Report Scope

This comprehensive Annual Report covers the economic, social and environmental performance of Commercial Bank of Ceylon PLC for the financial year ended December 31, 2013. In reporting both financial and non-financial matters, we have acted in compliance with all of the provisions stipulated by the Central Bank of Sri Lanka and Bangladesh Bank, as well as with those of The Institute of Chartered Accountants of Sri Lanka, the Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange. This Report also adopts the Global Reporting Initiative (GRI) Guidelines, version G4, and the GRI’s G4 Sector Disclosures for sustainability reporting. This Integrated Report has been presented to the Board and the Board has approved the Report.

We believe that an integrated report can better collate and demonstrate the links among different silos of information regarding Commercial Bank’s strategy, governance, and financial and corporate responsibility performance. Integration allows us to clearly articulate how we create and sustain value for all of our key stakeholders - customers, employees, shareholders, communities, business partners and so many others.

Commercial Bank published its inaugural sustainability report based on the GRI G3 Guidelines in our 2009 Annual Report, and we applied the same Guidelines in our 2010 Annual Report as well. In 2011, we commenced reporting sustainability impacts in accordance with the GRI G3.1 Guidelines. Last year, we published our first integrated Annual Report, incorporating the once-standalone sustainability chapter into the main Report. Following the same approach, and guided by our strategic imperatives, this 2013 Annual Report again examines sustainability integrated with our diverse business operations.

A detailed discussion about the strategic imperatives and various approaches adopted by key strategic business units to achieve them is given Business Model and Strategic Imperatives for Value Creation.

Commercial Bank has chosen to be an early adopter of the GRI G4 Guidelines. We have prepared this Report based on GRI G4 ‘in accordance’ - ‘Core’ option of the Guidelines. Accordingly, we changed our approach in reporting to align with the GRI G4 Guidelines. We re-evaluated the materiality based on the guidance provided in the GRI G4 Guidelines under the Section ‘Identified material aspects and boundaries’ covering our operations and supply chain aspects. Based on the evaluation we have concluded that , the following aspects and related indicators are not significant for reporting. However, we are internally monitoring the same to

Category	Aspect	GRI G3.1 Indicator(s)	GRI G4 Indicator(s)
Environment	Water	EN8	EN8
	Biodiversity	EN11, EN12, EN13, EN14, EN15	EN11, EN12, EN13, EN14
	Compliance	EN28	EN29
Social: Labour Practices and Decent Work	Occupational Health and Safety	LA7, LA8	LA6
Social: Human Rights	Investment	HR3	HR2
	Indigenous Rights	HR9	HR8
Social: Society	Public Policy	SO6	SO6
	Anti-competitive Behaviour	SO7	SO7
Product Responsibility	Customer Health and Safety	PR1, PR2	PR1, PR2
Social: Labour Practices and Decent Work	Employment	LA15	LA3
	Equal Remuneration for Men and Women	LA14	LA13

manage our sustainability risks and opportunities. From this point forward, we intend to report annually on sustainability initiatives based on the GRI G4 Guidelines, expanding our scope and boundary in our journey towards ‘in accordance’ - ‘Comprehensive’ reporting of all material aspects.

We re-stated the following information provided in earlier reports, as the underlying interpretations used for measurement were re-defined in line with the generally accepted practices and methodologies. We have documented the measurement methodology to ensure that these aspects are consistently measured.

To enhance reporting credibility, the Bank sought external assurance since the publication of our second sustainability report. This year’s Report has received external verification and assurance by Det Norske Veritas AS (DNV) represented by DNV Business Assurance Lanka (Pvt) Limited. As well, the Bank retained the services of KPMG to gain appropriate assurance with regard to financial performance data, as well as some key performance indicators. These Independent Assurance Reports appear under ‘Annexes ’.

Commercial Bank of Ceylon PLC, including our Board of Directors and senior management, does not have any relationship with DNV or KPMG, apart from the latter’s engagement as the Independent External Auditor of the Bank. The Managing Director, who is an Executive Director and members of the Corporate Management of the Bank responsible for sustainability practices and disclosures reviewed in this Report and interacted with the external assurance provider on the Report Content. We expect to continue seeking independent external assurance for sustainability reports, enhancing the credibility of our reporting.

 

Report Boundary

This Report primarily covers sustainability impacts, risks and opportunities arising from the Bank’s operations in Sri Lanka. Although our Bangladesh operation accounts for only 7.61% of Bank’s assets base, it contributes 13.28% to the post tax profits of the Bank which is material. Hence, this Report covers impacts, risks and opportunities on sustainability of the Bank’s operation in Bangladesh as well.

The activities and performance data of Commercial Bank’s three subsidiaries - Commercial Development Co. PLC, ONEzero Co. Ltd. and Commex Sri Lanka SRL - and the operations of its two associates, Equity Investments Lanka Ltd. and Commercial Insurance Brokers (Pvt) Ltd., are not included in this report, as the results of their operations are not significant compared to the overall results of the Group. For more information, please see the ‘Audited Financial Statements’. In addition, we believe that the low-scale operations of these entities have insignificant social, economic and environmental impact, and therefore do not warrant inclusion in the Report Content.

 

Material Aspects and Boundaries

Our Approach to Defining Report Content and the Aspect Boundaries

Because there is such a strong connection between Commercial Bank’s sustainability commitment and our business strategy, we recognise that we must align all aspects of that strategy with the expectations of our stakeholders. The content of this Report has therefore been determined by considering the full range of the Bank’s activities, along with our economic, social and environmental impacts, and the views we have gathered from stakeholders (see ‘Stakeholder Engagement Process’).

The methodology used to determine Report Content is based primarily on the GRI G4 Guidelines and follows a two-step process:

 

Step 1 - Identifying Relevant Aspects and Their Boundaries

We have identified aspects with broad sustainability significance - collected via the stakeholder engagement process - and established ‘boundaries’ isolating the most relevant impacts for the Bank and our stakeholders.

Aspects were evaluated according to their impact on and contribution to all areas of sustainability related to Bank’s business strategy and operations. They were also assessed in the light of stakeholder expectations gathered through the engagement process.

We categorised aspects according to three levels of significance in terms of sustainability: ‘High’, ‘Moderate’ and ‘Low’. We also used the following yardsticks to measure impacts and boundaries:

• The degree of influence the Bank has over each aspect.
• The extent to which the resources in question are used in Bank’s operations.
• The extent of various stakeholders’ interactions and their levels of expectation.
• The degree of responsibility that should be demonstrated by a responsible corporate citizen.
• The impacts arising from the activities of Bank’s customers and contributors to our supply chain.
• The degree of value that the Bank can deliver in relation to each aspect.

Step 2 - Establishing Material Aspects and Prioritisation

We have evaluated and ranked ‘material aspects’ according to the importance placed on them by the Bank, as well as the expectations of our stakeholders and the applicability of relevant local and international laws, regulations and treaties. At the same time, for each material aspect we have identified a boundary encompassing its most significant impacts.

To establish aspects’ ‘materiality’, or direct importance, we began by prioritising their relevance from two perspectives ranking them into three levels of importance, ‘High’, ‘Medium’ and ‘Low’:

1. The importance of the aspects as we work to achieve Bank’s strategic objectives (as set out in our Corporate Plan), fulfilling our responsibilities to the economy, the environment and the society.
2. The importance of the aspects to various stakeholder groups and the influence they could have on stakeholders’ assessment of and engagement with the Bank.

The following table depicts the level of significance, for each aspect, of the triple bottom line of economic, social and environmental considerations. Our analysis takes into account each aspect’s relevance to the Bank and our stakeholders, applying the principles of inclusiveness, sustainability context, materiality and completeness.

Based on the above assessment, all aspects gauged to have high priority for either Commercial Bank or our stakeholders have been included in the Report Content. The following matrix summarises the key aspects and their priority levels.