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Acceptance of terms:

I accept and agree for and on behalf of myself and the entity I represent (each a “recipient”) that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s Insight Report. The Insight Report is provided to each recipient for information purposes only. If a recipient relies on PwC’s Insight Report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the Insight Report by a recipient;
  3. Neither PwC’s Insight Report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation;
  4. PwC’s Insight Report was prepared with The Crown Estate’s interests in mind. It was not prepared with any recipient’s interests in mind or for its use. PwC’s Insight Report is not an assurance report under professional assurance standards; it is not a substitute for any enquiries that a recipient should make. The contents of the Insight Report relate to The Crown Estate’s Total Contribution report for the year ended 31 March 2016, and thus PwC’s Insight Report is based on historical information. Any projection of such information to future periods would be inappropriate;
  5. PwC will be entitled to the benefit of and to enforce these terms; and
  6. These terms and any dispute arising from them, whether contractual or non-contractual, are subject to English law and the exclusive jurisdiction of English courts.

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Introduction

Working towards a common goal

The Crown Estate engaged us to work with PwC’s Inspiring Trust Through Insight concept (see the report at www.pwc.com/inspiringtrust) for the second year running, to help inform the market on The Crown Estate’s progress in relation to non-financial reporting performance measures and direction of reporting beyond financial reporting. The Crown Estate provides users with information on its performance across a broad range of indicators and PwC’s Insight Report provides professional insight into the maturity of specific indicators disclosed within the Total Contribution Report 2017 “Everything is connected”. The Crown Estate have also disclosed the economic valuation of particular indicators in the Total Contribution Report 2017 “Everything is Connected” and have asked us to provide insight into the methodology applied to calculate these valuations.

This will assist users to understand The Crown Estate’s broader performance, to know how ‘soft’ or ‘hard’ the information is, and whether The Crown Estate is using this information for current decision making.

The state of play

The focus of business and corporate reporting is continuously evolving and is moving away from a narrow focus on increased output and short-term profit creation to one that considers a wider, longer term impact on a broader range of stakeholders. With recent events around the world, ranging from political events (such as the Brexit referendum and US election results) to environmental commitments (COP21 in Paris) and economic challenges (slowdown in growth of the global economy), successful business leaders are taking into account the impact of megatrends on their businesses, markets and societies. This is resulting in a demand for a broader range of performance indicators to measure and report risk and performance, and to enable better informed decisions, internally and externally. This demand is coinciding with technology advances that are driving the increased utility and availability of data. The resulting innovation in the use and reporting of information should be applauded, but as with all innovation there is a need to build public trust.

There has been considerable progress in building trust in broader measures of performance over the past few years and some of these areas (e.g. customer and supplier engagement) are already mature. Other areas are relatively embryonic but now being recognised as critical to performance (e.g. culture and behaviour) with companies facing the challenge of measuring, managing and building a degree of robustness into the information, so it can be used for decision-making. Even though this information is not as mature as financial data, there is an opportunity for organisations to provide insight through their reporting and in doing so build trust with users in how they manage their businesses beyond just the current reporting period.

How The Crown Estate reports performance

The Crown Estate has set out its vision based around four strategic objectives and has identified 12 material issues that can influence its ability to deliver those. It has also identified how, in its business activity, it draws upon six capitals and how, by using its Total Contribution approach it can measure and communicate the value it creates across its value chain. This approach has been further enhanced by establishing indicators allocated across the capitals. With these indicators, The Crown Estate wants to provide a deeper understanding of the impact of decisions on their capitals and ultimately demonstrate the bigger contribution it makes beyond its financial return.

To calculate the Total Contribution, The Crown Estate is valuing each indicator as part of an approach it has developed, called adjusted gross value added (aGVA). This is an evolving approach and The Crown Estate has shared its work with a broad range of companies and organisations and intends to build on this by working in collaboration with others to develop Total Contribution into a recognised methodology that takes account of the capitals that all organisations use to create value.

Further details of The Crown Estate’s strategic objectives, material issues and capitals are provided in its Annual Report and Accounts for the year ending 31 March 2016 and their Total Contribution Report 2017 “Everything Is Connected” is available online at: www.thecrownestate.co.uk/our-business/total-contribution/

PwC Insight Report

We have developed an innovative approach to support organisations in building trust. Our Inspiring Trust Through Insight concept supports innovation by providing insight into the maturity of an organisation’s reporting, across a number of dimensions, using a visual representation and supporting narrative. The interactive PwC Insight Report provides insight into the maturity of The Crown Estate’s Total Contribution indicators. This allows the user to ‘drill’ down into each capital, revealing detailed insight into the maturity of each indicator.

The Crown Estate’s six capitals are:

  1. Financial resources: the financial resources that are available to The Crown Estate to grow its business.
  2. Physical resources: the land and property that it owns and utilises.
  3. Natural resources: the natural resources that The Crown Estate nurtures, harnesses and harvests to sustain its business.
  4. ‘Our people’: the individual skills, competencies and experience of The Crown Estate’s employees, who collectively create value and deliver its business objectives.
  5. ‘Our know-how’: The Crown Estate’s collective expertise and processes, which provide it with competitive advantage.
  6. ‘Our networks’: the relationships it has with customers, colleagues, communities, business partners, government and other stakeholders, which are central to its business.

Scope

Insight has been provided on The Crown Estate’s own activities (direct; we have provided an insight on 21 ‘direct’ indicators) and those that are enabled through the letting of its land (enabled; we have provided an insight on 1 ‘enabled’ indicator) but not those of its supply chain (indirect). We have provided insight into 21 out of 35 indicators (see below) used by The Crown Estate to measure its Total Contribution. We have also provided insight in relation to the economic valuation methodology adopted by The Crown Estate for 10 indicators (those with a (£) symbol) across all capitals (except for Physical resources).

Capitals
Indicator
Financial resources

Gross value added (GVA) – (£)

Physical resources

Improvements to property (new development and retrofitting)

Damage to property due to workplace activity

Wear and tear of fixed assets

Natural resources

Greenhouse gas emissions – (£)

Waste generated

Water consumed

Carbon sequestered and stored – (£)

Greenhouse gas emissions avoided – (£)

Other ecosystem services – (£)

Capitals
Indicator
‘Our people‘

Workplace injuries

Workplace fatalities

Gender equality opportunity – (£)

Employee volunteering programmes

‘Our know-how‘

Knowledge decay

Sub-optimal employee turnover – (£)

Value added

‘Our networks‘

Local and wider communities (stewardship programme)

Late payments of suppliers – (£)

Employment placements – (£)

Visitor wellbeing (from ecosystem services) – (£)

Approach

We assessed the maturity of the reporting of each indicator across six dimensions:

  1. Measurement certainty: How much inherent measurement certainty is there?
  2. Reporting framework: Is the information prepared using established frameworks/standards?
  3. Information integrity: Is there a systematic approach to the generation of the information?
  4. Consistency: Is the information prepared and reported on a consistent basis?
  5. Transparency of performance indicators: To what extent is the entity’s external reporting aligned with its internal performance reporting?
  6. Validation: To what extent has there been external validation of the information?

The visual indicates the maturity of an indicator for each of the six dimensions on a scale ranging from non-existent/not-applicable through to mature, and the narrative details the reasoning behind the assessment. The assessment is not intended to be interpreted as good or bad as there can be external factors or self-imposed limits on the potential level of maturity. Our work was discussed with those responsible for data preparation on specific indicators within The Crown Estate. Where indicators are grouped to indicate the overall performance in a capital (e.g. ‘our people’) then further insight is provided into that grouping. At an overall level, for the six capitals we have assessed the reporting against two additional dimensions, as our view on the evolution of The Crown Estate’s Total Contribution reporting and how they have been improving their overall balance and increased integration of their Total Contribution indicators in their reporting‘

  • Overall balance‘ How does the report explain the significance of the resources and relationships, and related risks in the context of the entity’s strategy?
  • Integration‘ To what extent does the report explain the integration across the resources and relationships and the strategic implications of interdependencies between resources and relationships?

Our work did not include‘

  1. Evaluating the design of the key structures, systems, processes and controls for managing, recording and reporting the sample of indicators.
  2. Performing detailed testing of supporting evidence to validate the source records.
  3. Checking compliance with any relevant reporting frameworks, management systems or regulations.
  4. Validating internal management review processes over the selected indicators.
View PwC Insight Report

Appendices

Adjusted gross value added

Adjusted gross value added (aGVA) is the approach being used by The Crown Estate to quantify its total impact beyond financial (which is captured in GVA) on the UK economy and society. Here is a link to a summary of their approach.

This is a further development in the Total Contribution approach where The Crown Estate has put a value on each of the indicators used to measure the impact on its six resources and relationships. The aGVA approach further classifies the positive and negative values in each resource and relationship. These are used to adjust GVA for The Crown Estate’s wider interaction with society and the natural environment to provide a Total Contribution. In doing so it aims to provide a more complete measure of change in wellbeing and starts to address some of the criticisms of traditional GVA and GDP as metrics for businesses and governments to track ‘progress’ which are purely financial in nature.

The aGVA approach allows The Crown Estate to combine values for all indicators to generate one value of ‘Total Contribution’ from each of its direct, indirect and enabled activities (see The Crown Estate’s website). This is a progressive approach and the overall results will provide an indication of the scale of The Crown Estate’s contribution although some challenges remain.

In most cases, external data are used to calculate factors to convert the indicators into monetary values and the specificity of the external data to the indicator can vary. For example the most recent research available may be limited, or the external data may apply to the UK as a whole rather than The Crown Estate’s specific locations. This can lead to a valuation that may not reflect the actual contribution of The Crown Estate.

The valuation of some indicators can lead to a degree of double counting when they are already reflected in The Crown Estate’s own financial performance (i.e. GVA). For example the impact of employee turnover rate may be partially captured in the earnings and expenses.

There is a potentially a mix of maturity in the indicators and in their valuation. A low maturity in either the indicator or the valuation can lead to a less mature value and therefore when aggregated with more mature values, it can be difficult to assess the overall maturity of the total value.

This is however a new and developing framework and The Crown Estate intends to continue to refine the methodology in order to fully integrate it into business decision making and external reporting.

Instructions

How to navigate our PwC Insight Report

Our PwC Insight Report is designed to be easy to use and intuitive. This short guide provides you with what you need to know to understand our insight and navigate the report.

Structure and key features

Indicator and valuation assessment toggle

indicators
  • The toggle is used to switch between the indicator level assessment and the economic valuation assessment of the relevant capitals and indicators.
  • Indicator assessment relates to PwC’s insights on the data consolidation, reporting process and calculation of the underlying data for an indicator (e.g. tonnes of GHG released).
  • Valuation assessment relates PwC’s insights on the consolidation process and calculation of the economic value of an indicator (e.g. the social cost in monetary terms of GHG released).

Navigation

Depending on whether you are viewing our report on a laptop / PC or a mobile device such as an iPad, the way you navigate will differ slightly.

Viewing our insight

Our insight is provided both by the interactive visualisation and the supporting narrative. To view the supporting narrative for a particular chart segment (a capital or an indicator), you can either click (or tap) the chart segment to select and view the insight in the narrative pane.

Drilling down

There are two ‘levels’ within our report; capitals (level 1) and indicators (level 2). From the capitals, you can drill down to view and understand our insight into the maturity of certain indicators within those capitals.

To drill down from the capitals, click (or tap) a chart segment to select and view the insight in the narrative pane.

Navigating back “up”

You can use the breadcrumb to navigate back ‘up’ to the capitals by either clicking (or tapping) the breadcrumb.

Understanding our insight

Our report is designed to provide you with insight ‘at a glance’ into the maturity of an indicator or collection of indicators at the capitals level.

indicators
  • For example, the maturity of this indicator is fairly mature overall. Four of the dimensions; measurement certainty (a), reporting framework (b), information integrity (c) and consistency (d), are considered to be mature.
  • Transparency in performance measures (e) is seen as maturing and external validation (f) is viewed as embryonic.

User guide