ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
Sound and effective corporate governance; a sense of responsibility toward stakeholders and society; a concern for economic and environmental sustainability: these have been essential elements of SABIC from its very foundation.
As these issues moved to the center of the global corporate reporting landscape, we took initial steps toward telling our early ESG story in a formal systematic way with the publication of our first Sustainability Report in 2011. Our ESG reporting journey has continued over the subsequent years by way of materiality assessments, the setting of targets and KPIs, and increasing transparency of corporate reporting.
At the heart of this journey is a recognition that financial data only tell part of SABIC’s story. Yet while ESG factors are called ‘non-financial,’ how we manage them undoubtedly has tangible and measurable financial consequences – and, beyond that, consequences for the resilience of our business model and our ability to create value over the short, medium, and long term.
We are actively looking to further integrate these ESG factors into our core business strategy. We do that by ensuring that everyone at SABIC shares a common understanding of the megatrends that will affect our company and society over the decades ahead so that we can integrate our enhanced disclosures into the very fabric of our processes, tools, and priorities, whether regulation demands it or not. The aim is to embed ESG into decision-making at every level and in every area of the organization while ensuring that a holistic approach is taken.
We recognize the role of the UN Sustainable Development Goals and their call to action to deliver these goals by 2030.
Following our sustainability materiality assessment, we identified six strategic priority areas, and aligned them with 10 of the 17 SDGs, addressing issues such as poverty, climate change, environmental degradation, and prosperity. We are also working with the World Economic Forum framework on Stakeholder Capitalism to orient SABIC’s purpose toward creating long-term value not only for shareholders but also our broader stakeholders. We are active members of the WEF ESG practitioners group and we consider WEF metrics good guidance for enhancing the standardization and value orientation of the ESG disclosures (Please refer to "ESG Disclosures," Page 127). We are also actively engaged with CDP (former Carbon Disclosure Program), Ecovadis, Ethisphere Institute, World Business Council for Sustainability Development, and the Global Reporting Initiative – all of which provide us valuable guidance on our ESG disclosure journey.
SABIC has shown considerable improvements in its ESG disclosure scores in recent years, with social and governance scores mostly contributing to these improvements; thus, we recognize a need to focus more on our environmental disclosure scores. Our primary communication for ESG disclosures is both the Annual Report and the Sustainability Report, but our ultimate aim in our ESG reporting journey is to bring non-financial disclosures to the same standard as financial disclosures in terms of robustness, transparency, consistency, and comparability. And in doing so, create a holistic, integrated story of SABIC’s strategy, performance, and outlook for our stakeholders.
We applaud the Internal Financial Reporting Standards Foundation for its move to create the International Sustainability Standards Board (ISSB) and taking the lead in setting up rigorous processes for robust comparable standards for global companies. We contributed to the open consultations on ISSB, providing both support for its formation and in calling for fair representation of developing countries.
OUR ESG AND SUSTAINABILITY GOVERNANCE
To this end, SABIC has established the ESG Reporting Steering Committee. The Committee’s primary task is to formulate and drive SABIC's ESG reporting strategy and roadmap and promote the integration of ESG factors into core business processes and decisions. Headed by our CFO, the Committee includes cross-functional representation from our Human Resources, Sustainability, Legal Affairs, Corporate Affairs, including Corporate Social Responsibility and Global Communications, and Investor Relations departments. The ESG Reporting Steering Committee is responsible for:
- Understanding ESG performance and identifying the most relevant ESG disclosures for the company.
- Identifying and proposing general ESG reporting frameworks, and prioritizing current and emerging ESG issues that may affect operations.
- Establishing a clear and well-defined ESG reporting charter for the organization, along with a roadmap for its fulfillment, by capturing the ESG reporting priorities from the businesses and functions.
- Serving as a strong platform to engage and enhance SABIC’s understanding of ESG matters
- Supporting the evaluation of ESG risks and opportunities, and seek ways to monetize them.