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Jvan gaffuri 120424 stock markevalueofsustainability
 

Jvan gaffuri 120424 stock markevalueofsustainability

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  • Main Message: Introduce SAM, provide some facts & figures Description: SAM Sustainable Asset Management (SAM) was founded in 1995 as an assetmanagement company exclusively focused on sustainability investments. Today, the company ranks among the leading investment groups worldwide in this field of expertise. SAM has consistently asserted its role as a pioneer in sustainability investing by developing innovative investment solutions. Its recent expansion in the field of alternative investments represents a further step in reinforcing SAM’s powerful market position. Integrating industry-specific sustainability criteria into a traditional valuation methodology is the cornerstone of SAM’s investment philosophy. SAM’s know-how is based on its proprietary, independent research methodology and an active, international network of sustainability experts. Together with Dow Jones Indexes, SAM developed the globally recognized Dow Jones Sustainability Indexes (DJSI). Within the scope of this collaboration, SAM has compiled one of the world’s largest sustainability databases and analyzes more than 1,000 listed companies every year. Notes: - Robeco owns 64% of the SAM sharecapital. The rest is owned by the management and the employees. (Standard / bi-annual update / Information Services)
  • A full overview is almost impossible only in the DJSI family there are 107 indexes and sub-indexes. What is sure is that in the last year many more players have entered the field
  • A full overview is almost impossible only in the DJSI family there are 107 indexes and sub-indexes. What is sure is that in the last year many more players have entered the field
  • Continuously changing economic, social, and environmental factors have a meaningful impact on corporate stock performance. SAM identifies the most important non-financial factors, analyzes how well company policies respond to them and then quantifies the impact of these policies on shareholder value so it can be incorporated into relative value analysis. Sustainable investing is a more complete approach to identifying stock value than other methods and leads to improved investment decision-making as a consequence. Sustainable investment factors can be thought of as measures of responsible leadership which tends to create strong companies and higher shareholder value over time.
  • This chart shows the market opportunity we see. It shows the gap we see between companies and investors when it comes to adapting sustainability Companies are adapting better and more quickly. Compliance is no longer distinctive. Distinction more found in innovation (products, processes). Why is this gap there. One of the key reasons is that for companies the impact of the sustainability trends on their future business is much more tangible than for investors. Companies translate these trends actively back into their businesses. Simply because they understand that not doing so will harm their competiveness or even chances of survival. In our view investors will catch up however. And this is our great market opportunity. First because we have all the investment strategies that benefit form these sustainability trends. Secondly because our methodology & direct company access allows us to closely follow and predict the development curve of these companies and spot the winners and the losers. Also on the investors side you see players that are quicker and slower in adapting. We feel for example that Family Offices given the origin of their wealthy are much more open or even advanced. Research confirms that.
  • Full study can be made available upon request
  • Note: Sample is 180 American companies
  • the return on investments (ROIC) and the weighted average cost of capital (WACC) are the key determinants for the SAM company value (Fair Value; grey bar) a company which manages its businesses in a sustainable way, i.e. achieves an above-industry average sustainability score, will enjoy a higher return on the capital invested and/or a lower cost of capital and thus deserves a higher value (and vice versa) the sustainability impact on the fair value can range from +10% to -15%
  • Water Demographic changes, health related quality standards, climate change and ageing water infrastructure lead to scarcity in water Energy Government stimulus, rising interest in clean energy production and efficient use and concerns about a reliable energy supply are fuelling demand for renewable energies Healthy Living A combination of demographic changes, increasing costs of healthcare worldwide and rising standards of living in emerging markets demand a stronger focus on prevention and higher efficiency Resource Efficiency Soaring demand worldwide for raw materials means that resources are in short supply. There is a growing trend towards substitution and new materials Climate Change Rising levels of CO2 cause a climate change effect that impacts weather conditions, temperatures and sea levels
  • Water Demographic changes, health related quality standards, climate change and ageing water infrastructure lead to scarcity in water Energy Government stimulus, rising interest in clean energy production and efficient use and concerns about a reliable energy supply are fuelling demand for renewable energies Healthy Living A combination of demographic changes, increasing costs of healthcare worldwide and rising standards of living in emerging markets demand a stronger focus on prevention and higher efficiency Resource Efficiency Soaring demand worldwide for raw materials means that resources are in short supply. There is a growing trend towards substitution and new materials Climate Change Rising levels of CO2 cause a climate change effect that impacts weather conditions, temperatures and sea levels
  • Water Demographic changes, health related quality standards, climate change and ageing water infrastructure lead to scarcity in water Energy Government stimulus, rising interest in clean energy production and efficient use and concerns about a reliable energy supply are fuelling demand for renewable energies Healthy Living A combination of demographic changes, increasing costs of healthcare worldwide and rising standards of living in emerging markets demand a stronger focus on prevention and higher efficiency Resource Efficiency Soaring demand worldwide for raw materials means that resources are in short supply. There is a growing trend towards substitution and new materials Climate Change Rising levels of CO2 cause a climate change effect that impacts weather conditions, temperatures and sea levels
  • The dilemma: Companies as well as suppliers wants lower prices and faster deliveries in order to stay profitable, but this cannot be on the one hand jeopardizing product quality and on the other hand environmental & social responsibilities. Investors increasingly see the added costs connected to not managing this dilemma in a good way. Sustainability issues gets transferred into actual costs for the companies: Let’s look at some high profile examples of product recalls – and how much they cost the companies? 2007 – Mattel voluntarily recalls 19.5 million toys. Cost $30 million. 2006 – Sony recalls 10 million laptop batteries. Cost US$440m. What’s important to remember is that the cost of these voluntary recalls is relatively minor compared to the potential litigation-related costs that the companies may have faced without the recalls. BP example: The lawsuit suit seeks “the amount of costs and expenses incurred by BP to clean up and remediate the oil spill, the lost profits from and/or diminution in value of the Macondo prospect, and all other costs and damages incurred by BP related to the Deepwater Horizon incident and resulting oil spill,” according to the BP filing. BP did not put a specific number on the amount of damages it wants from Halliburton, but the oil major had previously estimated that the cleanup would cost about $42 billion. It has spent $14 billion in the Gulf coast region on spill cleanup and another $20 billion was set aside for economic claims and restoration work.
  • - 92.8 % of the assessed companies are scoring on the same side of the average for both the Total Score and the Standards for Suppliers score - 72.4 % of the top 20 % scoring companies over all are also amongst the top 20 % scoring companies in the Standards for Suppliers criteria
  • Early communication to enable companies to prepare for new data requirements Exposure & awareness: Dependece on critical suppliers, Exposure to high risk suppliers Risk management measures: Contract clauses, Collaborative initiatives, Audit, Corrective action plans, Incentives Strategy: Alignment between supply chain strategy and ESG initiatives Supplier selection & retention: Weight of ESG when selecting new suppliers (no consideration and the rest has no general approach but it’s done on a centralized level, Incentives for procurement staff (targets, KPIs etc.) Opportunities: Cost & benefit analysis (important to justify SSCM initiatives, both quantitative and qualitative) Measuring performance: Clearly defined SCM KPIs, including targets Transparency: Is the company publically reporting supply chain issues (risk mapping, risk measures, KPIs, breaches of suppliers’ code)

Jvan gaffuri 120424 stock markevalueofsustainability Jvan gaffuri 120424 stock markevalueofsustainability Presentation Transcript

  • Stock Market Valueof Sustainability: theDow JonesSustainability IndexJvan GaffuriSantiago de Chile, 24.04.2012
  • Content• SAM• Sustainability Investing• SAM Corporate Sustainability Assessment (CSA)• Developments in Corporate Sustainability2
  • SAM - Overview• Investment boutique focused exclusively on Sustainability Investing since 1995• Offering complementary capabilities to Sustainability Investing• Powering Dow Jones Sustainability Indexes since 1999• Member of Robeco, part of the Rabobank Group (with the highest credit rating of all privately owned banks, awarded by rating agencies Moody’s, Standard & Poor’s, Fitch and DBRS)• EUR 11.3 billion total assets (as per 30.06.2011)• Servicing a global and diversified client base• Approximately 100 employees based in Zurich, Switzerland3
  • SAM - Research & Dow Jones Indexes SAM Research – Sustainability Methodology Development • Analysis of scoring results for improvements • Development of new criteria, modification of questions • Ensuring validity of company responses & supporting evidence • Verifying consistency of comments and public disclosures • Generation of sustainability scores• Dow Jones Indexes • Responsible for index calculation • Companies are compared within their respective sectors • Selections based on Dow Jones Indexes Sector Classification System • Index components chosen according to pre-defined rules Index Guidebook4
  • Content• SAM• Sustainability Investing• SAM Corporate Sustainability Assessment (CSA)• Developments in Corporate Sustainability5
  • Sustainability Investing - Indexes, Raters and Research Sustainable Asset Formation of Global Launch of Dow Jones Management (SAM) Reporting Initiative (GRI) Sustainability Index (DJSI) Innovest Strategic Value Formation of oekom research KLD Research AG through spun-off from Advisors ökom GmbH 83 88 90 92 95 96 97 98 99 00 Formation of Risk Metrics Group Domini Social Index EIRIS Research through spun off from J.P. Morgan Launch of Carbon Disclosure Project (CDP) United Nations Environment Calvert Social Index Programme Finance Initiative (UNEP FI) Source: SAM Research AG6
  • Sustainability Investing - Indexes, Raters and Research Launch of the Dow Jones Sustainability Index Asia Pacific, and Korea Launch of the Dow Jones Sustainability Index North Thomson Reuters acquired ASSET4 America Launch of the Dow Jones Bloomberg launched ESG Data Service STOXX Sustainability Launch of UNPRI Foundation of Glass, RiskMetrics acquired KLD Research Index Lewis & Co. and Innovest 01 02 03 04 05 06 07 08 09 10 JSE SRI Index S&P ESG India First Chinese Sustainability Launch of the Ethibel Index Sustainability Index S&P EGX ESG Index vigeo Research Launch ASPI (Egypt) Bovespa Corporate Goldman Sachs Sustain MSCI acquired RiskMetrics Sustainability Index Focus List Group, Inc. Source: SAM Research AG7
  • Sustainability Investing - Evolution Negative Engagement Positive Integration screening & voting screening Robeco SAM Alpha Private Equity (Cleantech PE) SAM Asset ManagementStrategy (Core & Themes) focus Norm-based / ethical investing with best-in-class and Shareholder thematic screens Activism SAM Norm-based / ethical Beta Indexes investing with exclusions Dow Jones Sustainability Index Time 8
  • Sustainability Investing – Link to Corporate Sustainability Corporate sustainability ... ... is a business approach to create long-term shareholder value by seizing the opportunities and managing the risks that stem from sustainability trends and challenges. Sustainability investing ... ... is a long-term investment approach that integrates economic, environmental and social considerations in the selection and retention of investments.  The aim of sustainability investing is creating performance9
  • Sustainability Investing - Which information do investors consider?“We don’t like their sound, and guitar music is on the way out” Decca Recording Co. rejecting the Beatles, 1962“The horse is here to stay but the automobile is only a novelty - a fad” Michigan Savings Bank, advising Henry Ford’s lawyer, 190310
  • Sustainability Investing - Investors are closing the gapAdaptation to “93% of CEOs believe that SSustainability sustainability issues will be COMPANIE critical to the future success of their business.” UNGC- Accenture (2010): „A new Era of Sustainability“, p. 15. RS O ST VE IN “We believe that companies which take environmental, social and governance issues into account in their operations will benefit from this in the longer term“ Tomas Hildebrandt Senior Portfolio Manager Evli Investment Management Co. Ltd. Time11
  • Sustainability Investing - Alpha from Sustainability • SAM’s sustainability data has predictive power for stock-selection, reflected in the positive information ratio (0.5) of the portfolio consisting of sustainability leaders* • Added value is generated by selecting sustainability leaders and avoiding sustainability laggards • Value creation is consistent and stable for the entire time period *Slight changes were applied to the universe and methodology for the period between 2009 and 2010 (e.g. Canadian stocks are included in this period).12
  • Sustainability Investing – HBS: Early movers are outperforming in the long-term• Companies that adopted sustainability policies many years ago are showing long-term financial outperformance (both stock market & accounting performance) compared to companies that have very low adoption rates of such policies• Comparison of adoption levels of Environmental & Social Standards for Suppliers of “High Sustainability Firms” with “Low Sustainability Firms” shows that HSF have significantly higher adoption rates Type of Standard High Sustainability Firms Low Sustainability Firms EMS 50.0% 18.2% Data availability 12.3% 0.0% Human Rights 17.4% 5.7% Labor Standards 18.6% 8.1% OHS Standards 62.9% 25.7% Source: Eccles, Ioannou & Serafeim (2011): The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance. Harvard Business School, based on data provided by SAM. 13
  • Value of Sustainability – HBS: Sustainability Leaders Outperformance • Leading Sustainability Companies out-performed significantly over the long term • Sustainability Leaders out-performed on ROE and ROA during the time period Source: R. G. Eccles, I. Ioannou, G. Serafeim, The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, HBS Working Paper 12-035, 2011.14
  • Sustainability Investing - Integrating Sustainability Into Financial Models Economic Criteria - corporate governance Revenues - risk & crisis management - brand management Earnings - etc. Costs Return on Invested Capital Environmental Criteria SAM Fair Value Invested - operational eco-efficiency Investments Capital - climate strategy - environmental reporting - etc. Capital Structure Weighted Ave. Social Criteria Cost of Capital - human capital development - stakeholder engagement Cost of Capital - supply chain management - etc.15
  • Sustainability Investing – Integration Company Valuation SAM Corporate SAM Fair Value -Discounted Cash Flow (DCF) Sustainability Assessment + - & ROIC +0.2% WACC -0.2% Market Value Fair Value ROIC 10.0% ROIC 10.2% SAM Fair Value Impact WACC 5.0% WACC 4.8% range of + 10% - 15% Legend: ROIC Return on Invested Capital16 WACC Weighted Average Cost of Capital
  • Content • SAM • Sustainability Investing • SAM Corporate Sustainability Assessment (CSA) • Developments in Corporate Sustainability17
  • SAM CSA - Unique Model: Company-Sourced Data Corporate Participation via the DJSI Questionnaire Sustain- Feedback ability & Insight Services Data Provided SAM Research (20 Sector Analysts)Directly byCompanies Methodology & Data Guidance SIMS3 Data Base Unique insights from companies are essential The limitations of financial materiality must also be recognized18
  • SAM CSA - Sustainability Criteria Economic Dimension Over 130 cross- and • Corporate governance General Criteria (50%) industry-specific criteria and • Codes of conduct & corruption dimension weights • Risk & crisis management • Customer Relationship Management • … Social Dimension • Labour practice indicators General Sector 33% 33% • Human capital management Specific Criteria Criteria 43% • Talent attraction & retention 57% 33% • Corporate citizenship & philanthropy • Social reporting • …. Environmental Dimension • Environmental reporting • Environmental Policy/Management systems Dimension weights may deviate from the ones stated above for each of the 58 • Climate Strategy different market sectors analyzed by SAM. • Product Stewardship • Operational Eco-Efficiency • ….19
  • SAM CSA - Extra-financial Indicators (559) Economic Dimension Environmental Dimension Social Dimension • Anti-crime policy/measures 4 • Biodiversity 10 • Access to Insurance/ Other Social Value Added 1 • Antitrust Policy 4 • Building Materials 5 • Access to Water 3 • Brand Management 8 • Business Opportunities Financial Services/Products 2 • Addressing Cost Burden 2 • Codes of Conduct/Compliance/Corruption&Bribery 6 • Business Risks and Opportunities 4 • Bioethics 3 • Combating Smuggling 3 • Business Risks Large Projects / Export Finance 3 • Business Risks 2 • Compliance with applicable export control regimes 2 • Climate Change Governance 7 • Code of Ethics for Advertising 1 • Corporate Governance 10 • Climate Change Strategy 6 • Controversial issues, dilemmas in lending/financing 3 • Customer Relationship Management 19 • Climate Strategy 21 • Corporate Citizenship and Philanthropy 5 • Diversification 3 • CO2 from Logistics 2 • Digital inclusion 12 • Ecosystem Services 1 • Electricity Generation 4 • Editorial policy 1 • Efficiency 1 • Electro Magnetic Fields 5 • Enabling local development 7 • Exploration & Production 4 • Emission Products 2 • Ethical Conduct 2 • Food safety 2 • Environmental Policy/Management System 31 • Financial Inclusion/Capacity Building 1 • Gas portfolio 5 • Environmental reporting 4 • Health Outcome Contribution 6 • Grid Parity 6 • Fleet Age 1 • Healthy living 1 • Health & Nutrition 7 • Fuel Efficiency 2 • Human Capital Development 3 • Innovation Management 12 • Fuels for Tobacco Curing 2 • Human Rights & Corruption 2 • IT Security 6 • Genetically Modified Organisms 5 • Impact of Telecommunication services 3 • Lobbying activities 1 • Hazardous substances 5 • Labor Practice Indicators 3 • Market Opportunities 5 • International Production Standards 1 • Local Impact of Business Operations 2 • Marketing Practices 6 • Landfilling and alternatives 3 • Mine Closure 4 • Materiality 2 • Local Air Quality 1 • Noise 1 • Non-financial Project Evaluation 2 • LowCarbStrategy 4 • Occupational Health and Safety 16 • Piracy 2 • Manufactured Gas Plants 2 • Partnerships Towards Sustainable Healthcare2 • Price Risk Management 5 • Mineral Waste Management 8 • Promoting Responsible Gaming 5 • Privacy Protection 7 • Packaging 3 • Protection of Children 1 • Product Quality and Recall Management 3 • Product Impact 1 • Responsibility for Alcoholic Products 4 • Reliability 1 • Product Stewardship 30 • Responsible Marketing Policies 4 • Research and Development 5 • Raw Material Sourcing 5 • Security Forces 1 • Risk & Crisis Management 18 • Recycling Strategy 2 • Service to Patients 2 • Scorecards/Measurement Systems 2 • Refining/Cleaner Fuels 2 • Social Impacts on Communities 9 • Service development 2 • Releases to the Environment 2 • Social Integration 2 • Software-as-a-Service 2 • Renewable Energy 2 • Social reporting 4 • Stakeholder Engagement 3 • Resource Conservation and Resource Efficiency 5 • Stakeholder Engagement 8 • Strategy for Emerging Markets 6 • Risk Detection 3 • Standards for Suppliers 11 • Supply Chain Management 5 • Route network 1 • Strategy to Improve Access to Drugs or Products 4 • Transparency 1 • Sustainable Fibre and Pulp Sourcing 5 • Talent Attraction & Retention 8 • Water Operations 7 • Sustainable Management of Forests 6 • Transmission & Distribution 3 • Transport and Logistics 4 • Volatile Organic Compounds (VOCs) and hazardous substances in supply chain 120 • Water Related Risks 7
  • SAM CSA - Media & Stakeholder Analysis (MSA) • MSA helps to verify a company’s involvement and management of critical economic, social and environmental issues or crisis situations • Cases identified in the MSA can lead to exclusion of the DJSI anytime during the year • MSA can add up to 50% of the weighting in an individual criteria • Impact analysis revealing potential risks of reputation, financial liabilities • Assessment of materiality based on: Media, direct contacts with company, NGOs, consumer organizations, websites of public authorities, governments, international organizations • Issues covered: Economic-crime illicit commercial practices Human rights issues Workforce conflicts Large disasters or accidents Management response to the issue Various data sources (e.g. transparency, Materiality: Integration in Index-based search Potential measures taken) • Low corporate • Medium utility issue • High sustainability Effectiveness of Continuous monitoring • ..... performance management response21
  • SAM CSA – Output: Scorecard22
  • SAM CSA - Participation Participation of Companies in DJSI has been Constantly Increasing Over the Years23
  • SAM CSA: Companies in the DJSI Indexes 2011 – Latin America • Banco Bradesco S/A Pref • Companhia Energetica de Minas Gerais – CEMIG • Embraer S.A. • Fibria Celulose S.A. Ord. • Itau Unibanco Holding S.A. Pref. • Itausa-Investimentos Itau S/A Pref. • Petroleo Brasileiro S/A Pref • Redecard S/A Ord • Ecopetrol S.A. • Grupo de Inversiones Suramericana S.A. • Grupo Nutresa S.A.24
  • SAM CSA: Examples of companies recently added in the DJSI Indexes – Latin America• Ecopetrol (2011)• Grupo de Inversiones Suramericana S.A. (2011)• Grupo Nutresa S.A. (2011)• Embraer – Empresa Brasileiras de Aeronautica (2010)• Redecard S/A Ord (2009)25
  • Content • SAM • Sustainability Investing • SAM Corporate Sustainability Assessment (CSA) • Developments in Corporate Sustainability26
  • Developments: Long-term trends impacting competitive advantage Demographics, Resource Scarcity, Pollution, Climate Change Regulation Innovation Scarcity Climate Change Population growth natural resources • Co-creation • Stressed Ecosystem • Scarcity skilled • Governance • Resource efficiency capabilities • Reconstruction workforce • Anti-trust regulations • Innovative materials • Innovation • Infrastructure • Health costs • Consumer protection Management • Agribusiness • Health • Nutrition Impact on value chains within / across sectors Competitive advantage of companies Source: SAM Research27
  • Developments - Club of Rome 1972: Limits to Growth Fate or Choice?28
  • Developments - Methods to Accelerate Aging + 10 Wrong Partner + 9 to 10 High Blood Pressure + 8 Depression + 6 Being Uneducated + 10 to 15 Smoking + 3 Being Male + 3 Inaccurate Medication + 2 High Vitamin Dosage + 2 Passive Smoking + 1 to 3 Wine > ½ liter per day Years Source: Max Planck Institute, 200829
  • Developments - Predictions often underestimate…“I think there is a world market for maybe five computers” Thomas J. Watson, Chairman of IBM, 1943"Where a calculator […] weighs 30 tons, computers in the future may have only 1,000vacuum tubes and weigh only 1.5 tons" Popular Mechanics, 194930
  • Developments - “Wait and See” may not be good enough Witnesses for the perished culture of the Easter Islands31 Photo: www.losapos.com
  • Developments - Long-term trends impacting competitive advantage Demographics, Resource Scarcity, Pollution, Climate Change Regulation Innovation Scarcity Climate Change Population growth natural resources • Co-creation • Stressed Ecosystem • Scarcity skilled • Governance • Resource efficiency capabilities • Reconstruction workforce • Anti-trust regulations • Innovative materials • Innovation • Infrastructure • Health costs • Consumer protection Management • Agribusiness • Health • Nutrition Impact on value chains within / across sectors Competitive advantage of companies Source: SAM Research32
  • Developments - HDI and Ecological Footprint Innovation is required to enable human development by using less biocapacity33
  • Developments - Sustainability Drivers as Innovation Triggers Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Viewing Compliance Making Value Chains Designing Sustainable Developing New Creating Next- as Opportunity Sustainable Products and Services Business Models Practice Platforms Efficient production, New methods for Meeting demands New knowhow First mover new sources of product develop- differently, i.e. new platforms advantages for early materials, ment or ecofriendly delivery techno- and technologies, implementers reuse and recycling packaging logies, services new applications Source: R. Nidumolu, C.K. Prahalad and M.R. Rangaswami (2009), Why Sustainability Is Now the Key Driver of34 Innovation, Harvard Business Review, September 2009, U.S. and Canada.
  • Developments - Innovation Management DJSI 2011 Company Assessments - Innovation Managment 80 70 59 60 56 52 48 49 50 47 43 Score 40 30 28 20 10 0 Average 2010 Average 2011 North America Europe Asia / Pacific Rest of World35
  • Developments – Innovation Management The results of the SAM Corporate Sustainability Assessment show an increasing number of companies tracking environmental innovation (product, processes and revenues), highlighting the importance of sustainability within the innovation process.36
  • Developments - Long-term trends impacting competitive advantage Demographics, Resource Scarcity, Pollution, Climate Change Regulation Innovation Scarcity Climate Change Population growth natural resources • Co-creation • Stressed Ecosystem • Scarcity skilled • Governance • Resource efficiency capabilities • Reconstruction workforce • Anti-trust regulations • Innovative materials • Innovation • Infrastructure • Health costs • Consumer protection Management • Agribusiness • Health • Nutrition Impact on value chains within / across sectors Competitive advantage of companies Source: SAM Research37
  • SAM CSA - DJSI 2012 - Supply Chain Management: Why are investors interested in how companies are managing their supply chain?• Currently, companies are not only outsourcing production, services and business processes Working conditions but also corporate responsibilities and Human Rights reputational risks Toxic substances• The dilemma of combining lower cost, faster Guidance for subcontracting deliveries with improved sustainability performance and product quality Product quality Recall risk• SAM therefore wants: • to identify companies that have a lower Costs supply chain risk profile (due to e.g. supply chain characteristics, appropriate Transfer of mismanaged sustainability issues management of these risks etc.) into actual costs • to identify companies that are using sustainable supply chain management as an opportunity to improve their financial38 performance in the long term
  • Developments – Supply Chain: link between the overall management of sustainabilityissues and the management of supply chain risks • Strong correlation between overall corporate sustainability performance and y = 0.9263x + 3.419 the supply chain performance (based on Score Correlation 2 R = 0.7519 120 results of the SAM‘s Corporate Sustainability Assessment 2011) 100 80 Standars for Suppliers • Sample: 1269 companies (87.9 % of 60 total) were asked questions about Standards for Suppliers as part of SAM‘s 40 Corporate Sustainability Assessment 2011 20 0 0 10 20 30 40 50 60 70 80 90 100 Total Score • 72.4 % of the top 20 % scoring companies overall are also amongst the top 20 % scoring companies in the Standards for Suppliers criteria39
  • SAM CSA – DJSI 2012 - Supply Chain Management: New Framework Awareness of both risks & opportunities is the foundation for SAM’s new analytical framework for sustainable supply chain management Risk Management Measures Measuring Performance & Capacity Building Exposure & awareness Training and Transparency incentives for staff Strategy Supplier Selection Opportunities40
  • Where are we going? Photo: http://metroroute66club.blogspot.com/41
  • Stock Exchanges demand ESG Disclosure Stock exchanges are increasingly adopting listing requirement on ESG disclosure evidencing the enormous shift towards the importance of ESG issues in the financial arena. They can play a pivotal role in enhancing the ESG disclosure and transparency of listed companies. Country Stock Exchange Listing Requirement on ESG Disclosure Australia Australian Securities Exchange Disclosure on extent to which the companies have followed its Corporate (ASX) Governance Principles and Recommendations which includes sustainability- related issues China Shanghai Stock Exchange Governance standards in Corporate Governance code and Environmental (SSE) standards under “Green IPO” policy for initiating an IPO or obtaining refinancing from banks for 14 most polluting industries Norway Oslo Børs Companies applying for listing should define and disclose the guidelines for corporate social responsibility Malaysia Bursa Malaysia Mandatory disclosure on CSR information in the annual reports South Johannesburg Stock Exchange Integrated sustainability reporting and third party assurance under King Code Africa (JSE) on Corporate Governance III Taiwan Taiwan Stock Exchange CSR reporting in the corporate governance statement with information on (TWSE) company’s CSR system, measures adopted and performance US NYSE Euronext Mandatory disclosure of governance practices including the availability of a code of business conduct42
  • Methods to Decelerate Aging („Downaging“) Years - 0.9 1 Aspirine per day - 1 Folic Acid (daily) - 2 High HDL Level - 2 Washing Hands (daily) - 2 Good C Reactive Protein - 3 Good Sleep - 3 Wine < 1/3 liter per day - 3.4 Sports (2500 kcal/week) - 4 Periodical Sex - 6 Good Social Contacts - 7 OPTIMISM Source: Max Planck Institute, 200843
  • Sustainability Services - Contact Edoardo Gai Head Sustainability Services In industry since 1999; with SAM since 2000 Jvan Gaffuri Sr. Manager Sustainability Services In industry since 1997; with SAM since 2006 Matthias Narr Manager Sustainability Services SAM Sustainability Services In industry since 2005; with SAM since 2009 Josefstrasse 218 8005 Zurich Switzerland Cornelia Wicki Phone: +41 44 653 1240 Junior Manager Sustainability Services Fax: +41 44 653 1050 services@sam-group.com In industry since 2010; with SAM since 2011 www.sam-group.com/services www.sustainability-indexes.com44
  • Disclaimer No warranty This publication is derived from sources believed to be accurate and reliable, but neither its accuracy nor completeness is guaranteed. The material and information in this publication are provided "as is" and without warranties of any kind, either expressed or implied. SAM Group Holding AG and its related, affiliated and subsidiary companies disclaim all warranties, expressed or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Any opinions and views in this publication reflect the current judgment of the authors and may change without notice. It is each readers responsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice, services or other information provided in this publication. Limitation of liability All information contained in this publication is distributed with the understanding that the authors, publishers and distributors are not rendering legal, accounting or other professional advice or opinions on specific facts or matters and accordingly assume no liability whatsoever in connection with its use. In no event shall SAM Group Holding AG and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of any opinion or information expressly or implicitly contained in this publication. Copyright Unless otherwise noted, text, images and layout of this publication are the exclusive property of SAM Group Holding AG and/or its related, affiliated and subsidiary companies and may not be copied or distributed, in whole or in part, without the express written consent of SAM Group or its related, affiliated and subsidiary companies. No Offer The information and opinions contained in this publication constitutes neither a solicitation, nor a recommendation, nor an offer to buy or sell investment instruments or other services, or to engage in any other kind of transaction. The information described in this publication is not directed to persons in any jurisdiction where the provision of such information would run counter to local laws and regulation.45