@GRIAusConf_The Role of Integrated Reporting in Value Creation - Dr Jeanne Ng

The Role of Integrated

Reporting in Value Creation.

Chair: Karin Ireton, Director, Group Sustainability Management,

Standard Bank Group, South Africa

Nelmara Arbex, Deputy Chief Executive, Global Reporting Initiative

Michael Bray, Chair, Better Business Reporting Group, KPMG

Nathan Fabian, Chief Executive, Investor Group on Climate Change

Dr. Jeanne Ng, Group Environmental Affairs, CLP Holdings Limited

John Stanhope, Chairman, Financial Reporting Council’s Integrated Reporting

Taskforce; Former Chief Financial Officer, Telstra

CLP’s Sustainability Reporting Journey

The Australian GRI Conference on Sustainability & Integrated Reporting28 March 2012

Dr Jeanne NgDirector – Group Environmental AffairsCLP Holdings Limited

Group Environmental Affairs 2

CLP’s Sustainability Reporting (2010)

Annual Report

Sustainability Report – Short

Sustainability Report – Online Full Version

Accolade:

Globe Sustainability Reporting Award 2010


CLP’s Sustainability Reporting (2011)

Integrated Annual Report Sustainability Report – Online Full Version


Choosing ESG indicators

Monitoring ESG indicators

Setting ESG targets

ESG Reporting Integrated Reporting

Developing& choosing integrated indicators

Monitoring integrated indicators

Setting integrated indicator targets

Setting new standards & methods

1 23

4

Building awareness & learning

It’s A Journey…

2002 2011


Sustainability and Integrated Reporting

Publish reports and documents to: reach out to specific stakeholder groups for specific purposesHence: Our Sustainability Report is a voluntary document that focuses on reaching out to non‐governmental organizations, academia & students and the general public to provide an annual performance report primarily on our environmental and social performance, as well as a bit of our financial and governance performance

Our Annual Report is a compliance document that focuses on reaching out to our shareholders/investors, regulators, lenders, business partners and financial analysts to provide an annual performance report primarily on our financial and governance performance, as well as environmental and social performance that is material to our business


Objectives Of Piloting The Guidelines

Our Integrated Annual Report focuses on investors: Historical focus of our ESG communications primarily on non‐governmental organizations, general community/public , very little on shareholders/investors Help satisfy enlightened investors (small portion), sustainability indices, investor surveys e.g. CDP Inform/educate the less enlightened ones (help justify our investments for long term)

Improving our communications to our stakeholders on how we deal with ESG issues: Although managing ESG risks and opportunities is a part of our DNA, we need to be better at communicating what, how and why we do what we do, to secure the trust we currently have with our communities. Embedding ESG reporting that is material to the business into the Annual Report can help send the message that ESG is not philanthropy and has a solid business case


Piloting The Guidelines

Eliminating one printed document: 9 years of printed sustainability reports. It is time for an online‐only version of the report targeted for stakeholders other than investors.

Further improve and strengthen how we integrate ESG considerations into our daily decision‐making processes : Operationally, we already have processes in place (like IC sign‐off), but still relatively less cross‐dept interaction/understanding We already have the normal AR/SR joint preparation process but the content and perhaps members of the meetings/discussions will change (maybe more participants and meetings than before) Starting to look into linking reporting prep process to the business planning process Explore more relevant integrated metrics, e.g. CO2/$EBIDTA


International Integrated Reporting Council


International Integrated Reporting CouncilGuiding Principles & Content Elements

Content Elements

Guiding Principles


The Guiding Principles‐ Strategic Focus & Future Orientation

Usually already have a vision and strategic objectives & business plans developed around them

Challenge: being able to communicate them along with the justification behind them, but without giving away strategically competitive info

Way forward: identify the risks & opportunities landscape, particularly with ESG relevance; strike a balance on the level of detail of the business development plans to be divulged (consult/agree with internal stakeholders)


The Guiding Principles‐ Connectivity of Information May have all the major pieces of information, but being reported and/or managed in departmental/functional silos without clear connectivity to strategic objectives

Challenge: being able to communicate the complexity of the multiple interrelationships between different types of information & data (vertically from strategic objectives to planned activities, and horizontally across different functional areas, e.g. financial implications of emissions levies)

Way forward: increase cross‐departmental understanding & decision‐making through more discussion/synergy in daily operations (through organizational structure or process); develop more cross‐functional KPIs (& targets); bring in/develop communications expertise to improve upon current methods of communications


The Guiding Principles‐ Responsiveness & Stakeholder Inclusiveness

Current social media channels has changed the rate and level of sophistication at which stakeholders expectations are evolving

Challenge: being able to communicate accurate facts and our challenges in a manner to build trust

Way forward: continue sharing our failures and challenges and exploring/developing solutions together (empower our stakeholders with the right knowledge so that they can make the right decisions to support us in developing a more sustainable future for everyone)


The Guiding Principles‐ Conciseness, Reliability & Materiality

Keeping in mind the objective to communicate to different stakeholder groups in order to manage their changing expectations

Challenge: increasing dilemma of targeting multiple stakeholder groups with increasing and evolving reporting scope requirements but using more concise documents

Way forward: focus the integrated report on our shareholders (& continue with different documents to target different stakeholder groups so that we can address the topics most material to the relevant stakeholder groups in a timely and concise manner)


Getting StartedOverview Of The 7 Stages (Process Components)

1. Identifying your starting point2. Planning your exploration3. Engaging with stakeholders4. Identifying report content5. Assessing systems6. Preparing the report7. Continuing with your exploration

Some are interlinked or progressed in parallel Some may be in a different order depending on company and/or from year to year


Progress on the 7 Stages/Process Components

Year 1:1. Planning your exploration2. Identifying your starting point3. Identifying report content4. Preparing the report5. Continuing with your

exploration by gathering lessons learned

All stagesEngaging with stakeholders-External-Internal

In year 1, securing senior management support comes first in the exploration stage both in terms of budget, authoritative commitment & agreed timelineEngaging stakeholders runs parallel throughout all stages


Progress on the 7 Stages/Process Components

Year 1:1. Planning your exploration2. Identifying your starting point3. Identifying report content4. Preparing the report5. Continuing with your


Year 2:1. Identifying your starting point2. Planning your exploration3. Identifying report content4. Assessing systems5. Preparing the report6. Continuing with your


In year 2, identifying starting point from previous year’s lessons learned was a natural first step and looking at assessing/developing systems for reporting cycle began



Why Do We Report?Our Values… Company values to

honor our commitments to our stakeholders


Why Do We Report?

DrivePerformance

EngageStakeholders

Reporting

Reporting contributes to risk management, e.g. regulatory compliance, reduce exposure to regulatory risks and enhances corporate reputation


Why Do We Report?

DrivePerformance

EngageStakeholders

Enhanced public awareness increases pressure to improve performance and transparency

Example:• Increasing number of external surveys, questionnaires and queries (mostly relating to socially responsible investments) are benchmarking us and are increasing scrutiny of our performance and transparency


Responding To External Surveys

CLP provides environmental performance metrics to a number of international surveys

• Listed on DJSI Asia Pacific since March 2009. • The only HK company on DJSI Asia Pacific 40


Why Do We Report?

DrivePerformance

Making a commitment public increases

pressure to deliver

Example:• Climate Vision 2050 targets

Makes sure everyone in the company is on the same page on our policies, practices & goals

Examples:• Group Flue Gas Desulphurisation Policy

• ISO14001 Certification Policy

Creates opportunity to align systems, policies & practices across the Group


Why Do We Report?

EngageStakeholders

Stakeholders play an important role in helping

us set the rules and directions for our operations. They

influence our brand reputation and

regulatory compliancerequirements.

Awards and recognition helps communicate our

achievements and influence our brand & reputation

Communications, support and collaboration with stakeholders can help build a better foundation for reasonable

compliance requirements

2011 Examples:• Listed on the DJSI Asia Pacific 40

• Listed amongst CDP Top disclosure scores (6th) for Asia ex‐Japan Global 500 companies

Examples:• Study of Wind Energy Resources over HK, by the Environmental Central Facility (ENVF) of HKUST

• Sustainable Energy Curriculum, for HK secondary schools


Made massive errors in reporting CO2 emissions from Castle Peak (and other CLP facilities)

“ So far, out of the 50,000 plants listed only one meaningful discrepancy has been identified: China Light and Power (CLP)… informed us that its massive Castle Peak power plant...emitted significantly less CO2 than the CARMA estimate... CLP presented audited records to support this assertion and the CARMA team quickly made adjustments.”

Why Do We Report?

If you don’t report, sometimes someone else will guess your emissions…

Unfortunately, retractions are rare and damage already done..


Desired Principles Existing Measures

Economic Value

Social Value Resource Use Environmental Impact

Etc.?

Develop & Use Metrics Linking ESG that is Material to Business

Performance

Units of Output

#employees / unit of output

$Profit CO2 / $ profit

$Costs

Etc.? Developing Integrated Indicators Material To Business/CompanySome examples…..

Towards Reporting of Integrated Metrics

@GRIAusConf_The Role of Integrated Reporting in Value Creation - Dr Jeanne Ng

Technology

investor group

integrated reporting

standard bank group

group environmental

deputy chief executive

chief financial officer

bu wayforward

itsajourney esg