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Building on Report Leadership’s publicationTomorrow’s Reporting Today - November 2006
Best Practice Environmental Social and Governance (ESG) Reporting
Note to the reader:The Generico ESG disclosures in this publication are not intended to be a full annual report; instead we envisage them being considered for inclusion and integrated as part of the full annual report.
This ESG report should be read in conjunction with the original Report Leadership publication on www.reportleadership.com.
Report Leadership published Tomorrow’s Reporting Today in November 2006 as a stimulus to further debate on the relevance and quality of current corporate reporting, and to develop simple, practical ways to improve narrative and financial reporting. The Report Leadership group encouraged feedback.
In providing feedback, PricewaterhouseCoopers Australia has focused on the importance of environmental, social and governance (ESG) information in evaluating the long-term health of a business. Appreciating that superannuation funds and other long-term investors are looking for additional analysis, we have sought to enhance the Generico model by integrating and reporting on performance and future prospects in key ESG areas of business.
If you would like to discuss this further, please contact:
Nick Ridehalgh Scott G WilliamsPartner (Australia) Senior Manager (Australia) +61 2 8266 4899 +61 2 8266 [email protected] [email protected]
Contents 02 Backgroundtothisreport04 Modellingthefuture
10 Chiefexecutive’sstatement
11 Ourmarkets
13 Ourgroupstrategy
16 Ourdeliveryofvalue
20 Ouraccounts24 Appendix34 Glossary36 Basesforcalculation
09Generico-examplereport
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Backgroundtothisreport
ThisreportbuildsontheReportLeadershippublicationTomorrow’s Reporting Today1andproposesthatadditionalfinancialandnarrativeinformationaboutGenerico’sdeliveryofitsenvironmental,socialandgovernance(ESG)strategies–bothnowandinthefuture–beincludedintheannualreport.
Forthepurposesofthisreport,weconsiderESGstrategiestobestrategicallyimportantactivitiesundertakenbyGenericotoimprovecorporategovernance,reportandprotectthesocietiesandenvironmentinwhichitoperates,andinsodoingenhancethecompany’sreputationandoverallperformance.Itrepresentsinlargeparttheintangiblevalueofthecompany.
Traditionally,ESGmattershavebeenreportedinastand-alone‘sustainabilityreport’,ifatall,withlittlealignmenttotheorganisation’scorestrategy.Sustainabilityreportsarealsomainlyinnarrativeform,withoutexplanatorygraphics,andincludelimiteddisclosureofthefinancialimpactsofspecificsustainabilityactivities.(Someactivitiesarehardtovaluegivenavailabledataand/orcomplexexternalities.)
However,ourglobalresearchtellsusthatthecapitalmarketshavebeenscepticalofgovernance,corporatesocialresponsibility(CSR)andsustainabilityreports,andhavenotusedtheinformationtoanygreatextentwhencompletingtheiranalysisandrecommendations.Itappearsthatwhilecompaniesareprovidingadditionalinformation,theyarenotexplainingitsmediumtolong-termvalueeffectivelytotheirkeystakeholders.
Wethereforeproducedthisreporttohelpthosepreparingcorporatereportsexplaintokeystakeholdersthevalueoftheircompany’sESGstrategyandperformance.
Ourproposedreportingframework,whichbuildsontheReportLeadershippublication,isbasedonfourkeyprinciples:
1. Clearalignmenttocorporatestrategy
2. Long-termtargetsandmeasurementofperformance
3. TransparentreportingagainstESGmilestones
4. QuantificationofreturnsfromenhancedESGreporting.
Inaddition,weassumethatcertainstandingdata(governanceframework,boardandmanagementcommittees,organisationcharts,rolesandresponsibilities),togetherwithmuchofthedetailaboutESGstoriesandkeymeasures,willbeprovidedonthecompanywebsite.Maintainingthewebsitethroughouttheyearspreadsthesustainabilityreportingload.
Inthisreport,wehavenotaddressedthequestionofwhetherindependentassuranceisrequiredovertheinformationdisclosed.
1 www.reportleadership.com
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1.ClearalignmenttocorporatestrategyThechiefexecutive’sstatementclearlyexplainswhyresponsibleandsustainabledevelopmentofcorporateresourcesisfundamentaltothecompany’soverallstrategy.ESGfactorsareembeddedinoperationsandinthebusiness’skeystrategicdrivers.
OurmarketsdetailsthechallengesandsuccessesfacingthecompanyinembeddingESGpracticesasstrategicpriorities.Itfocusesontheimpactofchangestolegislation,regulationandothermarketactivitiesonthecompany’sstrategyandlikelyperformance.
2.Long-termtargetsandmeasurementofperformanceOurgroupstrategyprovidesasinglepointofreferenceforallESG-relatedkeyperformanceindicators(KPIs).TheseindicatorsestablishtheclearlinkbetweenstrategicprioritiesandKPIs.(SomeoftheESGmeasureshavebeenextractedfromtheNovember2006report.However,inacomprehensiveandintegratedreport,theywouldonlybereportedonce.)
TheKPIsaredevelopedbasedonindependentandinternalsurveys,workshopsandotherresearchsoastoaddresskeystakeholderinformationneeds.
3.TransparentreportingagainstESGmilestonesOurdeliveryofvalueincludesreportingandsensitivityanalysisinrelationtotheassumptionswhichunderpinourbase-casescenarioforthecomingyear.Thisbase-casescenarioisusedtodeterminethetargetsincludedinourKPIreporting.
4.QuantificationofreturnsfromenhancedESGreportingOuraccountsincludesquantificationofthenetsavingsfromourenhancedsustainabilityreporting,benchmarkinganalysisandourtotaltaxcontributionreporting.AnappendixtoOuraccountsincludesareferencetableofGRIG32disclosuresincludedinthereport.GRIG3disclosuresthatarenotcriticaltothisreport,butarediscussedonourwebsite,aremarkedWEB.Otherdisclosuresthatarestillbeingresearchedandmaybeprovidedinfuturearereferredtoas‘future’,andthereareafewsuggesteddisclosureswhicharenotrelevanttoGenerico.
Wedonotendorseanyspecificindicesorframeworks,andhavedesignedthisreportsimplytoofferguidanceinrelationtointegratedESGreporting.
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Modellingthefuture
“Goodmanagementofenvironmental,socialandgovernanceperformance,togetherwithreputation,stakeholderrelationshipsandotherintangibles,isfundamentallylinkedtolong-termshareholdervalue.”
Westpac2006StakeholderImpactReport,fromtheChairmanandCEO
TheproblemFundamentalelementsofvaluecreationarenotbeingadequatelyaddressedthroughthecurrentcorporatereportingframework.
Specifically,currentreportingdoesnotprovidealltheinformationinstrategicESGareasthatisrequiredbyinvestorstoaccuratelymodelfuturecompanyperformance.Investorsarelefttofindalternativesourcesofinformationandmaketheirownassumptions.Inotherwords,managementmaybeleavingituptoothersources(competitors,employees,suppliers)toexplainthecompany’sESGrisks,mitigationstrategiesandupsideopportunities.
Traditionally,acompany’sfinancialstatementsrepresentedanaccurateassessmentofthecompany’smarketvalue,withmostofthevaluebeingrepresentedbytangibleassetsincludedonthebalancesheet.However,overthelast25yearstherehasbeenashiftintheunderlyingdriversofacompany’smarketvalue.Recentestimatesindicatethatasmuchas80%ofacompany’smarketvalueisnowrepresentedbyintangiblesandotherfuturegrowthopportunities3.Thisdoesnotmeanthatthebalancesheetshouldnecessarilyreflectenterprisevalue,butmerelythatmanagementneedstomoreclearlyexplainthedifferencebetweenitsbookandmarketvalue.
Listedpubliccompaniesarealsorequiredtomakedisclosuresbeyondfinancialinformationtofulfilstatutoryreportingobligations.Thisincludes,inmanyterritories,areviewofoperations(whicharepreparedtovaryingdegreesofadequacy)aswellascontinuousdisclosures4tothemarketofinformationwhichisnotgenerallyavailablebutwhichareasonablepersonwouldexpecttohaveamaterialimpactonthevalueofthecompany’sshares.
AnarrowfocusonhistoricalfinancialreportingandfinancialmetricsnowneedstobesupplementedwithrelevantandreliableESGandothernon-financialstrategicKPIstoprovideamorebalancedsnapshotofperformanceagainststrategyandfutureprospects.
Clearly,thereisaneedforamoreintegratedandinclusivereportingframework.Thisreportpresentsananalysisoftheimpactofarangeofnon-financialESGindicatorstohelpcompaniesexplainmoreclearlytheimpactofESGperformanceindeliveringstrategyandcreatingvalue,bothnowandinthefuture.
3 www.clomedia.com/content/templates/clo_article.asp?articleid=1515&zoneid=66
4 InAustralia,theCorporations Act 2001s674requiresthecontinuousdisclosurenoted.Finesandpenaltiesincludinguptofiveyearsimprisonmentmaybeappliedforbreaches.
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WhatinvestorswantBasedonadecadeofresearchintowhatinformationthecapitalmarketsneed,weareabletospecifytheinformationdatasetsrequiredtomakeinvestmentdecisions.Ourmorerecentglobalinterviewsofinvestorsandanalystsshowaninterestingdivergenceofviews.
Thereisalmostuniversalagreementthattheboilerplategovernancereportora‘marketing-style’CSRreportaddsnorealvalueforanalystsorinvestorswhenmakingdecisions.ThatisnottosaythatanalystsarenotinterestedingovernanceandCSRmatters–theyare–buttheyeitherdonotlikethewayitispresented,ordonotunderstandhowithasimpactedonperformanceandhowitcanbequantified.Theythereforeusealternativesourcestohelpthemmakedecisions,ifrequired.
ClearlythereisanopportunityforcompanymanagementtoexplainthevalueofitsESGactivitiesandhelpthemarketsbetterassessthecompany’soverallperformanceandfutureprospects.
ESGissuesarebeingconsideredseriouslybythecapitalmarkets.Majorsuperannuationfundsandfundmanagersaredemandingbroader-basedreportingandanalysis.InEurope,investorsarepayingapremiumundertheEnhancedAnalyticsInitiative5foranalystreportswhichcoveracompany’sstrategicnon-financialperformanceandoutlookmorethoroughly.Inaddition,manyinvestorsandsuperannuationfundshavesigneduptotheUNPrinciplesforResponsibleInvestment6,ineffectdemandingbroader-basedreportingonESGmattersasanimportantfactorintheallocationofnewfunds.Assuperannuationfundsgrow,wewillseemoreandmoremarketfocusonmedium-termissues.
OtherdriversofchangeincludegovernmentsandmajorcompaniesrequiringsupplierstodemonstratetheirESGcredentialsbeforeallowingthemtotender;andinthetightgloballabourmarketweareseeingemployeesdifferentiateandchoosebetweenemployersbasedonESGperformanceandcredibilityinthemarket.Inaddition,consumersinthecommunityarebecomingmoreselectiveinwhichproductsandservicestheybuy.AsgenerationsXandYmature,theimpactofthesechoiceswillbemorevisible.
Thereisthereforeagrowingimperativetomanage,monitorandreportonESGmatters.
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SowhatESGinformationshouldacompanyconsiderproviding?
• Aclearexplanationofthecompany’sESGstrategicpriorities,integratedandalignedwiththeoverallcorporatestrategy
• AclearexplanationofthekeymeasuresofsuccessforeachESGstrategicpriority,includingshorter-termmilestoneswhererequired
• KPIsforeachESGstrategicpriorityforpriorperiods(trendline)andquantifiedtargetsforthefuture
• Summaryofkeyrisksandassumptionsunderpinningfutureoutlookandalevelofsensitivityanalysis
• Quantification,wherepossible,ofboththecostandthefinancial(andnon-financial)benefitsofimplementationoftheESGstrategy.(Thiswillhelptheinvestor,forexample,factortheimpactoftheESGperformanceintotheirfinancialmodelorintotheirunderlyingriskassumptions.)
MorethanjustfinancialreportingForthereasonsoutlinedabove,companiesneedtoassistthecapitalmarketsinunderstandinghowESGactivitiesandperformanceiscoretothecompany’soverallstrategicplan.TheUNPrinciplesforResponsibleInvestmentprovideaframeworkforinvestordecisionmaking;however,thereiscurrentlynostandardisedframeworkforreportingthefinancialandnon-financialinformationrequired.
Thisreport,buildingontheReportLeadershippublication,aimstostartthediscussiononsuchanintegratedframework.
Whatwe’vedonetomakeitwork• ProvidedspecificsectionsonESGstrategy,performance
measurement,disclosureandreporting
• IncludedkeymeasuresforassessingvaluecreationinrelationtoESG
• ProvidedguidanceonalternativescenariosandsensitivityanalysisonkeyESGnon-financialmeasures,tohelpusersmodelthefuture
• Appliedconsistentterminologyandaforward-lookingorientation(includingdisclosureoftargets)
• Providednon-GAAPnon-financialKPIsandotherinformationinlinewithglobalbestpracticereporting
• QuantifiednetsavingsfromimplementationofenhancedESGstrategy,wherepossible
• Comparedperformancetogloballyrecognisedindiceswhereavailable.
Modellingthefuturecontinued
ExplanatoryNotes
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ESGextractstobealignedwithandintegratedintoasingleGenericoperformancereport
In this section we address these key points:
Chief executive statement
Our markets
Our group strategy
Our delivery of value
Our accounts
Notetothereader:TheGenericoESGdisclosuresinthispublicationarenotintendedtobeafullannualreport;insteadweenvisagethembeingconsideredforinclusionandintegratedaspartofthefullannualreport.
ThisESGreportshouldbereadinconjunctionwiththeoriginalReportLeadershippublicationonwww.reportleadership.com.
Chiefexecutive’sstatem
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Environmental,socialandgovernance(ESG)factorsarecoretoourbusinessstrategy.Weplacegreatimportanceontheirvalue,andmanageourcorporateESGresponsibilitiesaspartofourdailybusinessoperations.Inthisreportweexplainhowwedothatandwhatwehaveachievedthisyear.
WehaveestablishedkeyperformanceindicatorsthatweusetotrackourperformanceinrelationtoESGmatters(seeOurgroupstrategy).Wecontinuetoreduceourgreenhousegas(GHG)footprint,takingoutafurther8,000tCO2-ethisyearaswestrivetowardsour2020target.Atthisstagewearebehindinourreductionplanby1,000tC02-e,butareputtingplansinplacetorectifytheoverallpositionbytheendofthisyear.
Inaddition,toensureweareperforminginlinewith–ifnotbetterthan–ourindustrypeers,wehaveconducteddetailedbenchmarkingonoursustainabilityandcorporateresponsibilityperformance,andIamdelightedtoreportthatwearetrackingwell(seeOuraccounts).
Wecomplywithalllegalandregulatoryobligations,butinordertomakeinvestmentdecisionswefocusonoptionswhichprovideapositivereturntoourshareholders(aswellasapositiveimpactonourreputationwithotherstakeholders)intheshorttomediumterm.InOuraccountswehavequantifiedtheexpectednetsavingsarisingfromourESGactivitiesplannedfor2008,aswellastheotherexpectedbenefits.Overall,weexpectourESGstrategytoprovideanadditionalnetreturnof5%.
Finally,inOuraccountswereportourtotaltaxcontribution,whichisacomprehensiveandtransparentmeasureofthetotaltaxwehavepaidandcollectedthisyear.Wehavealsoincludedbenchmarkingofourtotaltaxrateandtotaltaxcontributionbycomponentagainstcountry,regionalandglobalbenchmarks.Again,Iampleasedtoreportthatweareatornearbestpracticeinmostmeasures.
InpreparingthisreportwehaveusedtheUNGlobalCompactprinciples7asourguidanceformanagingESGissuesacrossthebusiness,andtheGlobalReportingInitiative(GRI)G3draftreportingguidanceasourreferencepointfordisclosure.
7 SeeGlossary
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KeypointsClimatechangeriskanalysiscompletedinaccordancewith
theGlobalFrameworkforClimateRiskDisclosuresESGBoardsub-committeeestablishedheadedbythe
ChairmanandsupportedbyanESGexpert
ChallengesandsuccessfactorsWefacethechallengeofremainingbest-in-classinrelationtotheinformationwereporttoourstakeholders.WhilethemajorityofESGrequirementsremainvoluntary,GenericointendstobecomeafullsignatorytotheUNGlobalCompactandtheCarbonDisclosureProjectby31December2008,andhasalreadycommencedtheprocessofensuringthatourESGdisclosurescomplywiththeGRIG3draftreportingguidance.
LegislationWehaveregisteredwiththeDepartmentofIndustry,TourismandResourcestocomplywiththerequirementsoftheEnergy Efficiencies Opportunities Act 2006(theAct)8.Ourenergyusageinthelastcalendaryearexceeded0.5PJ9;wearecurrentlydraftinganassessmentandreportingscheduletocoverthefirstfive-yearreportingcycle.WeareconfidentthatourrigorousassessmentofenergysavingopportunitieswillleadtosignificantenergysavingsandallowustomeetthestrictenergyreductionKPIwehavesetourselvesforfutureyearsto2020.Thiseffortwillbeco-ordinatedbyanESGsub-committee,asdescribedonourwebsitewww.generico.com/environment/EEO.
Itwaspleasingtonotethatweincurrednofinesorpenaltiesforlegalorregulatorybreaches.
EnvironmentDespiteincreasingpublicpressureonorganisationstoreducecarbonemissions,reducewasteandprotectourwatersupplies,therehasbeennosignificantnewlegislationorregulationaffectingusin2007.However,weareundertakingvoluntarymeasurestoremainbest-in-classinalltheseimportantenvironmentalareas,includingourrecentdecisiontobecarbon-neutralbyDecember2009(seeKPIsforcurrentperformanceineachoftheseareasinOurgroupstrategy).
Inourapproachtoclimatechangeandemissionsmanagementandreporting,wehavefollowedtheguidanceoftheGlobalFrameworkforClimateRiskDisclosures10(whichissupportedbytheCarbonDisclosureProjectannualsurveyresults).
8Note:ThisisAustralianlegislation.Companieswillneedtotailorthissectioninlinewiththeirlocallegislation
9PJ=Petajoule(1000trillionjoulesofenergy),equivalentto30,000MWh
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Todatewehaveproduced:
• aclimatechangestatement
• anemissionsmanagementstatement
• a‘strategic,physicalandregulatoryrisksofclimatechange’analysis.
Ourenvironmentalcharter,policies,proceduresandresponsibilities,aswellasdetailedexplanationsofourvariousactivitiesduringtheyear,areavailableonourwebsitewww.generico.com/environment.
SocialDespitenosignificantchangestothelawin2007,recentlitigationhasdemonstratedthepotentialcost(notonlyfinancial,butalsointermsofcorporateandexecutivereputation)ofpoorlyperformingOH&Ssystems,processesandcontrols.Comparedtoourcompetitors,weremaininthelowestnationalquartileforDaysLostThroughInjury11,andarecontinuallystrivingtoimprove.
InOurgroupstrategy,wehavecontinuedtotrainourpeopleinanti-corruptionpoliciestofurtherprotectourcustomersandcommunityfrom,inparticular,inappropriatebusinessarrangements.
Wehavealsocontinuedtoprovidesignificantsupporttoourlocalcommunitiesthroughthegiftoftime,moneyandresources.
Oursocialcharter,policies,proceduresandresponsibilities,aswellasdetailedexplanationsofourvariousactivitiesduringtheyear,areavailableonourwebsitewww.generico.com/social.
GovernanceWecomplywiththeprinciplesoutlinedbytheASXGovernanceCouncil12.Wehavecontributedseveralpublicsubmissionstorecentgovernmentenquiries,inwhichwehaveadvocatedincreasingtheleveloftransparencycurrentlyprovidedthroughthecorporatereportingframework.
During2007,theGenericoboardestablishedanESGsub-committeeheadedbytheChairmanandsupportedbyanESGexpert.
Detailsaboutourorganisationalstructure,governanceframework,boardandboardcommittees(includingrelevantcharters,policies,proceduresandaccountabilities)areavailableonourwebsitewww.generico.com/governance.
11ReportedintheGenerico2007AnnualReport,p21
12Refertotheguidanceissuedbytherelevantregulatorybodyinyourcountry/territory;forexampletheASXGovernanceCouncilBestPracticeRecommendationsinAustralia;theLondonStockExchangeCombinedCodeonCorporateGovernanceintheUK
Ourmarketscontinued
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Keypoints8,000tCO2-ereductioningreenhousegasemissions,not
quiteontrackto2020targetbutremediationplaninplaceContinuedincreaseinrecycledinputmaterialat29%
Employeeretentionslippedwithturnoverat28%
StrategyprogressstatementToimplementourstrategysuccessfully,weneedtomeasureourprogressinmeetingitsobjectives.Tobeabletodothatweneedtoestablishandmonitorkeyperformanceindicators.
ResponsibilityfordevelopingandimplementingthekeyESGperformanceindicatorshasbeendelegatedbytheboardESGsub-committeetotheESGmanagementteam.Toindicatethelevelofimportanceplacedonthisrolebytheboard,theheadoftheESGmanagementteamisanexecutivewhoseremunerationislinkedtoachievingoperationalobjectives.
Withintheexistingcorporategovernanceframeworkandinaccordancewiththeboard’soverarchingcorporatestrategy,theboardESGsub-committeeandESGmanagementteamdevelopandimplementtheESGstrategicprioritiesandsettherelevantKPIs.ThesestrategicprioritiesandKPIsareformulatedbasedonindependentandinternalresearchincluding:
• independentemployeesurveys
• independentcustomersurveys
• in-houseworkshopswithkeystakeholders,includingNGOs,customers,communityrepresentatives,employeesandothers.
Wealsosurveyinstitutionalandretailshareholderstoensureweunderstandandprovidetheinformationtheyneedtomaketheirdecisions.
OurKPIsforeachESGpriorityarelistedinthetableoverleaf.ItdetailsthespecificESGmetrictargeted,measuresofourperformancetodate,andourtargetsfor2008(andbeyondwhereapplicable).Wealsolistpotentialchallengestosuccessandtheactionthatwearetakingtoovercomethem.
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Strategicpriority Keyperformanceindicators
Metrics Definition/source Performance Potentialchallenges/response GRIreference
Marketcompetitiveness
Developing next- generation products
Health,safetyandenvironmentalimpactsofnewproducts
Percentageofnewproductsassessedforimprovementsinrelationtolifecycle,health,safetyandenvironmentalimpact
DisappointingproductperformanceresultingfromunsafeorenvironmentallyunfriendlyproductdevelopmentFocusonthreekeyareasinproductR&D:•Minimiseemissionsresultingfromproduction•Developlow-emissionproducts•Workwithcustomerstoreducetheirfootprint
EN26,PR1
Meeting the expectations of our customers
Riskofcorruptionreviews PercentageofemployeestrainedinGenerico’santi-corruptionpoliciesandprocedures
Reputationalimpactonkeystakeholdersandexposuretomonetaryfinesandnon-monetarysanctionsRollouttrainingtoallemployeesRegularcommunicationonprogresstostakeholders
S02,S03
Operationalexcellence
Financialimpactofclimatechange
Totalgreenhousegasemissionsacrossallbusinessunits,includingemissionsfromenergyusage,vehiclefleet,airtravelandmaterialsconsumption(forbasisofcalculationrefertoglossary)
LossofcomparativeadvantagePhysicalandriskanalysisofclimatechangeimpactsComprehensiveprogramofGHGemissionreductionCarbonneutralby2009ClimatechangephysicalandfinancialriskanalysisReviewofsupplychain
EN3,EN4,EN8
Financialimpactofenergyandwaterconsumption
EnergyconsumptionisbasedontotalenergyconsumptionacrossallbusinessunitsperFTE
Totalwaterusageistheaggregatewaterusagebasedondataprovidedbyourwatersuppliersineachoperationalterritory
ExposuretoincreasinglyvolatileworldenergyandwatermarketsProgressiveswitchtoaccreditedrenewableenergysourcesInvestmentinenergy-efficientproductiontechnologyWaterrecyclingplantsoperationalby2009
EC2,EN16,EN17
Financialimpactofmaterialsusage
Twometricsareused:1.Weightoftotalmaterialsusedinproduction2.%ofmaterialsusedthatarerecycledinputmaterials
ReputationalandfinancialimpactofinefficientproductionOperationalfocusonmaterialsreductionWorkwithsupplychaintoincreaserecycledinputPackagingReductionProgram(PRP)
EN1,EN2
Employeeretention(turnover%) Calculatedusingtheformula:(#staffleaving/averageheadcount)*100
LossofskilledoperatorsORTSincentivescheme
LA2
Indirecteconomicimpactoncommunities
Totalcommunityinvestmentexpenditure,includingemployeevolunteering,in-kindsupportandcommunityimpactassessmentonoperations
PositivecommunitycontributionandstakeholderengagementInvestinemployeevolunteeringschemesDevelopcommunitypartnershipExpandstrategiccharitablegivingprogramsGenericoFoundation
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Totalwaterusage(gigalitres)
Strategicpriority Keyperformanceindicators
Metrics Definition/source Performance Potentialchallenges/response GRIreference
Marketcompetitiveness
Developing next- generation products
Health,safetyandenvironmentalimpactsofnewproducts
Percentageofnewproductsassessedforimprovementsinrelationtolifecycle,health,safetyandenvironmentalimpact
DisappointingproductperformanceresultingfromunsafeorenvironmentallyunfriendlyproductdevelopmentFocusonthreekeyareasinproductR&D:•Minimiseemissionsresultingfromproduction•Developlow-emissionproducts•Workwithcustomerstoreducetheirfootprint
EN26,PR1
Meeting the expectations of our customers
Riskofcorruptionreviews PercentageofemployeestrainedinGenerico’santi-corruptionpoliciesandprocedures
Reputationalimpactonkeystakeholdersandexposuretomonetaryfinesandnon-monetarysanctionsRollouttrainingtoallemployeesRegularcommunicationonprogresstostakeholders
S02,S03
Operationalexcellence
Financialimpactofclimatechange
Totalgreenhousegasemissionsacrossallbusinessunits,includingemissionsfromenergyusage,vehiclefleet,airtravelandmaterialsconsumption(forbasisofcalculationrefertoglossary)
LossofcomparativeadvantagePhysicalandriskanalysisofclimatechangeimpactsComprehensiveprogramofGHGemissionreductionCarbonneutralby2009ClimatechangephysicalandfinancialriskanalysisReviewofsupplychain
EN3,EN4,EN8
Financialimpactofenergyandwaterconsumption
EnergyconsumptionisbasedontotalenergyconsumptionacrossallbusinessunitsperFTE
Totalwaterusageistheaggregatewaterusagebasedondataprovidedbyourwatersuppliersineachoperationalterritory
ExposuretoincreasinglyvolatileworldenergyandwatermarketsProgressiveswitchtoaccreditedrenewableenergysourcesInvestmentinenergy-efficientproductiontechnologyWaterrecyclingplantsoperationalby2009
EC2,EN16,EN17
Financialimpactofmaterialsusage
Twometricsareused:1.Weightoftotalmaterialsusedinproduction2.%ofmaterialsusedthatarerecycledinputmaterials
ReputationalandfinancialimpactofinefficientproductionOperationalfocusonmaterialsreductionWorkwithsupplychaintoincreaserecycledinputPackagingReductionProgram(PRP)
EN1,EN2
Employeeretention(turnover%) Calculatedusingtheformula:(#staffleaving/averageheadcount)*100
LossofskilledoperatorsORTSincentivescheme
LA2
Indirecteconomicimpactoncommunities
Totalcommunityinvestmentexpenditure,includingemployeevolunteering,in-kindsupportandcommunityimpactassessmentonoperations
PositivecommunitycontributionandstakeholderengagementInvestinemployeevolunteeringschemesDevelopcommunitypartnershipExpandstrategiccharitablegivingprogramsGenericoFoundation
EC8,EC9,S01
08 target 70
60
50
40
07
06
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Newproductsassessedforlifecycleimpacts(%)
08 target 70
63
58
57
07
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Employeestrainedinanti-corruptionpoliciesandprocedures(%)
*08 target
2020 target
455
245
465
473
479
490
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06
05
00
TotalGHGemissions(‘000tonnes)
*08 target
2020 target
425
220
434
444
489
520
07
06
05
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Energyconsumption(MWhperFTE)
*08 target 1060
1260
1295
1275
07
06
05
*08 target
9724
9926
9629
9035
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06
05
Weightoftotalmaterials(‘000tonnes)Recycledinputmaterials(%)
*08 target 25
28
25
22
07
06
05
Employeeretention(%)
08 target 1.2
1.0
0.9
0.7
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Communityinvestmentexpenditure(%ofpre-taxprofit)
*=FinancialimpactofFY08potentialsavingsdescribedinOuraccounts
Totalwaterusage(gigalitres)
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KeypointsMarketcompetitiveness–increaseinextremeweather
eventsisdrivinggrowthinmaritimesafetyproducts
Operationaleffectiveness–continuedfocusonemissionsreductionandresponsibleuseofwaterandothernaturalresourcescontinuestodrivedowncosts
Howdowemeasurevaluecreation?Traditionalfinancialmeasurestakeintoaccountsomeelementsofthevaluewehavecreatedasacompany,butfailtotakeintoaccountimportantnon-financialreturns.Forthisreason,inordertoassessGenerico’sperformanceincreatingnon-financialvalue,wehavequantifiedthereturnsfromimplementingstrategiesrelatingtosustainablebusinessdevelopmentandthemanagementofESGchallenges.
ModellingthefutureESGreportingWebelievetheactionwearetakingismakingourbusinessincreasinglyrobustand,asaresult,ourvulnerabilitytounexpectedeventsshoulddiminishovertime.
Weintendtopublish‘sensitivity’tableseachyearsothatinvestorsandotherstakeholderscantrackthepotentialimpactsofdeviationsfromourstrategicplan.
Inthesesensitivitytableswehighlightkeyelementsinourstrategicprioritiesthathavethegreatestimpactonourperformance.Foreachelementweassessthefinancialimpactof‘best-case’and‘worst-case’variationsfromourbase-caseassumptions.Theassumptionsunderpinningourbasecaserepresentaconservativeassessmentoftheopportunitiesforgrowthinbothrevenueandgrossprofit,andareusedtodeterminethetargetsincludedinthisreport.
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MarketcompetitivenessBasecase2008- Reducecustomerchurnrateby10%throughincreased
focusonlifecycleassessmentsofhealth,safetyandenvironmentalimpactsofproductswitha15%increaseinthenumberofnewproducts,assessedforimpacts,andpublicationofresults
- Increasetraininginanti-corruptionpoliciesandprocedurestoimprovebrandreputationandmeettargetofwinning30%ofcontractscurrentlyoutfortender
- Declininggrowthinboatsales,offsetbyincreasedmarketfocusonmaritimerisksarisingfromclimatechange;extremeweathereventstoincreasemarketpenetrationby10%
Bestcase2008- Customerchurnratereducedby20%throughsuccessful
marketawarenesscampaignonlifecycleassessmentsofhealth,safetyandenvironmentalimpacts
- Company’sstrategicfocusonsustainabledevelopmentandtransparentreportingofESGissuesresultsinsignificantincreaseinbrandreputation,drivingwinson40%ofcontractscurrentlyoutfortender
- BoatsalesinkeyNorthAmericanmarketstabiliseashouseholdwealthoutlookremainspositive.Company’sstrategicfocusonaddressingclimatechangerisksresultsin20%increaseinmarketpenetration
Worstcase2008- Customerchurnremainssteadywithnodiscernible
changeinpurchasingtrendsarisingfromcompany’simprovementsinrelationtoassessmentsoflifecycleimpactsofnewproducts
- 10%ofcontractsoutfortenderwonandmarketpenetrationlevelsdeclineby10%asboatsalesinallmarketscontinuetodecline
Changeinassumption
(forFY08only)
Financialimpact
Marketshare
+/-1% +/-$5m(Revenue):+/-$2m(Grossprofit)
Revenuegrowth
+/-7% +/-$8m(Revenue):+/-$3m(Grossprofit)
A1%riseorfallinmarketshare,ora7%riseorfallinrevenuegrowthassumptionsimpactonrevenueby+/-$5mand+/-$8mrespectively.Relatedimpactongrossprofitwouldbe+/-$2mand+/-$3m.
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OperationaleffectivenessBasecase2008- 7%reductioninGHGemissionsusing2000asthebase
yearforcomparison
- Reductioninenergyusageof8,000MWhperyear
- Waterusagereducedby200gigalitresperyear
- Reducematerialswasteby2,000tonnesperyearfromredesigningproductionprocessestodrivereducedmaterialsrecyclingcost
- Reductioninemployeeturnoverof3%drivenbyactivepromotionofcompanyESGactivityandresultantemployeesatisfaction
Bestcase2008- 9%reductioninGHGemissions(25%abovebasecase)
withefficiencybreak-throughsimplemented,especiallyinproductionandtransportemissions
- EnergyefficiencymaximisedbybringingallpipelineR&Dimprovementsintofullproductionenvironment,resultinginadditional25%reductioninenergyusageabovebasecase
- Waterusagereduction25%greaterthanbasecaseasaresultofcomprehensivewaterinfrastructureassessmentcompletedaheadofschedule
- Materialswastefromproductionsignificantlyreduceddrivingadditional25%reductionbelowbasecase
- Reductioninemployeeturnoverof5%,asESGactivitiescaptureemployeeimaginationanddriveincreasedparticipation
Worstcase2008- GHGemissionsreductionplansareimplementedacross
onlyhalftheorganisation
- ComplicationswithimplementationofrecommendedR&Dimprovementsdrives50%lessenergyusageandmaterialswastereductionthanbasecase
- Reductionsinwaterusageonlyreach50%ofbasecase
- Reductioninemployeeturnoverof1%,aslittlechangeexperiencedfromESGactivities
Changeinassumption
(forFY2008only)
Financialimpact
Operatingmargin
+/-25% +/-$7m(Revenue):+/-$3m(Grossprofit)
A25%riseorfallinoperatingmarginimprovementassumptionswouldhavea+/-$7mimpactonrevenueanda+/-$3mimpactongrossprofit.
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OngoingactivitiesMarketcompetitivenessandoperationaleffectivenessarebothsignificantlyimpactedbythesustainabilityofourbusinesspractices.WehavedevelopedKPIs,withsupportfromourkeystakeholders(Ourgroupstrategy),toassessourperformanceinembeddingsuchpracticesthroughoutourorganisation.WehavealsobegunthejourneytowardsfulltransparentreportinganddisclosureofourperformanceinaddressingthekeyESGchallengesfacingusnowandinthefuture.
Ourongoingactivitiesarefocusedonimprovingourreportingtostakeholderstoensurethatwecomply,asappropriateforacompanyofoursizeandcomplexity,withthefollowingvoluntaryglobalinitiatives:
- UNGlobalCompactCommunicationofProgress
- GlobalReportingInitiativeG3draftreportingguidance(certaindisclosuresareconsidered‘notrelevant’(NR)forGenerico;othersaredisclosedonthecompanywebsite(WEB)orbeingconsideredforfuturereporting(future)).
ToevaluatetheconsistencyofourapproachtoESGmeasurement,reportinganddisclosureagainstbothinternationalandlocalbestpractice,weareparticipantsinandbenchmarkourperformanceagainstthefollowing13:
- DowJonesSustainabilityIndex(DJSI)
- FTSE4GoodIndex
- GovernanceMetricsInternational
- CorporateResponsibilityIndex(CRI)
- ClimateLeadersIndex(outputoftheCarbonDisclosureProjectsurveys).
OurperformanceagainsttheDJSIandCRIbenchmarksisprovidedintheOuraccountssection.
Ourfocusremainsonensuringthatourreportingtostakeholdersistransparentandenablesinformedinvestmentdecisionmaking.
13Refertotheglossaryfordetailsofthesebenchmarks
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Keyperformanceindicators
Metrics ScenarioFY08capitalexpenditure
Carbonprice(pertonne)
TargetcarbonreductionbyFY08(tonnes)
Annualsaving
AnnualOPEX
Netannualsaving
Non-financialimpact
Financialimpactofclimatechange(GHGemissions)
Best $60,000 $12 12,500 $150,000 -$38,000 $112,000 ReputationRegulatoryriskEmployeeengagement
Base $60,000 $12 10,000 $120,000 -$38,000 $82,000
Worst $60,000 $12 5,000 $60,000 -$38,000 $22,000
Source:Carbonprice–refertoglossary
Metrics ScenarioFY08capitalexpenditure
Wholesaleelectricityprice(perMWh)
TargetenergyusagereductionbyFY08(MWh)
Annualsaving
AnnualOPEX
Netannualsaving
Non-financialimpact
Financialimpactofenergyandwaterconsump-tion(energyusage)
Best $275,000 $40 10,000 $400,000 -$180,000 $220,000 ReputationSupplychainEmployeeengagement
Base $275,000 $40 8,000 $320,000 -$180,000 $140,000
Worst $275,000 $40 4,000 $160,000 -$180,000 -$20,000
Source:www.nemmco.com.au
Metrics ScenarioFY08capitalexpenditure
Retailwaterprice(perGL)
TargetwaterusagereductionbyFY08(GL)
Annualsaving
AnnualOPEX
Netannualsaving
Non-financialimpact
Financialimpactofenergyandwaterconsump-tion(waterusage)
Best $93,000 $1,200 250 $300,000 -$127,500 $172,500ReputationSupplychainEmployeeengagement
Base $93,000 $1,200 200 $240,000 -$127,500 $112,500
Worst $93,000 $1,200 100 $120,000 -$127,500 -$7,500
Source:www.sydneywater.com.au
KeypointsForecastadditionalnetsavingsof5%resultingfrom2008
ESGstrategy
Continuedfocusonnon-financialopportunitiesarisingfromtransparentESGreporting
NetsavingsfromESGstrategyInordertounderstandthefinancialimplicationsofourESGstrategyforFY08andbeyond,wehaveattemptedtoquantifytheimplicationsofourstrategicactionsbysettingoutthecapitalcostinyear1(FY08)andtheongoingindicativeannualsavingandoperatingcostbasedontheFY08currencyvalues(i.e.undiscounted).Thebasisofourcalculation14andoursourcesarealsoincludedtoenableexternalverification.WehavenotfactoredincostbenefitsfromanyfutureESGactivitiesorothernon-financialbenefits(i.e.brand,reputation).
Ouraccounts
14Ourbasisofcalculationisprovidedintheglossary
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Metrics ScenarioFY08capitalexpenditure
Recyclingcost(pertonne)
TargetwasteforrecyclingreductionbyFY08(tonnes)
Annualsaving
AnnualOPEX
Netannualsaving
Non-financialimpact
Financialimpactofmaterialsusage(wasterecycling)
Best $76,000 $150 2,500 $375,000 -$108,000 $267,000ReputationEmployeeengagement
Base $76,000 $150 2,000 $300,000 -$108,000 $192,000
Worst $76,000 $150 1,000 $150,000 -$108,000 $42,000
Source:Refertowww.generico.com/environment/KPIcalculations/recyclingfordetails
Metrics ScenarioFY08capitalexpenditure
Averagerecruitmentcost(peremployee)
TurnoverreductiontargetbyFY08(turnover)
Annualsaving
AnnualOPEX
Netannualsaving
Non-financialimpact
Employeeretention
Best Nil $35,000 5% $1,531,250 -$250,000 $1,281,250
RecruitmentBase Nil $35,000 3% $918,750 -$250,000 $668,750
Worst Nil $35,000 1% $306,250 -$250,000 $56,250
Source:AnnualReportp23&p31
Metrics ScenarioFY08capitalexpenditure($’000)
Reportedpre-taxprofit($’000)
Annualsaving($’000)
AnnualOPEX($’000)
Netannualsaving($’000)
%ofpre-taxprofit
TOTAL Best $444 $26,005 $2,756 -$704 $2,053 8%
Base $444 $26,005 $1,899 -$704 $1,195 5%
Worst $444 $26,005 $796 -$704 $93 0%
ThestrategicKPIsoutlinedinOurgroupstrategyallimpactontheESGperformanceofGenericoyearonyear.Ifweimplementourstrategyandachieveourtargets,Genericowillexperiencecertainintangiblebutimportantnon-financialbenefitsincluding:
ReputationReputationisakeycomponentofGenerico’sbrandvalue.Althoughnotspecificallyvalued,anyactivityenhancingreputationwillanecdotallyenhancecorporatevalue.
RegulatoryriskTightmanagementofregulatedactivities(suchasemissions)preventsfinesandpenaltieswhichdamagereputation.
EmployeeengagementActivitiesundertakenbythecompanywhichengagethefullcooperationoftheworkforcetendtodriveproductivityandeffort,therebyimprovingoutputandreturns.
SupplychainReductioninusageofscarceresources,whileworkingwithkeysuppliers,cutscostsandimprovesworkingrelationships,therebyenhancingresults.
RecruitmentGoodretentionratesusuallymeananengagedworkforce–aplacepeopleenjoyworkingat.Asthisbecomesknown,thecompanyreceivesmoreapplicationsandrecruitmentiscomparativelyeasierandlesscostly.
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0%
20%
40%
60%
80%
100%
Other taxes(Customs duties, excise duties, GST/VAT)
Employment taxes (FBT, Payroll)
Corporate income tax
Generico2007
UKaverage
OECDaverage
Globalaverage
TotalTaxRate19benchmarkinganalysis
BenchmarkinganalysesSustainabilitybenchmarkingGenericotakespartintheannualassessmentsoftheDowJonesSustainabilityIndexes.Theseareglobalindexeswhichtrackthefinancialperformanceoftheleadingsustainability-drivencompaniesworldwide15.Ascanbeseeninthetable,Genericoisaboveorat‘bestpractice’levelforallcompaniesandforalllightmanufacturingcompanies.Oureconomicscoreisbelowmarket,andmanagementisfocusingonthisinlinewithourstrategicprioritytobeevenmorecompetitiveandtotightenouroperations.WeareaimingtofurtherimproveoureconomicscorebytheendofFY08.
Furtherdetailontheindexesisavailableatwww.sustainability-index.com.
CorporateresponsibilitybenchmarkingGenericoisaparticipantintheCorporateResponsibilityIndex.Thisindexisabenchmarkingtooltoenhancethecapacityofthebusinesstodevelop,measureandcommunicatebestpracticeinthefieldofcorporateresponsibility16.Genericoisabovemarketonallcorporateresponsibilitymeasures,andintendstoremainatthislevelforFY08.
TotalTaxContribution(TTC)TTC17isagloballyacceptedmethodologywhichwehaveadoptedtoaccuratelyreportourcontributiontothecommunitythroughallformsofbusinesstax.Itidentifiesalldirectandindirectbusinesstaxespaidbyacompanyaswellasthosecollectedonbehalfofthegovernment.AlthoughTTCisnotatraditionalGRIdisclosureandisnotakeyESGmetricforus,webelieveitisanimportantmeasureofourtotalcontributiontothetaxsystemandthemarketsinwhichweoperate.
TTCmakesiteasierforustoidentifyalltaxespaidandcollected,highlightspotentialareasofrisk,andallowsustocommunicatetoourstakeholdersonouroveralltaxcontribution.Italsoenablesustobenchmarkourtaxcontributionagainstindustry,regionalandinternationalaverages.TheWorldBankisusingtheTTCmethodologyinitsannualglobalsurveyof175countries,whichwillprovideaglobalreferencepointforsurveyparticipants18.
15www.sustainability-index.com
16www.corporate-responsibility.com.au
17www.pwc.com/uk/ttc
18ThelatestWorldBankandPricewaterhouseCoopersGlobalTotalTaxContributionreportisPaying Taxes: The Global Picture.Thereportisavailableatwww.worldbank.org/reference
19Seeglossary
Totalsustainability
score
Environmentscore
Socialscore
Economicscore
All companies
Light manufacturing sector
Generico
0% 20% 40% 60% 80% 100%
Integration ofsustainability
Overall
Managementpractice
Corporatestrategy
Performanceand impact
All companies
Light manufacturing sector
Generico
0 20 40 60 80 100
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Corporate Tax
FBT
Payroll tax
Other business
taxesIrrecoverable
GST
TTCforGenerico
WhatisourTotalTaxContribution?OurTTCisthedirectandindirecttaxespaidbythecompany,aswellasthosecollectedonbehalfoftheGovernment.Importantly,TTCmakesiteasierforthecompanytoidentifyallthetaxespaidandcollected,highlightspotentialareasofriskandallowustocommunicateholisticallyonouroveralltaxcontributiontoourstakeholders.
Asrepresentedinthetablebelow,ourTTCincludesanadditional29.4%(2006:29.6%)oftaxesotherthanthecorporateincometaxexpensereportedinourfinancialstatements.
TotalTaxContributionforGenerico2007(‘000) 2006(‘000)
Capital Corporateincometax 7,399 6,013
IrrecoverableGST 520 460
People Fringebenefitstaxes 910 720
Payrolltaxes 1,045 890
Products Customsduties 390 310
Exciseduties 215 150
Total 10,479 8,543
0%
10%
20%
30%
40%
50%
60%
Generico 2007
Generico 2006
OECD average
Global average
UK average
Taxrate%
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Appendix
Full Partial Future Ref
Strategyandanalysis1.1 ChiefExecutive’sstatement • 6
1.2 Descriptionofkeyimpacts,risksandopportunities • 9,AR16
Organisationalprofile2.1 Nameoftheorganisation • ARIntro
2.2 Primarybrandsandproducts • AR2
2.3 Operationalstructureoftheorganisation,includingmaindivisionsandoperatingcompanies
• AR2
2.4 Locationoforganisation’sheadquarters • AR2
2.5 Numberofcountrieswheretheorganisationoperates(andnamesofcountrieswitheithermajoroperationsorthatarespecificallyrelevanttotheESGissuescoveredinthereport,whereapplicable)
• AR2
2.6 Natureofownershipandlegalform WEB
2.7 Marketsserved(includinggeographicbreakdown,sectorsservedandtypesofcustomers)
• AR3
2.8 Scaleofthereportingorganisation,including:•numberofemployees,netrevenues,total
capitalisationbrokendownintermsofequityanddebt,quantityofproducts(orservices)provided,totalassets,beneficialownership(includingidentityandpercentageofownershipoflargestshareholder)
•breakdownsbycountry/regionofthefollowing:
-sales/revenuesbycountries/regionsthatmakeup5%ormoreoftotalrevenues
-costsbycountries/regionsthatmakeup5%ormoreoftotalrevenues
-employees
•AR26,AR34,AR58-59,AR64
C GRICoreindicator
A GRIAdditionalindicator
AR 2007GenericoAnnualReport
WEB OnGenericowebsite-notcriticalto thisreport
NR Notrelevanttotheorganisation
Full GRIrequirementfullycompliedwithinthe currentreport
Partial GRIrequirementpartiallycompliedwithin thecurrentreport
Future GRIrequirementisnotpartofcurrentcore strategy;tobeaddressedinfutureperiods
KeytoGRIindicatorstatus
G3IndicatorReferenceTableThetablelistsalltheGRIindicatorsandisasinglepointofreferenceforsubjectsanddatainthisreportandintheReportLeadershipdocument,withcrossreferencingtotheindicators.Forfurtherdetailandfulldescriptionsofallindicatorsgotowww.globalreporting.org.
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2.9 Significantchangesduringthereportperiodregardingsize,structureorownershipincluding:•thelocationof,orchangesin,operations,including
facilityopenings,closingsandexpansions
•changesinthecapitalstructureandothercapitalinformation,maintenanceandalterationoperations
• AR3,AR11
2.10 Awardsreceivedinthereportingperiod •
ReportparametersReportprofile
3.1 Reportingperiodforinformationprovided • AR51
3.2 Dateofthemostrecentreport • Firstreport
3.3 Reportingcycle • Annual
3.4 Contactpointforquestionsregardingthereportanditscontents
•
Reportscopeandboundary
3.5 Processfordefiningcontent,including:•definingmateriality
•prioritisingtopicswithinthereport
•identifyingstakeholderstheorganisationexpectstousethereport
WEB
3.6 Boundaryofthereport(e.g.countries,divisions,subsidiaries,leasedfacilities,jointventures,suppliers)
• Wholeorg.covered
3.7 Stateanyspecificlimitationsonthescopeofthereport
NR N/A
3.8 Basisforreportingonjointventures,subsidiaries,leasedfacilities,outsourcedoperationsandotherentitiesthatcansignificantlyaffectcomparabilityfromperiodtoperiodand/orbetweenorganisations
NR N/A
3.9 Datameasurementtechniquesandthebasesofcalculations,includingassumptionsandtechniquesunderlyingestimationsappliedtothecompilationofindicatorsandotherinformationinthereport
• 20-21
3.10 Explanationoftheeffectofanyre-statementsofinformationprovidedinearlierreportsandthereasonsforsuchre-statements
• N/A
3.11 Significantchangesfrompreviousreportingperiodsinthescope,boundaryormeasurementmethodappliedinthereport
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GRcontentindex
3.12 TableidentifyingthelocationoftheStandardDisclosuresinthereport,identifythepagenumbersorweblinkswherethefollowingcanbefound:•strategyandanalysis1.1–1.2
•organisationalprofile2.1–2.10
•reportparameters3.1–3.13
•governance,commitmentsandengagement4.1–4.17
•disclosureofmanagementapproach,percategory
•coreperformanceindicators
•anyGRIadditionalindicatorsandanysectorsupplementindicatorsincludedinthereport
• 24-33
Assurance
3.13 Policyandcurrentpracticewithregardtoseekingexternalassuranceforthereport.Ifnotincludedintheassurancereportaccompanyingthereport,explainthescopeandbasisofanyexternalassuranceprovided.Alsoexplaintherelationshipbetweenthereportingorganisationandtheexternalassuranceprovider
• 2
Governance,commitmentsandengagementGovernance
4.1 Governancestructureoftheorganisation,includingcommitteesunderthehighestgovernancebodyresponsibleforspecifictasks,suchassettingstrategyororganisationaloversight
WEB 10,AR22
4.2 IndicatewhethertheChairofthehighestgovernancebodyisanexecutiveofficer
WEB
4.3 Fororganisationsthathaveaunitaryboardstructure,statethenumberofmembersofthehighestgovernancebodythatareindependentand/ornon-executivemembers
NR
4.4 Mechanismsforshareholdersandemployeestoproviderecommendationsordirectiontothehighestgovernancebody
WEB
4.5 Linkagebetweencompensationformembersofthehighestgovernancebody,seniormanagersandexecutives,andtheorganisation’sperformance
WEB
4.6 Processesinplaceforthehighestgovernancebodytoensureconflictsofinterestareavoided
WEB
4.7 Processfordeterminingqualificationsandexpertiseofthemembersofthehighestgovernancebodyforguidingtheorganisation’sstrategyoneconomic,environmentalandsocialtopics
WEB
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4.8 Internallydevelopedstatementsofmissionorvalues,codesofconduct,andprinciplesrelevanttoeconomic,environmentalandsocialperformanceandthestatusoftheirimplementation.Explainthedegreetowhichthese:
•areappliedacrosstheorganisationindifferentregionsanddepartments/units
•relatetointernationallyagreedstandards
WEB 6
4.9 Proceduresofthehighestgovernancebodyforoverseeingtheorganisation’sidentificationandmanagementofeconomic,environmentalandsocialperformanceincludingrelevantrisksandopportunities,andadherenceorcompliancewithinternationallyagreedstandards,codesofconductandprinciples
WEB
4.10 Processesforevaluatingthehighestgovernancebody’sownperformance,particularlywithrespecttoeconomic,environmentalandsocialperformance
WEB 11,12
Commitmentstoexternalinitiatives
4.11 Explanationofwhetherandhowtheprecautionaryapproachorprinciple(asintroducedbyArticle15oftheRioPrinciples)isaddressedbytheorganisation
WEB
4.12 Externallydevelopedeconomic,environmentalandsocialcharters,principlesandotherinitiativestowhichtheorganisationsubscribesorendorses
• 9,13
4.13 Membershipinassociationsand/ornational/internationaladvocacyorganisationsinwhichtheorganisation:
•haspositionsingovernancebodies
•participatesinprojectsorcommittees
•providessubstantialfundingbeyondroutinemembershipdues
•viewsmembershipasstrategic
•
Stakeholderengagement
4.14 Listofstakeholdergroupsengagedbytheorganisation
WEB
4.15 Basisofidentificationandselectionofstakeholderswithwhomtoengage
WEB
4.16 Approachestostakeholderengagement,includingfrequencyofengagementbytypeandbystakeholdergroup
WEB
4.17 Keytopicsandconcernsthathavebeenraisedthroughstakeholderengagement,andhowtheorganisationhasrespondedtothosekeytopicsandconcerns,includingthroughitsreporting
WEB 13-15
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EconomicEconomicperformance
EC1 Directeconomicvaluegeneratedanddistributed,includingrevenues,operatingcosts,employeecompensation,donationsandothercommunityinvestments,retainedearningsandpaymentstocapitalprovidersandgovernments
C • 10-11,AR51-71
EC2 Financialimplicationsandotherrisksandopportunitiesfortheorganisation’sactivitiesduetoclimatechange
C • 8,10-11
EC3 Coverageoftheorganisation’sdefinedbenefitplanobligations
C • AR45-46,AR61-68
EC4 Significantfinancialassistancereceivedfromgovernment
C • Nilreceived
Marketpresence
EC5 Rangeofratiosofstandardentrylevelwagecomparedtolocalminimumwageatsignificantlocations
A •
EC6 Policy,practicesandproportionofspendingonlocalsuppliersatsignificantlocationsofoperation
C •
EC7 Proceduresforlocalhiringandproportionofseniormanagementhiredfromthelocalcommunityatsignificantlocationsofoperation
C •
Indirecteconomicimpacts
EC8 Developmentandimpactofinfrastructureinvestmentsandservicesprovidedprimarilyforpublicbenefitthroughcommercial,in-kindorprobonoengagement
C • 10-11
EC9 Understandinganddescribingsignificantindirecteconomicimpacts,includingtheextentofimpacts
C • 10-11
EnvironmentMaterials
EN1 Materialsusedbyweightorvolume C • 10-11
EN2 Percentageofmaterialsusedthatarerecycledinputmaterials
C • 10-11
Energy
EN3 Directenergyconsumptionbyprimaryenergysource C • 10-11,14
EN4 Indirectenergyconsumptionbyprimaryenergysource C • 10-11,14
EN5 Energysavedduetoconservationandefficiencyimprovements
A WEB 14
EN6 Initiativestoprovideenergy-efficientorrenewableenergy-basedproductsandservices
A WEB
EN7 Initiativestoreducedirectenergyconsumptions A WEB 14
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Water
EN8 Totalwaterwithdrawalsbysource C WEB
EN9 Watersourcesaffectedsignificantlybywithdrawalofwater
A WEB
EN10 Percentageandtotalvolumeofwaterrecycledandreused
A WEB
Biodiversity
EN11 Locationandsizeoflandowned,leased,managedin,oradjacentto,protectedareasandareasofhighbiodiversityvalueoutsideprotectedareas
C WEB
EN12 Descriptionofsignificantimpactsofactivities,productsandservicesonbiodiversityinprotectedareasandareasofhighbiodiversityoutsideprotectedareas
C WEB
EN13 Habitatsprotectedorrestored A WEB
EN14 Strategies,currentactionsandfutureplansformanagingimpactsonbiodiversity
A WEB
EN15 NumberofIUCNRedListspeciesandnationalconservationlistspecieswithhabitatsinareasaffectedbyoperations,bylevelofextinctionrisk
A WEB
Emissions,effluentandwaste
EN16 Totaldirectandindirectgreenhousegasemissionsbyweight
C • 10-11
EN17 Otherrelevantindirectgreenhousegasemissionsbyweight
C • 10-11
EN18 Initiativestoreducegreenhousegasemissionsandreductionsachieved
A WEB 14
EN19 Emissionsofozone-depletingsubstancesbyweight C WEB
EN20 NOx,SOxandothersignificantairemissionsbytypeandweight
C WEB
EN21 Totalwaterdischargebyqualityanddestination C WEB
EN22 Totalweightofwastebytypeanddisposalmethod C WEB 10-11
EN23 Totalnumberandvolumeofsignificantspills C NR
EN24 Weightoftransported,imported,exportedortreatedwastedeemedhazardousunderthetermsoftheBaselConventionAnnex,andpercentageoftransportedwasteshippedinternationally
A NR
EN25 Identity,size,protectedstatusandbiodiversityvalueofwaterbodiesandrelatedhabitatssignificantlyaffectedbythereportingorganisation’sdischargeofwaterandrunoff
A WEB
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Productsandservices
EN26 Initiativestomitigateenvironmentalimpactsofproductsandservices,andextentofimpactmitigation
C WEB
EN27 Percentageofproductssoldandtheirpackagingmaterialsthatarereclaimedbycategory
C WEB
Compliance
EN28 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetarysanctionsfornon-compliancewithenvironmentallawsandregulations
C •Nilfinesorsanctions,11
Transport
EN29 Significantenvironmentalimpactsoftransportingproductsandothergoodsandmaterialsusedfortheorganisation’soperations,andtransportingmembersoftheworkforce
A WEB
Overall
EN30 Totalenvironmentalprotectionexpendituresandinvestmentsbytype
A •
LabourpracticesanddecentworkEmployment
LA1 Totalworkforcebyemploymenttype,employmentcontractandregion
C •
LA2 Totalnumberandrateofemployeeturnoverbyage,genderandregion
C WEB AR31
LA3 Benefitsprovidedtofull-timeemployeesthatarenotprovidedtotemporaryorpart-timeemployees,bymajoroperations
A •
Labour/managementrelations
LA4 Percentageofemployeescoveredbycollectivebargainingagreements
C WEB
LA5 Minimumnoticeperiod(s)regardingsignificantoperationalchanges,includingwhetheritisspecifiedincollectiveagreements
C WEB
Occupationalhealthandsafety
LA6 Percentageoftotalworkforcerepresentedinformaljointmanagement-workerhealthandsafetycommitteesthathelpmonitorandadviseonoccupationalhealthandsafetyprograms
A WEB
LA7 Ratesofinjury,occupationaldiseases,lostdays,andabsenteeism,andtotalnumberofwork-relatedfatalitiesbyregion
C • AR21
LA8 Education,training,counselling,preventionandrisk-controlprogramsinplacetoassistworkforcemembersregardingseriousdiseases
C WEB
LA9 Healthandsafetytopicscoveredinformalagreementswithtradeunions A WEB
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Full Partial Future Ref
Trainingandeducation
LA10 Averagehoursoftrainingperyearperemployeebyemployeecategory
C WEB
LA11 Programsforskillsmanagementandlifelonglearningsthatsupportthecontinuedemployabilityofstaffandassisttheminmanagingcareerendings
A WEBORTS
program
LA12 Percentageofemployeesreceivingregularperformanceandcareerdevelopmentreviews
A •
Diversityandequalopportunity
LA13 Compositionofgovernancebodiesandbreakdownofemployeespercategoryaccordingtogender,age,minoritygroupmembershipandotherindicatorsofdiversity
C WEB
LA14 Ratioofbasicsalaryofmenandwomenbyemployeecategory
C WEB
HumanrightsInvestmentsandprocurementpractices
HR1 Percentageandtotalnumberofsignificantinvestmentagreementsthatincludehumanrightsclausesorthathaveundergonehumanrightsscreening
C •
HR2 Percentageofsignificantsuppliersandcontractorsthathaveundergonescreeningonhumanrightsandactionstaken
C •
HR3 Totalhoursofemployeetrainingonpoliciesandproceduresconcerningaspectsofhumanrightsthatarerelevanttooperations,includingthepercentageofemployeestrained
A •
Non-discrimination
HR4 Totalnumberofincidentsofdiscriminationandactionstaken
C • Noincidents
Freedomofassociationandcollectivebargaining
HR5 Operationsidentifiedinwhichtherighttoexercisefreedomofassociationandcollectivebargainingmaybeatsignificantrisk,andactionstakentosupporttheserights
C WEB
Childlabour
HR6 Operationsidentifiedashavingsignificantrisksforincidentsofchildlabour,andmeasurestakentocontributetotheeliminationofchildlabour
C WEB
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Full Partial Future Ref
Forcedandcompulsorylabour
HR7 Operationsidentifiedashavingsignificantriskforincidentsofforcedorcompulsorylabour,andmeasurestakentocontributetotheeliminationofforcedorcompulsorylabour
C WEB
Securitypractices
HR8 Percentageofsecuritypersonneltrainedintheorganisation’spoliciesorproceduresconcerningaspectsofhumanrightsthatarerelevanttooperations
A WEB
Indigenousrights
HR9 Totalnumberofincidentsofviolationsinvolvingrightsofindigenouspeopleandactionstaken
A • Noincidents
SocietyCommunity
SO1 Nature,scopeandeffectivenessofanyprogramsandpracticesthatassessandmanagetheimpactsofoperationsoncommunities,includingentering,operatingandexisting
C • 10-11
Corruption
SO2 Percentageandtotalnumberofbusinessunitsanalysedforrisksrelatedtocorruption
C • 10-11
SO3 Percentageofemployeestrainedintheorganisation’santi-corruptionpoliciesandprocedures
C • 10-11
SO4 Actionstakeninresponsetoincidentsofcorruption C NR
Publicpolicy
SO5 Publicpolicypositionsandparticipationinpublicpolicydevelopmentandlobbying
C WEB
SO6 Totalvalueoffinancialandin-kindcontributionstopoliticalparties,politiciansandrelatedinstitutionsbycountry
A • Nilcontributions
Anti-competitivebehaviour
SO7 Totalnumberoflegalactionsforanti-competitivebehaviour,anti-trustandmonopolypracticesandtheiroutcomes
A • Nillegalactions
Compliance
SO8 Monetaryvalueofsignificantfinesandtotalnumberofnon-monetarysanctionsfornon-compliancewithlawsandregulations
A • Nilfinesorsanctions
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ProductresponsibilityCustomerhealthandsafety
PR1 Lifecyclestagesinwhichhealthandsafetyimpactsofproductsandservicesareassessedforimprovement,andpercentageofsignificantproductsandservicescategoriessubjecttosuchprocedures
C • 10-11
PR2 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerninghealthandsafetyimpactsofproductsandservices,bytypeofoutcomes
A •Noincidentsofnon-compliance
Productandservicelabelling
PR3 Typeofproductandserviceinformationrequiredbyprocedures,andpercentageofsignificantproductsandservicessubjecttosuchinformationrequirements
C WEB
PR4 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerninghealthandsafetyimpactsofproductsandservicesinformationandlabelling,bytypeofoutcomes
A •Noincidentsofnon-compliance
PR5 Practicesrelatedtocustomersatisfaction,includingresultsofsurveysmeasuringcustomersatisfaction
A WEB
Marketingcommunications
PR6 Programsforadherencetolaws,standardsandvoluntarycodesrelatedtomarketingcommunications,includingadvertising,promotionandsponsorship
C WEB
PR7 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerningmarketingcommunications,includingadvertising,promotionandsponsorship,bytypesofoutcomes
A •Noincidentsofnon-compliance
Customerprivacy
PR8 Totalnumberofsubstantiatedcomplaintsregardingbreachesofcustomerprivacyandlossesofcustomerdata
A •Nosubstantiatedcomplaints
Compliance
PR9 Monetaryvalueofsignificantfinesfornon-compliancewithlawsandregulationsconcerningtheprovisionanduseofproductsandservices
C • Nilfines,11
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Accreditedrenewableenergysourceswww.greenpower.gov.au
GreenPoweraccreditationprovidesassurancethattherenewableenergypurchasedwilldecreasegreenhousepollutionandactivelycontributetothedevelopmentofarenewableenergyindustry.
ASXGovernanceCouncilwww.asx.com.au/supervision/governance/index.htm
TheobjectiveofthisAustraliancouncilistodevelopanddeliveranindustry-wide,flexibleframeworkforcorporategovernancethatisapracticalguideforlistedcompanies,toenablethemtoimprovetheirexistingpractices.(Note:localcountrieswillhavetheirowncorporategovernancedisclosureobligations.)
CarbonDisclosureProject(CDP)www.cdproject.net
Thisprojectprovidesasecretariatfortheworld’slargestinstitutionalinvestorcollaborationonthebusinessimplicationsofclimatechange.CDPrepresentsanefficientprocesswherebymanyinstitutionalinvestorscollectivelysignasingleglobalrequestfordisclosureofinformationonGreenhouseGasEmissions.CDPhasdevelopedtheClimateLeadersIndex(CLI)whichiscomprisedofbest-in-classresponsestotheannualCDPrequestfordisclosureinformation.
Carbonfootprintwww.carbonfootprint.com
Acompany’scarbonfootprintisameasureoftheimpactitsactivitieshaveontheenvironmentintermsoftheamountofgreenhousegasesproduced,measuredinunitsofcarbondioxide.
ClimateLeadersIndex(CLI)www.cdproject.net/climateleaders2006.asp
TheCLIrevealsforinvestorswhichhigh-impactFT500companieshavethemostcomprehensiveclimate-changedisclosurepracticesinplace,judgingbyeachcompany’sresponsetotheCDPquestionnaire.
CommunityInvestmentExpenditure
Thisincludesthemoneyvalueequivalentofallofthecompany’scommunitycontributionsincludingdirectcommunityinvestment,charitablegiving,employeevolunteeringandin-kindinfrastructureandequipment.
CorporateResponsibilityIndex(CRI)www.bitc.org.uk
BusinessintheCommunity’sCRIistheUK’sleadingbenchmarkofresponsiblebusiness,helpingcompaniestointegrateandimproveresponsiblebusinessacrosstheirorganisation,andprovidingasystematicapproachtomanaging,measuringandreportingtheirimpactsonsocietyandtheenvironment.
DowJonesSustainabilityIndexes(DJSI)www.sustainability-index.com
TheDJSIarethefirstglobalindexestrackingthefinancialperformanceoftheleadingsustainability-drivencompaniesworldwide.
EnhancedAnalyticsInitiative(EAI)www.enhancedanalytics.com
TheEAIisaninternationalcollaborationbetweenassetownersandassetmanagersaimedatencouragingbetterinvestmentresearch,inparticularresearchthattakesintoaccounttheimpactofextra-financialissuesonlong-terminvestment.
FTSE4GoodIndexwww.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp
TheFTSE4GoodIndexSerieshasbeendesignedtomeasuretheperformanceofcompaniesthatmeetgloballyrecognisedcorporateresponsibilitystandards,andtofacilitateinvestmentinthosecompanies.
Glossary
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GlobalFrameworkforClimateRiskDisclosurewww.unepfi.org
Thisisastatementofinvestorexpectationsforcomprehensivecorporateclimateriskdisclosure.Thestatementurgescompaniestodevelopaclimatechangestatement,anemissionsmanagementstatement,detailsofthecompany’scorporategovernanceofclimatechangeandastrategicandphysicalriskofclimatechangeanalysis.
GlobalReportingInitiativeG3www.globalreporting.org
TheGRIvisionisthatreportingoneconomic,environmentalandsocialperformancebyallorganisationsbecomesasroutineandcomparableasfinancialreporting.GRIaccomplishesthisvisionbydeveloping,continuallyimprovingandbuildingcapacityaroundtheuseofitsSustainabilityReportingFramework.TheG3isthelatestversionofthisframework.
GovernanceMetricsInternational(GMI)www.gmiratings.com
GMIprovidesindependentgovernanceratingsonover4,000companiesglobally.Theratingcriteriaarebasedonsecuritiesregulations,stockexchangelistingrequirementsandvariouscorporategovernancecodesandprinciples.
Greenhousegas(GHG)emissionswww.ghgprotocol.orgDirect
DirectGHGemissions(scope1)occurfromsourcesthatareownedorcontrolledbythecompany,forexample,emissionsfromcombustioninownedorcontrolledvehiclesandemissionsfromproductioninownedorcontrolledprocessequipment.
Indirect IndirectGHGemissionsareaconsequenceoftheactivitiesofthecompany,butoccuratsourcesownedorcontrolledbyanotherentity.IndirectGHGemissionsincludebothemissionsfromconsumptionofelectricity,heatorsteam(scope2)andotherindirectemissions(scope3),includingtransport-relatedactivitiesortransmissionanddistributionlossesnotcoveredinscope2.
TotalTaxRate(TTR) TTRmeasurestheamountoftaxespayablebythecompanyexpressedasashareofcommercialprofits.Thetaxesincludedcanbedividedintofivecategories:profitorcorporateincometax,socialsecuritycontributionsandotherlabourtaxespaidbytheemployer,propertytaxes,turnovertaxesandothersmalltaxes.
UNEPFIwww.unepfi.org
TheUnitedNationsEnvironmentProgramFinanceInitiative(UNEPFI)isaglobalpartnershipbetweenUNEPandthefinancialsector.Over160institutions,includingbanks,insurersandfundmanagers,workwithUNEPtounderstandtheimpactsofenvironmentalandsocialconsiderationsonfinancialperformance.
UNGlobalCompact(UNGC)www.unglobalcompact.org
TheUNGCisaninternationalinitiativeoftheUNthatbringscompaniestogetherwithUNagencies,labourandcivilsocietytosupportuniversalenvironmentalandsocialprinciples.AllparticipantsareexpectedtoprovideanannualCommunicationofProgressdescribingactiontakeninsupportoftheGlobalCompact.
UNPrinciplesforResponsibleInvestment(PRI)www.unpri.org
ThePRIaimstohelpintegrateconsiderationofenvironmental,socialandgovernance(ESG)issuesbyinstitutionalinvestorsintoinvestmentdecision-makingandownershippractices,andtherebyimprovelong-termreturnstobeneficiaries.
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Formoredetailrefertowww.generico.com/environment/KPI_calculations.
1.GHGemissionsThecarbonpriceof$12usedisacompositepricebasedontheEUEmissionsTradingSchemecurrentspotpricefor2005-2007emissionsandforwardpricefor2008-2012emissions,theNSWGreenhouseGasAbatementSchemecurrentspotpriceandtheChicagoClimateExchangecurrentspotprice.
CalculatedGHGemissionsarebasedonourreportedscope1,2and3emissions(refertoGHGemissionsintheglossary).Theseincludethefollowingfactors:
-Emissionsfromproductionprocessesininstallationsownedbythecompany(scope1)
-Consumptionofpurchasedelectricity(scope2)
-Consumptionofotherfuels(includingoil,naturalgasandcoal)(scope2)
-Transportationofproducts,materialsandwastebyvehiclesownedbythecompany(scope1) andvehiclesownedbysubcontractors(scope3)
-Useofproductsmanufacturedandsoldanddisposal(endoflife)ofproductssold(scope3)
-Employeebusinesstravel(scope3).
UnitsTonnesofcarbondioxideequivalents(tCO2-e):Thisisthestandardunitformeasuringthequantityofgreenhousegasemissions.
2.EnergyusageAllsitesprovidedelectricitymeterreadingswhichwereaggregatedtocalculatetotalcompany-wideenergyusage.
UnitsMWh:Megawatthour.Thisisaunitofenergywhichrepresentsonemillionwattsrunningcontinuouslyforonehour.1MWh=3.6GJ.
TheconversioncalculationfromtCO2-etoMWhis:tCO2-e=1.00/MWh.ThisisbasedonthecalculatedaveragevalueavailableontheAustralianGreenhouseOfficewebsite.
Formula:CO2-e(tonnes)=Energyconsumption(MWh)xFuelemissionfactor(tCO2/MWh).
3.WaterusageTotalwaterusagecalculatedfrominvoicedwaterusagedataprovidedbyutilitiessupplierateachsite.
Units kL:Kilolitre(1,000litres) GL:Gigalitre(1,000,000litres)
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4.MaterialsusageWeightoftotalmaterialsusedinproductioniscapturedthroughGenerico’sinventorymanagementsystem.
Recycledinputmaterialspercentageiscalculatedasthepercentageofrecycledmaterialsdividedbythetotalmaterialsusedinproduction.Theweightofrecycledmaterialsisalsocapturedthroughtheinventorymanagementsystem.
5.EmployeeretentionCalculatedusingtheformula:(Numberofstaffleaving/averageheadcount)*100.Therecruitmentcostperemployeeof$35,000istakenfromp21oftheGenerico2007AnnualReport,thetotalactiveemployeesof875istakenfromp64oftheAnnualReportandthetotalsalaryandwagesof$9,962,000istakenfromp59oftheAnnualReport.
Thebasecasegrossannualsavingiscalculatedusing:
Annualsaving = (averagerecruitmentcost)x (turnoverreduction%)x (totalactiveemployees) = $35,000x0.03x875 = $918,750
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© 2007 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
This document is provided by PricewaterhouseCoopers to its clients as general guidance only and does not constitute the provision of accounting, legal advice, tax services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, legal, accounting or other competent advisers. Given the changing nature of laws, rules and regulations, there may be omissions or inaccuracies in the information presented herein. The information is provided “as is” with no assurance or guarantee of completeness, accuracy or timeliness of the information. In no event will PricewaterhouseCoopers or its professionals be liable in any way to you or to anyone else for any decision made or action taken in reliance on the information.
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