25 February 2010

Spain, the quiet achiever

Imagine a world in which 17,000 annual budget settlements were being handled manually each year. The time and cost involved, not to mention the error rates, would be enough to challenge any organization. In fact, you'd expect something like this to have been automated years ago. Now add a small problem; all the reporting entities run different systems, have individual workflows, set their own priorities, only one of which was providing reporting to an external party. Lets add to the complexity by making each budget settlement require up to 400 rows of information.

Here we have an almost perfect scenario for XBRL - multiple reporting entities, using any range of different systems and processes, providing information that must be manually processed, all being provided to a common consumer of the information.

Okay, so the the title gives it away. But across Spain a quiet revolution has been underway in local government reporting. Specifically municipalities, regional government, regions and metropolitan areas. Specifically in the area of budget settlement, of which there are something like 17,000 from the various levels of government. Spain has a decentralised administrative system vesting local authorities and municipalities with significant freedom to make business decisions - what processes, system and standards they will use. Lets add to the complexity by understanding than t80% of the reporting entities represented communities of 5000 or less people.

I think many of us who attended the XBRL conference in Madrid would agree that a "standardized" Spain would lose too much of its charm.

Alejandro Amelivia Garcia, the project manager, has given me some fascinating insights on the project. Alejandro is the head of e-government area in Directorate General of Financial Coordination with regional governments and local Agencies. Ministry of Economy an Finance.

So if you want to reform at lease one element of public sector reporting, what would your project plan look like? Lets go to Alejandro's own words about the successes of the project.
  • First, developing the taxonomy with XBRL Spain.
  • Then we published a legal text recommending XBRL to transmit the data.
  • Then we made it well known by attending to meetings with local entities and showing the advantages of the standard.
  • They were convinced and began asking for the feature to their accounting systems vendors.
  • Vendors developed plug ins to dump the data into XBRL Files. They had to do it for free because they had to update their systems according to the legal text.
The Public Sector is, I've written before, one of the great opportunities for XBRL. Massive amounts of information flowing back and for, up and down, and much of it either manual or conforming to multiple local and national standards.

The LENLOC project (Liquidación ENtidades LOCales = LOCal Entities budget settlement) in Spain was designed to deal with this situation. It is important to note that that central government did not mandate the use of XBRL - in this case the advantages of using XBRL were simply too great to be ignored. That did not mean that there was a single "big bang" implementation. But progress has been impressive.

So what kinds of benefits can be achieved from such a project? Again we'll go to Alejandro's own words:
History of Budget Settlement transmissions:
  • Until 2004: Only paper + army of typers. Let’s forget this has ever happened.
  • Until 2006: Web forms for entities to type their data + hand-signed paper.
  • 2006: electronic signature (no more paper needed) + development of LENLOC, our XBRL taxonomy which describes the transmission of a settlement.
  •             20% of the settlements sent by a local entity were received via XBRL.
  • 2007:    60%
  • 2008:    (current reception): About 80%
  • 2009:    We deployed the application just a few weeks ago, so data is not significant.

My own guess is that 2009 will go down in history as the last year in which any local authority in Spain provided non-XBRL tagged budget submission information.And the benefits - again to Alejandro:
Improvements achieved:
  • No more paper and no more typing for anybody. This two would pay the bill.
  • Better data. No typos, information is extracted directly from the different databases. One instance is accepted only if it is correct.
  • Less expenses on mail, typers…
  • Better world: No paper, no physical space to storage paper for years, no bored people doing monotonous jobs.
There can be little doubt that Spain, the quiet achiever, is using XBRL to deliver real efficiency and effectiveness benefits to a key component of public administration. Equally there can be little doubt that with this success and the efficiencies demonstrated, we should expect more examples of Spain using XBRL to reduce administrative burden, reduce costs, while improving effectiveness of local government.

If you want to, you can learn more and contact Alejandro directly on his e-mail: Alejandro Amelivia Garcia .

24 February 2010

Developing Company Policy – an Overview Process

A CSR/Sustainability Policy does not exist in a void; it should exist as part of a fully integrated Policy Framework within a company.

This discussion follows from (or leads to, actually) the example CSR/Sustainability Policy Statement that I provided yesterday, and introduces Policy (and the Policy Framework). This is only an introduction, there's lots more, and feel free to contact me for more information on the topic of development, introduction, monitoring and updating of policy, defining responsibilities for Policy, and delegations of authority to develop, approve, introduce or alter policy.

Development of policy should be done in consultation with, and obtained agreement with representatives of Risk Management, Information Services/Technology, Human Resources, Communications and Finance among others. Senior management should review and approve the policy framework and high-level policies for submission to the Board of Directors for approval.

What is Policy

Each company’s Policy (formal and documented or informal) reflects its own culture. Fundamentally, Policy provides the guidance and boundaries for all managers and staff to enable achievement of company objectives. Policy can be a high level set of goals or objectives, or a set of directives and mandatory performance or behavioural requirements.

Policy should include objectives, responsibilities, and accountabilities and should include an identification of the owner of the policy. They should be clearly determined, setting the tone, values and governance of the company. Each policy should also include a statement of principle or prescribed general (rather than detailed) course of action, with application appropriate to the level of the policy.

What does Policy do?

  • Policy provides the boundaries within which employees achieve the strategic direction of the company, as set by the Board and the Senior Management Team.
  • Policy contributes to the setting of accountabilities for specific tasks in the organisation, and provides guidance to managers and staff as to how to achieve the strategic direction. Policy helps to drive behaviour.
  • Policy provides cohesion and congruence to the various parts of the company, ensuring that all parts are moving in the same direction.
  • Policy provides focus to address areas which are either of importance to the achievement of the company’s strategic objectives, or matters which are of considerable risk to the business.
CSR / Sustainability Policy

With that quick overview, lets return to the example CSR/Sustainability Policy statement. In that Policy, there is clear definition of ownership and responsibility, without attempting to define day to day functions of individuals. Think about the Policy Statement itself. It lays out "who we are, what each of us is responsible for doing, and what the company provides to enable us to meet our obligation".

The rest of the example policy provides context and is designed to help individuals in interpreting their responsibilities, and in providing guidance and direction, and importantly who or where to go when in any doubt.

CSR/Sustainability is not the responsibility of the CSR department, marketing or any other area. It is not the responsibility of a CSR coordinator or director of sustainability. It is part of the fabric of the company, and as such, needs to be integrated into the overall Policy Framework of the company.

23 February 2010

Example of a CSR / Sustainability Policy

Most companies already have policy frameworks in place, with policies covering a range of business activities. Sometimes policy is developed at a micro-level determining just who can spend exactly how much, on what and when (as one example). I have also worked with companies to develop their policy frameworks and to create the set of “high level” policies under which detailed policies can be ‘attached’. My clients found this to be an effective way of creating the link between the Vission/Mission and individual and business behavior at a detailed level.

For your reading pleasure, A CSR / Sustainability Policy. Note that the ‘Interpretation’ and 'Specific Responsiblities' secions set out the responsibilities of various business units and functions at a high level, but at a level “below” the policy statement. This provides the bridge between “who we are” and “how we do it”.

The Policy Statement itself contains a three elements - Who we are, What individuals are responsible for, and what is provided to enable achievement.



Throughout our history we have sought to achieve our business objectives while at the same time acting as a good corporate citizen in all our communities, and across those elements of our supply chain that we have been able to directly influence. It is the intention of the company to continue to be a good corporate citizen. The assumptions of what good corporate citizenship entails have been evolving, and it is our intention to continue to evolve our business practices as such assumptions evolve.

Recent years have seen the growth of the concept of Corporate Social Responsibility and Sustainability. While neither of these is a new concept, the importance of these to effective business operations has been demonstrated from the perspective of enhancing business performance and the potential negative public relations impacts where a company fails to demonstrate these principles in action.

While we are proud of our heritage and confident that we embody these principles in our business practices, this policy statement has been developed to provide clear guidance in understanding our obligations and expectations. This policy statement is effective from xxx date xxxx and is applicable to all company divisions, Strategic Business Units (SBUs), and to our commercial relationships will all suppliers and customers.

Policy Statement

We are an ethical company dedicated to ensuring that we use only those resources required to achieve our legitimate business objectives, while doing what we can to conserve existing natural resources such as to ensure that there will be sufficient resources for future generations, while also contributing to our communities and the communities in which we and our suppliers and customers much live.

It is the responsibility of each employee of the company to ensure that these principles are upheld across our business operations and commercial relationships, and that each employee serves as an ambassador for the company in all our communities.

As a company dedicated to this vision, we will make available the tools and resources required to be this company, and will support each employee as they live this policy.


The Company’s Policy Manual sets out specific policies covering all HR policies. These policies have been developed to provide a foundation for each employee’s behavior and the behavior of the company. These policies must be followed at all times by all employees.

The Accounting and Finance Policy Manual sets out specific policies for the allocation and application of the financial and capitol resources of the company.

As an element of demonstration of adherence to our policy, and to communicate our achievement against our policy, we produce an annual consolidated CSR/Sustainability report, providing in that report all information required to comply with and meet the reporting spirit of the standard that we use (*for example, the Policy might be to meet the reporting requirements of both the UN Global Compact Communication on Progress elements and a GRI - Global Reporting Initiative - index, ISO26000, CDP - Carbon disclosure Project -  or another standards).

Specific Responsibilities

The Board of Directors (BoD) is responsible for approval of the CSR/Sustainability Policy, and to ensure the principles of the policy are included in the company’s strategic plan and statement of business objective. The BoD also monitors for compliance with the policy via review of regular briefings from the CEO.

The Chief Executive and Senior Management are responsible for implementation of the policy, and to ensure the business plans and projections are built taking the policy into consideration.

Risk Management is responsible for identification and communication of the risk environment related to CSR/Sustainability, including economic, social and environmental risk, and to provide guidance senior leadership and SBU leadership on country and regional risk. Risk Management also provides the systems and processes for the estimation, monitoring and reporting against regulatory mandated reporting (excluding SEC or other financial regulator reporting).

Corporate Communications develops the company’s annual CSR/Sustainability report. Corporate Communications works with Finance and the CFO’s office to ensure that all reported information has been reviewed and that assurance has been provided over such information. Corporate Communciations may seek guidance and support from other functions in determining approriate content for such reports and communication. Corporate Communications, in consultation with Senior Leadership, will determine the most appropriate standards to use for such communication.

SBU Presidents (Managing Directors) are responsible for implementation of all company policies, including all CSR/Sustainability policies. SBU leadership is also responsible for provision of accurate and timely CSR/Sustainability reports at defined levels of data granularity, as required by the Office of Sustainable Business Practices.

Commercial Managers and Contract Managers are responsible for ensuring that all corporate CSR/Sustainability policies are accepted by all suppliers, and built into all future contracts.

The Office of Sustainable Business Practices is responsible for the development of specific sustainability metrics, the compilation of reports based on information provided by SBUs, and management of the relationship with the CSR/Sustainability Assurance provider (until such time as such assurance is incorporated into annual and regulator reports).

Human Resources maintains an inventory of social programs and the resources provided by the company in support of such programs.

Supporting Materials

The Operational Policies Manual for each SBU and Corporate include specific CSR/Sustainability metrics and standards.

Budgeting and Performance reporting templates have been (or will be) updated to identify additional budget estimates and reporting required to achieve CSR/Sustainability mandates.

Supporting Unit

Any questions regarding this policy should be directed to the Office of the Corporate Council, or to your local Risk Management or General Council’s office. Consult your local director for contact details.

03 February 2010

SEC's Climate Change reporting guidance released

Last week the SEC commissioners voted to release an interpretive guidance on companies including Climate Change issues in their files (annual reports to the SEC and investors).  The release is entitled "Commission Guidance Regarding Disclosure Related to Climate Change".

The guidance includes discussion of reporting requirements for US listed companies and for Foreign companies that list in the US and report to the SEC. That includes thousands of companies around the world.

You can read the guidance here: http://sec.gov/rules/interp/2010/33-9106.pdf