DNV GL represented by DNV Business Assurance Lanka (Private) Limited has been commissioned by the management of Diesel and Motor Engineering PLC (‘DIMO’ or ‘the Company’) to carry out an independent assurance engagement (Type 2, Moderate level) for the non-financial - qualitative and quantitative information (sustainability performance) prepared ‘in accordance – Comprehensive’ option based on Global Reporting Initiative G4 Sustainability Reporting Guidelines (GRI G4) and reported in DIMO’s Annual Report – 2013 -14 (‘the Report’) in its printed and web based 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.dnv. com/moreondnv/cr/; available on request) including confirmation of ‘in accordance – Comprehensive’ reporting requirements and adherence to reporting principles and standard disclosures of the 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 DIMO’s Annual Report – 2013- 14. The management of Company is responsible for all information provided in the Report as well as the processes for collecting, analysing and reporting the information presented in the printed and web based report, including the maintenance and integrity of the website. Our responsibility in performing this work is regarding the verification of the non-financial - qualitative and quantitative information (sustainability performance) disclosed in the Report only and in accordance with the scope of work agreed with the management of the Company. 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 April – May 2014.
The scope of assurance included the review of Economic, Environment and Social disclosures in the Report. In particular the assurance engagement included:
The reporting aspect boundary is based on the internal and external materiality assessment covering the operations (Vehicle - Sales, Vehicles – After Services, Marketing and Distribution, Construction and Material Handling Equipment and After Services, Electromechanical, Biomedical Engineering and Marine Solutions) in Sri Lanka, including the key 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, except certain disclosures related to remuneration which are set out in the report as sensitive and confidential. No external stakeholders were interviewed as part of this assurance engagement.
This assurance engagement was planned and carried out in accordance with the AA1000AS (2008) i.e. Type 2, Moderate, and VeriSustain. The report has been evaluated against the following criteria:
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 DIMO’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:
In our opinion, based on the scope of this assurance engagement, the non-financial - qualitative and quantitative information (sustainability performance) reported in the Annual Report – 2013-14 and referenced information on the website provides a fair representation of the sustainability related strategies, management system and performance, and meets the general content and quality requirements of GRI G4 i.e.,
– Comprehensive’ based on GRI G4 covering Generic Disclosures on Management Approach (DMA) and Performance Indicators for identified material Aspects as below:
Economic
− Economic Performance – G4-EC1,EC3 and EC4;
− Indirect Economic Impacts – G4-
EC7, EC8;
− Procurement Practices – EC9;
Environment
− Materials – EN1;
− Energy – G4-EN3 to 6;
− Water – EN8 to 10;
− Emissions – EN15 to 21;
− Effluents and Waste – G4-EN22 to 24;
− Compliance – EN29
− Environmental Grievance
Mechanisms - G4-EN34;
Social Labour Practices and
Decent Work
− Employment – G4-LA1 to 3;
− Occupational Health and Safety –
G4-LA5 to 8;
− Training and Education – G4-LA9 to
11;
− Supplier Assessment for Labour
Practices – G4-LA14 & 15;
− Labour Practices and Grievance
Mechanisms – G4-LA16;
Human Rights
− Non-discrimination – G4-HR3;
− Human Rights Grievance Mechanisms – G4-HR12;
Society
− Local Communities – G4-SO1 & 2;
− Anti-Corruption – G4-SO3 to 5;
− Compliance – G4-SO8;
− Grievance Mechanisms for Impact
on Society – GRI-SO11;
Product Responsibility
− Customer Health and Safety – GRI
G4-PR 1,2
− Product and Service Labelling - G4-
PR3 to 5;
− Marketing Communications - G4-PR7;
− Customer Privacy - G4-PR8;
− Compliance - G4-PR9;
We have evaluated the Report’s adherence to the following principles on a scale of ‘Good’, ‘Acceptable’ and ‘Needs Improvement’:
Inclusivity: The stakeholder identification and engagement process includes engagement with key stakeholders of business verticals to identify key 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 Company has carried out the materiality assessment for its five business verticals based on requirements of GRI G4. Inputs to materiality determination consider the aspects that are internal and external to the organization and concerns of stakeholders. In our view, the level at which the Report adheres to this principle is ‘Good’.
Responsiveness: We consider that the response to key stakeholder concerns through its policies, management systems and governance mechanisms are fairly reflected in the Report. In our view, the level at which the Report adheres to this principle is ‘Good’.
Reliability: The majority of data and information verified at the Head Office and at two sites visited by us 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; these 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”.
We consider the methodology and process for gathering information developed by DIMO 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.
Completeness: The Report has fairly reported the general and specific standard disclosures including the sustainability strategy, management approach, monitoring systems and sustainability performances indicators against the GRI G4 – ‘in accordance – Comprehensive’. However certain disclosures /performance indicators - internal and external to the Company like remuneration, other indirect emissions( Scope 3), occupational health and safety etc.– are partially reported/responded as systems for disclosure is being developed; 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”.
The following is a summary of observations and further opportunities for improvement reported back to the management of DIMO. These do not, however, affect our conclusions regarding the Report, and are not considered for drawing our conclusion on the Report; however, they are indeed consistent with the Management’s objectives already in place:
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 internal stakeholders interviewed during the verification process.
For DNV GL
Vadakepatth Nandkumar
Project Manager,
Head – Sustainability and Climate
Change,
DNV Business Assurance India Private
limited, India.
Prasun Kundu,
Assurance Reviewer,
DNV Business Assurance India Private
limited, India.
29th May 2014, Bangalore, India.
