CSR Exam Questions PDF

EXAM QUESTIONS GRIs The GRI Standards represent global best practice in sustainability reporting. The GRI Standards offer information on a wide range of sustainability topics: from anti- corruption to water, from biodiversity to occupational health and safety. In particular the Standards cover relev...

EXAM QUESTIONS GRIs The GRI Standards represent global best practice in sustainability reporting. The GRI Standards offer information on a wide range of sustainability topics: from anti- corruption to water, from biodiversity to occupational health and safety. In particular the Standards cover relevant topics across the economic, environmental and social dimensions. The GRI Standards are frequently revised to update existing topics and to include new topics. They are structured as a set of interrelated standards. There are three Universal Standards that apply to every organization preparing a sustainability report (Foundation 101, General Disclosures 102 and Management Approach 103). Then we have Sector Standards to apply to your specific sector that help companies to set their material topics (40 sectors such as oil gas or agriculture, highest impact). Then we can set up topic specific GRI Standards for reporting on material topics that were disclosed before (Economic 200, Environmental 300, Social 400). In the context of the GRI Standards, the economic dimension of sustainability concerns an organization’s impacts on the economic conditions of its stakeholders, and on economic systems at local, national, and global levels. In the context of the GRI Standards, the environmental dimension of sustainability concerns an organization’s impacts on living and non-living natural systems, including land, air, water and ecosystems. In the context of the GRI Standards, the social dimension of sustainability concerns an organization’s impacts on the social systems within which it operates. GRI 101 outlines purposes, lists requirements and specifies principles; GRI 102 gives insight into the organization’s workers, activities, governance, strategy, policies, practices and stakeholder engagement; GRI 103 explains the steps by which an organization can determine the topics most relevant to its impacts, its material topics, and describes how the Sector Standards are used in this process. GRI Sector Standards intend to increase the quality, completeness, and consistency of reporting by organizations. GRI Foundation Principles are: accuracy, information reported must be correct and detailed; balance, information should be reported fairly and without a subjective judgment; clarity; comparability, information reported should be consistent and comparable over time and with other organizations; completeness; sustainability context; information should be placed in a wider context of analysis; timeliness, should be available over time for decision makers; verifiability of the quality through examination. SASB SASB, an acronym for the Sustainability Accounting Standards Board, is a non-profit organization. The mission of the SASB is to develop standards of reporting for the environmental, social and governance performance of companies, based on the needs of investors. SASB has developed a set of industry-specific sustainability standards that identifies the so-called "material issues", that are the material sustainability issues considered significant for a company based on the sector to which it belongs and on the needs of stakeholders. The material issues identified by the SASB can be used by companies to identify the most important sustainability issues and to communicate in a transparent way the information on their sustainability performance. SASB Standards identify the subset of ESG issues most relevant to financial performance in 77 industries; it’s industry specific not all issues have the same weight and market informed SASB Standards are based on extensive feedback. Difference between SASB and GRI GRI, or Global Reporting Initiative, sets standards for companies to report on their economic, environmental and social impact. SASB, or Sustainability Accounting Standards Board, focuses specifically on the financial materiality of sustainability issues. AA1000 AP and SES AccountAbility is a global consulting and sustainability standards firm that works with businesses, governments and multilateral organizations to advance responsible business practices and improve long-term performance. AccountAbility’s work is based on the AA1000 Series of Standards, which are founded on the specific Principles. Part of the Series of Standards, the new AA1000AP (2018) is an internationally accepted, principles-based framework and guidance that organizations can use to identify, prioritize and respond to sustainability challenges to improve long-term performance. AA1000SES (2015) is the most widely applied global stakeholder engagement standard. AA1000 Accountability Principles are meant to guide not only the internal operations but also the management of its value chain, including its suppliers, business partners and customers. The principles are: inclusivity people should take part in the decisions, materiality decision makers should be clear about relevant topics, responsiveness organizations should act transparent, impact organizations should monitor their impact effects and be accountable for those. CSV, CSR and Philanthropy Philanthropy, projects and initiatives created in partnership with voluntary sector organizations that have a significant impact on communities; Corporate Social Responsibility is focused primarily on reputation and doing good made in response to external pressure, it has only a limited link with the business and it’s separated from profit maximization; Corporate Shared Value is functional to economic and social benefits in terms of profitability and competitive position of the company, the agenda is internally generated. ISO ISO stands for International Organization of Standardization. The ISO is an international body responsible for creating, setting, and promoting standards. To date it has published more than 22,600 standards and related documents that apply to all kinds of industries, such as manufacturing, healthcare, and accounting. ISO standards are a collection of best practices that promote product compatibility, sharing of solutions and know-how, and identification of safety issues. The standards present an approach that has been agreed on by international experts. Businesses use ISO certification to provide potential customers with proof of compliance and win their trust. Before that, however, you’ll have to purchase and achieve the certification. ISO certification costs differ based on many factors, such as your organization size, industry sector, annual revenue, number of employees, and so on. We can cite three main types of ISO: 9001 for general organizational quality management systems, 27001 for security management; 26000 focuses on social responsibility, it provides businesses direction on how they can work in a socially capable manner by explaining their social duty; 20121 cover sustainable events from music festivals to school outings. SA8000 SA8000 is a social accountability standard developed by Social Accountability International (SAI). It is designed to assess and ensure ethical practices in the workplace. SA8000 establishes a set of criteria and requirements for organizations to follow in order to demonstrate their commitment to social accountability. The SA8000 standard covers various areas, including: child labor: Prohibition of child labor, ensuring that no workers below the age of 15 (or the legal minimum age) are employed; forced labor, prohibition of forced or compulsory labor, including any form of bonded or involuntary labor; health and safety, Providing a safe and healthy working environment for employees. By obtaining SA8000 certification, organizations demonstrate their commitment to upholding labor rights, promoting fair working conditions, and respecting human rights in their operations. It’s worth noting that SA8000 certification is voluntary, and not all organizations choose to pursue this certification. Enterprise Risk Management The ERM function collaborates with other business functions to identify and respond to external forces that may impact the business. Risks are disclosed to investors and other interested stakeholders in a company's legal risk filings, annual report and sustainability reports. Forces creating risks and driving change are: social, environmental, legal, political, technological and economic. Risk management process has the following steps: risk identification, evaluation, response, communication and disclosure. B-Corp and Benefit Corporation A B-Corp is a for-profit corporation that is certified by B Lab, a nonprofit organization, as meeting certain standards of social and environmental performance, accountability and transparency. A Benefit Corporation is a legal status recognized by some states in the U.S. and Italy that allows companies to pursue a social or environmental mission in addition to generating profits for shareholders. Obviously, there are many advantages to being a Benefit Corporation or having a B- Corp certification. Both demonstrate to investors, employees, and consumers the company's commitment to sustainability and social responsibility. This can increase the company's trust and reputation, attract new customers and investment. In addition, a B Corp has a legal obligation to balance the interests of stakeholders, not just shareholders, in its business. This obligation may push the company to make more sustainable and socially responsible choices even though they may not be the most profitable in the short term. Benefit Corporation Italy vs USA Benefit companies have been introduced in Italy with Law no. 208 of December 28, 2015 (Art. 1 purposes, Art.3 Benefit corporations, corporate purpose and company name, Art.5 annual benefit report). Italy was the first European country to implement a regulation on benefit companies. According to the B Lab Europe calculation, approximately 200 benefit companies are based in Italy. To strengthen the system of benefit corporations throughout the country, the Italian Government has provided a tax credit of 50% of the incorporation or transformation expenses incurred by benefit corporations. Women Empowerment Principles Are a set of Principles offering guidance to business on how to promote gender equality and women’s empowerment in the workplace, marketplace and community. Established by UN Global Compact and UN Women, the WEPs are informed by international labor and human rights standards and grounded in the recognition that businesses have a stake in, and a responsibility for, gender equality and women’s empowerment. The Women’s Empowerment Principles (WEPs) are a primary vehicle for corporate delivery on gender equality dimensions of the 2030 agenda and the United Nations Sustainable Development Goals. By joining the WEPs community, the CEO signals commitment to this agenda at the highest levels of the company and to work collaboratively in multistakeholder networks to foster business practices that empower women. These include equal pay for work of equal value, gender-responsive supply chain practices and zero tolerance against sexual harassment in the workplace. The principles are: high level corporate leadership, treat men and women fairly, wellbeing of employees, education for training advancement, enterprise and supply chain development, community initiatives, measurement and reporting. SDGs The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. The 17 SDGs are integrated—they recognize that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability. Countries have committed to prioritize progress for those who're furthest behind. The SDGs are designed to end poverty, hunger, AIDS, and discrimination against women and girls. The creativity, knowhow, technology and financial resources from all of society is necessary to achieve the SDGs in every context. Double-materiality Was proposed by European Commission according to the Corporate Sustainability Reporting directive. It encourages a company to judge materiality from two perspectives: the extent necessary for an understanding of the company’s development, performance and position and in the broad sense of affecting the value of the company; environmental and social impact of the company’s activities on a broad range of stakeholders. These two perspectives are identified by the EFRAG such as financial materiality and impact materiality. Issues with outward impact should be presented in public ESG reports for a wide audience of stakeholders, Issues with business impact in annual reports to investors and lenders. UN Global Compact The Communication on Progress (COP) is a report that companies, which have joined the Global Compact of the United Nations, must present every year. The Global Compact is an initiative of the United Nations that invites companies to adopt 10 universal principles : human rights (1 support and respect of human rights 2 make sure they are not complicit in human rights abuses), labor ( 3 uphold freedom of associations 4 elimination of forced labor and 5 child labor 6 elimination of discrimination) , environment (7 support challenges, 8 undertake initiatives 9 encourage innovation) and anti- corruption (10 work against anti-corruption extortion and bribery). The businesses that adhere to Global Compact are engaged to implement these principles in their activities and to communicate progresses made through the presentation of the COP report. The COP report is published on the Global Compact website and can be consulted by the public. The presentation of this document is an important tool because allow to evaluate progresses in pursuing sustainability objectives and to identify possible areas for improvement. Scenario Analysis All decisions are based on a set of assumptions and inputs; the lack of certainty in the premises and inputs brings about risk; but also many opportunities. Before making an investment or taking a decision it’s necessary to assess the magnitude of them and weight them against potential benefits. Sensitivity analysis is the process of tweaking just one input and investigating how it affects the overall model. Scenario analysis requires one to list the whole set of variables and then change the value of each input for different scenarios. The first one provides an in-depth assessment, facilitate forecasting and helps in fact-checking. Scenario analysis generates several possible future events that are valid, although uncertain; so, in that way it improves systems of thinking and leads to an optimal allocation of resources. CSR definitions European Commission CSR I° definition (2001) not only fulfillment of legal expectations but also compliance and investment into human capital, environment, and relationships with stakeholders; it should nevertheless not be seen as a substitute to regulation or legislation concerning social rights or environmental standards. CSR II° definition (2011) responsibility of enterprises for their impacts on society; respect for collective agreements between social partners, the approach to CSR is long-term and strategic and complexity depend on the size of the enterprise. CSR Multidimensional (2011) covers human rights, labor and employment practices, environmental issues and combating bribery and corruption; community involvement and supply chain monitoring it’s included. The Commission also promotes for tax governance: transparency, exchange of information and fair tax competition. ESG ratings rankings and risks ESG ratings the evaluations of a company based on a comparative assessment of their quality, standard or performance on environmental, social or governance (ESG) issues. Fitch Ratings has published a compendium of 100 unique ESG sector templates across analytical groups. These are used by credit analysts in their assessment of each entity, transaction or program when assigning ESG Relevance scores (ESG RS). These templates assist the analysts in extracting the elements of ESG that affect fundamental credit at a sector level, helping them clearly identify and display which ESG risk elements have played a part in each entity’s credit rating decision. The templates can be used to identify ESG issues that are potentially relevant to the credit profiles of issuers in a specific sector. ESG rankings lists that classify companies based on their performance and put them in a certain order or grouping based on a specified grading system. Due to scope limitations, ESG rankings are excluded from this research. ESG-related risks are the environmental, social and governance-related risks and/or opportunities that may impact an entity. There is no universal or agreed-upon definition of ESG-related risks, which may also be referred to as sustainability, non- financial or extra-financial risks. Each entity will have its own definition based on its unique business model; internal and external environment; product or services mix; mission, vision and core values and more. The roles of ESG and ERM often work in silos within an organization. ESG disclosures should be integrated and align to the risks reported in an organization’s risk disclosure and business review sections of the Directors’ Report. Risk strategy and appetite, risk governance, risk assessment and measurement, management and monitoring, reporting and insights, risk culture and data technology. Sustainability reporting vs financial reporting Sustainability reporting is the disclosure and communication of environmental, social, and governance (ESG) goals—as well as a company’s progress towards them. The benefits of sustainability reporting include improved corporate reputation, building consumer confidence, increased innovation, and even improvement of risk management. While Financial reporting is the accounting process for communicating financial information. All companies do some form of external (used by company outsiders, like regulatory agencies, or investors) or internal (used by a company's senior management team to inform decision-making) financial reporting — or both. External financial reports must conform to accounting and reporting standards, and internal reports should do so too. Human Rights The three pillars of the UN Guiding Principles for human rights are: protect a duty of the state, respect responsibility of the corporate, remedy effective access given to victims. Businesses shall respect human rights which it means they should avoid violating them and manage adverse impacts they cause (identify, mitigate and remedy). Each defines concrete, actionable steps for governments and companies to meet their respective duties and responsibilities to prevent human rights abuses in company operations and provide remedies if such abuses take place. Human rights process starts with materiality analysis and then proceeds with human rights management system which expects business to commit at the highest corporate level. Then the first action is to put in place a public commitment and to embed it into operating policies and procedures. The commitment is based on main international reference standards (hard law and soft law), with soft law ones also setting the rules for implementation and monitoring. The second action is setting up a diligence process. The third action relates to ensuring access to remedy. We inform our internal and external stakeholders through several channels as evident in disclosure to the market, communication activities and training, as well as through the main ESG ratings and indices. We share such positioning with the most relevant international networks contributing to support and engagement in the human rights field while bringing international knowledge inside the company. Besides managing risks and impacts, respecting human rights is also creating the conditions for positive outcome. Stakeholders Stakeholders are individuals or groups who have an interest, involvement, or influence in a particular organization, project, or initiative. Stakeholders have varying levels of impact and are affected by the decisions and actions of the entity they are associated with. Involving stakeholders in decision- making can lead to a greater understanding of the goals to be achieved, better risk management, and the creation of stronger and more sustainable relationships. organization interacts with stakeholders to identify their concerns, assess their needs, and consider their views in decision making.The stakeholder engagement process may include activities such as interviews, meetings, working groups, surveys, public forums and other consultation tools. The goal is to listen to the concerns and needs of stakeholders, share information about the activities of the organization and work together to find solutions that meet the needs of all stakeholders. In the context of sustainability, the stakeholder engagement process is particularly important, as stakeholders are often the most affected by the organization’s activities and can have a great influence on its reputation and future activities. Involving stakeholders in defining strategy and action plans can help organizations create long-term value for all stakeholders, not just for the organization’s executives. AA1000SES takes care of stakeholder through commitment and integration, purpose, scope and stakeholders, stakeholder engagement process and improve performance and processes according to the outcome. (See pag. 2-3). Investors The PRI is the world’s leading proponent of responsible investment. The PRI is truly independent. It encourages investors to use responsible investment to enhance returns and better manage risks but does not operate for its own profit; it engages with global policymakers but is not associated with any government; it is supported by, but not part of, the United Nations. 6 Principles of PRI: incorporate ESG issues into investment analysis and decision-making process, incorporate ESG issues into ownership policies and practices, seek appropriate disclosure on ESG issues by the entities in which we invest, promote acceptance and implementation of the principles, work together to enhance effectiveness of these, report progress towards implementation. MSCI ESG Ratings are designed to help investors to understand ESG risks and opportunities and integrate these factors into their portfolio construction and management process. Investors refers to both survey respondents and interviewees unless specifically noted. The investors surveyed and interviewed represent a variety of investor types including asset managers, retail, pension funds, hedge funds, endowments insurance and investment advisory. KPIs and KRIs KPIs provide data about the performance of the organization. Tracking the sales numbers is a good example of a KPI. KRIs provide data about risk (track internal performance of the organization). They do not necessarily correlate with organizational performance (track internal and external risks affecting the organization). Materiality in IR Integrated Reporting requires that organizations think beyond financial reporting boundaries to identify risks, opportunities and outcomes that influence them on creating value. An integrated report should explain the factors that affect the organization's ability to create value over time. Focusing on core matters encourages meaningful and manageable reports that support decisions. Sustainability definitions ROBECOSAM Sustainability is a company’s capacity to prosper in a competitive and changing global business environment by anticipating and managing current and future economic, environmental and social opportunities and risks and focusing on quality, innovation and productivity to create competitive advantage and long-term value. According to AA1000 sustainability is the capability of an organization (or society) to continue its activities indefinitely, having taken due account of their impact on natural, social and human capital. According to ISO 26000 sustainability is a social responsibility involving impacts of actions and decisions made by a company on people and environment.