BDO SUSTAINABILITY

Developing a sustainability network

APRIL 2023
SUSTAINABILITY AT BDO
The sustainability concept as we know it today dates
to 1987 when it was used in the Brundtland Report,
or the Report of the World Commission on
Environment and Development: our Common Future,
produced by several countries for the United
Nations. Sustainability is often used interchangeably
with ESG (E = Environmental; S = Social; G =
Governance) – the three core pillars of sustainability.
At BDO, ‘Sustainability’ is the overarching term we
use to describe all our efforts to minimise our
negative impact on the world, as well as our efforts
to increase the positive.
Sustainability is core to our strategic ambition.
Everything we do at BDO is viewed through a
sustainability lens to ensure that we implement and
embed the principles of sustainability across all BDO
firms as a global initiative and a business imperative.
We are continually adapting our strategy to
incorporate sustainability into our business – and at
the same time, work with our clients to help them
navigate their own sustainability journey. As Advisers
of the Future to our clients we bring sustainability
issues to the forefront of discussions, now.
Our client-facing experts help organisations be
better, do better, be more efficient and contribute
to a more sustainable future through a range of
products, processes and tools to help clients in their
own sustainability journeys.
Smart companies are discovering that it is no longer
a choice between going green and growing long-term
profits – sustainability is the path to prosperity. For
both humanitarian and business reasons, it is
imperative that all organisations take action now and
embrace the benefits of a green economy.
Clients are increasingly interested in where BDO is on
the ESG journey, and about our ESG policies and
practices. We need to be able to articulate and
demonstrate a compelling response. We strongly
encourage you to ensure that your firm is on the
sustainability journey, to create a strong and
authentic link between living sustainability values
and delivering quality client reporting services.
You can read more about BDO’s sustainability
journey, our commitment and actions, and our
sustainability services on BDO World.
2
REPORTING ON WHAT MATTERS - SUSTAINABILITY

This ESG Reporting playbook is designed to equip all BDO firms to better understand,
analyse, develop, implement and support clients reporting on reporting their
material sustainability issues.
This playbook naturally does not cover all your clients’ reporting journey
intricacies, market and industry specific approaches, or appropriate digital
tools. Nor does it provide a ‘one size fits all’ template to address often
very individual sustainability maturity issues. Consider this playbook a
sustainability reporting map and compass in your hands – enabling you
to venture into your clients’ reporting landscape providing trusted
direction and support.

We also recommend using this playbook alongside the BDO

World ESG Reporting pages where you will find useful
news, content and materials covering all aspects of
reporting on environmental, social and governance issues.

We want to hear from you, so if you have questions or

challenges, need additional guidance, or simply want
to share your experience and successes, please email
us on sustainabilityservices@bdo.global.
Together we can become the preferred client For more on our other Sustainability services, visit BDO
destination for ESG Reporting. World

3
STATEMENT

To effectively sell and deliver ESG Reporting services to our

clients, it is important that team members can explain the
impact of producing an annual ESG report and related public
disclosures in terms of managing risk and taking advantage of
opportunities.

ESG is an investment and an integral part of each

corporate strategy. Clients need to understand
the driving forces in order to understand the
importance of producing an ESG report.
CONTENTS

The sustainability context and the importance of reporting P7

Our sustainability reporting services P14

Reporting toolkit and methodology P17

Our competitive advantage P28

Credentials, experts and support P34

4
KEY MESSAGES TO SHARE WITH CLIENTS (CONVERSATION STARTERS)
When having ESG conversations with clients, it’s
important to highlight the benefits of investing in an
ESG programme, along with asking certain questions
that will get the client thinking about how ESG will
impact their own business. The following key
messages can be used when speaking with clients
about various ESG risks and opportunities:
01 SUPPLY CHAIN
Global supply chains involve hundreds of stakeholders and a
myriad of activities that are often opaque and complex from an
ESG perspective. As a result, businesses need to monitor their
supply chain for ESG issues.
02 EMISSIONS MANAGEMENT
Upcoming regulations on public companies to disclose and
report on their Scope 1, 2 and 3 greenhouse gas (GHG)
emissions will put pressure on the entire supply chain to map
out their carbon footprint.
03
ENVIRONMENTAL RISKS
Certain sectors have many environmental risks that need to be
managed. The sector needs to gain resilience to regulatory change
by planning for climate risks, carbon pricing and anti-pollution
policies like bans on single use plastics.
04 PRIVACY AND DATA SECURITY OF ITS CUSTOMERS
The interconnectedness of today’s world means that a
corporation’s cyber policy, compliance and risk metrics can have
far-reaching impacts that can cascade throughout society.
Customers want to know that their information is protected and
that data won’t be shared or sold to other organisations.
05 ETHICAL BUSINESS AND FAIR LABOUR PRACTICES
Increasingly, organisations need to strengthen their human
rights policies, child labour safeguards and anti-bribery practices
across their entire value chain.
5
KEY MESSAGES TO SHARE WITH CLIENTS (CONTINUED)

06 ACCESS TO CAPITAL
Scrutiny from the public over limiting greenhouse gas emissions and fair business
practices makes it harder to obtain capital if organisations don’t commit to
impactful ESG practices.

07 BUSINESS MODEL DISRUPTION

Abnormal weather events including frequent wildfires are occurring more often
and with greater intensity making climate change appear more imminent. As a
result, businesses are experiencing pressure to innovate their business models
and reduce their environmental impact.

08 COMMUNITY ENGAGEMENT
Pressure is increasing on companies to re-evaluate their role in local and global
communities. For energy and natural resources companies, most of the scrutiny
focuses on environmental issues (i.e. water use, waste, air pollution,
transparency etc.). To successfully navigate this transition, it is vital to have a
robust ESG programme with a community engagement component, to maintain
the social license required to operate.

6
THE WHY
The sustainability context
The importance of sustainability reporting for
our clients, their stakeholders and wider society

7
OUR SUSTAINABILITY CONTEXT – ACTIVITIES HAVE IMPACT

You can't manage what

you can't measure;
you can't improve what
you can't report.

8
OUR SUSTAINABILITY CONTEXT – ACTIVITIES HAVE IMPACT (CONTINUED)
Business and human activities have rising and interconnected
impacts on our ecosystems, communities and economies - some
positive such as job creation, Covid19 vaccine availability, taxes
for improving public infrastructure and poverty reduction; some
negative including accelerating GHG emissions from burning fossil
fuels, an increase in corruption perception and gender/equal pay
disparities (illustration 1). Having a clearer view on all positive
and negative impacts arising from business activities will enable
risks to be minimised e.g., avoiding pollution fines while
maximising opportunities e.g., lower impact product innovation
over a short- medium- and long-term time horizon.
Global CO2 Global exports Global gender
emissions pay gap
Illustration 2 – +/- growth impacts
Sources: Stockholm Resilience Center (2022), UN Development Program (2022), Brundtland Report (1987), Triple Bottom Line (1994)
The concept of sustainability has many definitions including the
famous: “meeting the needs of the present, e.g., affordable
housing, clean energy, access to healthcare, well paid jobs,
robust food supply and no discrimination based on gender,
ethnicity and sexual orientation, without compromising the
ability of future generations to meet their own needs”. Another
popular approach that searches for a lasting balance or “sweet
spot” between economic prosperity, environmental protection
and communities' enhancement is the “Triple Bottom Line”.
Finally, a recent concept of living within a safe sustainability
space proposes we organise all economic activity within
scientifically proven ecological limits e.g., limiting GHG
emissions and to enhance shared social conditions and
infrastructure needs for a population soon exceeding 8 billion.
Global GDP Global population Global Plastics Global Corruption Loss of
volume Perception biodiversity
9
DRIVERS FOR SUSTAINABILITY REPORTING
MANDATORY REPORTING
Existing national/regional/international reporting regulations covering diverse
constituents and industries:
> Hong Kong Stock Exchange ESG reporting directive
> New Zealand Climate-related Disclosures and Other Matters Amendment Act
> Malaysia Sustainability Reporting Directive
> South Africa King IV Sustainability and Integrated Reporting
> Botswana Corporate Code of Governance and Integrated Reporting
> United Aarab Emirates Corporate Governance Code
> EU Corporate Sustainability Reporting Directive (CSRD)
> EU Sustainable Finance Disclosures Regulation (SFDR)
> European Sustainability Reporting Standards (ESRS)
> EU Taxonomy reporting
> United Kingdom climate-related financial disclosures (TCFD)
Regulators worldwide are increasingly realising, albeit at different speeds,
that managing sustainability risks and opportunities associated with climate
change, digitisation and wider stakeholder engagement requires higher quality
company data addressing material issues and allowing meaningful comparison.
Sustainability reporting regulation will only increase across the world making
tracking relevant policy developments vital to prepare clients for the next
step on their disclosure journey.
VOLUNTARY REPORTING
Motivations for voluntarily adopting sustainability reporting are diverse depending
on disclosure maturity, existing knowledge, reporting culture, available
resources, industry trends, stakeholder expectations and reporting purpose.
Here are examples of motivations:
> RISK MANAGEMENT > Preparation for future mandatory reporting and
integration of material ESG issues e.g., IFRS sustainability standards S1 & S2, US
SEC climate risk disclosure et al
> INNOVATION > Investigating higher margin products and services tied to lower
environmental and higher social impacts
> STAKEHOLDER EXPECTATIONS > employees, investors and consumers
increasingly want to know the impact of ESG investments and the benefits of
pursuing a more sustainable way to do business. Building closer partnerships
with local communities in which the company operates
> PURPOSE > articulating and demonstrating a wider societal purpose thought
adopting Net Zero emissions strategies, a meaningful Diversity and Inclusion
policy and adopting relevant SDGs.
> TALENT > talent retention and attraction through demonstrating a wider
“purpose beyond profit”
> REPUTATION AND BRANDING > marketing and communication benefits by
integrating ESG issues into public disclosures. Using ESG branding and
disclosures as a competitive advantage in addition to price, quality,
distribution, reliability and other industry relevant parameters
10
SUSTAINABILITY ACTIVITIES COME ALIVE USING ESG REPORTING
Environmental, Social and Governance (ESG) business reporting Avoid claims of greenwashing/redwashing, empty promises and
originated in the investor community as a reaction to perceived paying lip service to any sustainability commitments.
unclear, non-standardised, not comparable and mainly qualitative
ESG reporting can be seen as translating often lofty and longer-term
sustainability information in annual, sustainability and wider
sustainability ambitions and commitments into smaller pieces of real-
corporate disclosures.
time information underpinned by key issues identified by the
ESG reporting also supports the increased need of information organisation as crucial for decreasing ESG risks and maximising
users for greater transparency around clear and trackable targets opportunities.
and substantiation of any claims that achieve “positive impact”.

BDO SUSTAINABILITY IMPACT THROUGH ESG REPORTING

ENVIRONMENTAL ISSUES SOCIAL ISSUES GOVERNANCE ISSUES

> Climate change > Health and wellbeing > Purpose beyond profit
> Net Zero emissions > Diversity and inclusion > ESG knowledge
> Waste strategies > Future skills > Stakeholder engagement
> Biodiversity loss impacts > Human rights > Supply chain ESG risks
> Water and air pollution > Talent retention and recruitment > ESG innovation creating new products and services
> Energy efficiency and use of renewable energy > Community volunteering > Data management/cyber security
> Green office certification > Employment opportunities and wealth generation > Circular business models
> Natural resource availability > Modern slavery
> Green logistics models > First nations peoples’ rights
> Environmental Impact Assessment

11
KEY BENEFITS OF ADOPTING ESG REPORTING

Boosts organisational image, reputation and brand by

delivering relevant, reliable and impactful disclosures meeting
the information needs of key stakeholders.

Accelerates innovation by identifying material ESG drivers

including development of lower carbon impact products and
offering services to new, underserved audiences.

Decreases financial risks and improves access to credit,

lowers insurance premiums and boosts the ability to
attract investment.

Measures and reports the link between adopting ESG practices

and positive future financial performance.

Identifies, monitors and manages ESG opportunities and

risks effectively.

Improves data quality, issue spectrum and internal controls for

more effective information management and decision-making.

12
THE WHAT
An overview of reporting services and resources
BDO offers to meet our clients’ disclosure needs

13
SUPPORTING THE SUSTAINABILITY REPORTING JOURNEY
Report, Reporting and Integrated Thinking defined

SUSTAINABILITY REPORT SUSTAINABILITY REPORTING SUSTAINABLE/ INTEGRATED

A sustainability report is a concise
communication about how an organisation’s
strategy, governance, performance and
prospects, in the context of its external
environment, lead to the creation of
sustainable value over the short, medium
and long term.
Sustainability reporting is a process founded
on sustainable/integrated thinking that
results in a periodic sustainability report by
an organisation about sustainable value
creation over time, specifically addressing
Environmental, Social and Governance risks
and opportunities.
creation of sustainable value over the short,
THINKING
Sustainable/integrated thinking is the
active consideration by an organisation of
the relationships between its various
operating and functional units and the
capitals that the organisation uses or
affects. It leads to integrated decision-
making and actions that consider the
medium and long term.

We have created a glossary of popular sustainability reporting terms and concepts to support a common understanding with clients and
internally. You can access them here.
Source: adapted from the IIRC Framework and BDO‘s IR journey guide
14
ESG REPORTING SERVICES – HOW BDO CAN HELP
This playbook outlines the management of the process for ESG reporting. There are a range of services included in this process, but also
other services that are closely linked to reporting:
> KEY REPORTING SERVICES DELIVERED
Industry reporting baselines; reporting frameworks/standards
selection; KPI/KRI development and target setting; reporting systems
due diligence; issue specific investigation e.g. carbon inventories;
stakeholder involvement and communication; full/partial
sustainability report development.
> ESG REPORTING READINESS ASSESSMENT
Review and rating of existing reporting activities, reports and other
key business disclosures, examination of reporting system, data
quality and robustness against industry benchmarks, assessment of
auditability of information and data and advisory on opportunities for
improvement to align any strategic objectives, targets and KPIs
across the entire ESG spectrum.
> DIGITAL ESG REPORTING SUPPORT
Identifying sustainability and ESG reporting software solutions and
implementation activities. BDO can support and empower
organisations, credit institutions, and asset managers to measure,
disclose, and improve their sustainability using appropriate third-
party reporting platforms and SaaS for EU Taxonomy, SFDR,
NFRD/CSRD and all future emerging ESG Standards.
> ESG INTERNAL CONTROLS
Sustainability risks and opportunities are omnipresent. To effectively
achieve strategic goals, organisations need the right processes and
controls. BDO can provide services on assessing and improving
sustainability processes and controls, setting out ESG questionnaires
and facilitating ESG risk workshops to increase knowledge and
awareness, ensuring the implementation of proper processes and
controls. This will help ensure the reliability of ESG data, meet
sustainability objectives and assess against sustainability regulations
and standards (COSO)
> TRAINING ON ESG REPORTING
Understanding how ESG impacts business risks and opportunities is
extremely important: BDO training considers the development of the
requirements for companies to report sustainability information. It will
examine current requirements, impending developments, and the likely
direction of travel. The primary objective of the training is to enable
delegates to assess the sustainability information that entities are, and
will be, required to present, the basis and content of that information,
and the steps that will be needed in order to enable the preparation of
that information. It will also enable readers of corporate annual reports
to better understand and appraise the information disclosed
15
THE HOW
Reporting methodology, tools and templates
ready to deliver reporting value to our clients

16
BEFORE TAKING A FIRST STEP ON THE REPORTING JOURNEY

Sustainability is a conversation we should be having with all our clients and should be focused on how ESG reporting supports outcomes our
clients are looking to achieve – whether it’s 1. driving value by improving brand reputation and/or 2. ensuring compliance with regulations
and/or customer inquiries as examples. Either way, clients need to understand the ROI to be gained from ESG reporting in order to be
compelled to hire advisors and engage in the process. See Slide 30.
Selling ESG Reporting services involves educating and helping clients understand the benefits of producing an annual ESG report from both
risk mitigation and value creation perspectives. The following outlines some key considerations when selling our ESG reporting services in
this section:

KEY OBJECTIVES OF ESG REPORTING INCLUDE: The following slides provide an overview of the key
considerations for establishing ESG reporting:
> Establish an ESG baseline, using a robust materiality process aligned with
framework selection and approach to sustainability. The baseline is the > Sustainability reporting journey map
starting point for reporting which will evolve and improve each year as > Foundational elements
the company addresses its material issues. (See slide)
> Matching your stakeholders’ information needs
> Report against global framework(s) that feed into the ISSB (International
Sustainability Standards Board) – where applicable. (See slide) > Approach:
> Systemise your sustainability management so that you can continue to > Levels of ESG reporting
collate, track, monitor and measure performance, so it can drive and > Understanding the ESG ecosystem
inform sustainability / corporate strategy. (See slide)
> Establishing the proper workflow
> Treat sustainability data (ESG / non–financial disclosures) with the same
rigour as your financial data ensuring controls are in place and that the > Materiality overview
data is auditable. > Continuous improvement process
> Establish data architecture/programme structure to enable continuous
improvement. (See slide)
17
A SUSTAINABILITY REPORTING JOURNEY MAP

In order to ensure that the Sustainability report is produced timeously, Face-to-face/Teams meeting Project Deliverables
it is important to ensure that proper project management
methodologies are used. The diagram illustrates one way of setting up Materiality process & BDO work
a reporting mandate for a successful journey benchmarking

Research of material
Clear rationale – issues / business/
Strategic rationale for Pre-kick off meeting Develop & distribute
proceed global context Conduct kick-off
sustainability to discuss scope/key materiality survey
Unclear thinking – including meeting
reporting – why do it? stakeholders Develop benchmark
more work needed benchmarking against
the client's industry

Create data
Select reporting
Interview key Conduct materiality Materiality architecture of Data collection
framework / reporting
stakeholders workshop Assessment Report business, including training
metrics
ESG data map

ESG Technology
Software
Collect data / conduct Complete gap Program wrap-up &
(Onboarding of ESG Sustainability Report Roadmap Report
verification assessment next steps
Technology, training
for data owner)

18
SELLING OUR ESG REPORTING SERVICES
Sustainability reporting has several foundational elements that must be understood to successfully develop an ESG report. Disclosing ESG
data requires internal tracking through a robust governance structure, and care needs to be given to forward-looking statements. All
publicly disclosed information must be substantiated. See Levels of ESG Reporting slide

INTERNAL TRACKING TENDER AND PROJECT PARTNERS BEST PRACTICE SUSTAINABILITY

Understand company’s sustainability

Requires internal governance frameworks Tenderer may have specific requirements maturity, ESG baseline, targets &
and procedures to track & report ESG data on frameworks & metrics metrics, strategy, risk management &
governance

BDO team provides full report writing

services that include Board Statement,
An opportunity to develop & test Mature governance framework to support
Strategic Overview, UNSDGs alignment,
sustainability frameworks, & ESG policies sustainability strategy and external
forward-looking statements,
& procedures before disclosure disclosure
management approach, governance
description etc.

Robust external sustainability report that

Internal management of ESG baseline and Managed under an NDA or other form of
demonstrates company’s commitment to
management confidentiality
sustainability action and improvement

19
SELLING OUR ESG REPORTING SERVICES
Impactful ESG reporting brings together a compelling story underpinned by qualitative and quantitative disclosures with the information
needs of key stakeholder audiences.
ESG information preparation considerations
> Make sure your company understands the ESG disclosure
expectations of each stakeholder group
> Be aware that stakeholders (customers, employees,
investors, regulators) may have varying priorities and that
their priorities may change over time
> Delivering relevant information to the respective
audiences in the right format is not a one size fit all
exercise e.g., an all-encompassing annual report
Examples of Stakeholder information needs
> Investors: Climate risk management, future revenues from
sustainable product, innovation, ESG ratings
> Employees: Flexible working, diversity and inclusion, purpose
beyond profit
> Regulators: ESG regulation compliance, GHG emissions
reduction strategy, investments
NGOs: Transparency, greenwashing claims, business activity
> impacts
Suppliers: Payment conditions, responsible procurement
> policies
20
SELLING OUR ESG REPORTING SERVICES

Depending on the maturity and level of effort required from the client, BDO can scale and modify the ESG reporting services to suit the
client’s business needs. Below are examples of the different levels of services a team can provide to work within any budget range.

ENTRY LEVEL MID LEVEL HIGH LEVEL SUPPORT

Compliance-based report Comprehensive report Advisory support

Once framework and disclosures are
identified, BDO team supports client with
report writing and disclosure drafting.
Note: Board statement, strategy setting,
detailed management approach and
forward-looking statements are typically
not included.
BDO team provides full report writing
services that include Board Statement,
Strategic Overview, UNSDGs alignment,
forward-looking statements, management
approach, governance description etc.
BDO team augments client’s current
capabilities to create a Sustainability
report by providing high-level guidance,
drafting report outline and providing
feedback on content development.

21
UNDERSTANDING THE ESG ECOSYSTEM
BDO will need to gain an understanding of the organisation’s current ESG efforts to benchmark against stakeholder expectations and what
competitors are currently reporting on. This will allow the team to prioritise various ESG topics that will resonate with the organisation’s
stakeholders and drive impact.

Critical steps Tasks/Actions Benefit/Deliverables

> Alignment of workplan / approach
A. ESG kick-
> Initial ESG partnership kick-off meeting to align on approach, engagement milestones, > Confirm key internal stakeholders
off activities & working methodology & team introductions, etc. > Validate ways of working
meeting
> Set project up for success

> Review and understand the elements of the current business model and ESG
B. ESG programme - governance structure, targets & measurement, risk management, ESG- > Establish a baseline understanding of the
programme related activities, etc. organisation’s ESG efforts and ambitions to
understanding > Conduct a workshop with current Sustainability leaders and management to gain an date.
understanding of current and ongoing sustainability initiatives and goals.

> External evaluation of industry peers’ ESG reports.

C. External > Evaluation will include review of peer ESG strategic positioning, reporting
> Understanding of the ESG ecosystem –
ESG market frameworks, initiatives and governance
competitor / best practices in industry.
study > BDO will evaluate, compile and analyse sector specific reporting standards, ESG
ambitions, targets & measurement, and ESG strategic content.

> BDO to develop an ESG current state analysis across the spectrum of Environmental, > Current state analysis which will be used as
Social & Governance programme elements. a ‘north star’ when developing the ESG
D. ESG current Strategy & Report
> The analysis will compare the organisation against industry peers and best practices.
state analysis > Deliverable – ESG current state analysis
> Presentation to leadership with a 1-2 hour workshop summarising the findings from A
report & presentation of findings to
to D above. leadership team.
22
ESTABLISHING THE PROPER WORKFLOW
6 STEPS TO SUSTAINABILITY REPORTING AND MANAGEMENT

PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 PHASE 6

Industry research Launch and project Materiality assessment Data collection & Sustainability report Roadmap
plan verification

Provide context to the Establish project team, Identification of Collect and verify all Draft and finalise ESG integration and
Sustainability Report confirm scope, and primary impacts of ESG data required to meet Sustainability Report continuous
OBJECTIVE
and inform future deliverables elements the metrics selected improvement (click
strategy here for methodology)

> Conduct industry > Conduct kick-off > Design and deliver > Onboard onto a third > Synthesise report > BDO to provide a gap
research meeting materiality party ESG reporting content analysis and
assessment survey software tool recommendations
> Where possible > Develop and confirm > Develop draft and around next steps
provide project delivery plan, > Conduct three 1 on 1 > Client or consultant circulate for
benchmarking against including status interviews enters the data into comments > Client to consider
peers within the reporting the software setting ESG /
industry > Conduct Materiality > Finalise and deliver Sustainability
KEY > Establish key Workshop identifying > BDO to provide a report
ACTIVITIES strategy to address
> See Understanding milestones and disclosure topics review of the entered gaps and integrate
the ESG ecosystem project timeframe data, with feedback recommendations
> Determine the on how to improve (if
> Determine the key sustainability into business practice
the client is
personnel involved reporting framework, responsible for
with delivery of the as well as any inputting metrics)
project additional metrics

Industry Sustainability Project kick-off Materiality Matrix & Data Verification &
DELIVERY Sustainability Report Roadmap Report
Review meeting Assessment capture on ESG Tech

This example is indicative only – some may choose to switch the order to suit a client’s needs and where they are in their journey.
Included in this process is also the use of technology to digitise/systemise sustainability management and reporting.
23
MATERIALITY OVERVIEW

WHAT IS MATERIALITY? MATERIALITY DEFINITIONS

Materiality is a filter used to identify issues that are most relevant to internal
and external stakeholders and helps guide companies on what to report on
from a sustainability perspective, especially in the early stages of sustainability
reporting. It should be revisited over time as what is relevant changes.
Currently impact materiality is a requirement of most sustainability reporting,
however there is a growing drive to consider financial materiality as well.
Combining both aspects is considered double materiality and is current best
practice, when considering what might become material the company includes
dynamic materiality. See definitions below.
See Continuous Improvement Process slide
> Materiality - Material topics have a direct or indirect impact on an
organisation’s ability to create, preserve or erode economic, environmental
and social value for itself, its stakeholders and society at large.
> Materiality assessment - The process of identifying and assessing potential
ESG issues that impact your business and stakeholders.
> Dynamic materiality - What is immaterial to a company or industry today can
become material tomorrow, so materiality takes on a dynamic dimension.
Organisations need to be forward looking and proactive in how they think
about trends and potential issues.
> Double materiality – The union (not intersection) of materiality from two
perspectives:

METHODOLOGY
Financial materiality Impact materiality
To determine the topics that are material to a company a survey is sent out to Double materiality Information on the
Information on
various stakeholders which asks respondents to rank within each group economic value reporting company’s
(Environment, Social and Governance) which topic should be a priority for the creation at the level impact on the
company. The responses are then aggregated to determine which topics are of the reporting economy, environment
most material to the company. company for the and people for the
benefit of investors Financial Impact benefit of multiple
Implementing a materiality analysis leaves room for interpretation as
(shareholders). materiality materiality stakeholders; such as
applicable regulations can influence the final approach. For example, the
investors, employees,
European Financial Reporting Advisory Group (EFRAG) will provide guidance on
customers, suppliers
how to approach double materiality reporting for entities captured under the
and local communities.
Corporate Sustainable Reporting Directive (CSRD). We provide an approach
replicated in many jurisdictions but advise checking for any local materiality
interpretations and laws. See also GRI FRAMEWORK for more information on materiality.
24
MATERIALITY ASSESSMENT – PROCESS OVERVIEW

MATERIALITY ASSESSMENT, is the foundational step to begin the

process for reporting. It consists of identifying the primary
impacts of economic, environmental and social elements,
BDO provides a full materiality assessment report detailing the
summarised in a materiality matrix. This analysis helps to
process around reaching the results and the framework selection.
determine the broader dimensions of the company, defining its
strategic vision and the various challenges it faces as an
organization in both a national and global context.

Framework Assessment & Alignment

Stakeholder
Materiality Workshop Materiality
interviews
survey 3 x 30 min 2 Hours matrix
Internal & Management Technical Insights Direction
External (cross-views)

25
CONTINUOUS IMPROVEMENT PROCESS

Sustainability is a journey which means constant monitoring and

assessment of a sustainability programme and report, even once a
programme has been designed. The diagram illustrates the
approach that BDO takes in addressing the continuous improvement Review, optimise, Needs
process which aims to consolidate an organisation’s commitment to adjust assessment and
define plan
sustainable development, focusing on the measurement of impacts,
corporate objectives and change management. Assurance
Set
support
methodology
DEFINE
> IMPACT-ORIENTED THINKING REPORT
REPORTING
& IMPROVE
PLAN
Aims to unlock the value-creation benefits that an ESG approach Develop
can provide report
Engage
narrative

> RISK-BASED APPROACH ANALYSE &

MEASURE
Puts materiality of environmental and social impacts and risks at
the centre of the strategy
Elaboration Collection of
of data data
> MULTI-STAKEHOLDER PERSPECTIVE
Takes into consideration the interests and needs of stakeholders,
which helps strengthen the integrity of the programme

26
HOW TO SELL
Our differentiators

27
SELLING OUR ESG REPORTING SERVICES
Sustainability is a conversation we should be having with all our
clients and should be focused on how ESG reporting supports
outcomes our clients are looking to achieve – whether it’s 1. driving
value by improving brand reputation and/or 2. ensuring compliance
with regulations and/or customer inquiries as examples. Either
way, clients need to understand the ROI to be gained from ESG
reporting in order to be compelled to hire advisors and engage in
the process. See Slide 30.
01 WHERE IS THE CLIENT ON ITS SUSTAINABILITY
JOURNEY?
Slide 31 outlines the various factors to look at when evaluating
the client’s reporting needs (maturity, industry drivers, unique
client needs etc.).
02 BDO’S UNIQUE VALUE PROPOSITION
What is BDO’s value proposition and the differentiators that
separate us from the competition? See Slide 32.
Selling ESG Reporting services involves educating and helping
clients understand the benefits of producing an annual ESG
report from both risk mitigation and value creation
perspectives. The following outlines some key considerations
when selling our ESG reporting services in this section:
03 HOW CAN WE CUSTOMISE THE SOLUTION TO
BEST MEET THE CLIENT’S CHALLENGES?
This section will include information on how to customise an ESG
Reporting mandate to meet the clients’ business challenges,
rather than a one size fits all approach.
04 KEY MESSAGES AND TRIGGER QUESTIONS
This section will include key messages and trigger questions for
our people to use when engaging in client conversations.
28
IT PAYS TO INVEST IN SUSTAINABILITY – THE ROI

When selling ESG reporting to our clients it’s important to highlight

the benefits of investing in an ESG programme. You can use the
conversation topics and key benefits listed in this playbook when
planning your sales pitch.

29
WHERE IS THE CLIENT ON ITS SUSTAINABILITY JOURNEY?
Sustainability is a journey of continuous improvement. Using the
BDO’s Sustainability Integration Roadmap, BDO’s approach aims to
support an organisations’ commitments to sustainable
development, focusing on the measurement of impacts, corporate
objectives and change management.
Below is an illustration of the integration journey of how
companies embed sustainability strategy, metrics and principals
within their organisation. Depending on where the client is on
their journey, they have different needs for support from BDO.

Sustainability management integration level

Element
Activating Compliance Proactive Strategic Purpose-driven
STRATEGY
Rationale for Compliance-driven –
Compliance-driven – Ethics and excellence-
sustainability social licence to Risk-driven Risk and value-driven
minimum expectations driven
focus operate

Approach to Partially integrated or Fully integrated corporate

No defined approach
sustainability defined Stand-alone stand-alone strategy defined by the
to sustainability,
by social licence sustainability sustainability strategy organisation’s purpose to
Approach meeting minimum
requirements / strategy defined by defined by risk become best-in-class and
requirements for
expectations of risk management management and value deliver better outcomes
compliance
stakeholders creation opportunities for people and planet

SMART objectives and

SMART objectives SMART objectives and
Broad policies, no Qualitative action targets across all ESG
Commitments and targets across targets across all
commitments statements factors, nested in long-
some ESG factors material ESG factors
term strategy

30
WHY BDO IS THE RIGHT PARTNER: OUR UNIQUE VALUE PROPOSITION
01 MORE THAN JUST RISK MITIGATION
We work alongside our clients to understand, identify, quantify
and support reporting on opportunities arising from climate
change, greater talent diversity, more transparent supply chains
and other important sustainability issues. Where others focus on
sustainability risk we see opportunities to enhance clients’
reputation, improve their data quality, optimise existing
reporting processes and open new markets rewarding any
sustainability investments.
03 SYSTEMS-BASED APPROACH TO
SUSTAINABILITY
We take a systems-based approach to unearthing sustainability
opportunities and solving challenges. By looking for connections
between key issues, goals and ambitions and deployment of
limited, competing resources, we strive to improve the
organisation’s sustainability infrastructure and processes – to
support more efficient and leading to more informed decision-
making.
02 PRACTICAL APPROACH TO ADDRESSING CLIENTS’
UNIQUE NEEDS
No two businesses are the same, and neither is their
readiness, desire and ability to embrace sustainability. We
take a practical approach to working with clients no matter
where they are on their sustainability journey, including
reporting maturity, available resources, data and reporting
processes.
04 WE ARE TRUSTED TO ADVISE ON CORPORATE
REPORTING DEVELOPMENTS
BDO has been a trusted partner providing high quality audit,
tax and business advisory services. By integrating our financial
reporting teams with our corporate sustainability
practitioners, we are in a strong position to advise clients how
to navigate the fast-moving sustainability reporting space
including application of mandatory reporting standards and
voluntary reporting framework. We approach our client’s
financial and non-financial reporting matters in an integrated
way – by deploying cross functional and globally experienced
reporting teams to connect any reporting issues and deliver
reporting value to our clients.
31
TRIGGER QUESTIONS FOR CLIENT ENGAGEMENT
Clear definition of responsibilities, roles and communication is key
for the successful establishment of sustainability/ESG reporting
1. Who has overall responsibility for sustainability/ESG?
2. Who is responsible for sustainability/ESG reporting?
3. Who coordinates the communication between the
sustainability/ESG and other departments?
4. Who is responsible for the alignment with governance
stakeholders?
5. How have organisational capacities been re-evaluated to
ensure any mandatory disclosures e.g. EU CSRD?
6. What plans do you have in place to create a robust data
process and structure, methodology and tools for
sustainability/ESG reporting?
7. How does your approach to sustainability/ESG reporting
consider ratings e.g. Sustainalytics, investor and any capital
market communication?
8. Have any of your internal or external stakeholders asked for
information on your ESG programme? To that end, do you have
a complete list of all relevant stakeholders?
9. Have you considered the effect your supply chain or customer
base has on your organisation’s sustainability/ESG objectives?
10. Have you implemented any processes or technology to
establish, track and report on your sustainability/ESG
compliance & progress? If so, are the
results/reports and KPIs ‘auditable’ and reliable with full
traceability for accuracy?
11. Are you aware of new sustainability/ESG regulations and
requirements in place or soon to be adopted for your industry?
12. Are you seeing sustainability/ESG information or disclosure
from your competitors, suppliers or customers that you may
be compelled to adopt for either compliance or competitive
reasons?
13. Are you aware of your organisation’s carbon footprint and
energy consumption? Have you performed any comparative
analysis to peer organisations in your industry?
14. Are you aware of your company's approach to employment
diversity and community relations?
15. Are you aware of your company's policies and procedures on
ethical business practices, supply chains or executive
compensation?
32
OUR CREDENTIALS, EXPERTS
AND SUPPORTING YOUR
REPORTING JOURNEY

33
ESG REPORTING CREDENTIALS
INDUSTRY EXPERIENCE

Financial Food and Professional

Banking Manufacturing Pharmaceutical Real Estate Software

services Beverage Services

1. Industry/cross-industry reporting
baseline development

2. Reporting standard selection

3. Defining sustainability performance

measures and targets

4. Reporting data, design, processes,

REPORTING SERVICES

systems and quality Due Diligence

Review

5. Issue specific quantification of data

quality and processes for reporting on
e.g. GHG inventories and DEI

6. Communication and/or analysis of

feedback from stakeholders on
sustainability reporting

7. Full report development

with/without design

Multiple projects delivery (industry credentials)

34
OUR SUSTAINABILITY REPORTING EXPERTS

Viola Möller Carlo Luison Catherine Bell Pierre Taillefer Henning Dräger Aurora Bardoneschi
BDO in Germany BDO in Italy BDO in Australia BDO in Canada BDO in Ukraine BDO in USA

Our group of global sustainability reporting experts have extensive and diverse experience delivering reporting engagements
across all industries, worldwide. They advise BDO‘s global sustainability reporting activity streams on relevant regulatory
updates and industry reporting trends. We also have a number of experienced experts focusing on ESG topic and industry
specific reporting e.g. carbon and finance reporting which can be can be found in the relevant BDO Playbooks.

You can find a complete list of Sustainability experts on BDO World.

35
HOW WE CAN HELP YOUR SUSTAINABILITY
REPORTING ENGAGEMENT?

> I need client proposal support...

> Is there any sustainability reporting training available?
> I need industry guidance not already on BDO World…
> What key sustainability reporting regulatory developments do
we need to consider?
> Share with me practical client experiences when discussing
reporting...

> Email us on SustainabilitySupport@bdo.global

> Subject line: Sustainability Reporting Query from BDO
(Country)
> Give a concise description of your query

> Review of your query by the GO Sustainability

Team
> Direct response or referral to relevant reporting
expert who will respond.

36
BDO internal use only

This publication has been carefully prepared, but it has been written in general
terms and should be seen as containing broad statements only. This publication
should not be used or relied upon to cover specific situations and you should not
act, or refrain from acting, upon the information contained in this publication.
No entity of the BDO network, its partners, employees and agents accept or
assume any liability or duty of care for any loss arising from any action taken or
not taken by anyone in reliance on the information in this publication or for any
decision based on it.

The BDO network (referred to as the ‘BDO network’) is an international network

of independent public accounting, tax and advisory firms which are members of
BDO International Limited and perform professional services under the name and
style of BDO (hereafter: ‘BDO member firms’). BDO International Limited is a UK
company limited by guarantee. It is the governing entity of the BDO network.

Service provision within the BDO network is coordinated by Brussels Worldwide

Services BV, a limited liability company incorporated in Belgium.

Each of BDO International Limited, Brussels Worldwide Services BV and the BDO
member firms is a separate legal entity and has no liability for another entity’s
acts or omissions. Nothing in the arrangements or rules of the BDO network shall
constitute or imply an agency relationship or a partnership between BDO
International Limited, Brussels Worldwide Services BV and/or the BDO member
firms. Neither BDO International Limited nor any other central entities of the
BDO network provide services to clients.

BDO is the brand name for the BDO network and for each of the BDO member
firms.

© Brussels Worldwide Services BV January 2023

www.bdo.global