guidelines on environmental management and reporting for the financial services sector - forge

7/31/2019 Guidelines on environmental management and reporting for the financial services sector - FORGE

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Guidelines on Environmental Management and Reporting for the Financial Services Sector Page 1

Guidelines on EnvironmentalManagement and Reportingfor the Financial Services Sector

A practical toolkit

Environmental management and reporting involves identifying,understanding, controlling and communicating environmentalimpacts, risks and opportunities.These Guidelines on Environmental Management and Reporting provide an implem-entation toolkit that seeks to enable wider and more consistent engagement inenvironmental management and reporting across the sector.

Building upon the experience of many financial services organisations, the Guidelineshighlight why environmental management and reporting is an important part of corporate governance.

The Guidelines identify the business activities that create key environmental issues forthe sector. It gives step-by-step guidance for developing management processes suchthat environmental risk can be avoided, governance standards met and businessopportunity realised.

These Guidelines are the first step and they will evolve as market and legislativedemands develop to address new challenges. It may be appropriate, in time, to expandthe Guidelines to include social and ethical governance and sustainability.

Developed by the FORGE Group

These Guidelines have been prepared by the FORGE Group a consortium of some of the UKs leading financial service organisations. The consortium consists of representatives from The Abbey National Bank, Barclays, CGNU, Lloyds TSB Bank,Prudential, The Royal Bank of Scotland and Royal & Sun Alliance. Development of the Guidelines was led by CGNU and consulting support was provided byPricewaterhouseCoopers. The Guidelines also incorporate input from a wider selectionof financial and non-financial sector organisations that participated in a stakeholderdialogue process. The UK Department of Trade and Industry sponsored development of the guidance with support from the Department of the Environment, Transport and theRegions. The Association of British Insurers (ABI) support the development of theseGuidelines and British Bankers Association (BBA) recognise the Guidelines as animportant step.


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Part 1

The Financial Services Sectorand the Environment

Why is environmental management and reporting important for the sectorand how it can impact bottom line performance and licence to operate?

1.1 What is driving environmental management and reporting?

1.2 What are the benefits of environmental management andreporting?

1.3 What are the environmental impacts of the financialservices sector?

1.4 How can these environmental impacts be managed andreported?

1.5 About these Guidelines


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Part 1The Financial Services Sectorand the Environment

1.1 What is driving environmental management and reporting?

The financial services sector is under increasing scrutiny both internal and external todemonstrate commitment to environmental management and reporting . External scrutiny increasingly publicised through the issue of performance indices and rankings focuses onmeasuring and ranking performance against competitors. In some instances these indices areproduced remotely with the target company having no opportunity to contribute to or review

the results before they are launched into the public domain:

The scrutiny of internal and external stakeholders is twofold: performance in terms of direct(operational) impacts, and indirect (core business) impacts resulting from the managementand delivery of financial sector products and services. This scrutiny is no longer from justenvironmental activists, increasingly it includes:

All of these stakeholder groups have the ability to influence a business short-term success,operational continuity and long-term future.

Whilst risk drives action, so can opportunity. For this sector, substant ial achievements inenvironmental performance can occur as a direct result of taking market opportunities thatincrease income; for example, new products and new product delivery and service channels.

Whilst engaging in environmental management and reporting remains voluntary for the sectordue to limited directly relevant environmental legislation, it is increasingly achieving priorityat the highest management levels. Key influences include:

Turnbull Report guidelines for achieving internal controls to manage all business risksCompany Law Review analysing Directors duties and corporate responsibilities to

stakeholdersPensions Act requiring trustees to state their position on environment and social

issues in investments

In addition, the UK Government has stated its intention to "name and shame" those who donot make environmenta l performance information publicly available. Various governmentsare introducing environmental criteria as a mandatory component of documents of tender suchthat, to be eligible to participate, demonstrable environmental management processes needto be in place; and there are emerging requirements of individual Socially ResponsibleInvestment (SRI) codes and ethical investment policies.


Dow Jones Sustainability Group IndexBusiness in the Environment Index

PIRC Survey SERM rating

National governmentsInstitutional investors ShareholdersCustomers Suppliers Employees


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Figure 1: Summary of key drivers for environmental management and reporting

1.2 What are the benefits of environmental management and reporting?

Demonstrating a commitment to environmental issues is increasingly becoming a necessity. Itis no longer a question of whether environmental management and reporting will becomeessential it has. It is now a question of when, if unmanaged, it becomes critical to businesscontinuity.

Several within the sector have recognised the implications how negative risk must beavoided and reduction in environmental impact achieved and commenced environmentalmanagement and environmental reporting programmes. Certain global financial organisations,some with a diversity of financial services activities, are implementing global managementsystems and are committed to producing verified public environmental reports. All of theseorganisations have recognised the benefits and opportunities that environmental managementand reporting enables them to achieve:

1.3 What are the environmental impacts of the financial services sector?I Direct impacts from internal operational activities. Significant direct environmental

impacts are primarily associated with internal operational activities. These includeheating and lighting in buildings, transport of employees and materials, waste in all itsforms, purchasing of goods and services and use of resources such as energy, paper andwater. Good management of these activities will assist in achieving performanceimprovements, improve operational efficiency and create potential for improvement in thecost : income ratio.

I Indirectly, as a result of commercial activities. The environmental issues associated withcompany policies and practices for lending, investment, insurance and other businessactivities may create financial, legal, operational or reputational risk. These indirect

impacts are more difficult to manage, as frequently the sector can only exert influencerather than control. However, they are becoming a priority due to (a) the potentialseverity and scale of impact on business performance including reputational risk and (b)the business opportunity that can be created through positive attention to the emergingconcerns of institutional investors and customers.


Improve market share throughnew/enhanced products/services

Provide support to wider businessstrategy, opportunity for newstrategic initiatives, and improvedbrand positioning

Enhance value toshareholders/stakeholders

Improve risk management andinternal controls

Demonstrate tangible response tostakeholders who want to seeevidence of corporateenvironmental commitment

Respond to a real, and growing,risk to (and opportunity for)business commitment

Improve operational efficiency

Reduce operational costs contributing to improvedcost : income ratio

Respond to increasing level of external monitoring andbenchmarking of performance byexternal organisations

Provide transparency in performanceto institutional investors,shareholders and other stakeholders

Establish dialogue with stakeholders

Achieve self-assessment of corporategovernance processes, in respectof environmental risks

Drivers to implement environmentalmanagement and reporting

Strategy Management

ReportingOperational performance

Improves the cost : income ratioProtects incomeAttracts new income streamsImproves brand positioning

Achieves investor confidenceCommunicates facts to global stakeholders


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1.4 How can these environmental impacts be managed and reported?

A management and reporting system must include:

I Determination of the environmental impacts including prioritisation of impact areas,identifying management systems, achieving data collection, analysing performance and

setting objectives and targets;

I Board level commitment and input to the environmental programme to ensure effectiveuptake and implementation of Environmental Policy throughout the organisation;

I Robust procedures and systems which are integrated into business managementprocesses, rather than operated as a "virtual system" which is detached from the widerbusiness decision making processes;

I Flexibility in approach which allows each area of the business to implement policy in amanner that will withstand change within the business and evolve and develop in line withmarket demands and expectations;

I Training and awareness raising, to gain understanding and buy-in from staff at all levelsand in all areas of the organisation, also creating the opportunity to inform stakeholdersand raise stakeholder understanding;

I Regular monitoring and reporting of key performance areas in order to advise the Board(and stakeholders) where policies and procedures are working well and whereimprovements are required; and

I On-going dialogue and engagement with stakeholders inside and outside theorganisation to continue to raise awareness levels and achieve improved understanding,confirm that the issues of concern (actual and perceived) are being addressed and that theresponse reflects current knowledge and good practice.

The necessary scale and complexity of environmental management and reporting will bespecific to every organisation, dependent on the nature and scope of the services provided andinternal organisational structures and processes.

The Guidelines identify the key stages of development of a management system and discussindividual tasks that need to be completed within each stage. They contain tips on how toachieve these efficiently and effectively (Part 2). Full use of existing management processesis encouraged.

These Guidelines highlight some of the main business activities that create environmentalimpacts and suggest environmental management and reporting plans for each (Part 3).Through this, the Guidelines start to identify where environmental factors could encouragebusiness practice and product design to deliver enhancement in environmental performance.

Figure 2: Integration of environment into core business processes


Integrate environment into businessdecision making to demonstrate thedirect and material connections withbusiness performance

Differentiate products/services usingenvironmental criteria

Proactively manage environmental risks and opportunities to supportshareholder value

Include environment within existingrisk management policies and processes.

Establish key environmental performance indicators and targets

Integrate environmental objectives intostaff performance criteria and training

Expand internal audit and controls tocover environmental managementsystems

Incorporate environment intoprocurement policies and supplierreviews

Incorporate environmental factorsinto transport and travel management

Include environmental considerationsin property design and facilitiesmanagement programmes

Include environment in investorrelations programmes

Include environment withincommunity programmes

Undertake stakeholder communicationand encourage feedback onperformance

Integrated environmentalmanagement and reporting

Strategy Management

ReportingOperational performance


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1.5 About these Guidelines

This toolkit has been developed to help to achieve a higher level of engagement across thesector and encourage consistency in approach. When implemented, the tools contained withinthese Guidelines are designed to provide a foundation upon which the organisation will beable to build in order to meet related future environmental management and reporting needs.Prepared by some of the leading UK based financial services organisations, the Guidelines buildupon the lessons already learned within the sector and have been designed specifically torecognise the difficulties and issues for the sector in engaging and delivering environmentalgovernance. These issues include, in particular:

I The organisational structures and cultures of financial services organisations;

I The significance of indirect impacts over which there is limited potential to achieve directmanagement control;

I The rapid pace of change currently taking place throughout the sector, its global reach andimpact;

I The difficulty in balancing the often long-term nature of environmental risks andopportunities with the short-term focus of the financial markets; and

I The culture and level of awareness of environmental issues within the sector which, todate, have not driven action.

The Guidelines have been constructed as a toolkit, to enable users to select individual toolsthat are of use to their own circumstances or to enable adoption of the full toolkit to providea complete system. It contains a series of tools for those:

I With Board level responsibility, or directly answerable to the Board, for developing andoverseeing Environment Policy, objectives and targets, and Group level stakeholderinteraction; and

I With Group or business unit responsibility for day-to-day policy implementation andtargets achievement and contributing to Group performance reporting.

These Guidelines will also help to achieve wider understanding of the sector s approach toenvironmental management and reporting among other interested parties and stakeholdergroups.

These Guidelines have been deliberately restricted to address environmental management andreporting issues. It is recognised that some emerging issues, for example social and ethicalgovernance and responding to the sustainable development debate are very pertinent to thesector. As these issues develop, management processes will need to evolve to take them intoaccount.

These Guidelines are the first step to encourage all those in the sector to engage inenvironmental management and reporting. Subsequent revisions of these Guidelines areanticipated which will address more advanced environmental management and reportingissues and the wider governance issues created by the global move towards achieving a moresustainable future.



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Part 2

Toolkit for developing a managementand reporting system

2.1 Planning for system implementationThe early decisions before developing a programme; making fundamentaldecisions on scope, timeframe and approach.

2.2 Phasing system implementation and development Deciding where to start what to consider when determining programmedevelopment and roll-out.

2.3 Implementation toolkitGuidelines for the individual/team responsible for the development of acomplete management system. Presented as individual stages, with Tips

for implementation, to enable the system to be built right first time in a planned and structured manner.

The following stages are discussed:

1. Develop the evidence2. Obtain Board approval

3. Complete an Environmental Review 4. Draft the Group Environment Policy and Objectives5. Design the environmental management system (EMS)6. Implement and operate the EMS 7. Audit the EMS 8. Report to the Board9. Prepare Environmental Reports (internal and external)


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Part 2Toolkit for developing a Managementand Reporting systemThis section of the toolkit is targeted at the Group function which has the company-wideresponsibility for the design and management of an environmental programme. It gives adviceon getting started and obtaining Board commitment and then provides a stage-by-stageapproach to implementing the programme.

2.1 Planning for system implementation

The objective is to identify the strategic and significant environmental impacts of theorganisation and establish an overall environmental management framework with supportingmanagement processes. This framework should not be developed in isolation. Whereverpossible, at all levels through the business, the framework and the supporting processes shouldbe integrated into existing management structures and processes.

In order to establish an environmental management system it is necessary to have:

1. An understanding of the environmental impacts of the organisation;

2. Board commitment to policy and stated objectives;

3. Planning and appropriate resourcing;

4. Definition of the environmental aims of the organisation; and

5. An understanding of the concerns of key stakeholders.

Developing and implementing a full environmental management and reporting system isusually achieved in a series of stages to build a management process and associated feedbackand reporting cycles. These stages are defined in the toolkit presented in this section.

The key components of a management system should be common to all systems such that theoutputs are broadly comparable. These are defined in this section and, as presented, accordbroadly with international guidelines on environmental management systems. The specificdetailed structure of the system will be unique to each organisation taking into account, forexample:

I

Existing organisational structures;I Existing organisational priorities and commitments;I Company culture;I Product mix; andI Customer base.

2.2 Phasing system implementation and development

Most organisations develop a plan for the roll-out of the management programme such that,over a defined period of time, the entire business is incorporated within the system.Determining an appropriate programme requires consideration of:

I Business activities;I Environmental impacts; andI Environmental opportunities.

2.2.1 Business activities

In the first phase, most organisations select one business unit or region. Core components of the system are defined, developed and put in place before implementation across otherunits/regions. The first phase should include a part of the business which:

(a) Has the most significant environmental impacts;

(b) Represents a significant proportion of the business; and

(c) Is supportive of the development of the management and reporting programme.

See Part 3 for description of the environmental issues relating to some of the main businessactivities.



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2.2.2 Environmental impacts

Management systems do not have to address all environmental impacts at once it isimportant that priority is given to the significant impacts. The significance of impacts andthe subsequent prioritisation will be determined by each organisation based on theidentification and rating of the environmental impacts of the organisation/business (discussedfurther in Stages 1 and 3). Some prioritisation criteria are presented in Stage 3 and include:

I Are there applicable legal and governance requirements?I Have the issues been subject to scrutiny and questions from investors?I What level of risk (financial, legal or reputational) does this impact present to the

business?I What is the scale and severity of the associated environmental impact?

The timeframe for implementation can range from months to years, and is at the discretion of the organisation. Factors that need to be taken into account when considering the timeframefor implementation include:

I The importance (actual and perceived) of environmental issues to the organisation;I Resources available (primarily people and capital);I Pressures, in particular from shareholders and other external parties;I Competitor developments;I Specific needs (for example, terms of reference requirements for certain investments);I Legal and international environmental commitments (e.g. treaties);I Industry benchmarks and codes of practice; andI The current status of environmental management processes.

Achieving a successful environmental management and reporting system is a goal in itself. Formost organisations, it is a first step towards achieving a more comprehensive programme that,over time, could form the basis for the management of emerging governance issues, forexample social and ethical issues and sustainable development.

These Guidelines have been geared to provide information for those organisations starting anenvironmental management and reporting programme. For those organisations alreadyprogressing with programme implementation they may provide confirmation of approach andgive some insight into progress made.

2.3 Implementation stages

The first and most fundamental step is to collect hard, persuasive evidence and determine acorresponding business case and programme of action for presentation to the Board. Thesubsequent critical step is to gain Board commitment to develop an environmentalmanagement and reporting system including, in particular, an Environmental Policy andobjectives. Experience has shown that achieving buy-in from the Board can be a challengingand time-consuming task, frequently taking many months and some reiterations.

From there, it is critical to develop the commitment of the business units to support andparticipate in system development and implementation. It is vital to establish communicationand feedback mechanisms to inform all, including external stakeholders, of progress andachievements.

As with other significant business issues, it is common practice to have a Board Director withresponsibility for the environment. In medium and large organisations, the Board Director willnormally require the support of a central environment management function (one or morepersons) with responsibility for the actual development and implementation of theenvironmental management and reporting system. A network of environmental champions ormanagers typically supports the central team across different business functions (see Stage 2of the implementation programme).

The nine stages of the programme are outlined in Figure 3. Remember that:

(a) Existing processes may already cover some stages. It is important, when developing thesystem components to determine whether these can deliver the required level of managementcontrol; and

(b) The environmental management processes should be integrated, wherever possible, intoexisting management structures and processes.



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Figure 3: Key stages in the development of an environmental management and reporting system


Stage 1: Develop the evidence

Stage 2: Obtain Board approval for environmental management and reporting strategy

Stage 3: Complete an environmental review to identify environmental issues and impacts(if considering external verification process needs to start at this stage)

Stage 4: Draft an Environment Policy and objectives

Stage 5: Design and develop the management system components

Stage 6: Implement and operate the management system

Stage 7: Audit the managementsystem

Stage 8: Achieve Board level reviewand agree the way forward

Stage 9a: Prepare environmental reports (internal)

Stage 9b: Prepare environmental reports (external)(external verification is advised)

Key: continuous improvementfeedback


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STAGE 1: DEVELOP THE EVIDENCETASKS

1.1 Gain familiarity with the issues pertinent to the sector andcompetitor activity in environmental management and reporting

1.2 Undertake a strategic review of the business to identify the keyenvironmental impacts, risks and opportunities to the business

Determine, at a strategic level, the nature and scale of theenvironmental impacts. Document the risks that are presented to thebusiness and potential opportunities for enhancing businessperformance.

The overview should:

Determine performance from a review of existing data;

Review scope of data collection systems and collect further essentialdata if required;

Determine scope of existing management processes (Group andbusinesses);

Collect/review stakeholder feedback on (a) the issues for the sectorand (b) the organisation s performance; and

Identify the environmental aspirations and commitments of theorganisation.

TIPS FOR IMPLEMENTATION

TIP: This will involve reviewing reports and information within the sector, emerging best practice guidelines andgovernment activities relevant to the sector, including position statements and legislation.

TIP: Call on competitors already practicing environmental management reporting, where appropriate.

TIP: The overview must recognise any gaps or deficiencies in the existing management processes.

TIP: There are various options for undertaking stakeholder dialogue. These include:

Review of existing, publicly available survey data;

Consultation (frequently via surveys) to gain information; or

Direct interface through joint meetings and discussion groups.

Typically, a representative sample of stakeholder groups is selected. External expertise is frequently soughtto assist with this process. Once started, the dialogue will need to continue at key stages in the process. Thelevel of detail and scope of dialogue develops as the system matures.

Do not raise expectations through dialogue with external stakeholders at this stage if it is uncertain whetherthe Board will approve further development of environmental management and reporting.

TIP: Clearly identify the criteria that will be used to determine the significance of the identified issues (see TIPSStage 3.4).


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STAGE 1: DEVELOP THE EVIDENCE

1.3 Evaluate the findings of the strategic review

The objective is to determine the sources of impact to inform decisionsconcerning the business need for a management and reporting systemand its required scope.

Develop an outline of the business need, to present to the Board sponsor.This will form the core of the business case (Stage 2.2), and shouldidentify:

Key objectives;

Risks and benefits;

Estimated resource need;

Outline implementation programme (stating key business units,functions and/or activities); and

Indicative timescale.

1.4 Identify and engage Board sponsor

Identify a sponsor on the Board.

The Environment Manager should present an outline of the business needfor environmental management and reporting to the Board sponsor toengage wider board commitment.

Where no Environment Manager has been identified, the Board sponsorwill need to identify a suitable candidate.

TASKS TIPS FOR IMPLEMENTATION

TIP: This review is probably the most critical stage in the management process as, at a strategic level, it forms thereasoning and justification to the Board for taking action and defining the type of action required.

TIP: In the experience of the sector, the Environment Manager needs commitment to the project, a wideunderstanding of the business (in particular, core business products and services) and some environmental knowledge and prior training. Consider whether this is a full or part- time role this will depend up on the sizeand management structure of the organisation, as well as the scope of the intended programme.

TIP: Commonly in the sector, sponsors have risk or facilities management responsibilities. However with indirectimpacts resulting from products and services becoming an important issue for management, it is essential thatthe sponsor has a sufficient level of understanding of core business products and services.


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STAGE 2: OBTAIN BOARD APPROVAL

2.1 Develop options for an environmental management system (EMS),using the findings of the strategic review and views of the Boardsponsor

Options may include:

Integrate as an element in key business management processes;

Establish management processes in key parts of the business; or

Establish a full, dedicated management system.

Determine preferred option and provide justification.


TIP: In determining options consider: impacts on the business during implementation; ability to deliver short andlong term goals; corporate aspirations in relation to competitor positioning and external stakeholder andregulatory pressures. In particular, the following issues should be considered:

Key environmental issues requiring management attention;

Key points of management control: the degree of central control/business unit autonomy;

Existing environmental controls: optimum utilisation of existing systems/additional systems;

Existing data collection and management systems;

Policy structure: single Group policy/local Group and Business Unit policies;

Environmental management structure: current and future (by business unit, region or function);

Internal/external environmental reporting needs (including external verification if deemed appropriate): Groupand/or Business Unit reports;

Integration with other management systems: minimise cost/maximise benefit;

Resource demand: personnel needs at Group and Business Unit levels during implementation and operation;

Priorities: strategic and operational relating to brand and/or products;

Applicable deadlines: existing commitments (e.g. reporting commitments), legal deadlines;

Key values and principles; and

Key stakeholder concerns and issues both for the sector as a whole and specifically for the organisation.


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2.2 Prepare business case for environmental management and reportingstrategy

Consider developing draft alternative strategies for Board review.

2.3 Obtain business unit support and establish network of "champions"who will form the implementation team

The team should include:

Business unit personnel (see Part 3, for key business activities/units);

People from each geographic territory (as appropriate);

For direct impacts: staff from central support functions (in particularfacilities management, risk management, credit management);

For indirect impacts: staff from within the core business units;

Environmental specialists; and

External expertise (optional).


TIP: The business case needs to reflect the particular pressures and opportunities for the sector as a whole and, inturn, for the organisation, to reflect how and why environmental performance is becoming a key business issue.

Particularly, identify how managing environmental performance impacts overall business performance, isnecessary to meet corporate governance requirements and is required to maintain competitive position. Thebusiness case should identify the timeframe, in terms of getting started and achieving a functioning system.

TIP:Highlight the connections between business and the environment including, in particular: opportunities toimprove financial performance through environmental management, competitor initiatives and progress, thelevel of environmental risk exposure, relevant legal developments (e.g. corporate governance requirements)and new business opportunities.

TIP: Compile supporting information for inclusion in the business case including details of competitor activities,environmental risk exposure and business opportunity potential.

TIP: If external environmental reporting is intended, it needs to be considered from this stage forward in order thatreporting (and, if appropriate, verification) needs are addressed.

TIP: Obtaining the support of the business units may take some time and frequently involves a series of meetings,presentations, awareness raising and training sessions. It is critical to achieve their support and involvement toenable the resulting management system to be practical and pertinent to the business and to achieve the requiredlevel of ownership throughout the organisation.

TIP: External experts could be used to complement the in-house team to make sure that the organisation establishesownership of the system and to make sure that the system fits within existing organisational structures andcultures.


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2.4 Report to the Board and obtain commitment to preferred strategy

Present business case to the Board.

Debate the options and obtain Board agreement to the selected strategy.

Communicate commitment to all staff and key external interested parties(e.g. investors, customers and shareholders).


TIP: An internal note to all staff, signed by the Board sponsor, should be circulated to demonstrate the Board scommitment. It should identify a contact point and identify the process of development and implementation.

TIP: Once communication with staff has commenced, it must be continued regularly.

TIP: Communication with external stakeholders may be appropriate. Separate, formal communication may not benecessary; however, it is often useful to state the Board position in other communications (e.g. Annual Reportand Annual General Meeting (AGM)).


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STAGE 3: COMPLETE AN ENVIRONMENTAL REVIEW

3.1 Scope of the detailed environmental review

Build on the evidence gathered in Stage 1.

The objective of the review is to determine the detailed nature, scale andsource of impacts to provide information for the setting of policy,objectives and targets. It will also inform the process of scoping anddesigning the detail of the management system and preparing theprogramme for implementation.

Define the scope of the review in terms of:

Environmental impacts that will be covered; and

Coverage in terms of business units/regions/functions to be included.

3.2 Prepare for the environmental review

Define the review methodology, identify mechanisms to obtainbackground information, involve key stakeholders and develop a workand interview plan. Provide instruction to the review team.

Consider preparation of an environmental review questionnaire.


TIP: Key tasks within the review include:

Understand the extent and nature of current environmental management controls and their success, in particularthe comprehensiveness and structure of existing data collection systems;

Identify the environmental impacts over which the organisation will exert management influence (indirect or"core business" impacts), or control (direct or operational impacts);

Review the state of compliance with existing Environmental Policy and other environmental commitments (e.g.United Nations Environment Programme (UNEP) statements); and

Determine, in detail, those impacts/activities that will be the focus of the environmental managementprogramme.

TIP: The findings of the environmental review are the foundation for the management programme. The review needsto provide sufficient and accurate information such that the resulting programme is appropriate to the impactswhile remaining achievable. If the review misses key risks (either actual or perceived), the future Policy,objectives and targets may be deficient and the system potentially subject to criticism.

TIP: Document reasons for excluding business units, regions and/or certain functions from the review if these havean identified environmental impact that the organisation can influence or control. Wherever possible, justifyexclusions using business, as well as environmental, reasoning.

TIP: Consider using external consultants or internal specialists to support the team. Internal specialists will includepersonnel from central support functions and core business personnel involved with product design, developmentand delivery.

TIP: The review approach is most commonly influenced by the availability of personnel and the balance betweencentral control and business unit autonomy. The review process can range from travel of a central team tolocations to conduct reviews, through travel by appropriate in-country business unit or regional representatives,to local completion assisted by local internal or external experts as required. If reporting is intended, it can beuseful to involve the reporting and verification teams at this time.


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3.3 Gather environmental review information

Undertake interviews and if appropriate, complete review questionnaires(internal).

Consider undertaking dialogue with external stakeholders.

Collate relevant information from other internal sources and external publications (see Part 3 for further discussion of relevant issues) whichwill help to form a "performance benchmark" against which reviewfindings can be compared.


TIP: Identifying pertinent legal requirements and other external requirements is an important element of the reviewprocess. There are various ways in which this can be achieved, ranging from preparation of a specific register of environmental regulations and standards, through to use of published sources of information. It should berecognised that any publicly available information is not likely to be tailored to reflect the legislation relevantto the sector. (See Appendix 1, Reference Sheet 1 for further information on environmental legislation).

TIP: It can be helpful to develop the compliance report format (see TIP above) such that requirements are identifiedin a list/register format. This facilitates updating and revision of the requirements list in subsequent years.

TIP: Data collected to establish the performance benchmark would include, for example: public commitments (e.g.Policy and statements presented in Annual Reports); competitors environmental reports; external standards/guidance (e.g. UNEP publications, environmental reporting guidance); relevant legal documents;internal environmental performance data (e.g. energy use information); reports/articles prepared byenvironmental pressure groups relevant to financial organisations.

TIP: Achieving input from stakeholder dialogue into this process can add credibility to the output.


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3.4 Evaluate environmental review data

Based on the analysis, prioritise the relative significance of each impactin terms of the financial, legal or reputational risk or opportunity for theorganisation. (See Part 3 for a discussion of the risks/opportunities bybusiness activity). It is critical that this process is transparent, robustand able to be replicated.

Consider completing a cost : savings assessment, in particular, for areasof direct, operational impact.

Compare the findings of the review with the overview informationprovided in the business case (see Stages 1 and 2). Identify if there areparticular discrepancies or omissions from either review and resolve.

3.5 Report key findings of the review

Communicate findings to the Board as well as the businessunits/functions involved with completing the review, agree thosefindings that will be taken forward and, broadly, the time frame forprogramme implementation. (See Stages 1 & 2).


TIP: Evaluation is typically achieved using matrices rating impact against significance assessment criteria. Frequently,impacts are graded as high, medium or low significance. Significance criteria can include the following:

Legal requirements; Internal policy requirements; Organisational commitments (e.g UNEP statements); Contribution/scale of the source activity within the total business activity (and hence relative scale of the

impact); Degree of controls already in place or (in the case of indirect impacts) ability to influence and effect change; Potential to impact business performance; Severity/irreversibility of resulting damage; Level of stakeholder concern (internal and external); Position relative to or intentions to adopt/meet good practice; and Potential environmental opportunities for improvement.

TIP: To achieve cost : savings assessment, existing data on expenditure will need to be collated and assessed. Thisexercise is able to form the basis of future resource management and consumption/cost reduction plans.

TIP: The analysis needs to identify areas where management changes and improvements need to be made, considerhow issues can be addressed most effectively, and, in particular, identify at which level in the organisation theyneed to be addressed to achieve improvement. For example:

Procedural or strategic issues should be addressed by taking action at Group level; Issues associated with a particular product/service line may need to be addressed at the business unit level; and Specific operational impacts may need to be addressed at a location or national level, or by a function group

(e.g. facilities management).

TIP: Take into account the overall timescales developed and for those issues which will be addressed in later stagesof implementation, particularly the indirect impacts, provide justification for the decision. In many cases the

justification will include a "business" reason, for example: commercial sensitivity, commercial confidentiality,business impact and practice. (See Stage 6.2).


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STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

4.1 Define the scope of the Environmental Policy and Objectives

4.2 Plan for writing the Environmental Policy and Objectives

Obtain copies of existing, relevant company policies and programmeswhich will interact with the Environmental Policy, including:

Credit/underwriting/investment risk policies (portfolio and site

specific) etc;

Socially responsible investment policies;


TIP: Consider when determining the scope of the Group Policy:

The strategy agreed with the Board (Stage 2);

The findings of the environmental review;

Known short-term business changes (which affect the identified environmental impacts); and Other relevant Group and business unit policy commitments.

The Policy and objective commitments need to be realistic considering what can be achieved within the Policyterm (typically 3-5 years) yet challenging. With each Policy revision, the commitments should advance theorganisation towards achievement of better and, ultimately, best practice ("continual improvement"). It canbe useful to review the environmental policies of other organisations to understand their level of commitmentand scope.

TIP: It is essential that the Policy and objectives receive buy-in from all affected Business Units as well as the Board.The mechanisms to achieve this need to be identified and implemented at an early stage in the Policydevelopment process.

TIP: The Policy should include a statement on the organisation s approach to internal and public reporting anddisclosure of environmental information. This could include for example: separate environmental reporting,commentary in the Annual Report and Accounts and promotion at the company s AGM.

TIP: Objectives comprise high-level aims that provide the means to deliver and manage policy commitments. They canbe presented as an integral part of the Policy document or, alternatively, they can be presented separately. Formany centrally controlled management systems with local implementation, it can be preferable to provide theobjectives in a separate document with more explanation of intent to guide the development of local targetswhich will deliver achievement of the Objectives (see Stage 5.3).

TIP: Existing environmental management standards (see Appendix 1, Reference Sheet 2) set some requirements forPolicy content. It is good practice to adopt these and adoption would be necessary if certification under thesestandards is intended.


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STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

Procurement policies;

Property and facilities management policies; Health and safety policies;

Corporate governance policies; and

Human resource programmes.

Achieve buy-in and support of the business units that will be impacted.

Set deadlines for Policy and objective drafting and define Board reviewdates.

4.3 Draft the Environment Policy and Objectives

Policy commitments are supported by objectives, which are supported inturn by targets (see Stage 5.3).

In addition, consider the development of Key Performance Indicators(KPIs).


TIP: Some organisations seek stakeholder input to their Policy and objectives development and review stages (seeStage 1.2).

TIP: Within the Policy include: description of the coverage of the Policy in relation to the business activities;commitment to environmental compliance and continual improvement; and achievable aims that will remainrelevant for a period of 3-5 years.

TIP: Typically organisations set about 10-15 objectives, most of which are qualitative, but which must be time limited,auditable and able to be supported and delivered by realistic targets. Most objectives are developed to beapplicable for a 3-5 year period such that they are reviewed and revised in parallel with the Environmental Policy(see Stage 8). Individual tasks required to achieve the objectives will be specified through targets which aretypically reviewed and updated annually (see Stage 5.3).

TIP: KPIs represent indicators of performance that can be used in the long term to track and report businessperformance and demonstrate the organisation s core values. To be successful these must be embedded into corebusiness principles and core management processes.

TIP:Frequently, first or early Policies focus on reducing impact including, in particular, direct impacts. However,Policies of organisations with more established management systems are increasingly looking to manage indirect,core business impacts and further reduce direct impact. For example: eco-innovation (finding new ways to dobusiness with less impact), and doing more for less (good business practice) and developing new businessopportunities.


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STAGE 4: DRAFT THE GROUP ENVIRONMENTAL POLICY AND OBJECTIVES

4.4 Obtain Board commitment and Policy sign off

See Stage 8 for explanation of the process of reviewing and updating theGroup Policy and Objectives.

4.5 Distribute the Environmental Policy

Provide a copy of the Environment Policy and objectives to all businessunits/regions/functions.

Consider the value of wider circulation of the agreed Environment Policy

i.e. full public availability, selected stakeholders.


TIP: It is the responsibility of the Board to review overall Group-wide progress with Policy implementation. The Board sreview is typically achieved annually through the Management Review of the environmental management andreporting programme (see Stage 8).

TIP: The Environment Manager will be responsible for checking progress with Policy implementation and progresstowards achievement of objectives on a more frequent basis (e.g. quarterly). Day-to-day responsibility forimplementation will be at a local level and assessed by determining performance against targets which underpinthe Policy (see Stage 5.3).

TIP: Public distribution of an Environment Policy is a requirement of the existing environmental managementstandards (see Part 3 and Reference Sheet 5).

TIP: When circulating the Policy internally, it is advisable to enclose a memorandum from the Board stating that thePolicy should be made available to all staff and confirming that it provides the overall statement of the Group senvironmental commitment that the management and reporting programme will need to deliver.


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STAGE 5: DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

5.1 Define the EMS coverage and structure

Build on the pre-work in Stage 3. (See page 15).

Understand the existing organisational structure and align theenvironmental management and reporting structure with it. Whereverpossible, make use of existing management processes and tailor them tomeet the necessary environmental requirements.

The scope and structure of the EMS should reflect the scope of the Policyin respect of the activities and products included (see Stage 3.1 andStage 4.1). The structure should therefore also reflect the agreedstrategy and the findings of the environmental review, be practical forachievement and appropriate for the organisation.

5.2 Plan implementation of the EMS

Identify internal team(s) responsible for detailed design andimplementation of the EMS and allocate responsibilities.

Identify the timeframe for implementation, identify sub-stages and keymilestone dates (see also Stage 6.1).

Define key internal and external communication needs and channels.

Establish processes to monitor the success of implementation andachievements of the EMS.


TIP: Many financial services organisations have established central environmental management groups with adesignated Environment Manager. In addition to the central team, most organisations have identified

environmental champions/managers across the business to provide an implementation network with definedaccountability.

TIP: When determining the EMS structure consider:

Degree of central control vs. a management network;

Roles and responsibilities of the environmental management team/network;

Staffing arrangements internal staff input balanced with external support in development and implementation;

Degree of centralisation of target setting and procedures vs. local autonomy;

Regional, business unit and function areas and lines of environmental accountability; and

Means of communication, audit and management review.

TIP: If external verification of the report is intended (see Stages 2 and 9) it is advantageous to involve the verificationteam during this stage in particular to ensure that the management system delivers appropriate and reliable datafor reporting purposes.

TIP: It is important to involve the business unit managers/regional managers and/or function managers whose staff will be involved with EMS implementation.

TIP: For staff with key involvement, appropriate training should be provided. Ideally, include their environmental rolein their job description and develop appropriate individual performance objectives. All staff should

participate in environmental awareness raising initiatives and/or training.

TIP: The overall timeframe for implementation will have been considered during development of the strategy (Stage1.3 and Stage 2.2). The detailed timeframe needs to be realistic, taking into account other business activities thatneed resource and priorities of the various business units/regions/functions. In addition, the pace and directionof external influences (e.g. statutory requirements, stakeholder campaigns) should also be recognised.

STAGE 5 DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)


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5.3 Develop the EMS

The EMS will evolve to achieve increased coverage and system componentdefinition over time and take into account business changes includingstructure, focus and activities.

Define the environmental management hierarchy.

Develop the process for setting environmental targets and correspondingaction plans. These should include named responsible individuals,deadlines, reporting and audit data requirements.

Prepare written operational procedures and integrate these into existingmanagement control procedures where possible.

Establish Group level performance monitoring and feedback systemsincluding management review processes.

Communicate with internal and external parties using existingmechanisms where possible.

Establish Group-wide information systems and reporting structures forkey environmental data for internal and external reporting (if external reporting is planned see Stages 2 and 9). ["Key" environmental datacomprises that data which must be collected either to demonstratemeeting of targets, objectives and Policy and/or is necessary to providedata for reporting.]


See Business Activity Guidelines (Part 3) and Reference Sheets (Appendix 1) for discussion of individualenvironmental issues, suggested action plan components and reporting data which can be used to guide thedevelopment of local action plans and targets

TIP:Refer to European and international guidelines on environmental management systems (see Appendix 1,Reference Sheet 2).

TIP:It is important that the environmental management structure is clear, logical and appropriate for the business.The structure should reflect, and make use of, existing group management systems and structures. In particulardata management systems should be embedded into, or aligned with, existing management and financial (accounting) systems. The structure, both in terms of management hierarchy and documentation structure(e.g. procedures and reporting) must be defined but must also be sufficiently robust and flexible toaccommodate change. This may include business structure changes (e.g. formation of joint ventures), productmix changes (product and thus impact balance), and the altering roles of, and pressures on, financial servicesorganisations.

TIP:In many cases a combination of central and local operational procedures are developed (e.g. central proceduresfor assessing the environmental risks of lending and local procedures for business travel). For some

environmental issues it can be appropriate to have central "guidance-type" procedures which give an overviewof what needs to be achieved and how, such that the corresponding local procedures are comparable (e.g.energy management). With increasing stakeholder attention on the global performance of financial serviceorganisations it may be necessary to consider development of central guidance-type procedures covering areasof indirect activity. It is possible for these to leave scope for local amendment (to make the requirements morestringent or to reflect local priorities and practices) where necessary/practical.

TIP:Targets are the detailed, shorter-term goals that will deliver the Group objectives and Policy commitments.Wherever practical, targets should be quantitative. They must be time limited, measurable and auditable. Mosttargets have a time expiry of 12-24 months. It may not be possible to set meaningful, quantified targetsuntil 1 or 2 years after system development while data collection systems are put in place. However, qualitativetargets, possibly including system development targets, should be set in the first/early years, as soon ascircumstances permit.


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5.4 Issue internal release to demonstrate progress and commitment tothe environmental programme


TIP:Quantified targets and reporting data (that reports performance against target) can be reported as "absolute"data, or they can be "normalised" against a standard unit of business performance with which that

performance aspect has a proportional relationship (for example: by revenue, number of customer accounts,number of employees etc). Normalisation, if not presented appropriately, can impact the meaningfullness,transparency and accuracy of the reported data. To be successful, decisions on normalisation need to be madeat the individual organisation level such that they take into account business management and reportingstructures.

TIP:Issue a Board communication to all staff advising of the development of the EMS and imminentimplementation, emphasising the purpose of the EMS and its importance to the business.

STAGE 6: IMPLEMENT AND OPERATE THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)


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6.1 Plan for implementation in particular identify the programme of implementation through the business

6.2 Implement first phase of the programme

6.3 Formalise Business Unit management commitment

Build upon planning work (see Stage 5) and gain formal business unit

management commitment to the EMS including:

Providing specific training/guidance to improve understanding amongall staff;

Definition of individual performance objectives relating toenvironmental management and reporting (where appropriate);

Inclusion of environmental roles in job descriptions;

Allocation of management time;

Integration of environmental procedures into other managementprocesses/systems; and

Allocation of staff time to environmental training andcommunications.


TIP:The plan should including the following: milestones and timeline; training schedule; definition of critical pathfactors; deliverables and benefits; and allocated responsibilities for reporting information.

TIP:Define timetable for roll-out in consultation with the relevant parts of the business.

TIP:It is common for implementation to be phased. The early phases of implementation will typically includeGroup management activities as well as selected business units/regions and functions. First phase selectiontypically comprises those business units/regions with a significant environmental impact and/or those highimpact activities that apply across the business (e.g. transport policy). The ordering of issues for attentionshould be based on the priorities of the organisation identified during the course of the environmental review.(See Stage 3).

TIP:Encourage business unit managers to give their commitment to support the entire EMS implementation andoperation from the outset. Initially local champions will need to make additional time commitment, this istypically recouped as the management system matures.

TIP:Training options include central training of all staff; business unit/regional training for a limited number of staff who then conduct internal training; or use of external trainers. Many organisations have found workshop styletraining to be effective. In some instances environmental training can be successfully integrated into other,existing training programmes (e.g. health and safety and internal control audit programmes).


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6.4 Establish communication channels at Business Unit and Group level

The following structure offers an example:

Strategic Team (Group wide with business unit input) to discussstrategic evolution of the EMS, competitor and statutorydevelopments;

Business Unit Groups (e.g. investments, insurance) to considerrelevant stakeholder developments, methods for includingenvironmental considerations; and

Function Groups (e.g. property/facilities management, purchasing) toconsider relevant statutory/good practice developments,technological options, to provide specialist assistance.

Ideally use existing communication channels for wider cascade/staff involvement.

6.5 Continue EMS roll-out across the business

Implement the EMS according to the phasing plan developed in Stage6.1.

Implement ongoing checking mechanisms to monitor the status of programme implementation and achievements. Also identify the actionthat will be taken in the event of non-compliance with deadlines orconflict.


TIP:Wherever possible, use existing communication channels for formal management communications (e.g. businessunit meetings, management performance reports). Ensuring that the EMS management structure reflects existing

management structures and is appropriately integrated into wider business management processes (see Stage 5)will facilitate successful communication with limited additional effort.

TIP:Encourage networking for informal communication.

TIP:The strategic team needs to plan ahead to extend the Policy and EMS application into those businessunits/regions and/or functions excluded from the first stage of implementation.

TIP:Once commenced, the EMS will be subject to evolution and development. The Strategic Team will need to monitordevelopments within the organisation which have environmental significance and developments outside of theorganisation. This management system will need to be maintained. Business Unit Groups and Function Groupswill identify specific changes/developments that need to be taken into account. These updates will be made atdefined intervals (e.g. annually in the update of local action plans and targets and group wide through themanagement review).

STAGE 7: AUDIT THE EMS


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7.1 Define internal EMS audit programme

Define the audit objectives, which EMS components will be audited andhow the audit will be achieved. The audit needs to include:

Review of key system documentation;

Interviews with appropriate staff;

Audit check of system implementation and performance; and

Review of progress of any previous audit recommendations.

Decide on audit team(s) members whoever is conducting the auditmust be independent of the EMS implementation teams.

7.2 Prepare for the audit programme

Provide appropriate auditor training and develop the audit protocol,report format and pre-audit checklist.

Develop standard evaluation guidance for use by the auditors to facilitateconsistent and comparable interpretation of audit findings. This shouldidentify areas of over and under performance against EMS "systemrequirements" and against targets.

7.3 Conduct audits

Complete interviews and document review to confirm the level of compliance with the EMS.


TIP:The audit needs to interrogate the EMS to determine that the processes put in place achieve the required level of management control over the identified significant impacts (see Stage 3.4). The audit must confirm theobjectivity of the decision-making processes that determined the scope of the management system. The auditstructure will be largely dependent upon the design of the management system.

TIP:The audits can, and should, be integrated with existing internal control processes and where possible use existing

functions, such as internal audit or health and safety, to complete much of the work. The frequency, timing andmeans of completing the EMS audits will be strongly influenced by existing internal control arrangements. If internal audit resource is to be used, it is necessary that they are provided with some environmental training orwork with external specialists.

TIP:The audits can be conducted on a rolling programme. For example, they can cover different businessunits/regions/functions in each year or can be structured to audit Group wide implementation of the differentEMS components. Typically, audits are conducted of each part of the system either once per annum or at regularintervals (e.g. every 2 or 3 years).

TIP:There are some approved national auditor training courses available in many countries. The approved courses

satisfy the existing environmental management standards. It is not mandatory to have auditors complete thistraining unless certification under one of the standards is sought. However, attendance usually proves beneficial for auditors with no environmental experience.

TIP:The audit programme should cover the entire business. It is important that in addition to the business units,all Group functions are included.

TIP:Include time to receive questions from the business units and request their suggestions on EMS improvement anddevelopment.

TIP:Where possible, discuss the implications of any over or under performance and potential recommendations forimprovement during the interviews themselves. This will help in recommendations being practical and supportedby management.


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7.4 Evaluate and report the audit findings

Review all audit findings and collate into a single Group report.

Consider the implications of the detailed findings and develop relatedrecommendations, where appropriate.

7.5 Agree recommendations with Business Unit management andimplementation teams

Present and discuss the recommendations, with justification.

Obtain the appropriate management agreement to the recommendationsthat will be implemented.

7.6 Manage the implementation of recommendations

Issue formal communication to advise business units/regions/functionsof the immediate actions to be implemented with reasoning forrecommendations given.

Implement recommendations that are the responsibility of the Group,typically those that require amendment to the management system orGroup level action.

Implement process to check progress within Business Units.


TIP:The management structure will determine at which levels the audit findings will be evaluated and how thisinformation will be reported and incorporated into the ongoing development of the EMS. In more autonomousorganisations, a business unit/regional evaluation may be undertaken instead of the Group level one.

TIP:During evaluation, identify the "causes" of under-performance and over-performance. It is this knowledge thatgives useful insight for the ongoing development of the EMS.

TIP:Ensure that feedback from the audit programme is returned to the business units/regions/functions involved toenable continual learning and improvement. A summary of the findings and the resulting recommendationsshould be included in the management review (see Stage 8).

TIP:Justifications may include:

Achieving the EMS "system requirements" i.e. to maintain a pragmatic, effective management system;

Maintaining overall performance against Policy aims, objectives and local targets; and

Controlling business impact ability to realise and record tangible and intangible benefits and minimisebusiness risk.

TIP:The audit recommendations will provide the core information for the annual development of new targets (seeStage 5) and for the onward development and improvement of the EMS in those parts of the organisation whereit is still to be implemented.

STAGE 8: REPORT TO THE BOARD


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8.1 Define the objectives of the Board Level Review

The objectives of the Board Level Review are to assess the success of theEMS with respect to:

Achievement of targets, objectives and Policy commitments (and KPIsif developed, see Stage 4.3);

Control of significant business impacts;

Adherence to time-line and planned resource commitments; and

Attention to priority issues and agreement on the way forward.

The review also needs to achieve agreement on addressing problems andmaking changes to the EMS.

Within large organisations, the Board review will build upon the findings of individual senior management reviews within the individual BusinessUnits/regions/functions.

8.2 Prepare evidence for Board Level Review

Define how the review will be conducted it needs to culminate in ameeting of the Group personnel with environmental responsibility andBoard members. Planning tasks should include:

Confirmation of availability of required participants;

Communication of review objectives;

Scheduling such that the review can use audit feedback; and

Preparation of a pre-review information pack for participants,identifying achievements and benefits, problems and key concerns.

Get local management sign-off on findings in advance of presenting to theBoard.


TIP:The management review is the process that identifies and instigates change to the entire EMS framework. Itshould be conducted as a high level overview but refer to specific operational examples. The review is the forumwithin which any significant changes to the scope, structure and content of EMS will be agreed to maintain"fitness for purpose". It is therefore a critical stage in the continuing evolution and roll-out of the EMS. Thefrequency of management reviews varies, although it is advisable that a Board level EMS review is undertaken atleast once per annum.

TIP:Additional review objectives may include:

Suitability to respond to and address identified needs and impacts of the organisation adequately so as toachieve management control;

Effectiveness as a business management tool in realising opportunity and minimising risk; and

Comprehensiveness of implementation including adherence to the implementation programme and resource plans.

TIP:Where possible, add the evidence gathering process to an existing management review activity. However, thisshould not reflect a lower priority of the environmental system review, merely effective use of management time.


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STAGE 8: REPORT TO THE BOARD

8.3 Conduct the Board Level Review

8.4 Agree recommendations and actions

Document findings and recommended actions.

Obtain management commitment to agreed actions.

Get Board sign-off.

8.5 Communicate findings and outputs

Allocate actions to responsible individuals and determine how these will be implemented through the Group.

Present a summary of management review findings for internal circulation

and incorporate into the environmental report (if planned) asappropriate.

Communicate directly to those personnel involved in making systemchanges.


TIP:The Review needs to consider the success of the entire EMS. Therefore, it needs to remain as a high-level,strategic review and should not include discussion of EMS detail unless the Environment Manager has concernsabout specific components which cannot be resolved without Board support/involvement.

TIP:Issues for discussion may include: progress made, state of compliance with Group Policy, problems encountered(including implications and possible resolutions), new issues to be addressed, onward programme of implementation and preparedness for issue of public reporting (and verification if appropriate).

TIP:The actions that may result from the Board Level Review will be primarily those that require Group level attention(e.g. resourcing issues).

TIP:If an Environmental Report is issued (see Stages 3 and 9) this provides a useful mechanism to report publicly onthe environmental management progress that has been made and the intentions for future development of theEMS.

TIP:Also consider issue of a summary of achievements internally to all staff to increase ownership and understanding.

STAGE 9: PREPARE ENVIRONMENTAL REPORT (Internal and external)


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( )

9.1 Preparation

Confirm whether the Report will be for internal use or for both internal and external use.

Confirm whether the Report will form part of the Annual Report or will

be a stand-alone document.

Determine target audiences for the Report (e.g. employees, customers,investors, non-governmental organisations etc.).

Select reporting media (e.g. hard copy, Internet).

Define schedule for reporting process and production.

Review existing objectives, targets, KPIs and Group systems for collatingand assimilating environmental data, to confirm which will be includedin the Report.

Identify whether external verification is required, either of the wholereport or of selected data/sections. This may have been determinedalready (see Stage 2).

Determine the scope and purpose of external verification and prepareengagement letter.

Select verification team (this could include using the Internal Auditfunction and/or external verifiers).

Select a company to deal with drafting, graphic design and production asrequired.


TIP:Preparation for reporting, including the establishment of the reporting processes, should start at the earliestopportunity as it provides a fundamental check on the suitability and scope of the management programme tomanage the identified significant impacts.

TIP:In some cases, organisations will prepare an internal report in the first year while the reporting processes arestill being developed. Other organisations have chosen to issue a summary of activity in the first year with full

public reporting following in the second year.

TIP:For target audiences determine their key concerns and level of understanding of the business. Sufficientinformation may have been gained through the stakeholder dialogue which has been completed during previousstages.

TIP:Involve the independent verifiers from this stage to help ensure that the report is structured to ensure that thedata is presented in a form where it can be usefully verified. The verifier should also be able to assist indetermining the appropriate level of verification (see Stage 9.2 for further discussion), according to theverification statement to be included in the report (if any).

TIP:Consider involvement by external companies in drafting of the report, compilation of artwork and final

production. Also consider a level of involvement by the external verifiers to confirm the required and possiblelevel of verification.


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9.2 Scoping for report content, style and structure

Define the "strategic" content and style of the report in terms of overall key messages.

Define the scope of the Environmental Report in terms of:

Environmental performance (either by environmental issue or businessactivity);

Balance of the Report between qualitative Policy and systeminformation and quantitative performance data;

Geographic territories/business unit or function or issue (impact)focus (e.g. waste production, energy use);

Policy and EMS review; and

The means of presenting performance information (e.g.absolute/normalised).

Confirm the detailed scope of the verification.

9.3 Data management and reporting

Establish standard data reporting templates for Group wide application.

Ensure that the EMS audits identify the reliability and scope of theenvironmental monitoring and data collection systems in place (seeStage 7).


See Part 3 for some suggested reporting data which may be used as guidance and refer also to Appendix 1,Reference Sheet 2, Environmental management and reporting standards and guidance.

TIP:External environmental reporting is still evolving and remains voluntary in the UK. Several financial servicesorganisations now issuing environmental reports started by publishing policies and action and plans fordeveloping their EMS before preparing a full environmental report.

TIP:Develop a specification for the external verification exercise using pre-agreed selection criteria for reasons of objectivity and credibility. Recognise through the specification the roles and responsibilities of the internal auditfunction.

TIP:For the strategic content consider the emerging guidance on environmental reporting (e.g. Global ReportingInitiative) and environmental reporting award schemes (e.g. ACCA) and DETR reporting guidelines (e.g.greenhouse gases, waste and water).

TIP:Understand from the verifiers when the individual tasks required to complete the verification will be undertakenand what is involved with achieving each with respect to data and personnel being available. To maximise valuefrom the verification process it is beneficial to have the verification conducted as an integral part of the reportdevelopment process.

TIP:Reporting templates should cover qualitative and quantitative information:

Minimum information requirements;

Supporting evidence requirements (audit trail); and

Local (Business unit/senior management) accountability and sign off.



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For derived data, identify calculation formulae at Group level anddisseminate to business units/regions/functions as appropriate.

Define the process for achieving normalisation of data where appropriate.Communicate to the appropriate business units/regions/functions.

Establish internal control processes to check quality control through thedata management process.

9.4 Drafting and review

Follow standard report development processes e.g.:

Prepare skeleton content list;

Identify authors and reviewers for each section of the report;

Write and review the report; and

Provide the final draft report to the external verification team for final review and for preparation of the signed verification statement, if applicable.

9.5 Publish

Make the report publicly available, if applicable.


TIP:As identified (see Stage 5.3), KPIs, objectives and targets can be "normalised" against a standard unit of businessperformance. Within the sector, different normalisation criteria have been adopted and, at this time, it is notpossible to suggest "standard" normalisation factors for sector wide adoption some suggestions have beengiven in the individual Business Activity guidelines (Part 3). Appropriate normalisation criteria will depend upon:

Customer base and product mix;

Current organisational data management and reporting systems; and

Existing normalisation factors (for non-environmental data).

This is an area of ongoing debate for the sector to attempt to develop improved consistency and comparabilityin reporting.

TIP:Include details of targets and objectives within the Report with identification of progress against them. Theoutcome of this comparison should help inform the EMS review (Stage 8) and provide demonstration of continuous improvement.

TIP:If a separate Environmental Report is prepared, consider the preparation of an Executive Statement which couldbe stand alone and also included within the Annual Report.

TIP:If appropriate, consider and select options for achieving wider use of the Report e.g. at AGMs, promotional events, news releases and participation in environmental reporting award schemes.


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9.6 Collect and act on feedback


TIP:Positively encourage feedback this is the primary means to rate the success of the report and is important incompleting an assessment of the full cost/benefit of the reporting process. Include contact details. Considerincluding pull-out post cards addressed to the company on which comments can be written.


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Guidelines on Environmental Management and R

guidelines on environmental management and reporting for the financial services sector - forge

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