Assurance of Nestlé's Creating Shared Value Report

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Hollie Copeland
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1 Assurance of Nestlé's Creating Shared Value Report

2 Agenda Introductions The Purpose of Assurance Standards Reporting and assurance processes Guidance on Evidence Examples of Good and Bad Evidence Efficient Assurance Process 2

3 Introductions Vishal Goel More than eight years of experience in sustainability and an MBA in environmental management. Experience in a variety of sectors and a range of sustainability services. Has been leading verification projects for global clients including GSK, Astra Zeneca, Nestle UK amongst others. In his previous role at Ernst and Young, he conducted sustainability data verification and analysis for a number of international clients. 3

4 Introductions (cont.) Nicolas Desolino As a Senior Sustainability consultant at Bureau Veritas in the UK, Nicolas manages the delivery of complex, international sustainability assurance and advisory engagements for a variety of clients (e.g. DS Smith, Tate & Lyle and Canary Wharf Group). Spent eight years at KPMG supporting corporate clients (e.g. Barclays Bank, Cobham, Bunzl, Liberty Global, Balfour Beatty) on their sustainability initiatives and reporting. Also helped ensure that KPMG walked the talk by managing the implementation of environmental programmes for KPMG s own offices. 4

5 The Purpose of Assurance The purpose of assurance is to: provide management and stakeholders with the confidence that statements disclosed are relevant, complete and accurate, and can be supported by evidence; generate confidence on whether the reported information provides a robust basis from which decisions can be made; become a tool for mitigating risks associated with the potential disclosure of inaccurate or misleading information; and provide useful feedback to the reporter on better practice observations. 5

6 Assurance standards Bureau Veritas assurance protocols take account of a range of standards Our approach to materiality and review of report content is aligned with AA1000 AS and GRI principles and links to stakeholders feedback Our approach to auditing and checking of data is aligned with the requirements of ISAE300 Core Values * Integrity & ethics * Impartial counsel & validation * Respect for all individuals * Social and environmental Responsibility * IFIA Code of Compliance reflected in our Code of Ethics 6

7 Assurance standards (cont.) We evaluate the nature and content of the CSV report based on the principles of: Materiality of issues included in the report, Inclusivity of stakeholders engaged in the process, and Responsiveness of Nestlé to material issues. The quality of the report is evaluated based on the principles of: Reliability of information Clarity of the report Balance (both positive and negative performance is reported) Comparability (year on year and against peers) Accuracy of measurement Timeliness of the information being reported 7

8 Reporting and assurance process for data claims Nestlé's activities Raw data from various sources Aggregate data Collect data Data summary Include in CSV Report Measurement outcome Apply reporting methodology Measure outcome based on reporting methodology Bureau Veritas' activities Assess existence, accuracy, completeness of the source data Assess the application of the reporting methodology to collect the data Check the accuracy of the aggregation process Assess the application of the methodology to measure the outcome Check agreement between the outcome measurement and the information reported Conclude on accuracy of reported information 8

9 Example: GHG emissions reporting and assurance Nestlé's activities Raw energy data from across the Group Aggregate data and apply emission factors Collect data Data summary Include in CSV report Scope 1, 2 and 3 GHG emissions Apply GHG Protocol Measure GHG emissions for each scope Bureau Veritas' activities Assess existence, accuracy, completeness of the source data Assess the application of the GHG Protocol to collect the data Check the accuracy of the aggregation process and emission factors Assess the application of the GHG Protocol to measure the outcome Check agreement between the outcome measurement and the information reported Conclude on accuracy of reported information 9

10 Reporting and assurance process for text claims Nestlé's activities Activity Decide whether to include in CSV report Check that it is accurate and upto-date Collect information Write text claims Include in CSV Report Bureau Veritas' activities Assess reliability of the evidence supporting the information Check the accuracy of the text claims Conclude on accuracy of reported information 10

11 Example of text claim from the Our People section Nestlé's activities Nestle has established a Total Rewards Policy that outlines the employment package provided to employees. Decide whether to include in CSV report Check that it is accurate and upto-date Collect Total Rewards Policy Our global Total Rewards Policy outlines the employment package we provide for employees Include in CSV Report Bureau Veritas' activities Check the existence of a Total Rewards Policy during the reporting period and what it covers Verify the accuracy of the text claims against the content of the Policy Conclude on accuracy of reported information 11

12 Reporting on the effectiveness of an internal policy Nestlé's activities Activities Apply internal policy Check that it is accurate and upto-date Collect information to determine the effectiveness of the policy Write text claims about effectiveness of the policy Include in CSV Report Bureau Veritas' activities Assess existence, accuracy and completeness of the evidence supporting the information Evaluate the effectiveness of the policy Conclude on effectiveness of internal policy 12

13 Example: effectiveness of Supplier Code Nestlé's activities Supply chain activities Apply Supplier Code Check that it is accurate and upto-date Collect information to determine whether suppliers comply with the Supplier Code Write text claims about effectiveness of the policy Include in CSV Report Bureau Veritas' activities Assess existence, accuracy and completeness of the evidence provided regarding compliance with the Supplier Code Evaluate the effectiveness of the policy Conclude on effectiveness of internal policy 13

14 Assessment of the evidence Existence: Is there evidence to support the claim? Assessed through documents review and interviews with content owners Completeness: Does the evidence provided contain all relevant information? Is the relevant data collected for all applicable countries and business units? Assessed through interviews with content owners about the information collection process and other assurance procedures as required (e.g. comparison to prior year s data) Accuracy: Is the information accurate? Assessed by reviewing supporting documents and, if applicable, checking a sample of data points against source evidence 14

15 Assessment of the evidence (cont.) After the management interviews and first draft review of the CSV Report we may have more queries if: the evidence provided is not sufficient, the text has changed, new claims have been added, or the data has been updated. You do not need to supply evidence for KPIs or text claims made in prior years but removed from the 2016 CSV report. 15

16 Source and nature of supporting evidence The quantity of evidence needed is affected by: the risks of the information being materially misstated (the higher the risks, the more evidence is likely to be required); and the quality of such evidence (the higher the quality, the less may be required). Obtaining more evidence, however, may not compensate for its poor quality. The reliability of evidence is influenced by its source and by its nature. While some exceptions may exist: Evidence is more reliable when it is obtained from third-party sources Evidence that is generated internally is more reliable when the related controls are effective (e.g. internal report downloaded from Finance system) Evidence obtained directly by Bureau Veritas (for example, observation of the application of a control) is more reliable than evidence obtained indirectly or by inference (for example, inquiry about the application of a control) Evidence is more reliable when it exists in documentary form, whether paper, electronic, or other media 16

Third party evidence Third-party source evidence may include: energy invoices, waste collection notes, OHSAS 18001 health &

17 Third party evidence Third-party source evidence may include: energy invoices, waste collection notes, OHSAS health & safety certificates, records of awards received, Agreement with external NGOs, and other reports or statements from 3rd parties. 17

18 Internal evidence Evidence may also come from internal sources. For example: Report downloaded from HR or Finance system Training or community events sign up sheets Financial records of charitable donations Purchasing records Calculations based on internal methodology (e.g. Nestlé's Combined Water Stress Index) Internal spreadsheet showing data input, calculations and outputs (e.g. Nutrition Commitment Tracking spreadsheet) To be satisfied about the reliability of information obtained from internal systems/documents, Bureau Veritas needs to confirm (through inquiries or observation) that the system contains relevant and correct information. 18

19 Audit trail An audit trail should be maintained between the various sources of information and the reported figures. If calculations have been performed to reach the figures reported, then internal logs containing the original data, calculations and the final figures should be maintained. Evidence should be well organised, dated and clearly labelled. This will result in a more efficient audit process and will help ensure continuity if key employees leave the company. 19

Example of a well maintained evidence log Shows how the data has been logged, and how the raw-data has been used to obtain the final reported value Well maintained and clearly

20 Example of a well maintained evidence log Shows how the data has been logged, and how the raw-data has been used to obtain the final reported value Well maintained and clearly labelled data log Relevant information selected from raw data Reported figure clearly visible Note: our work is not limited to reviewing the log. We will also check a sample of invoices. 20

21 Example of Nestlé s good evidence Step 1: Nutrition data is collected in clearly labelled Input tab Step 2: Data is aggregated in a separate tab Step 3: A summary tab shows the final figures being reported 21

22 Example of Nestlé s well organised evidence Evidence uploaded to SharePoint, referenced, and a note left explaining where the relevant information can be found in the document provided. 22

Example of Nestlé s well organised evidence Files provided in SharePoint are well referenced using numbers which correspond with the related data in

23 Example of Nestlé s well organised evidence Files provided in SharePoint are well referenced using numbers which correspond with the related data in SharePoint. This makes it clear what the evidence provided is in support of. Removes any confusion for both parties over what evidence has or hasn t been received. 23

24 Poor evidence Internal records ( s, presentation, press releases, intranet information, etc) are not sufficient evidence. Documents provided to Flag may not be sufficient for us to verify the accuracy of the information. For example, a press release may be used by Flag to generate content for the report. However, as assurance providers, we need to verify the accuracy of the information provided. 24

Examples of insufficient evidence Internal communication is generally not sufficient evidence to support reported information Raw data without calculations or an indication of how the data was

25 Examples of insufficient evidence Internal communication is generally not sufficient evidence to support reported information Raw data without calculations or an indication of how the data was manipulated for reporting Evidence which has been requested from the content holder e.g. from a third party, following the verifiers request is often of lower reliability. This is because the content of the report should be based on robust information which is already available for the content holder. 25

26 Example of insufficient evidence Internal document does not add any support to the claims reported Draft document information not reliable and subject to change 26

27 Example of insufficient evidence Nestlé PowerPoint presentation provided with values simply being re-stated How have these figures been obtained and calculated? Evidence should include database, log and calculations behind these values or a third-party report 27

28 Risk of insufficient evidence If it is unclear how the reported information has been obtained from the evidence provided, this will lead to further questions or requests for evidence. Lack of strong evidence available at the time of our review may also lead to: changes in text/figures; or sections of the CSV report being excluded from our scope of assurance (the excluded sections will be stated in our public assurance statement); or publication of an adverse assurance opinion about the reliability of the information presented in the CSV Report. 28

29 Keys to an efficient assurance process Strong evidence and wellreferenced documents on SharePoint will enable the verifier to trace information from its source through to the final reported statements/figures Adding details or comments (e.g. a description of where to find the relevant information in documents provided as evidence) Notifying us of any changes Providing an explanation of how the information was obtained Maintaining internal logs of data collected from source or any internal workings Strong evidence Well organised Submitted on time Efficient assurance process: - Data checks facilitated - Reduced risk of errors - Less back and forth correspondence with content owners 29

30 - Copyright Bureau Veritas

Bureau Veritas Independent Assurance Statement

Bureau Veritas Independent Assurance Statement To: The Stakeholders of Nestlé S.A. Introduction Bureau Veritas UK has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé)