Best Practice Environmental Social and Governance (ESG… · Best Practice Environmental Social and...

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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Genericoexamplereport

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.

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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

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Ourgroupstrategy

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

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Newproductsassessedforlifecycleimpacts(%)

08 target 70

63

58

57

07

06

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Employeestrainedinanti-corruptionpoliciesandprocedures(%)

*08 target

2020 target

455

245

465

473

479

490

07

06

05

00

TotalGHGemissions(‘000tonnes)

*08 target

2020 target

425

220

434

444

489

520

07

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Energyconsumption(MWhperFTE)

*08 target 1060

1260

1295

1275

07

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*08 target

9724

9926

9629

9035

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Weightoftotalmaterials(‘000tonnes)Recycledinputmaterials(%)

*08 target 25

28

25

22

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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


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


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


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


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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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


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

Appendixcontinued


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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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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


PR5 Practicesrelatedtocustomersatisfaction,includingresultsofsurveysmeasuringcustomersatisfaction

A WEB

Marketingcommunications

PR6 Programsforadherencetolaws,standardsandvoluntarycodesrelatedtomarketingcommunications,includingadvertising,promotionandsponsorship

C WEB

PR7 Totalnumberofincidentsofnon-compliancewithregulationsandvoluntarycodesconcerningmarketingcommunications,includingadvertising,promotionandsponsorship,bytypesofoutcomes


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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