Communicating Sustainability Six Recommendations for Listed Companies Version 02 Contents Foreword 2 Introduction 4 Purpose of this Guide 8 What is ESG? 12 The United Nations’ Sustainable Development Goals (SDGs) 14 Why reporting on ESG is important 16 Best Practice Recommendations 20 Appendix: Sustainability Reporting Initiatives 28 We would like to thank GRI for their technical support 01 Foreword Sustainable investing has continued to gain momentum among financial market participants and ESG factors are increasingly outlined by leading institutional and retail investors from around the world as vital determinants of investment decisions. As this requirement comes into the fore, it is vital that listed entities take measures to effectively measure and communicate ESG performance and impacts to all stakeholders. The second version of our guidance document to listed companies on communicating sustainability integrates perspectives and standards of the Global Reporting Initiative, which is set to add considerable value to users of the publication. As a member of the United Nations Sustainable Stock Exchanges (SSE) initiative, the CSE actively engages in its commitment to promote improved ESG disclosure and performance among listed companies. Encouraging quality reporting among our listed entities is imperative in our effort to provide investors with the information they require to make sound investment decisions. The world is entering a new era as we move towards embracing new levels of transparency. We are encouraged by the growing commitment of Sri Lankan entities towards communicating their sustainability performance. We encourage Sri Lankan listed companies to take considerable strides towards making sustainability reporting an effective and standard practice. We are appreciative of the contribution of the Global Reporting Initiative towards this guidance document, and its efforts towards fostering reliable, globally accepted sustainability reporting by Sri Lankan listed companies. Rajeeva Bandaranaike Chief Executive Officer Colombo Stock Exchange 2 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Foreword Companies are crucial to building a sustainable future, and sustainability reporting is an important tool in their arsenal. Reporting on their impacts promotes transparency, which in turn can help them better anticipate risks, and inform the decision makers of companies and investors alike. The GRI Sustainability Reporting Standards help companies use transparency to create social, environmental and economic benefits for everyone. Transparency regarding business impacts, whether positive or negative, is not only a business opportunity, more and more it has become a business necessity. Sustainability reporting also helps companies better understand and communicate their impacts on critical issues for their communities like climate change, human rights and labor relations. Companies can become more aware of the risks, and take steps to manage them. And transparency can also help them gain access to new opportunities in global markets. It is encouraging to see new legislation and regulation being promoted around the world, to encourage companies to reap the benefits of greater transparency. We commend the Colombo Stock Exchange for providing guidance so that companies can make strides towards a more sustainable world. Mr. Tim Mohin Chief Executive GRI 3 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Foreword 02 Introduction “Environmental, Social and Governance (ESG) factors are increasingly outlined by global investors as vital determinants of investment decisions.” 4 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Introduction 5 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Introduction Introduction Growing legislative pressure and increasing public concern about the global climate and the carrying capacity of earth, labor conditions and growing inequality, have led to increasing demands for organizations to act in sustainable ways1. Many asset managers and asset owners are considering a wide range of sustainability issues on their investment selection and management decisions. According to the World Federation of Exchanges (WFE), the term ‘sustainable investment’ covers a wide range of concepts and niche asset classes, from carbon trading and clean-tech investment to the use of environmental, social and governance (ESG) information in portfolio construction and voting policies. Key drivers behind this continuing trend in the global capital markets are the growing political and economic prominence of climate change, market-based incentives for the transition to lower-carbon products, labour standards, human rights & product safety. 1 Freundlieb M, Teuteberg F (2013) Corporate social responsibility reporting-a transnational analysis of online corporate social responsibility reports by market–listed companies: contents and their evolution. International Journal of Innovation and Sustainable Development 7: 1–26. 6 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Introduction 7 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Purpose of this Guide 03 Purpose of this Guide 8 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Purpose of this Guide 9 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Purpose of this Guide Purpose of this Guide This guide will help companies listed in the Colombo Stock Exchange address topics related to environmental, social and governance (ESG) issues in their communications, as these aspects are among the factors influencing investment decisions by institutional and retail investors. The guide consolidates the current practices of investors and issuers and aims to provide guidance. It consists of useful recommendations related to sustainability reporting for companies. Listed companies are assisted and guided in a structured way on how to approach the topic of sustainability when they incorporate it into their capital market communication. Reading this guide will also encourage listed companies to focus and limit their ESG-related reporting to the content that is really material as this is what investors and analysts are interested in. The guide seeks to help the issuer navigate the complex process of identifying the content that is most appropriate and relevant to their capital market communication. Companies should bear in mind that the substance of their disclosures will depend on their industry or sector and on an individual analysis of the materiality of the information to their specific stakeholders. With its focus on capital market communication, this guide is specifically written with the investors and analysts in mind. It is important to note that the objective of this guide is not to provide a mandatory listing requirement, but specific guidance on the information that companies should consider and disclose under ESG issues. 10 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Purpose of this Guide 11 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Purpose of this Guide 04 What is ESG? ESG refers to a set of standards for a company’s operations that socially conscious investors can use to screen investments. ESG defines which Environmental, Social and Governance factors can be considered alongside financial ones in the investment decision-making process2. The table below provides MSCI ESG Research’s Key Issue Hierarchy in each category. Issue Factors Environmental Climate Change Natural Resources Pollution and Waste Environmental Opportunities Social Human Capital Product Liability Stakeholder Opposition Social Opportunities Governance Corporate Governance Corporate Behaviour The main argument for incorporating ESG factors into investment strategies is that these factors can help create or erode shareholder value. Beyond this business case rationale, many investors and other stakeholders also argue that incorporating ESG considerations will result in good corporate citizenship and enlightened self-interest. The United Nations Sustainable Stock Exchanges (SSE) initiative encourages stock exchanges to provide guidance to their issuers on Environmental, Social and Governance (ESG) reporting. As conduits between issuers, investors, regulators and other capital market stakeholders, stock exchanges are ideally placed to support the transition to greater ESG disclosure and to attract new investment flows with a sustainability-focus. The SSE also tracks sustainability related activities of stock exchanges in the SSE Database3, including how many stock exchanges require ESG reporting as a listing rule, provide ESG-related training or have written guidance on ESG reporting such as this guide. Examples of these guides are the “LSEG’s Your Guide 12 Communicating Sustainability: Six Recommendations for listed Companies - 2019 What is ESG? to ESG Reporting” and the ESG guidance of the Bombay Stock Exchange “Guidance Document on ESG Disclosures”. There is also the “Sustainability Reporting Guidelines by the Philippine Securities and Exchange Commission”. Many more can be found in the SSE Database. The United Nations Sustainable Development Goals have also drawn further attention to sustainability and sustainability reporting, causing existing and new report issuers to report on their contribution to these global goals. Using publications such as “In focus: Addressing Investor Needs in Business Reporting on the SDGs contribute to making the reported information relevant for investors”. 2 https://www.msci.com/esg-investing#what_is_ESG 3 http://www.sseinitiative.org/data/ Better World of the Business And Sustainable Development 13 Communicating Sustainability: Six Recommendations for listed Companies - 2019 What is ESG? 05 The United Nations’ Sustainable Develop- ment Goals (SDGs) Our planet faces massive economic, environmental and social challenges, such as poverty, inequality, environmental stress, etc. The 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs or Global Goals) were designed to help society and business to focus on solving global sustainability challenges. The SDGs provide a vision of a sustainable future and propose actionable targets for today’s major sustainability challenges. As a key stakeholder, the business sector has a critical role in providing solutions that can contribute to solving sustainable development challenges, while generating new business opportunities. The Global Reporting Initiative (GRI) and the United Nations Global Compact (UNGC) published “Business Reporting on the SDGs: An Analysis of the Goals and Targets” and “Integrating the SDGs into Corporate Reporting: A Practical Guide” to assess their current operations by identifying, assessing and measuring how they contribute to – or undermine – each goal. From there the SDGs are useful in two ways: firstly, companies can measure and report their impacts in relation to the SDGs and implement new ideas that improve the business, reducing their footprint and minimizing overall negative impacts. Secondly, organizations can use the SDGs as inspiration and design criteria for new product development and business process innovation, developing products and services that contribute to solving real global challenges while meeting human needs. The SDGs are anticipated to generate at least US$12 trillion worth of market opportunities by 2030. 4 In its ‘Better Business Better World’ report, the Business & Sustainable Development Commission identifies the 60 biggest market opportunities related to the achievement of the SDGs, in the areas of food and agriculture, cities, energy and materials, and health and well-being. The report concludes that over 50% of these opportunities are in frontier and emerging economies5. 14 Communicating Sustainability: Six Recommendations for listed Companies - 2019 The SDGs are becoming increasingly important also for investors, as they are ‘an articulation of the world’s most pressing environmental, social and economic issues and, as such, act as a definitive list of the material ESG (environmental, social and governance) perspectives that should be taken into account as part of an investor’s fiduciary duty.’6. There is a strong business case for investing in opportunities aligned with the SDGs, including helping investors secure stable returns, better represent the values of their clients and offer sustainable financial products that differentiate them in the marketplace7. By providing relevant SDG data, companies can help investors make informed decisions and direct capital towards investments with positive real-world impact. Achieving the SDGs can present great business opportunities, but the opposite is also true. Not reaching the Goals can have major negative consequences for companies and their finances and, therefore, for investors’ financial returns. This is why investors need to know the (actual and potential) positive and negative effects that a business has on contributing to the SDG targets, including depth, scale, duration and rate; the added contribution the business makes to the SDGs; and the likelihood that any effects will differ from set expectations. In their SDG reporting, straightforward, user-friendly metrics should showcase a company’s targets and progress; companies should consider risk factors and impacts on external social and natural environments in a focused manner, particularly risks to people and the environment8. 4 See the report Better Business, Better World of the Business And Sustainable Development Commission, report. businesscommission.org/, p. 26. 5 Find the report here: http://report.businesscommission.org/, p. 26. 6 See The SDG Investment Case, https://www.unpri.org/download?ac=5909, p. 10. 7 See In Focus: Addressing Investor Needs in Business Reporting on the SDGs, https://www. globalreporting.org/resourcelibrary/addressing-investor-needs-SDGs-reporting.pdf, p.5.6 8 See In Focus: Addressing Investor Needs in Business Reporting on the SDGs, https://www. globalreporting.org/resourcelibrary/addressing-investor-needs-SDGs-reporting.pdf, p. 4. 15 Communicating Sustainability: Six Recommendations for listed Companies - 2019 06 Why reporting on ESG is important ESG may have very strong economic implications, depending on the quality of the way they are managed. 16 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Why reporting on ESG is important 17 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Why reporting on ESG is important Why reporting on ESG is important USD 60 trillion AUM, incorporate ESG considerations into their decision making & ownership practices. 1. Attracting Investors Seeking Sustainable Investment Opportunities. There is an increasing interest by investors in the Environmental, Social, and Governance (ESG) impacts of businesses. This can be seen by the steady growth of the signatories to the Principles for Responsible Investment (PRI) to over 1900,9 representing over USD 80 trillion as of April 2018. These signatories are committed to incorporate ESG considerations into their decision making and ownership practices. Further, the 2016 report by GSIA10 found that, assets valued at over USD 21.9 trillion have incorporated ESG concerns into their investment selection and management globally. This is an increase of 25% from 2014, which shows that commitment is turning to action because companies can have significant ESG risks and impacts that can potentially negatively influence a business’ bottom line. For example, businesses are contributing to climate change through their greenhouse gas emissions; in turn, climate change can lead to extreme weather events, influence water availability and other issues that affect the operation of a business. For businesses, ESG related reporting leads to a better understanding of its impacts and the exposure of their operation to ESG-related risks. Communicating this information allows investors to better understand the management of ESG risks and impacts of their portfolio and potential investees. This gives companies access to a broader set of investors, as increasingly investors commit and take action to incorporate ESG information in their investment decisions11 and require companies to be transparent on these issues. Further, it opens the opportunity to be included in the sustainability focused indices, used for passive investment strategies, which increases visibility and makes it easier for investors to identify companies that are transparent on their ESG risks and impacts. Indices such as the MSCI Emerging Market ESG Index have been outperforming traditional benchmarks12. 18 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Why reporting on ESG is important 2. Getting Ahead of Regulatory Developments. Regulatory bodies are highlighting the importance of ESG disclosures to corporations to strengthen market procedures. This can help countries to attract new investments due to the disclosure of sustainability information according to regulatory requirements. So far there are number of regulatory bodies that have introduced frameworks to report on sustainability. For example, 19 of the G20 member states and 9 of 32 national securities commission on the board of the International Organization of Securities Commission (IOSCO) have implemented at least one mandatory reporting initiative or regulation on social environmental matters13. The International Organization of Securities Commission (IOSCO) states in its Principle 16 that issuers should provide “full, accurate, and timely disclosure of financial results, risk, and other information which is material to investors’ decisions.” With regard to this Principle, IOSCO emphasizes that ESG matters, though sometimes characterized as non-financial, may have a material short-term and long-term impact on the business operations of the issuers as well as on risks and returns for investors and their investment and voting decisions14. Issuing these type regulations assist companies to produce quality sustainability reports. 3. Enhanced Corporate Reputation. Companies can demonstrate their commitments towards ESG issues and the level of adherence to industry ethical standards and national and international frameworks on corporate sustainability and sustainable development. A reporting related stakeholder engagement will enhance corporate reputation by improving stakeholders’ perception of a company. 4. Strengthening Financial Performance. Reporting on ESG will generate financial value for the company by identifying opportunities for cost savings, revenue generation and risk mitigation. Continuous improvements on accountability and fostering collaboration with stakeholders will help companies to improve their image, which in turn has the potential to positively impact its profitability. 9 https://www.unpri.org/pri/about-the-pri 10 The Global Sustainable Investment Alliance (GSIA) is an international collaboration of membership-based sustainable investment organisations. 11 Based on the increasing number of PRI signatories and ESG investments as found by GSIA. 12 https://www.msci.com/documents/10199/c341baf6-e515-4015-af5e-c1d864cae53e 13 http://www.sseinitiative.org/wp-content/uploads/2012/03/SSE-2014-ROP.pdf 14 See IOSCO’s Statement on Disclosureof ESG Matters by Issuers, https://www.iosco.org/library/pubdocs/pdf/ IOSCOPD619.pdf, p. 1. 19 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Why reporting on ESG is important 07 Best Practice Recommendations “The following best practice recommendations for ESG reporting are designed to support companies in developing more holistic, integrated corporate reporting with the objective of effective capital market communication. CSE encourages all listed companies to consider sustainability reporting with a special emphasis on the following recommendations”. 20 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations 21 21 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations Best Practice Recommendations 1. Leadership and Drive The board of directors of a company can play a leading role by demonstrating the commitment to high quality ESG reporting. The board may define and control key topics and key performance indicators (KPIs) that reflect the company’s economic, environmental, social and governance impacts. This means that the senior management needs to set the sustainability agenda and ensure that line organisations understand and embrace the goals that have been set and the targets that have been agreed. Therefore, it is recommended for the board of directors to issue a statement that clarifies how the board determined the importance of ESG issues. This statement may include which ESG factors were selected, importance of different stakeholders and how and within what time frame it made these judgments on ESG issues, as they change over time. During the initial stages of report preparation, it is useful to determine the appropriate personnel within a company, who are best placed to be involved in disclosing ESG matters. Members from different departments such as finance, investor relations, communications, legal, sustainability and each business unit can team up on working towards a good quality ESG report. Any team working on ESG reporting should have the access to input from across the functional divisions of a company, as different functions within the company may be engaging with different stakeholders and managing material issues. Also it is important to highlight their responsibilities and capabilities that are relevant for ESG reporting. 2. Consider stakeholder interests ESG reporting caters for the needs of many stakeholders with differing requirements and expectations in terms of topics, as well as the format and granularity of data. Investors, financial institutions, insurers, customers, governments, communities, and non-governmental organizations increasingly want information and action on relevant environmental and social issues. When considering reporting information to investors, it is important to remember that while all investors can benefit from ESG information, different investors can have distinct information needs. Companies can therefore benefit from clarifying themselves on matters such as current top investors, 22 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations the investors whom the company would desire to have in the future and their interests. Increasingly, long term investors are recognising the importance of ESG factors on the long-term performance of the companies in which they invest. In order to price and manage risk during their analysis of an investment, investors need relevant information and companies need to understand the form that information should take. 3. Identify and prioritize material ESG issues An organization is faced with a wide range of topics on which it can report. In sustainability reporting, materiality is the principle that determines which relevant topics are sufficiently important that it is essential to report on them. Not all material topics are of equal importance, and the emphasis within a report is expected to reflect their relative priority. The degree to which each indicator is relevant will vary greatly among companies, and the materiality of each factor should be determined by the board and management of the company itself taking considerations from priority stakeholders into account. Two Complementary Approaches to Materiality For a better understanding of the concept of materiality, companies may refer to the concepts provided by the International Accounting Standards Board and the Global Reporting Initiative. These are two complementary approaches to materiality. The International Accounting Standards Board (IASB) defines information as “material” if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements.15 For example, climate-related information should be reported if it is necessary for an understanding of the development, performance and position of the company. This perspective is typically of most interest to investors16. GRI defines Material Topics as those that reflect the organization’s significant economic, environmental and social impacts; or that substantively influence the assessments and decisions of stakeholders. For example, ESG information should be reported if it is necessary for an understanding of the external 15 International Accounting Standards Board (2005) IASB Framework. 16 Consultation Document on the update of the non-binding guidelines on non-financial reporting, https://ec.europa.eu/ info/sites/info/files/business_economy_euro/banking_and_finance/documents/2019-non-financial-reporting-guidelines- consultation-document_en.pdf, p. 7. 23 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations impacts of the company. This perspective is typically of most interest to citizens, consumers, employees, communities and civil society organizations. However, an increasing number of investors also need to know about the climate impacts of investee companies in order to better understand and measure the sustainability and climate impacts of their investment portfolios.17 It is important that the organization can explain the process by which it determined the priority of topics. 4. Adopt Relevant Performance Indicators Once a company has established which ESG topics to report on, it can begin to disclose specific performance indicators to demonstrate progress. These indicators may be generic, industry-specific or company-specific. It is also recommended that companies use widely accepted indicators developed via a credible national or international process. GRI, for example, produces the most widely used set of standards for corporate sustainability reporting with detailed guidance on their application. 18 In 2018, the World Federation of Exchanges (WFE) published the “WFE ESG Guidance and Metrics to the GRI Standards”19, a sustainability reporting guidance for their member exchanges that is fully aligned with the GRI Sustainability Reporting Standards. The guidelines have been mapped against the GRI Standards in an easy-to-use linkage document. 17 Consultation Document on the update of the non-binding guidelines on non-financial reporting, https://ec.europa.eu/info/sites/info/files/ business_economy_euro/banking_and_finance/documents/2019-non-financial-reporting-guidelines-consultation-document_en.pdf, p. 7. 18 To download the GRI Standards go to https://www.globalreporting.org/standards/ 19 https://www.globalreporting.org/SiteCollectionDocuments/2018/Mapping_WFE-ESG-Metrics_GRIStandards.PDF 24 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations Please use a "respond or explain" rationale when following this recommendation; if a certain response is omitted, use the Revised WFE Recommendations comment area to explain the reasons why. GRI Standards (2018) Version 2 All responses are intended to be reported annually, unless otherwise indicated. Please identify the timescope for your responses if necessary. Corresponding Topic -specific GRI Standards to be used ID Category Metric Calculation Guidance Corresponding GRI Standard Corresponding Disclosures with GRI 103: Management Approach 2016 E1.1) Total amount, in CO2 Please use the WRI/WBCSD equivalents, for Scope 1 (if Disclosure 305-1 GHG protocol. applicable) E1.2) Total amount, in CO2 GHG Please use the WRI/WBCSD E1 Environmental equivalents, for Scope 2 (if GRI 305: Emissions 2016 Disclosure 305-2 Emissions GHG protocol. applicable) E1.3) Total amount, in CO2 Please use the WRI/WBCSD equivalents, for Scope 3 (if GRI 305: Emissions 2016 Disclosure 305-3 GHG protocol. applicable) E2.1) Total GHG emissions Scaling factors set by GRI 305: Emissions 2016 Disclosure 305 -4 per output scaling factor reporting company. Emissions E2 Environmental E2.2) Total non -GHG Examples include: Intensity emissions per output scaling Revenues, sales, production n/a n/a factor units. E3.1) Total amount of energy Reported in MWh or GJ. GRI 302: Energy 2016 Disclosure 302 -1 Energy directly consumed E3 Environmental Usage E3.2) Total amount of energy Reported in MWh or GJ. GRI 302: Energy 2016 Disclosure 302 -2 indirectly consumed Scaling factors set by Energy Total direct energy usage per reporting company. E4 Environmental GRI 302: Energy 2016 Disclosure 302 -3 Intensity output scaling factor Examples include: Physical space, FTEs, revenues. Examples include: Percentage: Energy usage by E5 Environmental Energy Mix Renewables, hydro, coal, GRI 302: Energy 2016 Disclosure 302 -1 generation type oil, natural gas. E6.1) Total amount of water Reported in gallons or GRI 303: Water and Effluents Disclosure 303 -5 Water consumed square meters (m3). 2018 E6 Environmental Usage E6.2) Total amount of water Reported in gallons or n/a n/a reclaimed square meters (m3). E7.1) Does your company GRI 301 -308 (The 300 series Environmen follow a formal Cite public content, if GRI 103: Management of the GRI Standards include E7 Environmental tal Disclosure 103 -2 Environmental Policy? available. Approach 2016* topic-specific Standards used Operations Yes/No to report information on an organization’s material impacts related to environmental topics.) GRI 306: GRI 303: E7.2) Does your company GRI 302: Effluent Water follow specific waste, water, Cite public content, if GRI 103: Management Energy Disclosure 103 -2 s and and energy, and/or recycling available. Approach 2016* 2016 Waste Effluents polices? Yes/No 2016 2018 E7.3) Does your company use GRI 103: Management a recognized energy ISO 50001, for example. Disc losure 103 -2 GRI 302: Energy 2016 Approach 2016* management system? Yes/No Does your Environmen Board/Management Team Cite public content, if GRI 102: General Disclosures Disclosures 102 -19, 102 -20, E8 Environmental tal oversee and/or manage available. 2016 102 -29, 102 -30, 102 -31 Oversight climate-related risks? Yes/No Does your Environmen Board/Management Team Cite public content, if GRI 102: General Disclosures Disclosures 102 -19, 102 -20, E9 Environmental tal oversee and/or manage other available. 2016 102 -29, 102 -30, 102 -31 Oversight sustainability issues? Yes/No Total amount invested, Climate Risk annually, in climate-related Reported in USD, if E10 Environmental n/a n/a Mitigation infrastructure, resilience, and possible. product development 25 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations S1.1) Ratio: CEO total Use total compensation, GRI 102: General Disclosures compensation to median FTE including all bonus and Disclosure 102-38 2016 CEO Pay total compensation incentives. S1 Social Ratio S1.2) Does your company For example: Dodd-Frank report this metric in n/a n/a regulations (US) regulatory filings? Yes/No Reported for FTEs only. Ratio: Median male Gender Pay Use total compensation, GRI 405: Diversity and Equal S2 Social compensation to median Disclosure 405-2 Ratio including all bonus and Opportunity 2016 female compensation incentives. S3.1) Percentage: Year-over- year change for full-time GRI 401: Employment 2016 Disclosure 401-1-b employees S3.2) Percentage: Year-over- Employee S3 Social year change for part-time n/a n/a Turnover employees S3.3) Percentage: Year-over- year change for contractors n/a n/a and/or consultants S4.1) Percentage: Total GRI 102: General Disclosures enterprise headcount held by Disclosure 102-8 2016 men and women S4.2) Percentage: Entry- and Gender GRI 405: Diversity and Equal S4 Social mid-level positions held by Disclosure 405-1 Diversity Opportunity 2016 men and women S4.3) Percentage: Senior- and GRI 405: Diversity and Equal executive-level positions held Disclosure 405-1 Opportunity 2016 by men and women S5.1) Percentage: Total GRI 102: General Disclosures enterprise headcount held by Disclosure 102-8 2016 Temporary part-time employees S5 Social Worker S5.2) Percentage: Total Ratio enterprise headcount held by n/a n/a contractors and/or consultants Does your company follow a Non- sexual harassment and/or Cite public content, if GRI 103: Management GRI 406: Non-Discrimination S6 Social Discriminati Disclosure 103-2 non-discrimination policy? available. Approach 2016* 2016 on Yes/No Percentage: Frequency of Reference ILO & UNDHR GRI 403: Occupational Health S7 Social Injury Rate injury events relative to total Disclosure 403-9 standards, if possible. and Safety 2018 workforce time Does your company follow an Global occupational health and/or Cite public content, if GRI 103: Management GRI 403: Occupational Health S8 Social Health & Disclosure 103-2 global health & safety policy? available. Approach 2016* and Safety 2018 Safety Yes/No GRI 409: S9.1) Does your company GRI 408: Cite public content, if GRI 103: Management Forced or follow a child and/or forced Disclosure 103-2 Child Labor available. Approach 2016* Compulsory Child & labor policy? Yes/No 2016 Labor 2016 S9 Social Forced S9.2) If yes, does your child Labor and/or forced labor policy Reference ILO & UNDHR GRI 103: Management GRI 414: Supplier Social Disclosure 103-2 also cover suppliers and standards, if possible. Approach 2016* Assessment 2016 vendors? Yes/No S10.1) Does your company Cite public content, if GRI 103: Management GRI 412: Human Rights follow a human rights policy? Disclosure 103-2 available. Approach 2016* Assessment 2016 Yes/No Human S10 Social S10.2) If yes, does your Rights human rights policy also Reference ILO & UNDHR GRI 103: Management GRI 414: Supplier Social Disclosure 103-2 cover suppliers and vendors? standards, if possible. Approach 2016* Assessment 2016 Yes/No G1.1) Percentage: Total GRI 405: Diversity and Equal board seats occupied by men Disclosure 405-1 Opportunity 2016 Board and women G1 Governance Diversity G1.2) Percentage: Committee chairs occupied by men and n/a n/a women G2.1) Does the company Cite public content, if GRI 102: General Disclosures prohibit CEO from serving as Disclosure 102-23 Board available. 2016 board chair? Yes/No G2 Governance Independen G2.2) Percentage: Total ce GRI 102: General Disclosures board seats occupied by Disclosure 102-22 2016 independents Are executives formally Incentivized Cite public content, if GRI 102: General Disclosures G3 Governance incentivized to perform on Disclosure 102-35 Pay available. 2016 sustainability? Yes/No Percentage: Total enterprise Collective headcount covered by GRI 102: General Disclosures G4 Governance Disclosure 102-41 Bargaining collective bargaining 2016 agreement(s) GRI 102: General Disclosures Disclosure 102-16 2016 GRI 308: G5.1) Are your vendors or GRI 414: Cite public content, if Supplier suppliers required to follow a Supplier available. GRI 103: Management Environmen Supplier code of conduct? Yes/ No Disclosure 103-2 Social Approach 2016* tal G5 Governance Code of Assessment Assessment Conduct 2016 2016 G5.2) If yes, what percentage of your suppliers have Percentage can be defined n/a n/a formally certified their by number or expenditure. compliance with the code? 26 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations GRI 102: General Disclosures G6.1) Does your company Disclosure 102-16 Cite public content, if 2016 follow an Ethics and/or Anti- available. GRI 103: Management GRI 205: Anti-Corruption Ethics & Corruption policy? Yes/No Disclosure 103-2 Anti- Approach 2016* 2016 G6 Governance Corruption G6.2) If yes, what percentage Percentage is defined by of your workforce has total (full-time employee) n/a n/a formally certified its FTE headcount. compliance with the policy? G7.1) Does your company Cite public content, if GRI 103: Management G7 Governance Data Privacy follow a data privacy policy? Disclosure 103-2 n/a available. Approach 2016* Yes/No G7.2) Has your company taken steps to comply with General Data Protection General Data Protection n/a n/a Regulation (GDPR). Regulation (GDPR)rules? Yes/No G8.1) Does your company Cite public content, if publish a sustainability n/a n/a available. Sustainabilit report? Yes/No G8 Governance y Reporting G8.2) Is sustainability data Cite public content, if included in your regulatory n/a n/a available. filings? Yes/No G9.1) Does your company provide sustainability data to If yes, cite frameworks n/a n/a sustainability reporting used. frameworks? Yes/No G9.2) Does your company Disclosure G9 Governance focus on specific UN Cite public content, if Practices n/a n/a Sustainable Development available. Goals (SDGs)? Yes/No G9.3) Does your company set Cite public content, if targets and report progress n/a n/a available. on the UN SDGs? Yes/No Are your sustainability External disclosures assured or Cite third-party assurance GRI 102: General Disclosures G10 Governance Disclosure 102-56 Assurance validated by a third party? partner. 2016 Yes/No *GRI 103: Management Approach 2016 is to be used in combination with the topic- specific Standards 5. Reporting Integrity and Transparency The absence of a generally accepted accounting standards for measuring and presenting environmental, social and governance metrics creates challenges for investors in interpreting performance. Companies should describe to investors any standards that they have applied in the preparation of key ESG metrics. This should be supplemented with details of key definitions and assumptions used in the calculation of metrics where an external standard does not exist or has not been applied. To facilitate ease of use by investors, it is preferable that a brief ‘basis of preparation’ explanation or document is made available either within the company’s report itself or on its website. 6. Proper Communication Companies may use various communication channels including integrated reports, standalone sustainability reports, websites or any other publications to disclose relevant, comparable and timely information on ESG matters. The right disclosure channels ensure investors receive relevant, easily accessible, comparable and timely information. It is advantageous for companies to be familiar with the preferred ESG information sources of its key stakeholders, and to update these with timely and accurate news about their performance. 27 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Best Practice Recommendations 08 Appendix: Sustainability Reporting Initiatives 28 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Appendix: Sustainability Reporting Initiatives 29 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Appendix: Sustainability Reporting Initiatives Appendix: Sustainability Recommendations Global Reporting Initiative (GRI) GRI is an independent international organization that has pioneered sustainability reporting since 1997. GRI helps businesses and governments worldwide understand and communicate their impact on critical sustainability issues such as climate change, human rights, governance and social well-being. With thousands of reporters in 110 countries, GRI provides the world’s most trusted and widely used standards on sustainability reporting, enabling organizations and their stakeholders to make better decisions based on information that matters. Currently, 60 countries and regions reference GRI in their policies. GRI’s mission is to empower decision-makers everywhere, through its standards and multi-stakeholder network, to take action towards a more sustainable economy and world. GRI Standards The GRI Standards are the first global standards for sustainability reporting. The GRI Sustainability Reporting Standards (GRI Standards) are a set of modular reporting standards that can be used by any organization to report about its impacts on the economy, the environment, and society. They represent the global best practice for reporting on a range of economic, environmental and social impacts. The GRI Standards are developed with true multi-stakeholder contributions and rooted in the public interest. www.globalreporting.org International Integrated Reporting Council (IIRC) IIRC is a group of international leaders from the corporate, investment, accounting, securities, regulatory, academic, standard-setting and civil society areas with a mission to create the Integrated Reporting framework. The Framework will provide material information about an organization’s strategy, governance, performance and prospects in a concise and comparable format, a fundamental shift in corporate reporting. www.integratedreporting.org 30 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Appendix: Sustainability Reporting Initiatives Sustainability Accounting Standards Board (SASB) The Sustainability Accounting Standards Board Foundation (SASB) is an independent, non-profit standard-setting organization that develops and maintains robust reporting standards that enable businesses around the world to identify, manage and communicate financially material sustainability information to their investors. SASB standards are evidence based, developed with broad market participation, and are designed to be cost-effective for companies and decision-useful for investors. To download any of the 77 industry- specific standards, or learn more about SASB, please visit the website. www.sasb.org UN Global Compact (UNGC) As a special initiative of the UN Secretary-General, the United Nations Global Compact is a call to companies everywhere to align their operations and strategies with ten universal principles in the areas of human rights, labour, environment and anti-corruption. Launched in 2000, the mandate of the UN Global Compact is to guide and support the global business community in advancing UN goals and values through responsible corporate practices. With more than 9,500 companies and 3,000 non-business signatories based in over 160 countries, and 70 Local Networks, it is the largest corporate sustainability initiative in the world. For more information, please visit the website. www.unglobalcompact.org 31 Communicating Sustainability: Six Recommendations for listed Companies - 2019 Appendix: Sustainability Reporting Initiatives # 04-01, West Block, World Trade Center, Echelon Square, Colombo 01. Tel: +94 11-2356456 | Fax: +94 11 2445279 E-mail: info@cse.lk | Web: www.cse.lk