4. Considerations for assessment and reporting

4.1 Setting a reference point to assess progress for elimination metrics

For some Break-Even Goals such as Operations emit no greenhouse gases, the progress indicator captures the degree to which a company has eliminated a negative impact. Defining what 100% means for such metrics is straightforward, but identifying the starting point (0%) is less intuitive. To make the company’s progress toward elimination relevant, we need a reference point to ‘anchor’ performance.

A company may choose its own reference point, from which subsequent reductions are measured, as follows:

  • If the company has for multiple years been measuring all of the data necessary to calculate its progress toward future-fitness (e.g. all operational GHG emissions), it can choose the data from any one of those years to use as its reference point.
  • If the company has been measuring a significant proportion but not all of the data necessary to calculate its progress (e.g. GHG emissions at 4 out of 5 facilities) it should estimate the missing amount, and use the part-estimated total as its reference point. If reporting on progress publicly, the use of the estimated value should be declared.
  • If the company has not kept records of the required data, its progress starts at 0% for the year in which measurement starts.

This approach ensures that any company which has already been actively measuring and reducing its impacts before using the Benchmark see its performance gains during that period reflected in its progress indicator.

Note that companies must follow up on their commitments with real action. If a company commits to becoming Future-Fit and chooses a reference point, its progress indicator will remain at 0% until it is able to decrease its impacts (e.g. by reducing its GHG emissions) from that initial value.

Once a reference point has been chosen, it should not be changed in future years except in rare cases where doing so would result in the reported data providing more reliable and relevant information.271

4.2 Assessing and reporting with incomplete data

Ideally, when describing their progress toward future-fitness, all companies would assess and report on the full extent of their operations. However, there are cases where it might be impossible to do this in a given reporting period. Examples include:

  • Companies that are just starting to assess their performance using the Benchmark, and which have not yet managed to gather information from across all parts of the business.
  • Companies that are undergoing major structural changes, such as a merger, acquisition or divestiture of operational components.272

In such cases, companies are still encouraged to report their Future-Fit performance, provided that: (a) they disclose and justify the extent of their activities which are not included; (b) they make clear to users of the data the likely implications of such omissions with respect to the company’s future-fitness273; and (c) they explain how those omissions will be addressed in future reporting cycles.

4.3 Assurance

Introduction to Benchmark assurance

The Benchmark indicators are designed to be used by companies to assess their environmental and social performance, and to give visibility into how management decisions affect fitness. Some companies will find that they want to have a third-party check they have done these assessments correctly, either to increase their own confidence in the information being used to drive decisions, or because they intend to report the indicators externally. Anticipating this, the Benchmark has been written in a way that helps facilitate assurance engagements using the ISAE 3000 standard.

When self-assessing performance, a company should think proactively about how to ensure and communicate that its data and calculations are correct. With respect to financial information, this involves two steps: 1) compiling evidence from the process used to arrive at the final figures, and 2) if the information is to be published for external reference (e.g. in an annual report) engaging an independent assurer to review the reported figures and the methods used to determine them. This approach is designed to give users of the information confidence in its reliability, and it is equally applicable to Future-Fit data and reporting.

Typically, assurers require an understanding of the checks and balances that a company relies on to keep things running smoothly (referred to as ‘internal controls’)274, along with an information trail that enables them to evaluate the following five areas where data collection and reporting could potentially go wrong:

  • Existence / Occurrence: Did the social and environmental outcomes reported actually take place? Or has information been included which cannot be verified, and therefore may relate to events that never occurred?
  • Completeness: Does what is reported include all the relevant information? Or are there other important pieces of missing data that someone using the report would need to make an informed decision?
  • Attribution: Did the social and environmental outcomes being reported occur because of the company’s actions? Is it possible that the company is claiming responsibility for outcomes (whether positive or negative) that were caused by another organization, or that would have occurred on their own?
  • Accuracy: Have the numbers in the report been calculated correctly? Did the company follow the instructions properly, and are the calculations free from errors?
  • Presentation: Are the figures being communicated in a way that makes their meaning and significance clear to report users? Where necessary, has adequate supporting information been included to put the data in context?

As a group, these are known as ‘audit assertions’. When a Future-Fit report is being reviewed, the assurance team’s objective is to determine whether the report was prepared according to the rules set out in the Benchmark. The company can make it easier for an assurance team to reach a conclusion by tailoring the evidence it collects to address these audit assertions.

Preparing for an assurance engagement

If a company is planning to have its Benchmark data assured by an independent third party, there are steps it can take prior to the assurance team arriving to help make the task easier. Because every company is different and faces unique challenges, it is impossible to be entirely prescriptive and provide a complete checklist of steps that will ensure the assurance process goes smoothly and successfully. Nonetheless, the following sections outline certain actions that will help companies address criteria that show up multiple times throughout the Benchmark.

Internal control documentation

Assurance providers suggest mapping out and documenting the organizational processes that the company uses to get information for calculating Benchmark indicators as flowchart diagrams, and to identify the internal controls that help prevent errors along the way. This will make it easy for external assurance teams to quickly understand which departments, systems and job functions are involved in each process, to identify areas where things might go wrong, and to start to consider whether the internal controls in place could be effective in preventing or quickly detecting potential problems. See the section on Guidance on mapping processes and internal controls for more information on how to do this.

Specific guidance for Break-Even Goal criteria types

The Break-Even Goals cover a wide range of topics, and the criteria outlined in their respective Action Guides include everything from measuring production outputs to scheduling regular review meetings, and from making company-wide commitments to implementing the recommendations of industry-specific frameworks. While the requirements are clearly defined and specific rules for measurement are given, there is substantial flexibility for companies to achieve these outcomes in unique ways that fit with their business model and strategy.

In general, this is good for businesses. Distinct criteria mean that the destination targeted by the goals is clear, and specific definitions set a level playing field for measurement among reporting companies. At the same time, companies are not being told how they have to achieve these criteria, which allows management freedom to define priorities and apply solutions that make sense for them.

While some of the criteria in the various Action Guides are only relevant to one specific Break-Even Goal, there are also some recurring themes that appear in several different Action Guides. This section identifies these themes, and gives some guidance on what types of internal controls can help ensure that all relevant risks are addressed.

1) Initial scope assessments

For many goals, the first step is to perform a scope assessment, where the company identifies all of the areas in which the goal applies to its business. For the goal Energy is from renewable sources a company must first identify all the areas where it is using energy before it can determine the type and ratio of energy it is using. For the goal Operations emit no greenhouse gases, the concept is similar; before measuring the amount of emissions, a company first needs to determine all of the different aspects of its operations that generate emissions. This type of criteria relates to the Completeness assertion – has the company included all of the relevant information in its assessment and report, or are there areas that were incorrectly excluded?

Some examples of controls that can help with this are:

  • Design processes that do not allow users to proceed until they have recorded all relevant pieces of information, reducing the likelihood of missing key data points.
  • Perform random spot checks of data points and track them through to the final aggregated total to ensure that they are included in the final reported value, potentially detecting necessary information that has accidentally been omitted.
    • E.g. Energy is from renewable sources: randomly select a month and a process that uses energy at a given location, and track that energy purchase through the reporting process to ensure that it has been included in the final report.

2) Calculation criteria

Once the necessary data has been collected for any Break-Even Goal a calculation needs to be performed in order to assess the company’s progress. There are several different formats of indicator in the Benchmark, and it’s helpful for a reporting company to understand which type of indicator it is dealing with before attempting the calculation. Indicator types include proportional (e.g. what percentage of employees are paid a living wage), elimination (e.g. reduce harmful emissions from the level produced in the baseline year to zero), and scoring-table goals (e.g. a supplier’s goods are rated at 60% because they fulfil some of the specific procurement requirements which correspond with the criteria used to measure progress, but are missing others).

For these criteria, Accuracy and Completeness are both relevant assertions. A company should make sure that, 1) it has carefully considered all of the information and definitions offered in the relevant Action Guide, 2) for topics where it does not have full data from all parts of the company, it knows how to communicate this and factor it into indicator calculations, and 3) baseline years have been set in line with the suggestions in the section on Setting a reference point to assess progress for elimination metrics.

Some examples of controls that can help with this are:

  • Creating a checklist for employees to use while completing aspects of the calculation process to ensure that necessary steps are followed and all key information is identified. The checklist will direct employees on the tasks needing to be performed, and can be reviewed by a supervisor once the employee’s work is complete to identify any steps that are missing.
    • E.g. A sample checklist for the goal Operational waste is eliminated could be:
      • Download all expense entries in the ‘Waste Disposal’ account for the year;
      • Identify each unique vendor from the account;
      • Obtain the folder containing the physical invoices for each vendor from the ‘Waste Disposal’ account, and review invoices for the period to ensure there are no other disposal charges that were errantly left out or mislabeled;
      • Record the weights listed on the invoices in a spreadsheet used for calculations;
      • For invoices listing the amount of waste in volume instead of weight, convert to weight using the appropriate ratio;
      • Check with the Facilities Manager whether they are aware of any other third-parties that removed waste from the location during the reporting period but weren’t listed in the account;
      • Sum the weights in the spreadsheet used for calculations;
      • Submit the file and invoices to Supervisor to check.
  • After the calculation for the current reporting period is complete, perform a variance analysis against the same calculation from a prior period. For any items included in this year’s calculation but not in the prior year’s, for items in last year’s calculation but not in the current one, or for items that are included in both years’ calculations but where the amounts differ significantly, investigate the differences and identify the reasons for each variance to ensure it is not an error.
    • E.g. For the goal Business is conducted ethically, the calculation might be:

      • 2017: 80% = 800 employees covered / 1000 total employees
      • 2016: 63% = 825 employees covered / 1300 total employees
    The variance of 300 total employees might indicate that the company is missing information from this year’s calculation, so it is investigated. Management confirms that one of the company’s factories was shut down during the year, affecting all 350 employees including 25 office staff. The company had assessments, policies and processes in place for the office staff, but had not completed that work for the other employees at the factory. Shutting down the plant had a positive impact on the company’s financials, allowing them to hire an additional 50 employees – who have not yet received the training they need for the company to count them as fully covered by the goal’s requirements. This explanation can be substantiated with evidence and explains the variance between years, so the reporting team is confident that it doesn’t indicate an error in the calculation.

3) Documentation criteria

At points throughout the Benchmark, there are requirements that companies document the steps of their processes, the calculations performed, and/or the names of the external resources used while applying steps from the Action Guides. This documentation can be for different purposes. In some cases, it is meant to be included in the company’s external Future-Fit communications, in order to give more context and a better understanding to users of the information. In other cases, it is meant to be recorded and retained internally, for management’s review or to create a trail for assurance providers to understand the approach that the company took in addressing the corresponding goal.

Documentation can be an effective way to demonstrate that a certain event occurred at a specific point in time. This is important internally when trying to convey the results of a project or generate buy-in for a proposal, and can also help to satisfy an external assurance provider that systems and controls worked as intended throughout a reporting period. Documentation can also be useful to take the informal, institutional knowledge or experience of individual employees, and codify it into something that anyone can use and understand. This can particularly benefit growing companies that need to replicate the success of their existing operations, or in cases of employee turnover where someone is leaving the company and their duties need to be transferred.

Some examples of documentation controls include:

  • Creating diagrams of steps in a process, showing what triggers each step, what actions are involved, and whether specific outputs are generated. Diagrams can be strengthened by adding narrative explanations of what happens at each point.
  • Recording calculations and retaining source documents of the numbers that go into them. This can include references to third-party documents or websites, as well as internal systems.
    • E.g. For the goal Employees are paid at least a living wage, a company may calculate the wage in its region by combining a housing cost based on a recent NGO report, the average cost of a healthy diet in the country from a government website, a fashion industry report detailing the cost of clothing, and primary research into the cost of schools in a city, amongst others. Referencing the sources and the dates they were accessed gives confidence to report users that the numbers are credible.
  • Creating documentation for physical processes which would not normally involve paper or electronic documents can help prove to internal and external stakeholders that processes are being used as intended.
    • E.g. For the goal Natural resources are managed to respect the welfare of ecosystems, people, and animals, an employee may perform a regular inspection of a filtration membrane in a farm’s drainage ditch that is part of the company’s system to prevent fertilizer runoff. That task doesn’t require anything to be written down, but if a physical checklist is created listing the different filters checked, the date on which the checks were performed, and it is signed by both the employee who performed the checks and by their manager or supervisor, then it becomes a convincing piece of evidence that the inspection occurred.

4) Periodic review of internal controls

Businesses are dynamic – constantly innovating, growing, and adapting. Internal controls are not immune to this, so businesses should always seek to improve on existing controls and be ready to adapt controls in response to other changes in the business. For this reason, it often makes sense to proactively set up time to review individual control processes. The Benchmark contains some requirements for these reviews, but there may be additional situations where they can be helpful.

Review timing should be planned based on the risk that the control relates to. For example, how frequently does the risk arise, and how significant are the consequences of the control not working efficiently? Depending on the answer, it might be that a control requires a review once every year (e.g. checking new employee training material contains updated links to supplemental online safety courses for staff), once a quarter, weekly, or even more frequently (e.g. ensuring a new electric fence is effective for keeping livestock from intruding on neighboring ecosystems without risking harm to the animals).

Some examples of periodic reviews include:

  • Setting regularly recurring meetings with relevant employees and management to evaluate and discuss the effectiveness of an internal control. When planning these reviews, companies should also plan for the next steps that will be taken to resolve any issues found with the control, and consider budgeting funds for addressing these issues.
    • For the goal Employee concerns are actively solicited, impartially judged, and transparently addressed, a company may schedule annual meetings between the CEO, head of HR, and union representatives to evaluate the system for employees to report grievances about working or employment conditions. Standing agenda items might include discussing employee awareness of the system, usage rates, response times, and feedback collected from employees.
  • Sending a request for feedback to randomly selected employees from different locations or divisions on a set schedule to gauge employee opinions, and reviewing the results to see whether any issues have been raised that require action.
    • For the goal Business is conducted ethically, a company might send out a survey to employees from each division on a quarterly basis to ask whether they perceive a risk of ethical breaches (e.g. pressure to meet sales targets causing employees to alter sales terms). Results could be analyzed and reviewed the following week by senior management, where any potentially significant issues or recurring themes in responses are responded to by the company.
  • Setting up time to observe whether controls are being executed the way they are intended to be. It is not unusual for controls to be enacted differently in practice than how they were originally designed. Observing them in practice can highlight weaknesses in the design, aspects that are impractical, or point to changes needed in training or incentive structures. Performing these observations without notifying the stakeholders responsible for the control may help ensure that observed behaviour is representative of what actually happens on a daily basis.

5) References to other standards

At several points, the Benchmark either refers to a specific third party management tool, or recommends that companies adhere to "relevant industry standards". The reason for this is that the Benchmark is designed to be applicable to any business in any industry, but for many sectors there is a wealth of highly specialized guidance available on social and environmental topics relevant to future-fitness. Whenever practical, we have attempted to point companies to these other standards, or to align guidance with them. In other cases, the topics covered are too specific to include in the Benchmark, as they would not be applicable to most users.

Some examples of other standards that may be applicable to companies include:

  • Identifying areas of cultural or environmental High Conservation Value around a company’s physical work sites.
    • For the goal Operations do not encroach on ecosystems or communities, companies should refer to the definitions and assessment guidance provided by the HCV Network in order to determine whether the areas that are impacted by their operations include High Conservation Value areas, and for guidance on their management if applicable.
  • For companies that produce or purchase products or services where widely accepted guidance exists detailing how to minimize negative social or environmental impacts, companies are expected to identify and adhere to those policies, while noting areas where the guidance does not extend to cover the requirements of the Benchmark.
    • For the goal Natural resources are managed to respect the welfare of ecosystems, people, and animals, companies that produce palm oil would be expected to identify and adhere to the guidance set out by the Roundtable on Sustainable Palm Oil (RSPO). The company would also be required to acknowledge where the scope of the relevant industry standard (in this case, the RSPO guidance) does not extend to information needed in the Benchmark. For example, the RSPO provides guidance and tools to help greenhouse gas calculations for the estate and mill aspects of palm oil producers and asks companies to calculate these values, but this does not provide the full carbon footprint for the company’s entire operation, which is required for the goal Operations emit no greenhouse gases.
Applying these principles

These examples should help provide insights on how a company might ensure that it is assurance-ready for some of the recurring criteria types found in the Benchmark. However, it is important to remember that each company is likely to have unique elements that require innovative planning to address.

There are also many criteria in the Benchmark that don’t fit neatly into the five categories outlined above. In those cases, companies should consider which audit assertions are likely to be of greatest concern to a report user, ensure that there are controls in place to prevent those potential issues from arising, and then clearly describe and document those controls. This will ensure that assurance providers are able to quickly and accurately understand the control environment at the company, and help ensure that assurance engagements are as efficient and helpful as possible.


“IAS 8 — accounting policies, changes in accounting estimates and errors.” International Accounting Standards Board, 01-Dec-2005 [Online]. Available: https://www.iasplus.com/en/standards/ias/ias8. [Accessed: 01-Sep-2017]

  1. The company should approach setting a reference year in the same manner as it approaches applying an accounting policy. For this reason, the wording used here reflects that used in International Accounting Standard 8.14. [125]↩︎

  2. In such cases, companies must consider whether adjustments should be made to previously-reported figures (including to any reference points, as described in Setting a reference point to assess progress for elimination metrics). They must also determine how and when to integrate any new asset’s future-fitness information into their company calculations.↩︎

  3. For example, is the omitted part expected to be similar to rest of the company’s operations in terms of its future-fitness? If so, what is the size of that part, as a percentage of the company’s overall operations? If not, how might the omitted part introduce new risks (e.g. regional or industry-specific) that are not proportional to size?↩︎

  4. See the section What are internal controls? for a more detailed description of internal controls.↩︎