Annexes

Independent Assurance Statement on Non-Financial Reporting

INDEPENDENT ASSURANCE STATEMENT ON NON-FINANCIAL REPORTING

Introduction

DNV GL represented by DNV Business Assurance Lanka (Private) Limited has been commissioned by the management of Commercial Bank of Ceylon PLC (‘Commercial Bank’ or ‘the Bank’) to carry out an independent assurance engagement (Type 2, Moderate level) for the non-financial - qualitative and quantitative information (sustainability performance) prepared ‘in accordance - Core’ option based on GRI G4 guidelines and reported in Commercial Bank’s printed Annual Report - 2013 (‘the Report’). This engagement focused on verification of non-financial - qualitative and quantitative information (sustainability performance) disclosed in the Report, and underlying management system and reporting processes. The engagement was carried out against AccountAbility’s AA 1000 Assurance Standard 2008 (AA 1000AS), the DNV GL Protocol for Verification of Sustainability Reporting (‘VeriSustain’ - www.dnvgl.com/cr; available on request) including confirmation of ‘in accordance - Core’ reporting requirements and adherence to reporting principles and standard disclosures of the Global Reporting Initiative G4 Sustainability Reporting Guidelines (GRI G4).

The intended users of this assurance statement are the management and readers of the non-financial - qualitative and quantitative information (sustainability performance) reported in Commercial Bank’s printed Annual Report - 2013. The Management of Commercial Bank is responsible for all information provided in the Report as well as the processes for collecting, analyzing and reporting the information presented in the Report. Our responsibility in performing this work is regarding the verification of the non-financial - qualitative and quantitative information (sustainability performance) reported in Commercial Bank’s printed Annual Report - 2013 only, in accordance with the scope of work agreed with the management of the Commercial Bank. The assurance engagement is based on the assumption that the data and information provided to us is complete, sufficient and authentic. We disclaim any liability or responsibility to a third party for decisions, whether investment or otherwise, based on this assurance statement. Our assurance engagement was planned and carried out in January - February - 2014.

Scope, Boundary and Limitations of Assurance

The scope of assurance included the review of Economic, Environment and Social information in the Report. In particular the assurance engagement included:

  • The verification of the qualitative and quantitative sustainability performance reported in the Annual Report prepared by the Commercial Bank based on the GRI G4 guidelines, covering economic, environmental and social performance for the activities undertaken by Commercial Bank over the reporting period January 1, 2013 to December 31, 2013 and reported in this Annual Report;
  • Review of the policies, initiatives, practices and performance described in the non-financial - qualitative and quantitative information (sustainability performance) reported in Commercial Bank’s printed Annual Report - 2013 as well as references made in the Report;
  • Evaluation of the disclosed information in the Report, both general and specific standard disclosures ‘in accordance - Core’ reporting requirements covering the systems and the processes the Commercial Bank has in place for adherence to reporting principles set out in the Global Reporting Initiative Sustainability Reporting Guidelines 2013 (GRI G4);
  • Evaluation with respect to the AccountAbility principles and specified performance information, for a Type 2, moderate level of assurance, in accordance with the requirements of AA1000AS (2008):
    • information relating to the issues, responses, performance data, case studies and underlying systems for the management of such information and data;
    • information relating to materiality assessment and stakeholder engagement processes;
  • The sustainability disclosures fulfils the criterion related to GRI G4 - ‘in accordance - Core’ as declared by the Commercial Bank.

The reporting aspect boundary is based on the internal and external materiality assessment covering the banking and associated operations in Sri Lanka and Bangladesh, including the selected supply chain activities as set out in the Report. During the assurance process, we did not come across limitations to the scope of the agreed assurance engagement. The Report does not include performance data and information related to the activities 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. as the results of their operations are not significant (<1% revenue) compared to the overall results of the group. No external stakeholders were interviewed as part of this Assurance engagement.

Verification Methodology

This assurance engagement was planned and carried out in accordance with the AA1000AS (2008) i.e. Type 2, Moderate and the DNV-GL Protocol for Verification of Sustainability Reporting (‘VeriSustain’). The Report has been evaluated against the following criteria:

  • Adherence to the principles of Inclusivity, Materiality and Responsiveness, as well as Reliability of specified sustainability performance information, as set out in the AA1000AS (2008);
  • Application of the principle of materiality as per GRI G4;
  • Adherence to additional principles of Completeness and Neutrality, as set out in DNV-GL’s Protocol;.
  • The GRI G4 requirements - “in accordance - Core”.

During the assurance engagement, we have taken a risk-based approach, meaning that we concentrated our verification efforts more on the issues of high material relevance to Commercial Bank’s business and its stakeholders. We have verified the statements and claims made in the Report and assessed the robustness of the underlying data management system, information flow and controls. In doing so, we have:

  • Reviewed the approach to stakeholder engagement and its materiality determination process;
  • Verified the sustainability-related statements and claims made in the Report and assessed the robustness of the data management system, information flow and controls;
  • Examined and reviewed documents, data and other information made available by the Commercial Bank and visited the Head office at Colombo and two branch offices - City office and Ward Place at Colombo;
  • Conducted interviews with key representatives including data owners and decision-makers from different functions of the Commercial Bank;
  • Performed sample-based reviews of the mechanisms for implementing the sustainability related policies, as described in the Report;
  • Performed sample-based checks of the processes for generating, gathering and managing the quantitative data and qualitative information included in the Report.

Conclusions

In our opinion, based on the scope of this assurance engagement, the non-financial - qualitative and quantitative information (sustainability performance) reported in Commercial Bank’s printed Annual Report - 2013 and referenced information provides a fair representation of the sustainability related strategies, management system and performance and meets the general content and quality requirements of the GRI G4 i.e.,

  • General Standard
    Disclosure: We reviewed the general standard disclosures reported in this Report and we are of the opinion that the reported information generally meets the reporting requirement for ‘in accordance - Core’ based on GRI G4.
  • Specific Standard
    Disclosure: We reviewed the specific standard disclosures reported in this Report and we are of the opinion that the reported information generally meets the reporting requirement for ‘in accordance - Core’ based on GRI G4 and financial sector guidance covering generic DMA and performance indicator for identified material aspects as below:

ECONOMIC

  • Economic Performance - G4-EC1;
  • Market Presence - G4-EC5, G4-EC6;
  • Indirect Economic Impact - G4-EC7;

ENVIRONMENT

  • Energy - G4-EN6;
  • Effluents and Waste - G4-EN23;
  • Products and Services - G4-EN27;
  • Supplier Environment Assessment - G4-EN32;

SOCIAL

LABOUR PRACTICE AND DECENT WORK
  • Employment - G4-LA1, G4-LA2, G4-LA3;
  • Labour/Management Relations - G4-LA4;
  • Occupational Health and Safety - G4-LA8;
  • Training and Education - G4-LA9, G4-LA11;
  • Diversity and Equal Opportunity - G4-LA12;
  • Equal Remuneration for Women and Men - G4-LA13;
  • Supplier Assessment for Labour Practices - G4-LA14;
  • Labour Practices and Grievance Mechanisms - G4-LA16;

HUMAN RIGHTS

  • Non-Discrimination - G4-HR3;
  • Freedom of Association and Collective Bargaining - G4-HR4;
  • Child Labour - G4-HR5;
  • Forced or Compulsory Labour - G4-HR6;
  • Security Practices - G4-HR7;
  • Assessment - G4-HR9;
  • Supplier Human Rights Assessment - G4-HR10;
  • Human Rights Grievance Mechanisms - G4-HR12;

SOCIETY

  • Local Communities - G4-SO1, G4-SO2, G4-FS13, G4-FS14;
  • Anti-Corruption - G4-SO3, G4-SO4, G4-SO5;
  • Compliance - G4-SO8;
  • Supplier Assessment for Impacts on Society - G4-SO9, G4-SO11;

PRODUCT RESPONSIBILITY

  • Product and Service Labelling - G4-PR3, G4-PR4, G4-PR5;
  • Marketing Communications - G4-PR6,G4-PR7;
  • Customer Privacy - G4-PR8;
  • Compliance - G4-PR9
  • Product Portfolio - G4-FS6, G4-FS7, G4-FS8;

We have evaluated the Report’s adherence to the following principles on a scale of ‘Good’, ‘Acceptable’ and ‘Needs Improvement’:

AA1000AS (2008) Principles

Inclusivity: The stakeholder identification and engagement process includes engagement with key stakeholders to identify sustainability challenges and concerns through different channels. The material issues emerging from the stakeholder engagement were collected and prioritised, and the results are fairly reflected in the Report. In our view, the level at which the Report adheres to this principle is “Good”.

Materiality: The process of materiality assessment has been carried out based on requirements of GRI G4 and financial sector guidance. The process considered the aspects that are internal and external to the organization and prioritized the aspects for sustainability management. The materiality of the aspects is explained in the Report along with the management and monitoring systems. However, the topics related to IFC, Green banking, and other charters to which it subscribes in the geo locations of operations and supply chain are not fully explained. In our view, the level at which the Report adheres to this principles is “Acceptable”.

Responsiveness: We consider that the response to key stakeholder concerns, through its policies and management systems including governance are fairly reflected in the Report. In our view, the level at which the Report adheres to this principle is “Acceptable”.

Reliability: The majority of data and information verified at Head Office and at two branch sites at Colombo were found to be fairly accurate. Some of the data inaccuracies identified during the verification process were found to be attributable to transcription, interpretation and aggregation errors and the errors have been corrected; Hence in accordance with the AA1000AS (2008) requirements for a Type 2, moderate level assurance engagement, we conclude that the specified sustainability data and information presented in the Report is reliable and acceptable. In our view, the level at which the Report adheres to this principle is “Good”.

Specific Evaluation of the Information on Sustainability Performances

We consider the methodology and process for gathering information developed by the Commercial Bank, for its sustainability performance reporting is appropriate and the qualitative and quantitative data included in the Report, was found to be identifiable and traceable; the personnel responsible was able to demonstrate the origin and interpretation of the data and its reliability. We observed that the Report presents a faithful description of the reported sustainability activities for the reporting period.

Additional Principles as per DNV’s Protocol

Completeness: The Report has fairly attempted to disclose the general and specific standard disclosures including the disclosure on Management approach covering the sustainability strategy, management approach, monitoring systems and sustainability performances indicators against the GRI G4 - ‘in accordance - Core’.
However, certain performance indicators -internal and external to the Commercial Bank like energy, waste, occupational health and safety etc. - are partially reported/responded due to absence of data aggregation system; In our view, the level at which the Report adheres to this principle is “Acceptable”.

Neutrality: The disclosures related to sustainability issues and performances are reported in a neutral tone, in terms of content and presentation. In our view, the level at which the Report adheres to the principle of Neutrality is “Good”.

Opportunities for Improvement

The following is an excerpt from the observations and further opportunities for improvement reported to the management of Commercial Bank and are not considered for drawing our conclusion on the Report; however, they are generally consistent with the Management’s objectives:

  • The disclosure on supply chain may evaluate and disclose the strategic risks in supply chain in the geo locations of operations and articulate the strategy, management approach and monitoring mechanisms to manage the frontier risks.
  • To further strengthen the materiality i.e., identify the topics considering the national and international charters to which the Commercial Bank subscribes in the geo locations of its operations.

Our Competence and Independence

We are a global provider of sustainability services, with qualified environmental and social assurance specialists working in over 100 countries. We were not involved in the preparation of any statements or data included in the Report except for this Assurance Statement. DNV GL maintains complete impartiality toward any people interviewed.

For DNV GL

Vadakepatth Nandkumar
Project Manager,
Head - Sustainability and Climate Change
DNV Business Assurance India Private Limited, India.

 

Balasubramoniam, Sivasubramaniam
Assurance Reviewer,
DNV Business Assurance India Private Limited, India.

February 24, 2014,
Bangalore, India