Sustainability Reporting, CSR and Business Ethics in

IsraelLiad Ortar

Structure of presentation:• Israel – some facts and figures• Corporate Philanthropy – religious

sources and actual response• The definition of a corporation – the

legal aspect• CSR guidelines:

• Maala ranking• IS 10000• GRI & sustainability reporting• Mandatory non financial

reporting law proposal

• Another motive from Jewish literature…

The State of Israel – some fact and

figures

Size IL – 22,770 sq. KMSize Baden Württemberg – 35,752 sq. KM

Population IL – 8.1 millionPopulation Baden Württemberg – 10.51 million

Egypt Palestine Israel Germany0

10000

20000

30000

40000

50000

1570 1600

33243

44985

$GDP per capita in US

Population growth rate IL – 1.9%Population growth rate DE – 0.4 %

Data from OECD site – https://data.oecd.org/germany.htm / https://data.oecd.org/israel.htm

Key characteristics –

Small Geographically isolated but globally

connected (70% of all households are internet connected. In DE – 85.5%)

Rich Religious (only?) by definition and

institutions High levels of income inequality (0.36

Gini coefficient, DE – 0.29) Innovative “Start-Up Nation” Continues status of security

challenges and regional instability

"If there be among you a poor man of one of thy brethren within any of thy gates in thy land which the LORD thy God giveth thee, thou shalt not harden thine heart, nor shut thine hand from thy poor brother:

But thou shalt open thine hand wide unto him, and shalt surely lend him sufficient for his need, in that which he wanteth." –

King James Bible "Authorized Version", Cambridge Edition. Deuteronomy 15:7,8

Two basic principles of Jewish philanthropy:• It is a ‘Mitzva’ (command)• It must be done secretly

The role of theological ethics in the business sector in Israel

One of the results…charity boxes on the streets of Bnei-Brak

Some figures concerning philanthropy in IsraelSurvey included 408 not-for-profit organizations with a budget of over 500K NIS

50%

34%

2%2%

7%5%

2011Government Income from sales and interestOther transfers From other NGOsPhilantropy from abroad Philantropy from Israelis

1554; 27%

4026; 71%

100; 2%

2011In million NIS and relative

%

Corporations House holds legacies

Distribution of funding sources – total budget

Distribution of funding sources – only Israeli funding sources

Source: Israeli Central Bureau of Statistics, Philanthropy of Israeli 2009-2011 (2014)

To what purpose Israeli corporations donate money to

3%

12%

6%

35%

17%

2%

25%

2011

Sport and culture Education & researchHealth WelfareEnvironment, housing and advocay ReligionVolunteering

• Only 34% (!) of all corporate donations are reported to the tax authorities for recognition as an expense. (Article 46 ? )

"…to operate in accordance with business considerations in realizing its profits, and within the scope of such considerations, the interests of its creditors, its employees and the public may inter alia be taken into account;

similarly, the company may donate a reasonable sum for a proper object, even if such donation is not within the scope of business considerations as aforesaid, if a provision for such is laid down in the articles of association."

The Israeli Companies Law (1999), Chapter 11(a), p. 9

According to the Israeli law the goal of the corporation is to:

Corporate Social Responsibility in Israel is well founded in the ‘beyond compliance’ realm with voluntary managerial approaches:

Sustainability Reporting (GRI based)

Israeli Standard 10000 (based on ISO 26000)

Maala RankingMandatory ESG reporting – law

proposal

• 85 Companies participated at the 2015 Maala CSR index

• 30% of them published a sustainability report

The result -

Maala bond – 20 largest traded companies:

Yearly yield

TA100 in comparison to TA Maala index (30 largest traded companies participating in the

Maala ranking)

Israeli Standard (IS) 10000–

Guidance on Social Responsibility of Organizations“Attestation is done after

implementation of an intra-organizational process, in which the Social Responsibility system, per the standard requirements, is successfully implemented” (from SII site)

ISO 26000 ?

Still only a managerial guide ?

In 2014 – out of 7 companies holding the IS10000 certificate – non had a sustainability report

2008 2009 2010 2011 2012 2013 20140

5

10

15

20

25

30

8

14

46

84

9

0

3

8

9

10

13

19

Already reportedFirst time reporters

Sustainability Reports in Israel

• G3 introduced in 2007 by me with its translation to Hebrew

Although there is a clear increase in the number of sustainability reports being published in Israel, it is a fraction of the total number of large (traded / governmental / private) companies.

But… in Israel there are:• 300,000 registered LTD

companies. • 575 traded companies

The Knesset (the Israeli Parliament)

CSR Law Proposal (Obligatory Reporting) - 2014

• "Large Company" - public or private company that complies with either one of the three following terms:

1. Employs over 250 people2. It’s yearly revenue is at list 25 Million NIS (new

Israeli Shekel)3. The ratio between the highest monthly salary

to the lowest one is larger than 30 times.

Article 6 – Timing of handing in a CSR reportThe report will be handed in by the end of the

first quarter of the financial year and will cover the previous year.

The clerk in charge is allowed, according to the specified conditions, to grand a delay of up to two months in the handing in of the report to the companies requesting in doing so.

The minister is allowed to exempt a company from up to one reporting period, according to the specified conditions.

Article 9 – Penalties

An obligated reporting company that did not hand in its report accordingly will be fined in the rate of 1% of its yearly revenue.

Before executing the fine as specified in article (A), the clerk in charge is allowed to summon for hearing the company's responsible manager. Any company not handing in a report on time will not be allowed to do any use of the reporting logo until the report is handed in accordingly.

An obligated company not handing in a report will be registered a violating company and this record will be saved to a period of up to seven years.

Workplace Diversity  Yes/No Is the organization a policy for the

advancement of disadvantaged populations in Israeli society?

  Attachment If yes, complete and attach the policy document

  Text If no, please explain why there is no such policy document

    Please answer the following questions for each population group: women, Arabs, ultra orthodox, people with disabilities, elderly (45+), Ethiopian

  Percentage What is the percentage of employees in each of these groups out of the total employees in the organization?

  Percentage What is the percentage of employees for each of these groups that were hired by the organization during the reporting period?

  Percentage What is the percentage of employees in each of these groups that hold management positions in the organization?

  Percentage What is the percentage of employees in the organization from each of these groups are earning in the top fifth (20% upper) of high wage recipients?

We developed in a multi-stakeholders dialogue process a detailed guidelines for non financial reporting.

The world is based on three pillars:1.On the Bible2.on the Work3.And on Charity:

1.In money donations2.In personal fiscal

assistance3.In one’s speaking out

Liad.ortar@gmail.com