Susan McGeachie - Sustainability Issues on the Horizon


Published on

Published in: Investor Relations
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Susan McGeachie - Sustainability Issues on the Horizon

  1. 2. Emerging Sustainability Issues <ul><li>Climate change </li></ul><ul><ul><li>Remains a leading issue of concern </li></ul></ul><ul><ul><li>Paralysis in Copenhagen </li></ul></ul><ul><li>Biodiversity loss </li></ul><ul><ul><li>Expanding awareness throughout 2010 </li></ul></ul><ul><ul><li>At the nexus of many other risks </li></ul></ul><ul><li>Freshwater resources </li></ul><ul><ul><li>Increasing water scarcity: an environmental and social issue </li></ul></ul><ul><li>Total contribution </li></ul><ul><ul><li>Socio-economic assessment of a company’s net impact </li></ul></ul>
  2. 3. Climate Change <ul><li>Remains one of the leading sustainability issues of our time, yet one for which global consensus on mitigation strategy continues to elude us (e.g. Copenhagen) </li></ul>
  3. 4. Climate Change <ul><li>Affects many aspects of business risk (and potential opportunities): </li></ul><ul><ul><li>Financial : costs associated with regulatory GHG reduction requirements </li></ul></ul><ul><ul><li>Operational: negative impact on a company’s inputs through resource constraints or disruptions, and increasingly unpredictable weather patterns that could impede revenue forecasts </li></ul></ul><ul><ul><li>Physical : adverse impacts on infrastructure due to climatic change depending on the region in which a company, and its operations, are located </li></ul></ul><ul><ul><li>Reputational : consumers increasingly looking to reduce their carbon footprint through lifestyle changes and more select product selection </li></ul></ul><ul><ul><li>Legal : compliance with climate change regulations, water withdrawal licenses and land access permits. </li></ul></ul>
  4. 5. Climate Change <ul><li>Numerous stakeholders requesting disclosure on executive ability to manage climate change-related issues: </li></ul><ul><ul><li>Regulators (e.g. seeking industry collaboration in addressing international commitments to fight climate change) </li></ul></ul><ul><ul><li>Investors (e.g. CDP) </li></ul></ul><ul><ul><li>Consumers (e.g. possibility of carbon labelling) </li></ul></ul>
  5. 6. Biodiversity <ul><li>Variability among living organisms within species, between species, and between ecosystems </li></ul><ul><li>Underpins the proper functioning and delivery of ecosystem services </li></ul><ul><li>Biodiversity loss can exacerbate other observed risks, including coastal flooding and droughts and desertification </li></ul><ul><li>Requires revising valuations for ecosystem services that are currently undervalued </li></ul><ul><li>Still very much a nascent area for corporate reporting, despite growing concern among stakeholders and GRI guidance on how to measure and disclose corporate ability to prevent biodiversity loss </li></ul>
  6. 7. Freshwater Resources <ul><li>Concerns over: </li></ul><ul><ul><li>Water quantity : natural and man-made changes to water availability. </li></ul></ul><ul><ul><li>Water quality : protection of drinking water, human health impacts, and ecosystems/ biodiversity. </li></ul></ul><ul><li>These two concerns are often inter-connected: as water quantity decreases, concern over quality increases. </li></ul>
  7. 8. Freshwater Resources <ul><li>Significant diversity in how companies address water issues in sustainability reports, depending on: </li></ul><ul><ul><li>Internal factors: </li></ul></ul><ul><ul><ul><li>How integral water is to business and operations </li></ul></ul></ul><ul><ul><ul><li>Nature of impact(s) on water </li></ul></ul></ul><ul><ul><ul><li>Company environmental programs </li></ul></ul></ul><ul><ul><ul><li>Company policy on reporting </li></ul></ul></ul><ul><ul><li>External factors : </li></ul></ul><ul><ul><ul><li>Local/regional water availability and quality </li></ul></ul></ul><ul><ul><ul><li>Stakeholder concerns / demand for information </li></ul></ul></ul><ul><ul><ul><li>Regulatory environment </li></ul></ul></ul>
  8. 9. Total Contribution <ul><li>Reporting the total impact a company has on the regions in which it operates by measuring contributions to local: </li></ul><ul><ul><li>Government revenues (taxes – subsidies) </li></ul></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li>Investment (e.g. use of local suppliers) </li></ul></ul><ul><ul><li>Access to education </li></ul></ul><ul><ul><li>Community support (e.g. NGO partnerships, sponsorship, disaster relief) </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Knowledge transfer </li></ul></ul><ul><ul><li>Conservation initiatives </li></ul></ul>
  9. 10. Future of Reporting <ul><li>Companies moving to online reporting and continuous disclosure of sustainability information </li></ul><ul><li>Increasing demand for more rigour behind sustainability data </li></ul><ul><li>Investors calling for third party assurance of sustainability data </li></ul><ul><li>Greater integration of sustainability information in traditional corporate disclosures and analysis </li></ul><ul><li>OSC last year mandated to assess the investor need for more robust environmental and social disclosure </li></ul>
  10. 11. Concluding Thoughts <ul><li>There is increasing pressure from a number of stakeholders for companies to improve the quality of their sustainability reporting </li></ul><ul><li>Companies face myriad sustainability issues, increasing the importance of meaningful materiality assessments to prioritize them according to their impact on the company and the society in which it operates </li></ul><ul><li>As sustainability issues increase in complexity, practical solutions continue to evade us </li></ul><ul><li>There will continue to be less confidence in sustainability reporting as long as it, and the independent assurance of this type of data, remains voluntary </li></ul>