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Responsible Electronics 2013: Corporate Reporting and Transparency
 

Responsible Electronics 2013: Corporate Reporting and Transparency

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Presentations from the EICC conference Responsible Electronics 2013, Oct 1-3 in California. This is one component of the Corporate Reporting and Transparency panel, from SASB.

Presentations from the EICC conference Responsible Electronics 2013, Oct 1-3 in California. This is one component of the Corporate Reporting and Transparency panel, from SASB.

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    Responsible Electronics 2013: Corporate Reporting and Transparency Responsible Electronics 2013: Corporate Reporting and Transparency Presentation Transcript

    • Sustainability Accounting Standards Board Responsible Electronics 2013 Electronics Industry Citizenship Coalition (EICC) October 2, 2013 Deb Martin Manager– Stakeholder Engagement
    • Welcome & Agenda • What is SASB? • How is SASB different from other frameworks? • How does SASB determine materiality for industry standards? • What is the SASB’s standard setting process? • How can I engaging with SASB? • Q&A © 2013 SASB™
    • © 2013 SASB™ The Sustainability Accounting Standards Board is an independent, US-based 501(c)3 non-profit engaged in the development of sustainability accounting standards for use by publicly- listed corporations in disclosing material sustainability issues in standard filings for the benefit of investors and the public. SASB is accredited by the American National Standards Institute (ANSI). Standards Development Research Publications and Licensing Corporate Pilot Program Awareness & Outreach The Sustainability Accounting Standards Board Accounting for a sustainable future
    • Organizational Momentum Our Advisory Council, Standards Council and Industry Working Groups are comprised of prominent representatives of the business and investor communities.
    • 0% 20% 40% 60% 80% 100% 1975 1985 1995 2005 2010 Intangible Assets Tangible Assests Why SASB- Changing Valuations Source: Ocean Tomo Components of S&P 500 Market Value © 2013 SASB™
    • SASB completes the picture on corporate performance © 2013 SASB™ Value Proposition Financial Accounting Standards • Business • Financial • Governance Sustainability Accounting Standards • Environmental • Social • Governance Investment Value • Efficient due diligence and screening • Data for determining portfolio risk exposure • Peer-to-peer comparability of ESG risk & opportunity Corporate Value • ESG legal and risk management tool • Cost-effective reporting • Peer benchmarks • Market-based sustainability perspective Client Service Value • New service offerings • Powerful industry research • Thought leadership
    • Sustainability Reporting Landscape 7 © 2013 SASB™ CONFIDENTIAL & PROPRIETARY Organization Type • 501(c)3 • NGO • NGO Orientation • United States • International • International Accreditation • ANSI • None • None Primary Deliverable • Industry-specific standards  80+ standards documents • General guidance  1 guidance document • General framework  1 framework document Disclosure Platform • Form 10-K • Voluntary report • Voluntary report Reporting Entities • Public corporations  traded on U.S. exchanges • Public corporations • Private companies • Public corporations • Private companies Materiality • Defined by US Securities Law  material to investors • Defined through stakeholder consensus  relevant to stakeholders • Defined internally  relevant to investors Working Groups • 850 members in four sectors to date (out of ten total) • Affiliation:  33% Investment  31% Corporate  36% Other • 115 members Affiliation (G4):  2% Investment  3% Corporate  95% Other • 43 members Affiliation:  23% Investment  14% Corporate  63% Other
    • SASB complements other established frameworks and initiatives SASB Industry Accounting Metrics FASB SEC Financial Accounting Standards Sustainability Accounting Standards IIRC GRI GISR Ratings System SASB provides minimum content requirements for integrated reporting SASB establishes industry Accounting Metrics for use by ratings agencies and analysts SASB develops language for standardized disclosure of material, non- financial impacts Protecting Investors Principles for Integrated Reporting Global issues, voluntary guidelines SASB provides guidance on the materiality of sustainability issues for mandatory disclosure to investors SASB covers sector specific issues for all industries US Based Global 2013 SASB™
    • Materiality & US Securities Law SASB is guided by the SEC definition of materiality “Material information” is defined by the Supreme Court as presenting a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information made available. The Supreme Court’s Definition of Materiality 2013 SASB™
    • Materiality Assessment Environmental capital | Social capital | Human capital | Business model and innovation | Leadership and governance Evidence of interest Issue frequency in 5 data- driven tests:  Financial risks  Legal drivers  Industry norms  Stakeholder concerns  Innovation opportunity Evidence of financial impact Issue impact on 3 financial value drivers:  Revenue & Cost  Assets and Liabilities  Risk profile (Cost of Capital) Forward-looking adjustment Issue relation to 3 sustainability principles:  Probability  Magnitude  Timing Material sustainability issues Universe of sustainability issues 2013 SASB™
    • The universe of sustainability issues is vast however… 2013 SASB™
    • SASB Industry-Specific Standards Reduce the Noise to Signal Ratio 2013 SASB™
    • Form 10K quotes from FY 2012 period 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hardware EMS/ODM Semiconductors Telecommunications Quality of disclosure on: Product lifecycle management No Disclosure Boilerplate statement Industry specific Metrics Issue-specific analysis on current state of disclosure in 10Ks The analysis provides SASB with evidence of interest on material issues 80% 79% 86% 85% IWGMaterialityScore © 2012 SASB™ CONFIDENTIAL & PROPRIETARY
    • Developing Standards for 80+ Industries in 10 Sectors To date, SASB has started work on 34% of the industries in SICS Sector Industries Status Healthcare 6 ISSUED Financials 7 FINALIZATION PHASE Technology & Communication 6 Public Comment Non-Renewable Resources 8 WORKING GROUPS Transportation 9 Q4 2013 Kickoff Services 9 Q1 2014 Kickoff Resource Transformation 5 Q2 2014 Kickoff Consumption 17 Q3 2014 Kickoff Renewable Resources & Alt. Energy 8 Q4 2014 Kickoff Infrastructure 10 Q1 2015 Kickoff Industries Hardware EMS & ODM Semiconductors Software & IT Services Internet Media & Services Telecommunications
    • SASB Standards Development Process and current status on our sector work Sector research (Q1) - Issue and KPI research - Evidence gathering - Industry Brief research and writing Vetting process (Q2) - Industry working groups survey - Review of IWG feedback - Delta Series + Research dialogue Standards development (Q3) - Public note of issues - Standards Council review on content and process - SEC Briefing Issue / Metrics Reviewed Public Comment (Q4) - Public Release Health CareTechnology & Communications Non-Renewable Resources Financials Set of material Issue / Metrics SASB Standards Development process is certified by: - Public comment on standards’ draft form - Standards Council draft form and PCP review Standards Draft Form Standards Draft Form reviewed Transportation © 2013 SASB™
    • The Vetting Process A robust multi-stakeholder vetting process $12T Assets Under Management (AUM) $ $5.1T Market Cap Industry Working Groups Survey participants provide feedback on:  Material Issues o Materiality of suggested issues o Ranking of issues o Additional issues for consideration  Accounting Metrics Principles o Decision-usefulness o Relevancy o Cost-effectiveness o Comparability o Auditability * Figures for IWGs for Health Care, Financials, Technology & Communications, and Non-Renewables Industry Working Group totals for 4 sectors * 850 Industry Working Group Participants (balanced between investors, corporations, and intermediaries.
    • Sector Status Healthcare ISSUED Financials FINALIZATION PHASE Technology & Communication DEVELOPMEN T PHASE Non-Renewable Resources DEVELOPMEN T PHASE Transportation RECRUITING Services Q1 2014 Kickoff Resource Transformation Q2 2014 Kickoff Consumption Q3 2014 Kickoff Renewable Resources & Alt. Energy Q4 2014 Kickoff Infrastructure Q1 2015 Kickoff © 2013 SASB™ CONFIDENTIAL & PROPRIETARY We are here Brief (Draft) Std. (Draft) Brief v1.0 Std. v1.0 Standards Development Process- Tech and Com
    •  SASB provides guidance for disclosure of material sustainability issues in the Form 10-K by establishing issues that are material at the industry-level and likely to be material at the company-specific level  Companies are responsible for determining materiality; issues deemed material at the company- level should be accounted for in Form 10-K  SASB provides accounting standards to account for companies’ performance on material issues in a comparable and auditable way Sustainability Accounting Standards SASB provides guidance on issues and standards to measure performance © 2012 SASB™ CONFIDENTIAL & PROPRIETARY
    • The Call to Action– How can You Engage? 19 10/2/2013  View SASB’s free webinars on our website: o http://www.store.sasb.org/  Visit the SASB Tech & Communication webpage for status o http://www.sasb.org/sectors/technology-communication/  Participate in the public comment period launching on October 2, 2013 o http://www.sasb.org/engage/public-comment/  When available, download the standards applicable to your industry and start to think about integration. (Launch is on Feb 20, 2013) o See Healthcare Standards: http://www.sasb.org/standards/standards/  Attend our Delta Series Event on Oct 11th in NYC o http://www.sasb.org/engage/sasb-delta-series/  Consider participating in our Corporate Pilot Program (coming soon)
    • Deb Martin Stakeholder Engagement Manager deb.martin@sasb.org 415-830-9220, ext. 122 Thank you.
    • 21 10/2/2013 © 2013 SASB™ CONFIDENTIAL & PROPRIETARY Appendix
    • Hardware EMS & ODM Semiconductors Software & IT Services Internet Media & Services Telecom Env.Capital  Sustainable energy management  Sustainable energy management  Water and waste management in manufacturing  Sustainable energy management  Water management  Managing waste and air pollution from manufacturing operations  GHG emissions • Sustainable energy management • Sustainable energy management • Sustainable energy management Social Capital • Data privacy and security • Data privacy and freedom of expression • Cyber security • Data privacy, advertising standards and freedom of expression. • Cyber security • Data privacy and security • Digital inclusion HumanCapital • Talent recruitment, development and retention • Labor relations • Talent, recruitment, development and retention • Employee health and safety • Talent, recruitment, development and retention • Talent, recruitment, development and retention • Labor relations B.Model&Innovation • Product lifecycle management: design, use and disposal • Product lifecycle management: design, use and disposal • Product lifecycle management: design, use and disposal • Products and services enabling environmental efficiency and positive social impacts • Products and services enabling environmental efficiency and positive social impacts • Products and services enabling environmental efficiency and positive social impacts • Product lifecycle management: disposal • Products and services enabling environmental efficiency and positive social impacts Leadership& Governance • Supply chain management and materials sourcing • Supply chain management and materials sourcing • Supply chain management and materials sourcing • Systemic risk management of technology disruptions • Intellectual property protection and anti- competitive practices • Management of intellectual property • Systemic risk management of technology disruptions • Market manipulation and anti-competitive practices Material issues in the Technology & Communications sector 22 © 2012 SASB™ CONFIDENTIAL & PROPRIETARY10/2/2013
    • 10/2/201323 Issues for discussion Innovation, data privacy, energy management and supply chains © 2013 SASB™ CONFIDENTIAL & PROPRIETARY Hardware EMS / ODM Semi- conductors Software & IT Services Internet Media & Services Telecom Products enabling environmental / social benefits ✔ ✔ ✔ ✔ Data privacy ✔ ✔ ✔ ✔ Sustainable energy management ✔ ✔ ✔ ✔ ✔ ✔ Supply chain management and materials sourcing ✔ ✔ ✔
    • 10/2/201324 Actual 10K quotes from FY 2012 period Supply chain management and materials sourcing Evidence of financial impact + IWG feedback MP: Market participants (e.g. investors, analysts) CO: Companies and industry associations IWG Feedback  Production stoppages due to labor unrest in some Asian countries.  Reputational damage and public outcry.  A recent study by PWC found that 78 percent of sector senior executives perceived mineral and metal scarcity as a pressing issue for their company; 67 percent thought that their company would experience an unstable supply of these inputs within the next five years; with 56 percent of respondents rating the severity as ‘high’ or ‘very high’.  The SEC estimates that costs to comply with the Conflict Minerals provision of the Dodd-Frank Act will total $3 to $4 billion in the first year and at least $200 million each year afterward. IWG Support MP CO Hardware 100% 100% 100% EMS / ODM 100% N/A N/A Semiconductors 100% 100% 100%
    • 10/2/201325 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hardware EMS/ODM Semiconductors Type of disclosure on: Supply chain management and materials sourcing No Disclosure Boilerplate statement Industry specific Metrics “We are subject to provisions of the Dodd- Frank Wall Street Reform and Consumer Protection Act intended to improve transparency and accountability concerning the supply of minerals originating from the conflict zones” Boilerplate language Industry-specific disclosure “In 2013, [the company] will continue to work to establish a “conflict-free” supply chain for our company and our industry. In 2012, [we] verified, after reasonable inquiry, that the tantalum we use in our microprocessors is “conflict-free,” and our goal for the end of 2013 is to manufacture the world’s first verified, “conflict-free” microprocessor” Actual 10K quotes from FY 2012 period Supply chain management and materials sourcing Disclosure on the issue already exists in Form 10Ks, there is a need to standardize