Dr. Liad Ortar, Head of Shibolet ESG
On 7.10, the State of Israel rose to war. 1,400 murders, hundreds of abductees, and extensive reserve mobilization unprecedented in recent years. The country has entered and is still in a deep emotional upheaval and a sense of uncertainty about what will happen. For now, the end of the war is not in sight.
The Israeli economy and the business corporations within it are an inseparable part of Israeli society, and they have suffered a significant blow in their activity and face challenges to continue their business activity. At the same time, we see a very impressive mobilization of the business sector, whether in direct donations to the soldiers and evacuated families, in adapting services and products for the time being, and in building a long-term social strategy for the rehabilitation of the damaged areas, and more.
In 2022, over 60 Israeli corporations publish an ESG (Corporate Responsibility) report every year, following the progress of global regulation in the field (mainly in the EU) and two significant Israeli regulations. One regulation applies to the banking sector, which has been committed to this since 2009, and the other to government companies (although most of them do not yet do so). Now that corporations are beginning to prepare for the ESG reports concluding 2023 (with reports expected to be published starting in March 2024), we see fit to present this professional guidance and emphasize how to integrate the various war efforts in these reports according to reporting guidelines (the GRI).
In general, we begin by noting that there are no specific reporting guidelines for orderly communication of corporate activity during emergencies. The issue is mainly covered around the issue of business continuity and risk management (to be disclosed at GRI 2: General Disclosures 2021), but we are aware that the scope of activity and involvement in war efforts is much broader and deserves much more extensive attention in the reports, hence this guidance document.
How to relate to war in the ESG report: separately? or in a distributed format that is woven throughout the various chapters of the report?
Both options are possible and at the discretion of the company’s managers and consultants. The reader’s orientation map in the ESG report is the index of metrics found at the end of the report (according to the GRI, ESRS, or any other guideline). This index, which presents the reporting methodology, is where it is possible to present the various locations in the report in which there is an orderly reporting reference to the corporation’s activities during the war. Therefore, the war efforts of the corporation can be presented in a unique and separate chapter and additional references can be added within the various chapters of the report. The important thing is that all reporting metrics and management approaches (even those that do not have direct GRI references) are indexed.
The list of material issues needs to be updated!
As is well known and as we presented in a dedicated webinar, identification of the material issues is a central process in formulating the contents of the ESG report. The GRI changed its latest set of guidelines on how the material issues are presented (GRI 3: Material Topics 2021) and instead of a complex matrix, it requests an orderly list of the material issues, with the understanding that what is on the list does constitute a material issue (‘with reference’ to the designated reporting index) and what is not on the list, is not a material issue in the corporation’s activity and therefore there is no need to include it in the report.
The EU reporting guidelines, the ESRS, have anchored the ‘double materiality’ concept. That is, not only the ESG aspects that affect the corporation’s bottom line, but also what are the key corporate activities that externally affect social and environmental issues. According to these two approaches, there is no doubt that the materiality analysis for 2023 cannot remain the same as that presented in the 2022 report.
The war posed and continues to pose significant business and social challenges for every business corporation, and therefore it is necessary to reevaluate the list of material issues and examine how it has changed during wartime.
The following is a proposed reporting typology that cross-references the types of activities taking place in corporations during the war to the reporting indicators of the GRI:
| How to report | Activity description | GRI reporting guidance |
| Support Framework Scope of support A future commitment with implications for business operations | The Israeli government, with its various branches, launched extensive programs of encouragement and support during the war. Many corporations that until now were not used to or did not need this support have found themselves relying on government assistance and this must be reported regularly. | 201-4 Economic assistance received from the government |
| Purpose of investment Financial scope Which groups benefited from this investment (in addition to employees)? Future Plans. | Many businesses have built infrastructure to provide public protected spaces and invest in other public infrastructure. It is very important to describe the investment in infrastructure and how these have contributed to the sense of public safety in the workplace and beyond. | 203-1 Investing in infrastructure and other services. |
| What are the aspects of the war in the company’s procurement policy? What are the criteria for preference in procurement If there are designated procurement budgets, then they must be presented completely and proportionally to the general scope of procurement. | Procurement is a significant means of social involvement of many corporations. As part of the war, many corporations adapted their responsible procurement policy to the situation, giving preference to businesses operating in the areas surrounding the Gaza Strip and the northern border. You may have taken additional/other steps within the framework of the procurement policy, and this is the place to expand on this. | 204-1 Relative figure – the volume of procurement from local suppliers Also, can be at: GRI 414 Suppliers Social Assessment 414-1 New suppliers that were screened using social criteria |
| The scope of personnel affected by reserve duty or other circumstances Adjustments in work hours for parents Both spouses are at the forefront. Any other change in the personnel situation quantitatively Future preparations for the continuation of the war reality in 2024. | The manpower of corporations is challenged by the war situation due to the significant recruitment of workers for the reserves, the need to reduce working hours for parents left alone with their children, or other related circumstances. It is appropriate to present in the report how the war situation affected the personnel situation and how the Human Resources Department dealt with these challenges. It is also important to show how coping becomes routine and not a one-time preparation. | 401-1 New employee hires and employee turnover |
| Description of benefits granted. The financial scope of benefits is divided by type. Comments/Feedback Received Plans to continue granting benefits according to the various population groups | Over the past few months, many employers have offered their employees many different rewards and gifts. This can be expressed in gift packages for spouses who remained on the home front with a recruited spouse, in a summer camp for the employees’ children, and more. This is the space to report regularly on all benefits given to workers in the context of the war. | 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees |
| The Protective Purpose of the Investment The scope of the investment itself Responses from employees and other related groups | Many corporations have invested significant resources in the establishment of protected spaces and the establishment of facilities that strengthen the sense of protection of employees and customers in the workplace. It is necessary to report on the scope of these investments and how this has contributed to the employees. | 403-2 Hazard identification, risk assessment, and incident investigation |
| What is the overall management approach to employee health and what adjustments were made to it What activities did the company initiate? The participation rate of employees. They have an orderly system of getting feedback from employees and if so what were the responses What are the future plans? | The devastating event of 7.10 mentally and healthily destabilized many workers. Maintaining employee health has become much more complex. This does not mean physical health while at work, but rather maintaining employee health in the broad aspects of the word while understanding that there is no healthy body in the mind that is not healthy. Many employers invest significant efforts in strengthening the mental resilience of their employees, in conversations with professionals and in meetings of various types such as dialogue and sharing circles. It is appropriate to present in an orderly manner how the corporation is managing this challenge and what resources are allocated for this purpose. during the war months. | 403-6 Promotion of worker health |
| Scope of training Types of training offered to employees. Have there been changes and adjustments in the company’s professional training system? Participation rate and feedback | Maintaining the professional level of employees is extremely important at this time. Many employees find themselves bothered by the day-to-day news with distracting images (and rightly so). In the face of this situation, we must continue to present a high level of professionalism in the production and provision of services. It is appropriate to report how the vocational training system was adapted in times of war. | 404-2 Programs for upgrading employee skills and transition assistance programs |
| What was the attitude of community involvement from the moment the war broke out and how has it changed over time Is there a social strategic approach, and if so, what is it? What is the scope of support provided to social partners – direct financial contribution, equivalent products and services, and employee volunteering? What are the goals for next year and the routine of war? | One of the most significant areas of activity in the short term in times of crisis or disaster is the diversion of financial donations (and equivalents) for the benefit of those in need until the appropriate public systems are advanced. The corporate mobilization by donation was and still is very significant, and it is appropriate to report this in an orderly manner in the ESG report, just as the subject of contribution to the community is routinely found in these reports. It is important to emphasize the strategy of community involvement (although it was not always such in the first few weeks and this is certainly expected), Dialogue and involvement processes with social partners and how to measure impact (to the extent possible). | GRI 413: Local Communities 2016 413-1 Operations with local community engagement, impact assessments, and development programs 413-2 Operations with significant actual and potential negative impacts on local communities |
| What is the advertising strategy of the corporation What products and services have received regular media exposure How the Corporation Enlisted in Israel’s Public Relations Efforts What is the scope of resources invested in this | Many corporations take an active part in Israel’s public relations efforts as well as in the orderly communication of their services and products. As part of these activities, we see cooperation with other bodies in order to motivate action and disseminate messages relating to advocacy, the return of abductees, concern for evacuees, soldiers, etc. While this reporting section exceeds in its performance indicators the restrictions imposed on corporations in their advertising efforts, in our opinion it is most appropriate to present this activity within the framework of the management approach. | GRI 417: Marketing and Labeling 2016 |
This specification presented above is a proposal only for the consideration of the Company’s managers and consultants. It does not include environmental indicators. Of course, if there was relevant environmental activity, it must be reported ‘in accordance’ with the guidelines.
We hope that this guidance document will assist you in the reporting process for 2023 and clarify the types of activities that we believe should be incorporated into the ESG report. Of course, we will be happy to assist and answer any questions on the subject.
Shibolet ESG Team
