Assess record for 'Disclosure of Non-Financial Information by Companies'

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1 Page 1 of 5 Assess record for 'Disclosure of Non-Financial Information by Companies' Meta Informations Creation date Last update date User name null Case Number Invitation Ref. Status Background Information For the purpose of analysis of this consultation you want to be identified as -single choice reply- Please specify the user type -single choice reply- N User NGO /Other organisation of stakeholders Name(s) (of respondent and of your organisation / company) -open reply- Edwin Koster, Director of Stichting Social Accountability International, Netherlands and Eileen Kaufman of Social Accountability International, USA Country where your organisation / NL - Nederland company is located -single choice reply- Please provide the name and location of parent company Social Accountability International, New York, USA Your address Vorselaarstraat ST Amsterdam The Netherlands Your address: -open reply- ekoster@sa-intl.org Short description of the general activity of your organisation / company: SAI is a multi-stakeholder non profit organization dedicated to improving workplace conditions and the human rights of workers around the world. In 1997, it pioneered the development and implementation of socially responsible standards, and developed one of the world s preeminent social standards SA8000. SAI also partners in capacity building activities around the world offers open and custom training courses for workers, social auditors, buyers and suppliers and corporate compliance managers spanning numerous industries, including: apparel, footwear, agriculture, electronic assembly, light manufacturing, logistics, finance and retailing. Training is aimed at helping people to understand social compliance issues and the importance of management systems as the key to ongoing compliance and continual improvement. Is your organisation registered in the Interest Representative Register? No If your organisation is not registered, you have the opportunity to register here before you submit your contribution. Responses from organisations not registered will be published separately from the registered organisations. -single choice reply- Can the Commission contact you if further details on the information you submitted is required? -single choice reply- Publication: Do you object to

2 Page 2 of 5 publication of the personal data on the grounds that such publication would harm your legitimate interests? -multiple Questionnaire 1. How would you consider the current regime of disclosure of nonfinancial information applicable in your country? -single choice reply- Sufficient In replying to this question, please provide information on what way current reporting provides useful information, and to what extent it is sufficiently tailored to the circumstances of the company. Please also comment on whether you find non-financial information useful for the decision-making of a company. Due to legislation which has become effective in the last decade, reporting on non-financial information in the Netherlands has improved. This is due to the Arbowet on health and safety issues and article 31b of the WOR legislation specifying social reporting for larger companies. Due to the obligated PRTR report for certain types of industrial companies the reporting on environmental issues has improved as well. These forms of reporting are however all restricted to the company itself. No reporting is obligatory on social and environmental conditions of suppliers delivering products or services to companies in the Netherlands. Since they influence and are partially responsible for the conditions under which their products are made, SAI feels that enlarging the scope of reporting to the supply chain of companies should be a first and important step in improving the reporting requirements for companies in the Netherlands. Supply chain management and conditions directly affect financial results of companies, as ever more investors and managers realize. 2. Have you evaluated the effects, and costs and benefits, of any current corporate disclosure of environmental and social information? -single choice reply- SAI and its stakeholders are positive about the effects, costs and benefits of the reporting of non-financial information. It meets the expectation of the stakeholders of companies and is beneficial to the organization itself via increased trust, better reputation and increased competitiveness. SAI has experienced the impact and effects of reporting of non financial information in diverse ways. SAI is known to many through the SA8000 standard. In this standard and in SAI s training programs the implementation of management systems is seen as key to effective implementation of labour standards. It is also the basis for credible and consistent internal and external communication of the social behavior of a company. Many companies therefore use SA8000 certification as proof or an external communication tool of being socially compliant. This was highlighted in a report issued at the Global Compact summit where six companies demonstrated SA8000 certification as a way to fulfill and report on their adherence to the labor principles of the Global Compact. SAI is also active in the stakeholder committees of CERES, which comment on sustainability reports of companies. As one of founding members of ISEAL, SAI works on increasing the quality of setting voluntary standards, impact measurement and verification processes which include credible and consistent ways of communication to outside stakeholders among which consumers 3. If you think that the current regime of disclosure of non-financial information should be improved, how do you suggest that this should be done? SAI would recommend reporting of non-financial information based on principles (for labour issues these would be UN and ILO-principles). Effective implementation of these principles should be based on standards and linked management system enabling measuring of improvements on key performance indicators. The measured improvements on these indicators form the basis for internal and external reporting and decision making. Once measured, they can be tracked, improved, and used for internal evaluation of staff as well as external evaluation of company implementation. 4. In your opinion, should companies be required to disclose the following (check all relevant boxes): -multiple Whether or not they have a CSR policy, and if they do, how they implement that policy and what the results have been The principal business risks and opportunities arising from social and environmental issues, and how they are taken into account in company strategy. Key information regarding issues such as employee engagement (e.g.: employee training policy, equality and diversity, etc.);

3 Page 3 of 5 customer satisfaction (e.g.: customer loyalty); public perception of the company (e.g.: stakeholder dialogue); environmental policies (e.g.: energy efficiency, waste reduction); and innovation (e.g.: R&D expenditure). Other Other, please specify: -open reply- Comapnies should be transparent on the impact of their down stream supply chain activities. SAI believes in interdependence of business and society not on the tension between them. Companies should identify the environmental or social areas with the greatest shared value. Shared value leading to benefits for society and competitiveness of companies. These shared values are the basis for setting and implementing a corporate responsibility strategy. Though some companies may perceive the above suggested measures as unnecessary bureaucracy in the beginning, SAI thinks it will both help society and also increase the competiveness of European companies. Long-run successful workplaces are partnerships between workers and management. Degredation of environmental resources leads to higher costs for society as a whole and individual companies as well. Reporting on environmental impact helps companies set goals for reducing and managing that impace. 5. In your opinion, for a EU measure on reporting of non-financial information to achieve materiality and comparability it should be based upon (check all relevant boxes): - multiple 5a) In case you consider that Key Performance Indicators (KPIs) would be useful, would you think that they should be (check all relevant boxes): - multiple choices reply- Principles Key Performance Indicators (KPIs) General for all economic sectors 5b) Please indicate which indicators you would consider to be the most relevant for all economic sectors: Here we refer to our answer to question 3 and In your opinion, what should be the process to identify relevant principles and/or indicators (whether general or sector-specific)? In replying to this question, please comment on whether the Commission should endorse or make reference to any existing international frameworks (or a part of them), such as Global Reporting Initiative (GRI), UN Global Compact, the OECD Guidelines, ISO 26000, or other frameworks; or whether companies should be required to select relevant indicators together with their investors and other stakeholders and to disclose information according to such indicators, depending on the use that different stakeholders would make of such information. Companies should be expected to report according to the GRI and to explain why they omit any topics/areas. This is in addition to using references to the above mentioned frameworks to help in determining principles, indicators and consistent reporting. We would recommend to refer to SAI and SA8000 for principles, indicators and demonstration of compliance with respect to human rights and labour conditions. Each company should consult to a degree appropriate for its size and geographical impact with internal and external stakeholders to establish key indicators. The number of indicators may grow over time, as the company engages with more topics and more expertly. 7. In your opinion, should companies be required to disclose the steps they take to fulfill the corporate responsibility to respect human rights? -single choice reply- Based on the principles of core ILO conventions and UN Conventions and based on the framework of professor John Ruggie on business and human rights, all companies should be and feel obligated to respect and actively work on the promotion of human rights in their company and in their supply chain. This is part of their obligations to shareholders and stakeholders and the community more generally. And disclosure enables tracking of results. Such tracking, in turn, enables companies to see opportunities for improvement and learn what practices are most effective.

4 Page 4 of 5 8. In your opinion, should companies be required to disclose the risks they face and the policies they have in the field of corruption and bribery? -single choice reply- This is very clearly related to financial performance and viability. There are tools available to help companies develop and implement programmes in this area. Transparency International and SAI co-convened the multistakeholder Steering Committee for the Business Principles for Countering Bribery in The Principles were first released in 2003, and revised in 2009, and take a management systems approach to reducing bribery and corruption. Work is based on the belief that corruption is a major threat to development, international trade and human rights and that containing corruption to manageable levels calls for the creation of a broad coalition. Growing engagement with the private sector is therefore seen as a key to mission achievement. 9. In your opinion, what companies Other should be required to disclose nonfinancial information (check only one box)? -single choice reply- Other, please specify -open reply- Over time we see the importnace of working toward reporting on non-financial results for all comapnies including smaller ones. 10. In your opinion, should institutional investors be subject to specific or additional disclosure requirements, for example to disclose whether and how they take into account environmental and social issues in their investment decisions? -single choice reply- In replying to this question, please provide information on which issues seem to be the most relevant and why; and which institutional investors should be subject to such an obligation. Investors are an important driver of sustainable change. Already now investors see the level of sustainability of a company as an important proxy for the future financial success of a company. Requirements in this field would therefore beneficial to all involved parties and society and is in line with already ongoing developments. Institutional investors are made up of individual investors, and they and the public have a right to know the criteria used and the voting [when there are resolutions submitted to shareholders] by pension funds and other large capital pools. Disclosure here is likely to drive development and use of more careful investment criteria. 11. In your opinion, should European policy promote the concept of "integrated reporting"? Integrated reporting refers to a report that integrates the company's key financial and non-financial information to show the relationship between financial and non-financial performance (environmental, social, and governance). -single choice reply- In replying to this question, please indicate the advantages and disadvantages of an integrated report, as well as possible specific costs of integrated reporting. Promotion of integrated reporting would be desirable in order to highlight the equal importance of economic, social and environmental aspects. It would also enhance the integration of CSR in the overall policy of a company. Today financial results are still of primary importance while social and environmental results are seen as secondary. The costs of reporting are not large if the organization is as it should be- already collecting the information, as part of its good financial and legal governance. Reporting also promotes internal integration of purchasing/investing and compliance/social functions within a company when every department is gathering

5 Page 5 of 5 information on its performance in ESG functions. We disagree with the dichotomy between financial and ESG, however because environmental, social, and governance performance are key drivers of financial results. Long term sustainability will require awareness of the inter-connections of the three bottom lines. 12. In your opinion, should disclosed non-financial information be audited by external auditors? -single choice reply- In replying to this question please provide any evidence you may have regarding costs of auditing non-financial information, as well as your views on other possible forms of independent reviews besides external auditing. Credible external auditing of the report would increase the credibility of reports published. Besides external auditing by one party, SAI also sees the added value of stakeholder consultation on the accuracy, relevance and completeness of the report. As referred to before SAI participates in the stakeholder committees of CERES, which comment on sustainability reports of companies. Third party certification programs are particularly useful due to their independent view and because they lead to structured corrections, continious improvement, and complaint processes. Costs of external auditing are based on the size and complexity of a company; many companies report that the learning and systematization required for certification are worth more than the costs. 13. If you have relevant documents you want to share with us, please attach them here. (optional) -multiple PRINT EXPORT RECORD