self- referral). Within the framework of its internal referrals, the ESEC has taken an interest in several questions relating to sustainable development. In fact, as early as 2011, the ESEC formalized a repository of standards and objectives for a new forward-looking Moroccan social charter. This frame of reference deals in particular with access to essential services and social well-being, inclusion and solidarity, protection of the environment, responsible governance as well as development and economic security and social democracy. The last self-referral of the year 20168 specifically focused on the theme of corporate social responsibility (CSR). In its opinion, the ESEC makes an inventory and consequently gives recommendations for the integration of CSR at the level of Moroccan organizations. These recommendations are broken down according to the different actors involved, including the State, the economic fabric and civil society. 3. National Sustainable Development Strategy (SNDD) Morocco's commitment to Sustainable Development has been strengthened by the development of a National Charter for the Environment and Sustainable Development formalized in framework law No. 99-12 adopted by Parliament in February 2014. This framework law sets the fundamental objectives of the State in terms of environmental protection and sustainable development. It also specifies that the government is called upon to adopt the national strategy for sustainable development. 8 See link in appendix 4 16 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Thus, a National Strategy for Sustainable Development9 (SNDD) was developed through broad consultation with all stakeholders: the public sector, private operators and the civil society. This strategy is based on four fundamental principles: compliance with international best practices, compliance with the principles of framework law No. 99-12, commitment of the various stakeholders to achieve common sustainable development objectives, and being operational by relying on current strategies and programs. This strategy is broken down into 7 priority issues, 31 strategic axes and 132 objectives. The 7 priority issues of the SNDD10 4. CSR Label of the CGEM The General Confederation of Moroccan Enterprises (CGEM) has been committed, since 2006, to promoting CSR within Moroccan companies. It has drawn up a CSR11 charter in consultation with various stakeholders: companies, NGOs, social partners, international institutions, etc. 9 See link in appendix 4 10 Source: Ministry Delegate to the Minister of Energy, Mines, Water and the Environment in charge of the environment 11 See link in appendix 4 17 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google This charter is structured into 9 areas of commitment, each defining specific strategy and managerial conduct objectives and aligned with international standards and legislation. national. The 9 nine areas of commitment of the CSR Charter of the CGEM are as follows: • Respect human rights; • Continuously improve employment and working conditions and professional relations; • Preserve the environment; • Prevent corruption; • Respect the rules of healthy competition; • Strengthen the transparency of corporate governance; • Respect the interests of customers and consumers; • Promote the social responsibility of suppliers and subcontractors; • Develop commitment to the community. On the basis of this charter, companies can obtain a distinction by which the CGEM recognizes their commitment to CSR and its integration into their managerial strategy and their daily operations: The CGEM Label for Corporate Social Responsibility. The label is awarded to the candidate company by an independent award committee which decides based on the opinion of an accredited external firm according to precise specifications. To date, 78 companies are labeled by the CGEM, including 16 listed companies. 5. Initiatives related to the financial market: The financial market is beginning to integrate subjects relating to sustainable development and CSR. For example, two Moroccan UCITS, created in 2014, explicitly integrate the notion of socially responsible investment into their investment strategies by basing their selections on ESG ratings carried out by recognized agencies. Both funds are SRI certified by an independent body. Similarly, Green Bonds began to appear on the Moroccan market in 2016. Indeed, during the fourth quarter of the year, 2 Moroccan issuers issued on the market a cumulative amount of 1,650 MDh in Green Bonds, while 2 others received preliminary visas 18 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google for the issue of a cumulative amount of 2,500 MDhs. At the same time, the AMMC has developed, with the help of IFC, a guide on Green Bonds in order to support and secure the development of these instruments on the Moroccan market. Also, and on the sidelines of COP 22 organized in Marrakech in November 2016, regulators and players in the Moroccan financial sector (ACAPS, AMMC, BAM, Casablanca Stock Exchange, CFC Authority, GPBM and FMSAR) have developed and adopted two roadmaps: • Roadmap for the alignment of the Moroccan financial sector with sustainable development12 : It lists the actions and measures to be implemented for the coordinated and progressive alignment of the Moroccan financial sector with the challenges of sustainable development. It is articulated around the following 5 major axes: - The extension of risk-based governance to socio-environmental risks; - The development of sustainable financial instruments and products; - the promotion of financial inclusion as a vector of sustainable development; - Capacity building in the field of sustainable finance; - Transparency and market discipline. • Roadmap for the emergence of sustainable finance in Africa: intended to promote the emergence of a green finance market in Africa, it encourages all stakeholders in the Moroccan financial sector to strengthen their cooperation with African actors in this regard to mobilize stronger and more ambitious climate action. It revolves around two strategic axes: - Strengthen regional and continental cooperation in development durable ; - Positioning of the financial center of Casablanca as a hub for finance climate. At the same time, the AMMC and the Casablanca Stock Exchange initiated the " Marrakech pledge" for "Fostering Green Capital Markets in Africa" or "Marrakech Declaration" to "Promote green capital markets in Africa". Through this initiative, regulatory authorities and stock exchanges 12 See link in appendix 4 19 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google representing more than twenty countries on the continent have pledged to work individually and collectively to achieve three priorities: • Enable the development of an effective ecosystem to support the establishment of green capital markets in Africa; • Encourage the development in Africa of green financial instruments and vehicles climate-resilient investments; • Promote transparency and accessibility of information on green finance and climate resilient investments in Africa. In addition, the Casablanca Stock Exchange has joined the "Sustainable Stock Exchanges" (SSE) initiative of United Nations, which has 56 global stock exchanges and its mission is to study ways of collaboration between financial markets, regulators, companies and investors, with a dual objective: • Improve transparency on environmental, social and governance issues (ESG) ; • Encourage responsible and long-term financing. Finally, the regulations governing the communication of public companies should evolve to integrate ESG information into the information obligations incumbent on these companies. Indeed, ESG reporting requirements should promote the dissemination of CSR among issuers, thus making them more resilient thanks to the integration of a broader and more effective risk management approach (which also covers non- financial risks ). They also provide investors with an additional analytical framework, thus improving the efficiency of the market, which depends on the quality of the information available. Future disclosure requirements will adhere to the following guidelines: • Be based on international standards and benchmarks in this area, while being adapted to the Moroccan context; • Be accessible to the public through the same channels and procedures as the information financial; • Be relevant to the analysis of risks and returns; • Be applicable in a progressive manner to allow sufficient preparation of the transmitters. 20 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Part 2: Implementation of a CSR approach and ESG Reporting I. Benefits of CSR and ESG reporting Like any new approach to be implemented in the company, the implementation of a CSR approach generates additional costs. However, since the CSR approach is essentially a "long-term" approach, these costs must be considered as an investment whose benefits are felt in the long term. The dissemination of the CSR culture within the companies of a financial center is likely to improve the efficiency of the market and its resilience. Also, CSR brings benefits at the level of the company itself. The main advantages that the company gains by being part of a CSR approach are presented below. 1. Better risk management and resilience The CSR approach is fundamentally a risk management approach. Indeed, by adopting such an approach, the company listens to its stakeholders in an anticipatory perspective. It implements measures and action plans to meet the present and even future needs of the said stakeholders. Thus, the risks of conflicts, with the related harmful consequences, are minimized. In addition, the company adopting a CSR approach identifies and continually seeks to minimize the environmental and societal risks related to its activities. Finally, compliance with international laws and standards is established as a fundamental principle of CSR. Thus, CSR is a powerful risk management and compliance tool. Therefore, it is likely to improve the resilience of the company and its long-term sustainability. 2. Better access to markets Adopting a CSR approach is likely to significantly improve the company's conditions of access to both the goods and services market and the financial market. Indeed, in a globalized context of awareness of the importance of sustainable development and global mobilization to achieve its objectives (either by virtue of regulations 21 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google binding or voluntary procedures), major contractors such as multinational companies or states are increasingly integrating requirements relating to CSR and ESG into their specifications. Thus, a company that demonstrates a convincing CSR approach can more easily access the markets of these organizations. On the contrary, a company that performs poorly on ESG criteria can be excluded from certain markets even if its operational and financial performance is very convincing. This issue is more pronounced for exporting companies. Moreover, the adoption of a CSR approach can also improve the conditions of access of the company to financing through the financial market. On the one hand, with the development of socially responsible investment models, more and more leading investors explicitly take ESG aspects into account in their investment strategies. Thus, a company adopting a CSR approach is likely to attract these investors who would potentially be ready to pay a “CSR premium”. On the other hand, as an effective and holistic approach to risk management, CSR can improve the financing conditions of the company by enabling it to present a more favorable risk/return profile. 3. Team motivation and federation The CSR approach has a motivating and unifying effect on the company's human resources. Indeed, being a strategic, transversal and participative approach, the initial implementation of the approach as well as its daily exercise give employees a feeling of participation in projects and activities of primary importance for the company. In addition, employees working for a company adopting CSR are more "proud" to be part of this organization because the latter is not only focused on short-term financial benefits but also takes into account issues of sustainable development. at the service of society in general. Finally, the social dimension is a major focus of CSR. Thus, as part of its CSR, the company listens to its employees and takes their expectations and needs into account, thus improving their working conditions and consequently their performance. 22 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google 4. Competitive advantage and reputation The exercise of CSR allows the company to derive some important competitive advantages. On the financial side, the adoption of a CSR approach is most often accompanied by a rationalization of the use of resources (e.g.: reduction of paper waste, use of renewable energies, rationalization of the use of water, recycling, etc.). This rationalization leads to cost optimization allowing the company to be more competitive. The competitive profile of the company is also improved by promoting innovation within the company. Indeed, by taking into account the needs of its stakeholders, the company seeks innovative modes of consumption, production and marketing. Finally, a company adopting a CSR approach conveys the image of an organization concerned about its environment, its stakeholders and the society in which it operates, and which works concretely for the collective well-being. This positioning gives it greater acceptance by society, which no longer associates it with the image of opportunism and savage capitalism, but perceives in it a collective added value. Thus, the stakeholders are loyal and the company's relations with them become less conflictual. Some advantages of adopting a CSR approach Better risk management Resilience Long term durability Better access to term Growth markets + Competitive advantage Cost optimization best return on and reputation invested capital Team motivation Productivity 23 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google II. Implementation of a CSR approach within the company: 1. CSR in practice: • State of mind and corporate culture: Traditionally, the primary objective of any company is to generate financial profitability to grow the wealth of its investors. By opting for a CSR approach, the company integrates other societal and environmental concerns into its decisions and activities. It is about creating value for society as a whole by contributing to the achievement of global sustainable development objectives. Indeed, beyond the procedures to be put in place and any labels to be obtained, CSR begins with a paradigm shift and the adoption of a new vision of the company's objectives and raison d'être. This is a new state of mind in which the company no longer serves the interests of its shareholders alone, but also takes into account the interests of stakeholders, and of society in general. Thus, a CSR approach can be adopted by any company regardless of its size, activity or location. It should be noted that adopting a CSR approach does not mean giving up profit and the financial interests of the company and its shareholders. On the contrary, CSR should serve the said financial interests in the long term. Indeed, CSR makes it possible to ensure a sustainable and sustainable development of the company and a better resilience of the latter to crises. In addition, the markets are increasingly integrating the CSR profile of companies into their assessments and decisions. Thus, companies that do not follow this strong and global trend can be penalized on several aspects having a direct and significant impact on their financial situations (examples: obtaining large markets, valuation of securities on the financial markets, etc.). • Continuous and dynamic approach: Being socially responsible is not limited to setting up a static device. Indeed, the CSR approach is a continuous and iterative process insofar as the company's CSR objectives are monitored, reviewed and adapted periodically. Also, the company is called upon to take into consideration its social responsibility in the unforeseen situations that may arise at any time. moment. CSR is also a dynamic approach since it must continually adapt to changes in society's expectations, the latter being its main driving force. 24 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • Holistic approach: The CSR approach must integrate all the central subjects identified by the adopted reference system (eg ISO 26000, CGEM charter, etc.). Thus, a socially responsible company should not deal with these topics selectively and in isolation. This does not mean that the company is obliged to act on all these fronts, but that it must take them into consideration in its thinking. Indeed, all subjects must be examined in order to identify the most sensitive areas requiring priority action. It is quite conceivable that a company, depending on its own situation, does not have to adopt specific measures on one or more areas if its diagnosis shows that it is in compliance with the law and the best practices in this area. matter or if its budget does not allow it to implement all the actions identified. Furthermore, the fundamental principles of CSR must all be applied and a socially responsible company should not omit to put one of the principles into practice (transparency, "accountability", ethical behavior, consideration of the interests of stakeholders, respect for laws and regulations, respect for international standards of behavior, respect for human rights). • Horizontal and vertical approach CSR is a horizontal (transversal) approach which must be reflected in all of the company's processes. A socially responsible company incorporates CSR in all its key functions (purchasing, production, finance, marketing, etc.) since any activity or decision of the company can have impacts on stakeholders and society in general. It is also a vertical approach in the sense that it must be supported by all hierarchical levels of the company. Indeed, CSR must first be reflected in the day-to-day activities and decisions of the company. All employees must therefore understand the challenges of CSR and adhere to the company's objectives in this area for effective implementation of the approach. • Exercised directly or indirectly CSR is directly exercised and applied by the company in its internal processes and activities under its control (eg recruitment, investments, manufacturing, etc.). However, a socially responsible company does not stop there. It must exercise influence, by the means at its disposal, to mobilize its stakeholders (business partners, government, civil society, etc.) and commit them to the path of sustainable development and social responsibility. 25 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • In strong interaction with the governance of the company CSR has a dual relationship with corporate governance. Indeed, on the one hand, an appropriate governance constitutes the means of endowing the company with the capacity to act in a socially responsible manner. On the other hand, governance is a main subject of CSR and an axis of its application. CSR influences corporate governance and must be reflected in it. 2. Practical implementation of the CSR approach within the company: The elements described below constitute the main steps in setting up a CSR approach. However, the sequencing and the effort dedicated to each step will depend on the specific situation of each company. • Adoption by company management The adoption of a CSR approach involves changes in the company. The depth and scope of said changes will, of course, depend on the business situation, but require committed leadership to drive a coordinated transition to effective adoption. Thus, the company's governing bodies (General Management, Board of Directors or Supervisory Board) must understand the challenges of CSR and subscribe to the objectives of sustainable development, and take the decision to adopt a socially responsible way of conducting business. To operationalize this transformation, a CSR entity should be created to steer CSR projects. It should report to the highest decision-making levels of the company to have the resources, the leadership and the credibility necessary for any transformation. • Identification of the areas of social responsibility The CSR approach is a broad concept that covers several aspects of the life of the company and its relations with its environment. There are several benchmarks in this area, which define the axes and components of CSR, explain the approach to its implementation, provide methodologies and standards for impact assessment, or even set ESG reporting frameworks. 26 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google The company must refer to one or more recognized standards to define the axes of its social responsibility. Thereby , at the level of the ISO26000 standard, these axes are as follows: - The environmental Protection ; - Respect for human rights; - The promotion of good governance practices; - Improving working and employment conditions; - Respect for the interests of consumers and suppliers; - Compliance with the rules of fair competition; - Community development; The relevance and weight of each axis will depend on the profile of the company and its particular situation. Thus, some sectors will be more concerned by a given axis than others. • Identification of activities and stakeholders Being socially responsible means first and foremost taking into account the expectations and interests of stakeholders and of society in general. To do this, the company must list its activities and identify all of its stakeholders. In the context of CSR, the concept of stakeholder is broader than in other exercises where usually a stakeholder is a direct partner with whom the company is linked by a business relationship (employee, customer, supplier, investor...). Indeed, the company must consider as a stakeholder any person or group of people who have one or more interests likely to be affected by an activity or decision of the company, even without there being a formal link that materializes the relationship. The interests in question are not necessarily financial interests but can be of different natures. The company will rely on the axes of CSR to identify the interests of stakeholders that are relevant to the CSR approach because they are linked to sustainable development. In addition, the company must understand the expectations of society with regard to “responsible” management of the impacts of the activities and decisions of the company. This involves adopting recognized benchmarks for ethical behavior with regard to each area of CSR. The company's most basic expectation is compliance with all laws applicable to the business. 27 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • Carrying out a self-diagnosis After having defined the axes of CSR and the company's stakeholders, the latter must position itself in relation to the standards adopted. The company's activities must be assessed in relation to their degree of compliance with the requirements and criteria of the said reference systems. An objective assessment will allow the company to identify its strengths and areas for improvement, as well as to define the most important topics to be addressed. • Identification of objectives and action plans For each of the important topics identified above, an appropriate action plan must be developed. Reasonable objectives should be set and prioritized based on available resources and criticality of topics. Goals can be permanent or one-time. For example, in terms of commitment to the community, an objective could be to "donate 10,000 Dhs to association X this year" or "Donate 1% of turnover to associations working for..." . The objectives must be measurable and the indicators for their measurement clearly identified. • Establishment of adequate means to achieve the objectives The company must acquire sufficient resources to achieve its CSR objectives. Resources can be material, financial, human or organizational. The missions of the various entities and the work procedures must be reviewed to be consistent with the objectives set and commitments made. For example, the risk management function will have to integrate CSR risks into its approach, and the human resources function will have to integrate the objectives of parity and non-discrimination into its recruitment and career management procedures. Also, the organization of the company must be arranged to allocate decision-making and monitoring responsibilities in terms of CSR. • Mobilization of employees Like any dynamic of change in the company, the success of the CSR approach depends on the support of employees at all hierarchical levels. Employees must be informed of the company's strategy and objectives in terms of CSR as well as their respective roles in achieving these objectives. CSR responsibilities should be integrated into job descriptions and performance reviews. 28 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Employees must be trained to understand CSR in general and assimilate the company's strategy in this area. They must also be trained in how to fulfill the missions entrusted to them within the framework of the CSR approach. It is important that management displays its commitment to CSR and its support for the process to ensure its success. It is also interesting to note that the CSR approach, at the same time as it requires an effort to mobilize employees, it is a federating motivation factor for the teams through its ethical content. Indeed, employees are more proud to belong to a company that works for sustainable development and the well-being of all. • Application in daily activities Company work procedures, however detailed they may be, cannot anticipate all possible situations or dictate appropriate courses of action in all circumstances. Company employees should learn, through training and experience, to recognize situations with CSR implications and integrate CSR objectives into their decision-making. They must also be made aware of the impacts of their personal actions, such as printing documents, using the air conditioner or smoking, as well as the behaviors to adopt to minimize them. • Stakeholder Engagement The company adopting a CSR approach must try, by the means at its disposal, to disseminate the CSR culture in society and mobilize its partners towards the achievement of the objectives of sustainable development. Stakeholder engagement is exercised within the company's sphere of influence in several ways. Stakeholder engagement starts with listening to them. The company must put processes in place to identify, gather, and even anticipate the interests of stakeholders. These can be, for example, meetings with stakeholder representatives to gather their points of view, or monitoring processes to identify CSR trends. The company also engages its partners in favor of sustainable development by encouraging them to adopt socially responsible practices. It conditions its business relations by CSR requirements (e.g. in specifications or supplier assessments) and exercises the influence at its disposal in favor of CSR (e.g. campaigning for the establishment of a or publicly commit to a cause). Finally, ESG reporting is an essential pillar for stakeholder engagement and a fundamental principle of any CSR approach. The company must communicate its strategy and its 29 | Page Document submitted for consultation-May-June 2017 Machine Translated by Google CSR achievements by following the principles set out in the section of this guide dedicated to ESG reporting. • Monitoring and continuous improvement The CSR approach must be subject to methodical monitoring which aims to: - Evaluate the achievement of CSR objectives and determine corrective actions; - Adapt the company's objectives and approach to changes in its environment; - Ensure continuous improvement by setting evolving objectives. Indeed, the approach described above must be considered as iterative, repeating itself throughout the life of the company. 3. Evaluation of a company's CSR approach: The evaluation of the CSR approach is important both internally in the context of the continuous monitoring presented above, but also for the company's stakeholders, including investors in the financial markets. • Importance of standards and labels The standards adopted are decisive in evaluating the company's performance and the relevance of its approach to each of the areas of CSR. The CSR approach is as credible and relevant as the reference framework adopted is universal. It should be remembered that the first standards to be respected by the company are the laws in force. In addition, the labels allow a direct and rapid evaluation of the company's CSR approach. Indeed, a label provides assurance that the company meets certain CSR criteria. However, any stakeholder (particularly investor), who would take a label into account in their assessment of the company, must understand the criteria for awarding said label to avoid errors of judgment. • Role of independent experts The adoption of a CSR approach within the company is a transformational process that requires the implementation of several projects at different levels of the organization. As such, a certain expertise is required to carry out the transformation. Independent experts can thus assist the company in defining and implementing a CSR strategy aligned with best practices in the field. 30 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Also, the use of independent experts can be requested to review the CSR approach and “rate” the company on the ESG aspects, thus giving credibility to the approach and to the information communicated to the stakeholders. • Role of transparency Transparency is a fundamental principle of any credible CSR approach. Indeed, one cannot conceive of a CSR approach without organizational transparency. The principle of transparency is put into practice through a communication policy adapted to the needs and interests of the various stakeholders internal or external to the organization. The company must be clear about its strategy, objectives and priorities in terms of CSR, as well as about its progress and achievements in the various areas selected. The information channels to be used are varied, but the CSR/ESG report remains the preferred means. III. Communication on CSR through ESG reporting 1. Format de reporting ESG In the context of the financial market, a public company (APE) must make ESG information public in a structured form and cannot be satisfied with direct communication with its stakeholders. Indeed, investors on the market become central stakeholders, who are interested not only in their direct relationship with the company (shareholders' rights, distribution of dividends, etc.) but also in the latter's relationship with other stakeholders. (relationship with customers and suppliers, with the community, environmental performance, etc.) to make informed decisions. The ESG report thus becomes the preferred form of reporting and communication to stakeholders. This report, which deals with the various ESG issues, must meet a certain number of requirements, described below, in order to properly fulfill its role. The ESG report can be prepared and published separately, or integrated into another document such as the annual report. It is recommended to publish it at the same time as the annual publications in order to allow investors to better integrate ESG analysis into their financial analysis. It is also recommended that the ESG report be posted on the company's website to ensure proper dissemination and easy access. 31 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google 2. Principles of ESG reporting For a better impact, the information included in an ESG report must obey certain principles that determine its quality and relevance. These include in particular: Reliability Punctuality Clarity Materiality Balance Comparability • Reliability : The information must be reliable and documented. The company must ensure control of the process of production, collection, processing and presentation of information. The reliability of information is significantly improved by an external review. • Clarity: Information should be presented in an easily understandable manner. Thereby, ambiguous or technical concepts must be accompanied by explanations. • Balance: The report should reflect the positive and negative aspects of the performance of the organization in order to allow a fair assessment of its overall performance. • Comparability: The information presented must be comparable over time and across the industry. The company must take care to publish the information in a continuous way in order to allow an appreciation of the evolution of its performance over time. It must also make sure to align itself with the best practices of its sector in terms of publication to ensure comparability with its peers. • Materiality and Exhaustiveness: The information published must be material. It must be relevant for the stakeholders and useful for their assessment of the company's performance. However, for each of the subjects identified as material, 32 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google the company must provide comprehensive information to enable a fair assessment of its performance. • Punctuality: ESG information must be communicated regularly and known to stakeholders. Such information must be made available in time to allow adequate decision-making. 3. Content of the ESG13 report The ESG report provides information on the various CSR systems put in place as well as the resources allocated to monitor and control them. Through said report, the company can also demonstrate, when the data exists, the contribution of CSR actions to economic and financial performance (examples: cost reductions, productivity gains, capture of new markets or customer loyalty, employee loyalty, better risk management, better reputation, better picture….). At the international level, there are several standards14 which provide normative frameworks for ESG reporting and the content of the ESG report. In general, the ESG report must contain general information as well as information specific to each of the pillars of the ESG analysis. INFORMATION ELEMENTS OF ESG REPORTING GENERAL ELEMENTS SPECIFIC ELEMENTS • Profile of Environment Social Governance Others l’organisation • HR Policy • Governance Description of • bodies relationships and Environmental Policy • Hygiene, health and • Aspects pertinents (composition and impacts vis-à-vis security • Use of identified functioning) external stakeholders: resources • Climate and • Management and • Pollution and dialogue social control of • CSR Strategy • Human rights to risks • Ethics and waste management work • Ethics and corruption Corruption • Adopted standards • • Suppliers … • Climate change • Relationship with • Clients • Champs du reporting shareholders • Civil society • … • … • … 13 See Appendix 3 for examples of ESG indicators to be published 14 See Appendix 2 for examples of ESG reporting frameworks 33 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • General information items: This part of the ESG report provides an overview of the company and its CSR strategy. It also introduces the methodology and structure of the ESG report. The company must describe itself in general terms (products, geographic markets, main figures, etc.) and offer an overview of its profile. Emphasis must be placed on activities related to sustainable development themes considered material for the company (examples: production sites with polluting activities, issues with neighboring communities, etc.). The company manager must provide a statement in which he explains the company's overall vision and its CSR strategy in the short, medium and long term, as well as the organization put in place to implement this strategy. It presents the strategic priorities and key themes identified by the company in this area, the broad trends (macro-economic or political, for example) that affect the organization and influence its priorities in terms of sustainable development, as well as the objectives that it has fixed. The presentation should cover the achievements of the reporting period in relation to the objectives set as well as the main successes and failures during this period. Also, it is important to clearly define the profile of the ESG report itself so that it can be used optimally. First, the scope covered by the report should be clearly presented. Indeed, if the company is established in different markets or has several business lines or subsidiaries, the scope of the reporting (geographical, activities covered and excluded) must be clear to the reader. Generally, the company will have to provide a report on its most significant activities. The duration concerned by the report must also be specified. The methodological aspect of the report must also be described and explained. Thus, the reporting framework adopted should be brought to the attention of the reader, specifying, where applicable, the degree of compliance of the report with said framework (aspects not applied, explaining the reasons for non-application). The methodology for analyzing and defining the materiality of the subjects dealt with in the report must also be described. • Specific information items This part of the report provides information specific to each of the areas considered material by the company. Indeed, the information to be published in the report depends on the profile of the company. Some topics will be material for some companies and not others. A 34 | Page Document submitted for consultation-May-June 2017 Machine Translated by Google For example, companies operating in IT consulting will not a priori be affected by greenhouse gas emissions, whereas this subject will be a major concern for companies operating in heavy industry, refining or electricity production. from coal-fired power plants. Each company must carry out its own materiality analysis, based in particular on the work carried out to define its CSR approach (see the paragraph “Identification of the areas of social responsibility”). For each of the axes defined as material, the report must provide the impacts of the company as well as the objectives and action plans put in place to deal with them. The environmental dimension deals with the company's environmental policy and covers the impacts linked to the use of inputs (water, energy, etc.) and the treatment of outgoing elements (emissions of greenhouse gases, effluents and waste, etc.). In general, the report must highlight the company's participation in the conservation of natural resources and its efforts to reduce its consumption while improving its economic efficiency. The social dimension describes the employer/employee relationship and relates the company's employment and labor practices. Thus, this part of the report sets out the main axes of the company's policy in terms of human resources (recruitment, training, career management, social dialogue, etc.) and provides measurable indicators making it possible to assess the degree of integration of best practices in this area: parity and diversity, equal opportunities, respect for human rights and freedom of association, accident prevention measures and health, hygiene and safety policy. Transparency regarding the governance structure is important to ensure the “accountability” of the bodies and people involved. This part describes in particular the composition of the governance bodies and their operation. It also covers the contribution of the said bodies in determining the mission, values and strategy of the organization, as well as their role in risk management, the definition of the CSR approach and the production of the report. ESG. Finally, the ESG report deals with other subjects affecting the company's various stakeholders, such as its relations with its customers and suppliers, with local communities or NGOs. Also, the report must relate the objectives and measures put in place by the company to integrate the best universal practices in its operations (examples: fight against corruption, fair competition, etc.). 35 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google IV. Recommendations and regulatory approach 1. Best practices and recommendations for preparing the ESG report To ensure that the ESG report has an optimal level of quality and credibility, its preparation, the verification of its content and its dissemination must be based on a series of best practices and recommendations as presented below. • Adopt a recognized standard for ESG reporting In order to have a structured communication allowing a relevant analysis by the stakeholders, the company should base itself on a recognized frame of reference in terms of ESG reporting. Indeed, several initiatives have been developed internationally to standardize ESG communication. These initiatives, a non-exhaustive list of which appears in appendix 2 of this guide, provide general (covering all ESG aspects) and/or specific (to certain ESG aspects or certain sectors) reporting frameworks. • Adopt the principle of materiality as the basis for defining the elements to be communicate Putting the concept of materiality and relevance at the heart of the reporting process guarantees content focused on topics that are important to stakeholders (including investors). Indeed, favoring exhaustiveness at the expense of materiality leads to overly detailed reports that drown out the relevant information and require a considerable effort for exploitation. Also, the methodology used to determine the materiality thresholds should be described in the report. • Be transparent about the methodology for collecting and processing l’information It is recommended to present in the report a methodological note describing the process of identification, collection, processing and compilation of non-financial information, as well as the limits attached to this methodology. The quantitative indicators as well as the calculation methods used must be clearly defined and specified. • Ensure the comparability of the indicators communicated The company must take care to keep the same indicators from one financial year to another to enable reporting users to understand changes in the company's performance. In the event of a change in the indicators communicated, the company must explain the reasons for said change, and ensure, as far as possible, the publication of the abandoned indicators during a transitional period. 36 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google In addition, the company must take care to ensure the comparability of its reporting with the practices of its sector of activity or its market, in order to ensure the comparability of its performance with that of its peers. • Adopt language understandable to stakeholders The company should prepare its report in language that is generally accessible to the public, and not consider all readers of the report to be qualified. Thus, the technical or complex notions must be accompanied by simple explanations making it possible to understand the content in order to properly situate the company's performance. • Listening to the public on issues related to ESG reporting: The implementation of ESG reporting, especially during the first experiences, should be accompanied by the implementation of a listening process. The latter allows the company to collect the reactions and requests of the public in relation to the information published. This process must be supported by a defined organizational entity (whether dedicated or not). • Ensure adequate dissemination of the ESG report The ESG report must be easily accessible to the public. Its online publication allows wide and rapid distribution while reducing the costs associated with publication. Also, the company must take care to keep a sufficient history on its site to meet the needs of users. • Take a step-by-step approach ESG reporting should be implemented gradually. Thus, the company can start in its first reports by covering the scope and the most mastered subjects and for which the information is more easily available, to then extend the scope of the report as it gains more knowledge. experience and its publishing capacity is growing. • Prioritize the concomitance of financial and extra-financial publications Irrespective of the choice of report format (separate document or integrated into another), the ESG report should be published at the same time as the annual financial publications. Thus, investors and analysts have a complete view of the company's performance, both financial and extra-financial. For greater efficiency, it is also recommended to opt for the integrated reporting format (single report containing financial and ESG publications). 37 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • External verification of published ESG information The credibility of published ESG information is crucial for stakeholders. Indeed, said parties integrate ESG criteria in their decisions about the company (investment, business relations, etc.). The preferred way to ensure the credibility of published information is to have it reviewed by independent and qualified third parties. The intervention of said third parties can take on several aspects. First, the independent third party may be called upon to certify the information published and attest to its accuracy. In addition, the independent third party may be asked to provide a conclusion regarding the company's CSR approach. Indeed, it examines the systems put in place and rates the company in relation to the expectations of the stakeholders, allowing the latter to quickly assess the company's performance in terms of CSR. It is important that verifiers: - Be independent of the company to issue impartial and objective conclusions; - Demonstrate recognized skills, both in the field concerned and in the verification practice; - Apply quality procedures; - Assess whether the report provides a legitimate and objective presentation of performance; - Write a report accessible to the public including an opinion or a set of conclusions. 2. Regulatory approach: The disclosure of ESG information currently remains voluntary in Morocco. This guide aims to raise awareness among issuers and prepare them for future ESG reporting obligations. Indeed, in accordance with the guidelines of the Kingdom and the commitments that the Authority has made within the framework of the "roadmap for the alignment of the Moroccan financial sector with sustainable development" adopted at COP22, the regulations governing the obligations of information of publicly traded companies should evolve to integrate extra-financial information (ESG). The Authority's approach to ESG reporting will adhere to the following principles: • Propose rules adapted to the local context while drawing inspiration from international best practices in this area In accordance with Morocco's ambitions to make the Casablanca financial center a regional financial hub, convergence with international best practices is essential in 38 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google the development of any market regulations. However, the authority will make sure to propose rules that take into account local specificities, the market situation and the constraints of the issuers who will be subject to them. • Propose rules that are not unduly disproportionate and that would risk discouraging access to the capital market As part of the development of new ESG reporting rules, the authority will ensure that a balance is maintained between the information requirements of the market and the weight of the new obligations on existing or potential issuers. Thus, the new obligations should not be so burdensome that they would discourage potential issuers from going to market. • Differentiate as much as possible the obligations according to the different profiles companies In connection with the previous principle, and in order to take into account the capacities of different types of companies, the rules could possibly be broken down according to certain criteria such as the size, industry, or market segment. • Adopt a gradual approach in the application of the obligations of reporting The new ESG reporting obligations should come into force gradually. Thus, initially, the obligations will relate to information that can be quickly and easily produced by companies (examples: indicators related to the social aspect or to governance, etc.). The scope of information to be published would then be expanded at a rate that should enable issuers to adapt. • Adopt the “comply or explain” principle A uniform set of elements to be communicated will be specified for companies making APE. However, given that the situations of issuers vis-à-vis ESG issues are different and must be considered on a case-by-case basis, disclosure requirements will be accompanied by a so- called “comply or explain” approach . Thus, the issuer who does not publish one or more specified elements must provide sufficient and valid explanations. 39 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • Adopt the “name and shame” approach for companies that do not do not comply with obligations In order to encourage ESG disclosure, consideration will be given to publishing an annual list of companies that do not comply with these obligations in order to encourage them to improve their practices in this area. • Adopt a consultative approach by involving stakeholders, upstream, in the definition of obligations The authority will adopt a consultative approach for the development of ESG reporting obligations. Thus, all stakeholders will be invited to express their expectations and proposals in terms of ESG reporting. As such, this guide can be considered as a starting point to trigger the debate on these issues. • Monitor ESG Reporting practices The Authority will periodically publish a report that will take stock of ESG communication practices and give recommendations to improve these practices. Such an approach is likely to improve the quality of the reports from year to year • Involve the public and investors in the monitoring and surveillance of issuer disclosure practices The authority will put in place a listening process to encourage users of ESG reports to communicate any shortcomings or inadequacies they may have noted in the reports published by issuers. The main observations made would be published in the report below. above. 40 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Annex 1 UN Sustainable Development Goals Goal 1. Eradicate poverty in all its forms everywhere Goal 2. End hunger, achieve food security, improve nutrition and promote agriculture durable Goal 3. Enable healthy lives and promote well-being for all at all ages Goal 4. Ensure equitable, inclusive and quality education and lifelong learning opportunities for all Goal 5. Achieve gender equality and empower all women and girls Goal 6. Ensure universal access to sustainably managed water supply and sanitation services. durable Goal 7. Ensure access for all to reliable, sustainable and modern energy services at an affordable cost Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all Goal 9. Build resilient infrastructure, promote sustainable industrialization that benefits everyone, and encourage innovation Goal 10. Reduce inequalities within and across countries Goal 11. Make cities and human settlements inclusive, safe, resilient and durables Goal 12. Establish sustainable consumption and production patterns Goal 13. Take urgent action to combat climate change and its impacts Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development Goal 15. Preserve and restore terrestrial ecosystems, ensuring their sustainable use, sustainably manage forests, combat desertification, halt and reverse land degradation and halt biodiversity loss Goal 16. Promote peaceful and inclusive societies for sustainable development, ensure access to justice for all and build effective, accountable and inclusive institutions at all levels Goal 17. Strengthen the means to implement the Global Partnership for Sustainable Development and revitalize it 41 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Annex 2 Examples of ESG reporting frameworks Global Reporting Initiative (GRI): it is an independent international organization that provides a recognized and widely used benchmark for sustainability reporting. https://www.globalreporting.org/standards The international reference framework for integrated reporting: edited by the International Integrated Reporting Council (IIRC), a global coalition of companies, investors, regulators, standard setters, representatives of the accountancy profession and NGOs. http://integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR FRAMEWORKFrench.pdf The Climate Disclosure Standards Board (CDSB): launched in September 2010, this framework offers companies a tool for reporting environmental information. http://www.cdsb.net/sites/cdsbnet/files/cdsb_framework_for_reporting_environmental_informatio n_natural_capital.pdf The United Nations Global Compact, which brings together companies committed to aligning their activities and strategies with 10 universal principles related to human rights, labor, the environment and the fight against corruption. The signatory companies undertake to communicate annually on their progress. https://www.unglobalcompact.org/docs/communication_on_progress/Tools_and_Publications/COP_ Basic_Guide.pdf 42 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google Annex 3 Examples of ESG indicators This list presents, for the main categories of the ESG report, indicators that the company can use depending on its size, its activity and its own situation. This list is provided for illustrative purposes and should not be considered as limiting. I. ENVIRONMENTAL INFORMATION: This part must provide information on the steps taken by the company in terms of the environment: ÿ General policy in terms of the environment: • The total expenditure and investments committed in terms of environmental protection environment, by type • The amount of provisions and guarantees for environmental risks, (unless this information is detrimental to the company in an ongoing dispute) • Employee training and information actions carried out in terms of Environmental Protection ÿ Sustainable use of resources: • Total water consumption and water supply according to constraints geographical • Total energy consumption, measures taken to improve efficiency energy and the use of renewable energies • Energy saved through energy efficiency • Consumption of raw materials and measures taken to improve the efficiency of their usage ÿ Pollution and waste management: • Greenhouse gas emissions • Total weight of waste • Percentage of waste recycled • Total weight of hazardous waste • Volume of wastewater discharges 43 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google ÿ Climate change: Adaptation to the consequences of climate change • Total direct or indirect greenhouse gas emissions • Initiatives to reduce greenhouse gas emissions and the reductions achieved • R&D expenditure on energy efficiency and the fight against climate change as a percentage of turnover ÿ Protection of biodiversity • Measures taken to preserve or develop biodiversity • Location and areas of land held in the vicinity of protected areas and areas rich in biodiversity • Description of the significant impacts of activities, products and services on the biodiversity of protected areas or areas rich in biodiversity outside protected areas II. SOCIAL INFORMATION: This part mainly describes the employer/employee relationship, in particular workforce management, working conditions and social dialogue: • Total workforce and distribution of employees by gender, age and geographical area • Age pyramid • Hiring, firing • Remuneration and its development • Work time organization • Absenteeism • Percentage of employees covered by a collective agreement • Occupational health and safety conditions • Rate of serious or fatal work accidents in relation to the total number of employees • Expenditure on maintenance and safety of production sites • Policy implemented for employee training • Total number of training hours • Skills development and training programs • Average expenditure on training per employee • Measures taken in favor of diversity and equal opportunities: 44 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google - Measures taken to promote the employability of people with mobility scaled down - Percentage of women in positions of responsibility - Composition of management bodies and distribution of employees by gender, age group, and other indicators of diversity III. GOVERNANCE INFORMATION: This part gives an overview of the composition of the governance body, its role in risk management and sustainable development: • Composition of the Board: executive and non-executive members, independence, functions within the governing body, gender, stakeholder representation • Number of terms and positions of directors • Parity rules • Existence of specialized committees • Attendance at Board meetings • Remuneration of directors • Remuneration of executive officers: detail of stock option plans, share free, benefits in kind • Process for evaluating the performance of the governing body against economic, environmental and social themes • Relations with shareholders: Information communicated to shareholders IV. STAKEHOLDER INFORMATION: ÿ Economic and social impact of the company's activity: • Impact on neighboring or local populations and regional development: creation jobs, investment in health, culture, education • Impact of investments in infrastructure and public services • Corrective actions implemented within the activities including impacts potential or proven significant negative impacts on local communities ÿ Relations with associations, organizations: • Affiliation to associations or membership in national organizations or international advocacy 45 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google • Practices relating to customer satisfaction (survey results) • Measures taken in favor of consumer health and safety ÿ Relations with suppliers and subcontractors: Companies are invited to promote and respect human rights within their sphere of influence, and to ensure that they are not complicit in human rights violations: • Number of significant contracts including human rights clauses ÿ Ethics, deontology and corruption: Businesses are urged to act against corruption in all its forms, including extortion and bribery: • Actions taken to prevent corruption • Measures taken in response to incidents of corruption • Total number of lawsuits for anti-competitive behavior, breaches of anti-trust laws and monopolistic practices, results of these actions 46 | P a g e Document submitted for consultation-May-June 2017 Machine Translated by Google APPENDIX 4 Useful links • UN Global Compact : https://www.unglobalcompact.org/ • The International Organization for Standardization: www.iso.org • Directive of the European Parliament and of the Council 2014/95/EU with regard to the disclosure of non- financial information and information relating to diversity by certain large companies and certain groups: http://eur-lex.europa.eu/legal-content/FR/TXT/PDF/?uri=CELEX:32014L0095&from=FR • la Global Reporting Initiative : www.globalreporting.org • UN Principles for Responsible Investment: https://www.unpri.org/about • the 22nd conference of the parties to the united nations framework convention on the changes (COP22): http://cop22.ma/fr/ • The constitution of the Kingdom of Morocco: http://www.chambredesrepresentants.ma/sites/default/files/documents/constitution_2011_marocai no.pdf • The Economic, Social and Environmental Council (CESE): http://www.ces.ma/ • ESEC report entitled “Social responsibility of organisations: mechanisms for transition towards sustainable development”: http://www.ces.ma/Documents/PDF/Auto-saisines/2016/av26/rpas26f.pdf • National Sustainable Development Strategy (SNDD): http://www.environnement.gov.ma/fr/strategies-et-programmes/sndd?showall=1&limitstart= • the CGEM CSR Charter: https://rse.cgem.ma/upload/CHARTE-RSE-FR.pdf • Roadmap for the alignment of the Moroccan financial sector with sustainable development / Roadmap for the emergence of sustainable finance in Africa: http://www.ammc.ma/actualites/feuille-de-route-pour-lligne-du-secteur-financier-marocain on-le- developpement-dura 47 | P a g e Document submitted for consultation-May-June 2017