WEC International Corporate Social Responsibility Verification Protocol: The Reality of Implementing Social Responsibility Jim Lime Pfizer Inc April 26,

WEC International Corporate Social Responsibility Verification Protocol: The Reality of Implementing Social Responsibility

Jim LimePfizer IncApril 26,

2001

Agenda

• Overview of Global Reporting Initiative

• Global Reporting Initiative (GRI) Metrics

• WEC Audit Protocols• WEC Verification Protocols• WEC Filter Mechanism

Overview of Global Reporting Initiative • The GRI is a long-term, multi-

stakeholder, international undertaking whose mission is to develop and disseminate globally applicable sustainability reporting guidelines for voluntary use by organizations reporting on the economic, environmental, and social dimensions of their activities, products and services.

Overview of Global Reporting Initiative • First Organizational Meeting in the

Fall of 1997.• Released the GRI Sustainability

Reporting Guidelines in June 2000.• Greatest Degree of Consensus is

with Environmental Indicators, Economic and Social Indicators are Less Developed.

Overview of Global Reporting Initiative

GRI Steering Committee Members Include:

Association of Chartered Certified Accountants (U.K.)Canadian Institute of Chartered

Accountants CECODES (Colombian Business

Council for Sustainable Development)

Overview of Global Reporting Initiative

GRI Steering Committee Members Include:

Centre for Science and Environment (India)

Coalition for Environmentally Responsible Economies (U.S.) Council on Economic Priorities (U.S.)Environmental Auditing Research

Group (Japan)

Overview of Global Reporting Initiative

GRI Steering Committee Members Include:General Motors Corporation (U.S.)Green Reporting Forum (Japan)Institute of Social and Ethical Accountability (U.K.)Investor Responsibility Research Center (U.S.)ITT Flygt (Sweden)

Overview of Global Reporting Initiative

GRI Steering Committee Members Include:

New Economics Foundation (U.K.)SustainAbility, Ltd. (U.K.)United Nations Environment

ProgrammeWorld Business Council for

Sustainable Development World Resources Institute

Overview of Global Reporting Initiative• The Guidelines Provide a Framework for

Reporting That Promotes Comparability Between Reporting Organizations.

• The Guidelines Do Not Provide Guidance On:– Data Collection– Information and Reporting Systems– Organizational Procedures for Preparing

Reports

Overview of Global Reporting Initiative• The Guidelines Do Not Provide

Guidance On:– Monitoring Performance– Verification Practices– Standards of Performance

Five Reporting Principles and Practices• Underlying Principles• Qualitative Characteristics• Classification of Performance-

Reporting Elements• Absolute Figures and

Ratios/Relative Indicators• Disclosure of Reporting Policies

Underlying Principles

• Reporting Entity Principle• Reporting Scope Principle• Reporting Period Principle• Going Concern Principle• Conservatism Principle• Materiality Principle

Qualitative Characteristics• Relevance • Reliability • Clarity• Comparability• Timeliness• Verifiability

Classification of Performance- Reporting Elements• Categories: Areas or Groupings

of Economic, Environmental or Social Areas of Concern

• Aspects: Types of Information Related to a Specific Category

• Indicators: Quantitative Measurement of an Individual Aspect

Absolute Figures and Ratios/Relative Indicators• Self-Explanatory

Disclosure of Reporting Policies• Prepared in Accordance with GRI

Guidelines• Scope of Report• Conversion Factors• Approaches to Data Collection• Etc.

All Reports Following GRI Guidelines Should Include Six Sections

• CEO Statement• Profile of Reporting Organization• Executive Summary and Key

Indicators• Vision and Strategy• Policies, Organization and

Management Systems• Performance

Global Reporting Initiative Metrics• Three Components of

Sustainability– Environmental Performance– Economic Performance– Social Performance

Global Reporting Initiative Metrics • Environmental Performance

– Thirty-six indicators– Includes both “Generally Applicable”

and “Organization Specific.”– Categories include Energy; Materials;

Water; Emissions, Effluents, and Waste; Transport; Suppliers; Products and Services; Land-Use/Biodiversity and Compliance.

Global Reporting Initiative Metrics• Economic Performance

– Twenty-three indicators– Categories include Profit; Intangible

Assets; Investments; Wages and Benefits; Labor Productivity; Taxes; Community Development; Suppliers; and Products and Services.

Global Reporting Initiative Metrics• Social Performance

– Thirty-seven indicators– Categories include Quality of

Management; Health and Safety; Wages and Benefits; Non-discrimination; Training/Education; Child Labor; Forced Labor; Freedom of Association; Human Rights; Indigenous Rights; Security; Suppliers; and Products and Services.

WEC Audit Protocols• Useful Aid to Facilities In Preparing for

Audit and Ensuring Indicator Expectations Are Met.

• Useful Probing Aid By The Audit Team To Assess Indicator Expectations Are Met.

• Positive Response To Protocol Questions Provides Reasonable Degree of Confidence That Indicator Expectations Have Been Met.

WEC Verification Protocols• One of Many Possible Tools to

Enhance the Quality and Reliability of Sustainability Reports.

• Detailed Audit Tool To Ensure Indicator Expectations Are Met.

WEC Audit Protocols• Environmental Performance Indicators

– Total Energy Use - Does the organization have a process that monitors total energy usage by type?

– Initiatives to Move Towards Renewable Energy Sources and Energy Efficiency - Does the organization have a detailed plan to move towards renewable energy sources? Does the facility have goals and objectives to become more energy efficient?

WEC Audit Protocols

• Economic Performance Indicators– Net Profit/Earnings/Income - What

are the net profit, earnings, and income figures for the organization?

– Dividends - What dividends have been paid to shareholders?

WEC Audit Protocols

• Social Performance Indicators– Evidence of Employee

Engagement in Shaping Management Decision-Making - What mechanisms are employed by the organization to engage employees in helping shape management decision-making?

WEC Verification Protocols• Environmental Performance

Indicators– Total Energy Usage - Review

documents (invoices, tax records, internally generated usage reports, etc.) pertaining to all sources of energy usage by type. Select a major energy source and review monthly bills for the reporting period to verify that usage and cost figures are accurate.

WEC Verification Protocols• Environmental Performance

Indicators– Initiatives to Move Towards

Renewable Energy Sources and Energy Efficiency - Review detailed plan to move the company to more renewable forms of energy and increased energy efficiency.

WEC Verification Protocols• Economic Performance Indicators

– Net Profit/Earnings/Income - Rely upon existing financial information and public accounting firm audits.

– Dividends - Same as above.

WEC Verification Protocols• Social Performance Indicators

– Evidence of Employee Engagement in Shaping Management Decision-Making - The assessor should review the approaches taken by management to include employees in decision-making. The assessor should review the results from surveys, focus groups, employee-management sessions, luncheons, etc.

WEC Filter Mechanism• Risk to the Organization Must be

Considered to Limit the Number of Metrics to Those Deemed Important

• Filter Process Can Add or Delete Metrics

• Filter Mechanism Can Assess How an Organization is Performing and Form Basis for Improvement