NEW MOMENTUM FOR REPORTING ON HGFEDCBA SUSTAINABILITY? Study on the Implementation of the German CSR Directive Implementation Act (CSR-RUG) by econsense and Global Compact Network Germany (Read full study in English: Link 1 & Link 2) v o^ sense m Global Compact Network G erm any
CSR Directive Implementation Act (CSR-RUG) In a nutshell: - Information on relevant non-financial matters (,double materiality requirement') - Disclosure risks and approach dealing with them - Non-financial Statement (NFS): Either as part of the management report or as/in a HGFEDCBA separate report - Auditing of the NFS by the supervisory board - Almost 490 companies affected econsense
Key Questions of the Study - How did the companies affected implement the provisions laid out in the CSR-RUG? - What challenges emerged in the implementation of the CSR-RUG in the affected HGFEDCBA companies? - What impact did the implementation of the CSR-RUG have on internal structures, processes, and reporting by the affected companies? - How did the implementation of the CSR-RUG impact on the awareness for sustainability within the companies affected? v O ^ jconsense m Global Compact Network G erm any
Ф Methodology O ftAŁCo, nonsense Global Compact Network G erm any
Point of Depature: Varying Levels of Maturity HGFEDCBA (OĎ - Reporting on sustainability long-term Have yūu already published non-financial inform ation in the practice in many companies past? (n = nure than one a-sw er Is pass a e) - Concrete understanding of sustainability Response option Number % often company-specific Yes, in (he form of a sustainability report 45 56 Yes, in the m anagem ent report 43 53 - Integration of sustainability into Yes, at another place in the annual report 26 32 management processes varies, but tends to Yes, in a different form * 13 16 be advanced No 6 10 *N re designated online form ats fór this v O ^ jconsense m Global Compact Network G erm any
Implementation: Many Paths to Destination HGFEDCBA Publication of the Non-financial Statem ent Publication of the N on-financial Statem ent outside the (group) m anagem ent report - 3 out of 4 publish NFS outside management in the (group) m anagem ent report report. Integrated, i.e. Integrated as a Integrated in the annual report or Published independently - Variety in reporting formats: Most common non-financial inform separate section sustainability report ation integrated in the m anagem ent at different points report format is a stand-alone NFS (33%), followed by 40 % 33 . 5 % In the text a section in the management report (23,5%), Integrated in the Integrated in a Published O ther annual report sustainability Independently (home page or integration in the CR-report (23%) and a report outside the report as a separate as a separate m ixed form ats) m anagem ent report Non-financial Report Non-financial as a separate (in its entirety, in Report in the annual, but outside of management Non-financial sections or at Report different - m arked - places) report (17%) - Frameworks: Large companies tend to use 3 % 23 . 5 % 17 % 23 % 33 % 0 . 5 % GRI, smaller ones the German Sustainability 7 * 50 35 49 70 1 Code or no framework at all v o^ îconsense m Global Compact Network G erm any
Non-Financial Matters: Reporting on all Matters HGFEDCBA C SR -RU G m atters N um ber of com pam es % describing the concepts - Most companies report on all non-financial Environm ental m atters J 97 93 matters (slightly less on social matters and human Em ployee m atters 206 97 rights) Social m atters J 70 60 H um a n rights perform ance J 67 79 C orruption 203 96 and anti-bribery m atters - Significant differences in the disclosure of Number of companies % CSR-RUG matters which designate indicators between non-financial matters (less indicators common again with , social topics' Environm ental m atters 157 74 Em ployee m atters 166 69 Socia m atters 102 46 H um a" rights perform ance 69 33 Corruption and anti-bribery m atters 142 67 v o^ îconsense m Global Compact Network G erm any
Auditing: Supervisory Board Actively Involved - 81% have their NFS externally audited, Was your Non-finanCial Statement externally audited? HGFEDCBA in 81 ) most of them with limited assurance Nú 19 % - Less than half publish audit certificate - Concrete involvement of supervisory Yes. other form ûf audit 7 % board in auditing at times intransparent Yes, with reasonable assurance 9 % Yes, with lim ited assurance 65 % v O ^ jconsense m Global Compact Network G erm any
Content: Various Challenges - Disclosure of KPIs is a challenge across - Double materiality as a challenge (given HGFEDCBA sligthly varying defintion of materialty by all non-financial matters other reporting frameworks) - 58 % report on risks as defined by CSR- - Human rights and social matters are RUG, mostly regarding environmental & most challenging non-financial matters to corruption and anti-bribery matters disclose v O ^ jconsense m Global Compact Network G erm any
- Processes: More Work for Everybody (9> - More work for virtually everybody (90%) By comparison with reporting in the previous year: HGFEDCBA What resources were expended on drawing up the Non· - 78% publish further sustainability financial Statement in your company? (n = 73) information (in addition to NFS) Response option Number % - Process challenges: Far few er resources com pared with the previous year 0 0 - Limited internal resources Fewer resources com pared with the previous year 0 0 - Auditing the report About the sam e resources 7 10 - Timely availability of indicators Higher resources com pared with the previous year 34 47 - Determination of risks M uch higher resources com pared with the previous - Data collection from different 44 32 year departments v O ^ jconsense m Global Compact Network G erm any
№ Value Added: Higher Awareness and Data Quality - Positive effects on process and data quality - Improved collaboration between departments - 88% emphasise increase in internal communication on the issue of sustainability - Majority of companies reports higher awareness of sustainability in management and supervisory board v o « AL c Q v sense Global Compact Network G erm any
- Conclusions - Added value despite additional work - Increased attention from company management - Synchronization of processes - Particularly challenging: identification of relevant non-financial matters and risks, HGFEDCBA presentation of key performance indicators & scarce resources - Majority of companies plans future changes, either content or process-related - Final evaluation of non-capital-market-oriented companies not yet possible econsense
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