LRQA Limited

BT - CR Verification - Case Study


Courtesy of LRQA Limited

BT has long believed in corporate responsibility (CR) in its broadest sense. They understand that to operate a sustainable business it needs to look beyond profit towards the communities it serves. This sees them investing 1% of its pre tax profits, around £25m a year, into initiatives supporting its Better Future vision.


BT has chosen to have its annual non-financial report assured by LRQA for nearly a decade. This case study looks at the role that external assurance continues to play.

Leading organisations now increasingly understand the need to look beyond short term profit gain as an indicator of success. They recognise the impact on the environment and society across their value chains.

Stakeholders expect business to help create a more sustainable, fairer future through taking a more holistic look at their value chains and enforcing this through the policies and practices that they use.

BT has long believed in corporate responsibility (CR) in its broadest sense. They understand that to operate a sustainable business it needs to look beyond profit towards the communities it serves. This sees them investing 1% of its pre tax profits, around £25m a year, into initiatives supporting its Better Future vision.

In addition to this investment is the ethos of engaging with stakeholders at every level – whether this is internally with its own people or externally with customers, suppliers and wider society. And it is this engagement which continues to help inform and shape BT’s strategy and policy making.

This approach also makes sound commercial sense. Stakeholders increasingly want to see evidence of businesses embedding responsible and sustainable business practices into its operations.

It is partly this pressure from employees, customers, government, non-governmental organisations and the investment community that has seen a proliferation in environmental and social responsibility standards and schemes in recent years; such as SA8000, ISO 14001, AA1000AS and the Global Reporting Initiative (GRI).

Independent certification and assurance to these standards provides business’s stakeholders with the confidence that these issues are well managed.

Reporting a Better Future

BT is well placed to provide substantiated evidence of its practices, having reported on its non-financial data for over two decades.

Its first environmental report was published in 1992. In 2000 this was combined with BT’s community reporting into a combined online Social and Environment Report. Both BT’s financial and non-financial reports have been published shortly after its financial year end, in tandem, since 2004.

BT’s ‘Better Future’ report is part of a wider strategy that sets out how the organisation intends to meet its priority to be a ‘responsible and sustainable business leader’. This is one of the business’s six strategic priorities.

Ian Wood, Performance & Reporting Manager, who works within BT’s Better Future transformation programme, explains. “Reporting to our stakeholders on our performance as well as our challenges is core to our entire sustainability approach.

“We need to give confidence to our stakeholders that we are managing issues appropriately and disclose transparently how we are progressing towards meeting our strategic priorities. It also helps drive performance internally, enabling us to monitor and report against our long term targets and KPI’s. It all goes back to the idea that if you can’t measure it, you can’t manage it.”

Engagement is at the heart of its approach. Materiality, or getting to the nub of what is relevant and significant to them, is key to this engagement as Ian explains. “The whole reporting process, as opposed to the physical report, is about listening to our stakeholders and understanding what is relevant and important to them.

“We then come back into the business to see how that affects our policies, strategy and risk management processes. As a matter of course we then report back to stakeholders on our progress.”

Assuring a Better Future

The role that external assurance has played within non financial reporting has evolved significantly over the last two decades.

When BT published its first environment report it chose to have it assured by its own Environment Liaison Panel. However, as the status of non-financial reporting rose up the corporate and governmental agenda, BT were quick to realise the value that external verification could bring and so became an early adopter of independent assurance.

In 1998, BT chose Lloyd’s Register Quality Assurance (LRQA), its existing management systems certifier to carry out assurance of its Report against the criteria of the voluntary reporting standard, AA1000 (AS).

Ian Wood comments. “We know reports that are independently verified are more trusted than those which are not and there are statistics available that support this. The rigour of the assurance process adds credibility and gives additional stakeholder confidence – our customers, investors, government, regulators and wider society. Ultimately, it is about trust and reputation.

“A very tangible commercial benefit we have seen directly from having our ‘Better Future’ report assured by LRQA is the ease with which we can now respond to tenders and ratings requests. When it comes to answering questions about our policies and performance, instead of spending a few days gathering the information around the business, we already have everything we need at our fingertips, and it’s been verified which provides additional reassurance.

“Our report is seen as a single source of facts and figures that our colleagues from around the business can turn to, so avoiding any contradictory information being placed in the marketplace.

“Additionally, we felt it important to benchmark against recognised criteria. There is really only one non-financial reporting standard that we felt appropriate which was the AA1000 Assurance Standard. This offers a standardised approach allowing readers to more easily compare and contrast with our own previous reports and also those from other organisations that choose to use the same standard,” comments Ian Wood.

Indeed, BT and LRQA were part of the working group that helped develop the first version of AA1000 (AS) published in 2003.

This voluntary standard gives a framework for assurors to evaluate the nature and extent to which a business adheres to the AccountAbility Principles of Inclusivity, Materiality and Responsiveness.

Technical experts from LRQA were involved in helping develop the principles of the Standard. This input has enabled LRQA assurors to give a practical interpretation of the standards based on extensive technical expertise combined with business systems knowledge.

LRQA’s Lead Assessor Ged Farmer comments: “The thrust of the AA1000 Assurance Standard is so much more than simply issuing a report but a commentary on how well an organisation has embedded corporate sustainability issues within the overall framework of their business.”

Choosing LRQA

The business assurance approach launched by LRQA in 2005 has seen greater focus and alignment between an organisation’s management systems and its corporate objectives to help drive performance and growth.

This approach has seen LRQA assessors focusing on what really matters for the organisation. It has also helped the LRQA assessment teams build up in-depth knowledge of the BT management systems which in turn has helped inform the assurance process.

Ged Farmer explains further: “We have certified BT’s environmental management systems to ISO 14001 since 2000 as well as other standards. And this has a knock-on impact in terms of our assurance team having a more holistic understanding of BT’s approach to sustainability.”

Ian Wood agrees that the long standing relationship was a factor in choosing LRQA to assure its sustainability performance. “LRQA simply have so much depth of experience in working with BT people, processes and systems.And having spent time with the LRQA assurance team, I have confidence in the rigour of their approach. Using the same organisation for our management system certification and assurance work has given specific benefits.

“The assurance process is also continually evolving. For example, this year saw our ISO 14001 Lead Assessor and Lead Verifier working closer together to share relevant information so minimising duplication of work and reducing contact time with BT managers.

“From a commercial point of view, LRQA also came out very strongly in the last benchmarking tender that we carried out. As with all decisions that we make, we need to make sure that we make sound economic decisions. We work well together, and have confidence in, the LRQA approach,” concludes Ian Wood.

The Future

The pressure on business to demonstrate how the decisions that it makes impact on society and the planet is ever increasing.

These are increasingly complex ranging from: actions within its supply base on labour standards, its ethical policy on investments, or the ‘eco’ backpack’ of its products and services when being used - and disposed of - by customers.

In an increasingly online world the way in which stakeholders interact with business is changing too. Stakeholders want increased transparency and real-time information. This will require a shift from annual performance reporting and a change to reporting formats over time.

There are also an increasing number of assurance standards and schemes. In the summer of 2012, the GRI are consulting on the next version of their guidance, the International Integrated Reporting Committee has produced its draft framework and the UK Government has signalled its intention to mandate carbon reporting – to name but a few.

These all pose interesting challenges for business, in terms of how to engage with its stakeholders, what the best method is to communicate its actions, how to benchmark its performance and the role of formal assurance standards.

Learning Points

Are you thinking about assuring your next non-financial report? Or looking at producing your first sustainability report?

In this section, Ian Wood, Performance & Reporting Manager and Darshna Patel, Senior Programme Manager offer advice from the BT perspective.

Engaging our people – this is key to delivering our strategic aims. The challenge lies in how to win the hearts and minds of all our people so they understand responsible and sustainable behaviours are simply business as usual and not just for a year-end report.

Teamwork – the reporting process has its challenges. The reporting team involves more than 40 people drawn from within BT and externally from the partners involved in the process.

We look on our people and external support partners as a single, ‘virtual’ reporting team and despite contractual obligations at play we expect all those involved to work together.

Responsibility and accountability – should be clearly defined, understood and accepted. This is a critical part of the overall governance structure and helps towards an integrated end–to end approach.

Materiality – together with stakeholder engagement lies at the heart of our reporting process.

We peer review other organisations including those of our direct competitors within the communications sector but also from wider industry and then conduct our own stakeholder surveys. From these separate strands, we take a view on what issues are right and appropriate for inclusion within the report.

Clearly defined processes – these are important to ensure data and information gathering is appropriate to the needs of our stakeholders.

Making sure that processes are ‘fit for purpose’ means they are continually reviewed and monitored in the light of changing organisational, regulatory and market conditions. This lends itself to the promotion of a more ‘holistic’ approach.

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