Measuring, managing, reporting and assurance

Sustainability reporting is voluntary, but there is an increasing move by governments in Canada, Australia and across Europe to make it mandatory. These governments recognise that a revitalised and resilient economic system will only be sustained if it accounts for long-term risks, including environmental, social and economic impacts.

In Malaysia, Bursa Malaysia mandates a disclosure on CSR by its PLCs in their annual reports. Bursa Malaysia is also planning to launch its sustainability index by 2012, which will push Malaysian companies to improve their disclosure on their environmental, social and corporate governance practices to remain on the competitive edge. Companies obliged or volunteering to explain their company’s position and performance in emissions and climate change need to consider carefully their processes, systems, controls and internal reporting requirements used in gathering this information.

PwC's "Measuring, managing, reporting and assurance" proposition helps clients answer these questions and covers the following areas::
 

Carbon reporting

There is overwhelming demand from a multiplicity of stakeholders for information about carbon and climate change risks and opportunities, and the associated strategies that might impact the financial wellbeing of a business. The Carbon Disclosure Project (CDP) encourages carbon disclosure, and PwC has been appointed to be the global report writer and advisor for a three-year period (2008 – 2011).

Carbon measurement and reporting creates a strategic picture of a business that is both informative and convincing. It gives enhanced market insight and reveals how emerging risks can be opportunities rather than threats if they are managed for competitive advantage – all critical in a carbon-constrained world. Forward-looking analysis and statements of the risks and opportunities affecting a business will soon become an established part of the reporting cycle.

PwC can perform an in-depth review of an organisation’s current carbon position – from measuring the carbon footprint to assessing the effectiveness of reporting and how it measures up to leading practice. The output from the review will detail the actions, costs and time required to close the gap from the current position to the identified desired state.


Carbon Disclosure Project

Global 500 report – Carbon Disclosure Project (CDP)

The CDP, to which PwC has been appointed global advisor and report writer, aims to provide investors with a unique analysis of how the world’s largest companies are responding to climate change. The Global 500 report, conducted annually on behalf of 475 investors with assets of $55 trillion, analyses the greenhouse gas disclosure performance of the world’s top 500 companies and is an important tool in the effort to combat climate change and strengthen responsible business practices. Read more.
 

Corporate social responsibility (CSR)/Sustainability and non-financial reporting

In the future, reporting performance will be less dependent on financial numbers and more about delivering the strategy of the business. Companies will choose to adopt a multiple time-horizon approach to reporting, explained with a data-set of non-financial indicators and metrics. These will create a blueprint of the long-term position of the business and the drivers of business success, and short-term context against which current performance can be assessed.

As companies become more aware of the implications on the future success of their business of issues such as climate change, population growth, finite resource usage, the employee agenda and the ability to establish and maintain critical relationships, the challenge will be to report on the material issues in an integrated way. This does not mean bolting-on additional reporting to existing reporting requirements, but showing how sustainability and other non-financial issues pervade a company and its reporting, and add value to business performance.

PwC can help organisations understand and present the relevant information that can help paint a cohesive and persuasive picture. The critical elements of this reporting will include:

  • Enhanced market insight –context for operating.
  • Delivering on a long-term strategy – how a business is responding.
  • How the business model works – its dynamics and key relationships.
  • Measurement and performance – a more balanced assessment of corporate contribution.

Case study

Baseline CR performance reporting - Leading Malaysian telecommunications company

We were engaged to provide guidance to the CR reporting team of a leading Malaysian telecommunications company on developing their first standalone CR report. We provided training on CR reporting good practices and CR frameworks for their team and assisted the management in determining their scope, boundary and CR reporting framework. Subsequently, we helped to review the draft CR reports and provided recommendations for improvement to the structure and quality of the CR report. We also helped them define a high-level CR reporting roadmap for the next 3 years.
 

Assurance 

Alongside the increasing number of CSR reports and the reporting of carbon emissions by companies, is a growing tendency to obtain independent assurance, either for regulatory purposes or voluntarily. The assurance can be public and designed to underline credibility to external audiences, or private and intended to give confidence to management and board that they are doing the right thing. However, unlike financial accounting, where companies have long-established systems, processes and controls, the collection of sustainability related information and the production of reports is new. Because of this relative immaturity compared to financial assurance, normal checks and balances may not be in place. This creates the opportunity – or challenge – for business to report consistent, reliable and complete data on a routine basis.

PwC can carry out a variety of assurance assignments ranging from internal readiness assessments and feedback on processes, controls and data, to external public assurance. The scope of the work can be sized to the company’s needs, and the level of assurance designed accordingly. We can also provide assurance for regulatory purposes. Since PwC is involved in every step of the process of achieving the overarching goals of sustainability, including shaping government regulations and policies, we bring an invaluable perspective to assessing compliance and proposing improvements.


Case study

EU-ETS verification - Large international airline

We were engaged to conduct verification services for the client’s 2010 EU-ETS emissions report. We worked with PwC’s Netherlands team to provide reasonable assurance on the client’s EU-ETS reports, to provide an opinion as to whether the EU-ETS reports were prepared, in all material aspects, in accordance with the monitoring plans.

Sustainability report assurance – Nestle Malaysia

We were engaged to provide assurance on the 2010 Creating Shared Value (CSV) Report by Nestlé (Malaysia) Berhad, according to ISAE 3000 against the GRI-G3 guidelines and the company’s internal sustainability reporting guidelines. The approach included engaging local communities and NGOs to verify data reported in the areas of rural and social development, biodiversity and the environment as well as reviewing the 2010 CSV Report to verify its GRI application level.

Management information systems and processes

Putting management information in the spotlight raises issues about how decision-making within business is currently undertaken. The bar continues to be raised when it comes to increasing the relevance and timeliness of the management information that is now put before boards and senior executives, but at the same time much needs to be done to improve the insightfulness and accuracy of the data that are being collected, especially in the case of sustainability related data, such as carbon and water.

PwC can help businesses understand the data they need to collect and the management information systems they need in place to be able to do this effectively. This also ensures that the data they collect are sufficiently clear and forward-looking to identify opportunities. PwC can also assist with data integrity and consistency by looking at the controls in place over the processes that are operating.


Case study

CR policies and procedures – Asian telecommunications company

We helped to develop the group policies for our client’s Corporate Responsibility department, which set out the guiding principles on Oversight and Responsibility; CR Strategy and Budget Setting; CR Initiatives Assessment and Reporting and Monitoring. The policies provide general guiding principles for the management of CR activities that reflects the identity and values of the client and ensures that CR activities are carried out effectively.