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_DTP0613941 Corporate brochure.

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How the leaders

become leaders
The differentiating aspects of
corporate responsibility performance
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How the leaders become leaders - the differentiating

aspects of CRI performance
Validation of participant responses Understanding materiality is one of the most critical aspects of a successful
corporate responsibility approach. Material issues are those that can influence the
to the CRI reveals basic building
decisions and actions of stakeholders, including not only shareholders, but other
blocks and differentiators of interested stakeholders such as employees, local communities in the area of
corporate responsibility company operations, various levels of government or interested non-government
performance. Our analysis shows organisations. Approaches to identifying material issues that fail to involve the full
that the leaders are stepping up to suite of stakeholders run the risk of failing to identify issues that can have a
significant impact on brand and reputation, and consequently, shareholder value.
the challenge in four key areas: Corporate responsibility approaches that do not clearly focus on material issues can
identifying their material risks and suffer from a lack of direction, result in inefficient targeting of company resources
opportunities in the areas of and have limited impact in improving environmental and social outcomes.
community, environment, Engaging with stakeholders goes hand in hand with understanding materiality. The
marketplace and workplace through simplest way to understand the issues that will influence the decisions and actions of
formal and integrated risk stakeholders is to ask them what they are. Invariably, companies that actively
engage in stakeholder dialogues and invest in building long term relationships with
management processes, engaging
stakeholders report the value of receiving unique perspectives on business activities
with stakeholders in an interactive and the consequent identification of business opportunities that may have otherwise
dialogue, transparently disclosing remained unidentified.
performance using structured and Once material issues are understood, there is often a flow-on effect to improved
consistent reporting methodologies reporting practices. A good understanding of material issues tends to lead to clear
and subjecting their systems and objectives being set in these areas, followed by the development of key performance
data to independent assessment by indicators and the setting of targets to drive action. When this framework operates
well, and when there is top level commitment to transparency, the company has a
third parties.
clear structure for reporting outcomes.

Finally, as companies realise the bottom-line value being gained from their
corporate responsibility approach, they are increasingly seeking independent
assessments of their systems to identify areas for improvement. In addition, they are
also realising the value of third party assurance in providing stakeholders confidence
in reported information that is of importance to them.

Used to its full potential, the CRI provides companies with a robust framework for
advancing their corporate responsibility approach. It identifies the key pieces of the
puzzle that, when in place, will result in a culture where corporate responsibility is
integrated within business practice. Companies that are willing to make this long
term investment in building a robust approach to corporate responsibility are likely
to achieve the benefits being reported by the leaders, such as improved brand and
reputation value (and consequent shareholder value), attraction and retention of staff
and improved access to capital.

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CRI Section Basic Building Blocks Differentiators

Strategy ■ Corporate responsibility related ■ Allocation of specific CR responsibilities at top level
values, principles and policies. (Senior Executive/Board).
■ Transparent public reporting of CR ■ Integration of CR issues into overall business risk
values, principles and policies. management processes and clear identification of material
■ Top level (Senior Executive/Board) CR risks.
commitment to CR within the ■ Regular reporting of CR issues at the Board/Senior
company. Executive level, focused on reporting against consistent
KPIs in material risk areas.

Integration ■ Clearly defined procedures and ■ Stakeholder (including staff) opinions sought on whether the
behaviours in relation to business company lives up to its CR values and commitments.
conduct that are communicated and ■ Formal mechanisms in place to consider CR issues are
upheld through active monitoring. incorporated in strategic business decisions.
■ Direct responsibilities allocated for ■ CR issues incorporated in performance appraisals of senior
CR issues, with inclusion of CR management and executive and remuneration or bonuses
issues in performance appraisals and linked to outcomes.
links to remuneration. ■ Regular and active stakeholder engagement to obtain input
■ Training and briefing sessions held and feedback on strategic direction.
on CR issues, at all levels within the ■ Transparent public reporting that:
- incorporates the methods used to identify material
■ Public reporting based on risks;
descriptive summaries of key issues. - identifies the key stakeholder groups, the engagement
conducted with these groups and the outcomes of this
- identifies performance against set targets; and
- includes an independent assurance statement that covers
completeness, materiality and responsiveness.

Management ■ Strategies in place for managing key ■ Strategies contain clear objectives, management and
community, environment, performance targets for each key risk.
workplace and marketplace risks. ■ Public disclosure of strategies and targets.
■ Formal OH&S and environmental ■ Third party independent assessment of effectiveness of
management systems in place. strategy implementation.
■ Environmental and social ■ Dialogue-style engagement with key stakeholders informs
stewardship of core products and appropriate management practices.
services. ■ Formal supplier selection processes that incorporate
■ Formal codes in place regarding consideration of environmental or social performance.
responsible selling and marketing ■ Engagement programs with suppliers focused on improving
practices. environmental and social impacts down the supply chain.

Performance ■ Centrally aggregated data for key ■ Well established KPIs that appropriately reflect performance
impact areas. over time (e.g. efficiency, rather than absolute indicators).
■ Data based on mostly verifiable ■ Publicly reported performance targets.
information. ■ Independent verification of data.
■ Demonstrated management ■ Demonstrated performance improvement across a range of
improvement across a range of environmental and social indicators.
environmental and social indicators.

Assurance ■ Established systems for collating ■ Independent assurance processes that assess the effectiveness
and reporting data, with internal of data collation systems.
sign offs. ■ Willingness to fully disclose survey responses on request.
■ Willingness to disclose high level
feedback report in the public

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Adelaide Melbourne
91 King William Street 8 Exhibition Street
Adelaide SA 5000 Melbourne VIC 3000
Tel: 08 8233 7111 Tel: 03 9288 8000
Fax: 08 8213 1775 Fax: 03 8650 7777

Brisbane Perth
1 Eagle Street 11 Mounts Bay Road
Brisbane QLD 4000 Perth WA 6000
Tel: 07 3011 3333 Tel: 08 9429 2222
Fax: 07 3011 3100 Fax: 08 9429 2436

Canberra Sydney
51 Allara Street 680 George Street
Canberra ACT 2600 Sydney NSW 2000
Tel: 02 6267 3888 Tel: 02 9248 5555
Fax: 02 6246 1500 Fax: 02 9248 5959

Gold Coast
Level 5,
12-14 Marine Parade
Southport QLD 4215
Tel: 07 5571 3000
Fax: 07 5571 3033

This article was prepared by:

Kirsty Bailey, Manager, CRI Validation, Ernst & Young
Liza Maimone, Environment and Sustainability Services National Practice Leader, Ernst & Young

For Further Information please contact:

Liza Maimone
Tel: +61 3 8650 7348
Fax: +61 3 9655 2970
Email: liza.maimone@au.ey.com

ERNST & YOUNG www.ey.com/au

© Ernst & Young Australia 2006.

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