Accountability specialist : Charles Duchesne
Obtaining certification in sustainable development and corporate social responsibility (CSR) strategy and management is an increasingly common practice for companies wishing to differentiate themselves from the competition, lend credibility to their eco-responsible business practices, or attract talent committed to management's responsible management philosophy.
This quest for recognition is growing worldwide, and Canada is no exception. Of the 250 Canadian companies that make up the S&P/TSX stock market index, 71% included ESG (Environment, Social, Governance) elements in their 2019 annual reports (Millani, 2021). Faced with this expansion, the number of reference frameworks (standards, certifications, labels) for sustainable development management is multiplying, making it difficult for managers to identify those that correspond to their needs, context and expectations. Many questions are raised by management teams when faced with the various existing standards:
Faced with these many questions, COESIO is publishing two articles over the next two weeks, offering a summary analysis of the various corporate sustainability management standards. This analysis will be divided into two parts: (1) Reporting standards; and (2) Certification in sustainable development management. The objective is to situate the history of the standard, its scope, its credibility, and the type of organization targeted. All of this will help guide managers in their thinking.
The aim of these standards is to provide a framework for extra-financial reporting by companies, which consists of giving a public account - often through a sustainability report - of their contributions, positive or negative, to society. It should be noted that, although these standards are aimed at listed companies (stock market index: S&P/TSX Composite Index in Canada), the guidelines and methodologies are a source of inspiration for many small and medium-sized private companies (SMEs).
UN Sustainable Development Goals
The Sustainable Development Goals (SDGs) are a global call to action to address the major economic, social, and environmental challenges facing our planet and its people. The SDGs define global priorities and aspirations for 2030 and aim to achieve a sustainable, resilient, and inclusive society.
The SDGs came into being at the end of a consensus process following the 2015 Conference of the Parties in Paris (COP21). They are the result of the collective reflection of various actors in society and over 1,500 organizations around the world. Their contributions have made it possible to establish 17 ambitious and engaging targets to be achieved by 2030.
In this way, organizations can use the SDGs as a general framework for developing, driving, communicating and reporting on their strategies, objectives and activities.
While the SDGs were launched five years ago, the next decade will be dedicated to achieving the various goals and targets set for 2030 (UN, 2019 - Decade of Action). Internationally, the SDGs are gradually becoming a recognized sustainable development steering framework for the private sector.
In Canada, 46% of the 250 organizations on the TSX composite (stock market index) use the SDGs in their reporting exercise. In Quebec, in 2018, 25% of organizations listed on the TSX composite mentioned the SDGs in their business strategy (BCE, Bombardier, CN, Power Corporation, Power Financial, Semafo, SNC Lavalin, WSP, and others) (Millani, 2021; PWC, 2019).
Global Reporting Initiative (GRI)
TheGlobal Reporting Initiative(GRI) is an independent international organization that helps companies and governments around the world understand and communicate their impact on critical sustainability issues such as climate change, human rights, governance, and social well-being. This enables concrete action to be taken to create social, environmental, and economic benefits for all.
The GRI Sustainability Reporting Standards(GRI Standards) are the most widely adopted global standards for sustainability reporting. They are designed to improve the comparability and quality of information on sustainable development issues worldwide, thus enabling greater organizational transparency and accountability.
The GRI standards are structured as a set of interrelated, modular standards, differentiating between general and specific elements. The general elements are integrated into three series of so-called universal standards, which apply to every organization preparing a sustainability report. These three universal series are supplemented by three so-called specific series, covering economic, environmental, and social issues. Depending on the specific issues identified by the organization, it chooses the specific GRI standards it wishes to include in its report.
The majority of companies aligning their sustainability reporting with GRI standards are international in scope. With 64% of S&P/TSX companies reporting according to GRI, this standard remains the most widely used in Canada (Millani, 2021). In Quebec, these include Hydro-Québec, Alcoa and Fonds FTQ.
Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) is a non-profit organization founded in 2011 to develop sustainability accounting standards.
Like the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB), which respectively established International Financial Reporting Standards and Generally Accepted Accounting Principles (GAAP), currently used in financial statements, SASB's stated mission is "to establish industry-specific disclosure standards on ESG - environmental, social and governance - topics that facilitate communication between companies and investors on material, decision-useful financial information. This information should be relevant, reliable, and comparable between companies at a global level" (SASB,2020).
SASB has created specific standards for 77 sectors in 11 industries. For example, automotive industry topics and disclosure measures include: (1) Material efficiency and recycling; (2) Product safety; (3) Labor relations; (4) Fuel economy and use-phase emissions; and (5) Materials sourcing.
Each theme includes a description of how to improve sustainability performance, as well as the specific measures a company must follow and report on.
In Canada, 51% of S&P/TSX companies that publish a sustainability report cite SASB as a guideline (Millani, 2021). These include Cascades, CN, and COGECO Communications, among others.
The UN SDGs, GRI, and SASB standards are the three most widely recognized extra-financial reporting standards used by companies committed to sustainable development and CSR. Although these standards are now mainly the preserve of multinationals, they provide an inspiring framework for small and medium-sized companies, through which COESIO can guide you.
In a second part to be published next week, COESIO will introduce you to the main sustainability certifications that support companies in adopting sound management practices.
While companies are increasingly recognizing the role they have to play in addressing the major social and environmental challenges facing our societies, it can be difficult to navigate the myriad of standards and benchmarks governing sustainable development and responsibility practices. COESIO introduces you to the major sustainability certifications, to help you go further in adopting management practices compatible with a desirable healthy, resilient, and inclusive future, lend credibility to your corporate responsibility initiatives, and consolidate your reputation as a responsible company.
Sustainability management certifications recognize efforts to implement sound internal management practices that address the economic, social, environmental, and governance dimensions of companies. These certifications lend credibility to an organization's initiatives while supporting the implementation of management and continuous improvement systems. These certifications are often deployed in small and medium-sized private companies (SMEs) which, unlike public companies, are not subject to extra-financial reporting constraints.
B Corp
In 2006, the American organization B Lab founded the B Corp certification program, now recognized by organizations and the general public alike. Its vision defends the integration of an inclusive, equitable, and regenerative economy for the well-being of communities and the planet.
This community brings together leaders who are redefining business success by merging social impact and profitability. B Corps are legally obliged to consider the impact of their decisions on their stakeholders. They meet stringent requirements in terms of (1) Social and environmental performance, (2) Transparency, and (3) Accountability.
B Corp is a certification that assesses a company's overall performance by looking at all its practices.
B Lab's online tool, the B Impact Assessment, is an iterative self-assessment questionnaire based on five themes: employees, customers, community, governance and environment. This method, adapted to a company's context (industry, size, etc.), enables it to assess its social and environmental performance according to its own specific conditions and challenges.
B Lab ensures a rigorous verification process to validate the information disclosed. Companies that submit to the exercise are audited by an independent third party.
More than 3,600 companies worldwide from over a hundred different industries are proudly B Corp certified. In Quebec, some forty companies are certified, including Danone Canada, Kotmo (design and manufacture of responsible promotional objects), Magnus (Boucherville-based manufacturer), and Optel Group (Quebec City-based manufacturer).
ECOVADIS
EcoVadis offers a comprehensive assessment service for corporate social responsibility (CSR), via a global digital platform.
EcoVadis ratings cover a broad spectrum of non-financial management systems, including environmental, social and human rights, ethical and responsible purchasing impacts. Each company is assessed on key issues according to its size, location and sector of activity.
Evidence-based assessments are refined in clear scorecards, with scores between zero and one hundred (0 and 100) and medals (bronze, silver, gold) where appropriate.
Leading multinationals use EcoVadis to promote sustainability in global supply chains, encouraging their business partners to go beyond mere compliance. Evaluated companies can compare their score with industry benchmarks. Combining improvement points with the results of a scorecard leads to a race towards excellence, in which all business sectors compete to achieve global best practice.
Purchasing teams easily integrate EcoVadis scorecards into their day-to-day business practices, such as supplier registration, compliance, procurement and supplier performance and relationship management. They drive their organization to make more responsible purchasing decisions, while positively motivating business partners who respect their sustainability practices.
To date, EcoVadis has evaluated over 45,000 business partners worldwide. Companies using ECOVADIS in Canada include Cascades, Telus, CHEP Canada (manufacturing) and Rico (IT services).
ECOresponsibleTM
The ÉCORESPONSABLETM certification, held by the Conseil des industries durables (CID) du Québec and co-developed by COESIO, the ECOCERT group and other players in the field, is designed to recognize any type of organization that favourably masters the challenges of sustainable development management. Through this certification, based on the continuous improvement process, the organization acquires a better understanding of the concept, integrates the concerns and interests of its stakeholders into its thinking, sets targets for progress, implements concrete actions, aims to achieve precise objectives, and uses operational mechanisms to measure and report on its progress.
The certification establishes four levels of progression designed to equip organizations to navigate through sustainable development:
Level 1 - COMMITMENT. Preparing for change: recognizing the organization's commitment to implementing a culture of continuous improvement aimed at sustainable development.
Level 2 - PERFORMANCE. Implement actions and monitoring mechanisms: measure and recognize the consolidation of management systems and dialogue mechanisms needed to embed a culture of continuous improvement in sustainable development.
Level 3 - OPTIMUM. Optimizing the value chain: recognizing the organization's contribution to improving its sustainability performance and exerting influence through its actions and activities.
Level 4 - ELITE. Maximize overall sustainable development performance: recognize the implementation of a culture of continuous improvement in sustainable development.
Certification is audited by an independent third party - the ECOCERT Group - to verify that the certification criteria for each level have been met. These criteria are available in the certification specifications.
This certification is international in scope, although it is currently only available in Quebec. Among the 175+ certified companies are Station Mont-Tremblant, Granby Zoo, and LeProhon (manufacturer).
More than ever before, the corporate ecosystem is sensitive to the social and environmental impacts of management practices and all organizational activities. In their desire to act in favor of future generations, consolidate their activities, and anticipate regulatory changes, organizations are developing and transforming their business models to incorporate the notion of positive impacts.
These transformations are framed by a growing number of standards, both for extra-financial reporting exercises and for the recognition of sound internal management practices through certification.
Finding your way through this plethora of offerings can be complex. That's why our team of experts works closely with managers and their teams to guide them in selecting the repositories best suited to their context.
Please do not hesitate to contact us to support you in your customized strategic approach to sustainable development, and to help you seize the opportunities offered by the various existing standards.
Written by :
Marius André, Operations Director and Partner
Adèle Renon, Consultant
