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6 Stakeholder pressure IDX s move of Sustainable adoption Stock Exchanges and indices Integrated Reporting Converging Development International initiatives and regulatory trends Global Reporting Global Initiative Reporting Initiative Sustainable finance roadmap
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8 Sector Number of companies in the sector Number of reporting companies in the sector Reference to a materiality process Agriculture 8 1 Basic industry 6 5 Consumer 8 1 Finance 11 7 Infrastructure 11 5 Mining 10 7 Miscellaneous industry 4 1 Property 22 3 Trade 20 2 80% or more companies in the sector meet the assessment criteria 50% to 79% companies in the sector meet the assessment criteria none to 49% companies in the sector meet the assessment criteria
9 Use of stakeholder engagement for aspect identification Identification of boundaries of material aspects Recurring report of sustainability performance Public reporting of material aspects
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11 Quality of report Criteria of disclosure Percentage of reporting companies Sector Unbalanced Fairly balanced Balanced One-sided view of the company s sustainability performance Failure to mention challenges, negative performance, missed goals and areas for improvement Focus solely on positive progress and CSR programs Disclose some sustainability data (such as greenhouse gas emissions) Commentary on areas where performance targets had not been met Mention of risks/challenges to the company s operations Disclose a wide range of sustainability data Commentary on whether specific targets had been met or not Explanation of negative impacts to the company s operations and how these impacts were being managed 50% 34% 16% Basic industry, finance, infrastructure, mining, miscellaneous industry, property, trade Basic industry, consumer, finance, infrastructure, mining, property, trade Agriculture, basic industry, mining
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32 1 11 2 1 13 IDX companies that disclose material aspects Sustainability report integrated in annual report One reporting format Standalone sustainability report Sustainability report in annual report and website Two reporting formats Integrated report and website 17 Sustainability report and website
14 Sector Number of reporters Adopting a materiality assessment process Agribusiness 1 1 Basic industry 5 4 Consumer goods 1 1 Finance 7 7 Infrastructure 5 4 Mining 7 6 Miscellaneous industry 1 0 Property 3 2 Trade 2 2 Total 32 27
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27 3 24 IDX top 100 companies undertaking materiality assessment Internal stakeholder engagement Internal and external stakeholder engagement 16
17 Materiality assessment Mention effort to act on stakeholder concern No mention 7% 93%
18 Number of reporters 16 14 12 10 8 6 4 2 0 Reported material aspects 10 and less 11-21 22 and more Amount of reported indicators 10 and less 11-21 22 and more
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Pathway to evolving Non-Financial Report Start Non-reporter Limited non-financial disclosure on company website or annual report Early stage Some disclosure in a high level sustainability report or within annual report Internal review Limited or no stakeholder engagement Middle pack Standard disclosures, ad-hoc performance indicators Beginning to determine material indicators Early relationship with stakeholders Pre or limited assurance Leader Comprehensive, balanced disclosure Well developed materiality process, beginning to integrate internally Report aligns with stakeholder expectations Closely linked financial and nonfinancial reporting Limited assurance over data and principles Differentiator Comprehensive, balanced disclosure based on advanced materiality and stakeholder engagement Sustainability principles integrated into strategy and operations Reasonable assurance over data and principles Finish 21
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24 Source Global Reporting Initiative 7 International Integrated Reporting Council 8 Sustainability Accounting Standards Board 9 AccountAbility AA1000 Guidance Note on the Principles of Materiality, Completeness and Responsiveness 10 Definition of materiality Materiality is the threshold at which aspects become sufficiently important that they should be reported. A matter is material if it is of such relevance and importance that it could substantively influence the assessment of providers of financial capital with regard to the organization s ability to create value over the short, medium and long term. SASB uses the US Supreme Court definition of materiality. US Federal law requires publicly listed companies to disclose material information, defined by the US Supreme Court as information presenting a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available. (TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976)). Information about [an organization s] sustainability performance required by its stakeholders for them to be able to make informed judgments, decisions and actions.
Sector Material aspects Agriculture* Materials Energy Water Emissions Local communities Basic industry Economic performance Indirect economic impacts Emissions Effluents and waste Occupational health and safety Consumer* Procurement practices Water Effluents and waste Customer health and safety Product and service labelling Finance Economic performance Energy Employment Training and education Anti-corruption Infrastructure Energy Emissions Employment Local communities Anti-corruption Mining Economic performance Energy Water Emissions Occupational health and safety Property Economic performance Energy Emissions Effluents and waste Occupational health and safety Trade Economic performance Effluents and waste Products and services Customer health and safety Product and service labelling Source: EY analysis 25
26 IDX sector segmentation Agriculture Basic industry and chemicals Consumer goods industry Finance Infrastructure, utilities and transportation Mining Miscellaneous industry Property, real estate and building construction Trade, services and investment Source: IDX Key industry group within the sector Crops; plantation; animal husbandry; fishery; forestry; others Cement; ceramics, glass, porcelain; metal and allied products; chemicals; plastics and packaging; animal feed; wood industries; pulp and paper; others Food and beverages; tobacco manufacturers; pharmaceutical; cosmetics and household; houseware; others Bank; financial institution; securities company; insurance; investment fund/mutual fund; others Energy; toll road, airport, harbor and allied producer; telecommunication; transportation; non-building construction; others Coal mining; crude petroleum and natural gas producer; metal and mineral mining; land/stone quarrying; others Machinery and heavy equipment; automotive and components; textile and garment; footwear; cable; electronics; others Property and real estate; building construction; others Wholesale (durable and non durable goods); retail trade; restaurant, hotel and tourism; advertising, printing and media; health care; computer and services; investment company; others