Strategy and Analysis

 Strategy and Analysis

This section is intended to provide a high-level, strategic view of the organization’s relationship to sustainability in order to provide context for subsequent and more detailed reporting against other sections of the Guidelines. It may draw on information provided in other parts of the report, but this section is intended to produce insight on strategic topics rather than simply summarize the contents of the report. The strategy and analysis should consist of the statement outlined in 1.1 and a concise narrative outlined in 1.2.

1.1      Statement from the most senior decision-maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy.

The statement should present the overall vision and strategy for the short-term, medium-term (e.g., 3-5 years), and long-term, particularly with regard to managing the key challenges associated with economic, environmental, and social performance. The statement should include:

·    Strategic priorities and key topics for the short/medium-term with regard to sustainability, including respect for internationally agreed standards and how they relate to long-term organizational strategy and success;

·    Broader trends (e.g., macroeconomic or political) affecting the organization and influencing sustainability priorities;

·    Key events, achievements, and failures during the reporting period;

·    Views on performance with respect to targets;

·    Outlook on the organization’s main challenges and targets for the next year and goals for the coming 3-5 years; and

·    Other items pertaining to the organization’s strategic approach.

1.2     Description of key impacts, risks, and opportunities.

The reporting organization should provide two concise narrative sections on key impacts, risks, and opportunities.

Section One should focus on the organization’s key impacts on sustainability and effects on stakeholders, including rights as defined by national laws and relevant internationally agreed standards. This should take into account the range of reasonable expectations and interests of the organization’s stakeholders. This section should include:

·    A description of the significant impacts the organization has on sustainability and associated challenges and opportunities. This  includes the effect on stakeholders’ rights as defined by national laws and the expectations in internationally-agreed standards and norms;

·    An explanation of the approach to prioritizing these challenges and opportunities;

·    Key conclusions about progress in addressing these topics and related performance in the reporting period. This includes an assessment of reasons for underperformance or over-performance; and

·    A description of the main processes in place to address performance and/or relevant changes.

Section Two should focus on the impact of sustainability trends, risks, and opportunities on the long-term prospects and financial performance of the organization. This should concentrate specifically on information relevant to financial stakeholders or that could become so in the future. Section Two should include the following:

·    A description of the most important risks and opportunities for the organization arising from sustainability trends;

·    Prioritization of key sustainability topics as risks and opportunities according to their relevance for long-term organizational strategy, competitive position, qualitative, and (if possible) quantitative financial value drivers;

·    Table(s) summarizing:

o   Targets, performance against targets, and lessons-learned for the current reporting period; and

o   Targets for the next reporting period and mid-term objectives and goals (i.e., 3-5 years) related to key risks and opportunities.                 

Concise description of governance mechanisms in place to specifically manage these risks and opportunities, and identification of other related risks and opportunities.

Organization Profile

Organizational Profile

2.1     Name of the organization.

2.2     Primary brands, products, and/or services.

The reporting organization should indicate the nature of its role in providing these products and services, and the degree to which it utilizes outsourcing.

2.3     Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

2.4     Location of organization’s headquarters.

2.5     Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

2.6     Nature of ownership and legal form.

2.7     Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

2.8     Scale of the reporting organization, including:

·    Number of employees;

·    Net sales (for private sector organizations) or net revenues (for public sector organizations);

·    Total capitalization broken down in terms of debt and equity (for private sector organizations); and

·    Quantity of products or services provided.

In addition to the above, reporting organizations are encouraged to provide additional information, as appropriate, such as:

·    Total assets;

·    Beneficial ownership (including identity and percentage of ownership of largest shareholders); and

·    Breakdowns by country/region of the following:

o   Sales/revenues by countries/regions that make up 5 percent or more of total revenues;

o   Costs by countries/regions that make up 5 percent or more of total revenues; and

o   Employees.

2.9      Significant changes during the reporting period regarding size, structure, or ownership including:

·    The location of, or changes in operations, including facility openings, closings, and expansions; and

·    Changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations).

2.10   Awards received in the reporting period.

Report Parameter

Governance

Governance

4.1      Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. 

          Describe the mandate and composition (including number of independent members and/or non-executive members) of such committees and indicate any direct responsibility for economic, social, and environmental performance.

4.2      Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function within the organization’s management and the reasons for this arrangement).

4.3      For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

          State how the organization defines ‘independent’ and ‘non-executive’. This element applies only for organizations that have unitary board structures. See the glossary for a definition of ‘independent’.

4.4      Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. 

          Include reference to processes regarding:

·    The use of shareholder resolutions or other mechanisms for enabling minority shareholders to express opinions to the highest governance body; and

·    Informing and consulting employees about the working relationships with formal representation bodies such as organization level ‘work councils’, and representation of employees in the highest governance body.

Identify topics related to economic, environmental, and social performance raised through these mechanisms during the reporting period.

4.5      Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance).

4.6      Processes in place for the highest governance body to ensure conflicts of interest are avoided.

4.7      Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization’s strategy on economic, environmental, and social topics.

4.8