Stefan crets
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Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer......

Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

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  • 1. Getting management right to allow accurate assessment of future value Stefan Crets Executive Director CSR Europe
  • 2. 2013: unique convergence in Europe • Increase in number of companies reporting • Level playing field but sufficient flexibility • Stronger link to what really matters • Materiality • Impact • Market value & growth How to make ensure companies are ready ? How to support the link to management performance ? This material may not be reprinted or redistributed without the express written consent of CSR Europe
  • 3. Integrated Performance as a focus Integrated Performance reflects the true market value of a company because the real company value is expressed in both financial and non-financial performance Management Virtuous cycle of an integrated approach Materiality Analysis / Due Diligence Performance Reporting
  • 4. Challenges of Better Integration of Financial and Non-Financial Performance 1. 2. 3. 4. Materiality assessment Maturity of management Integration of management Good story telling for better evaluation 4
  • 5. 1. Materiality = Defining Relevant Sustainability Areas to Manage and Report for Business Benefit Key Success Factors - Informing corporate strategy not only reporting - Instrumental in setting sustainability context & identifying risks and opportunities - Dynamic and evolutionary process - Incorporates short, medium and long-term view of social, environmental, governance issues impacting business - It must build on reliable, evidencebased data, observations and conclusions - Multi-stakeholder engagement is key to success & to avoid myopic view of impacts Challenges for Companies • Issue identification • Issue Prioritisation • Strategic Use • Review of Materiality Assessment
  • 6. The real challenge: quantity and quality 20,000 (1) Increase in the number of companies reporting in Europe 15,000 10,000 5,000 0 Current (2) Focus on maturity and integration of the management of ESG factors, within companies and within the supply chain 100 75 % 50 25 = degree to which KPIs, targets, performance management & transparency are developed 46 61 0 Maturity Integration = degree to which ESG management is linked to core strategy & management processes This material may not be reprinted or redistributed without the express written consent of CSR Europe
  • 7. 2. Maturity: KPIs and reporting but less targets and link to business Average score, n=19 Five factors of maturity None of the operations 0 HQ 1 HQ, Affiliates 2 HQ, Affiliates, Supply Chain 3 Non-financial KPIs in place Carbon emissions Employee engagement Targets related to nonfinancial KPIs Waste management Customer satisfaction Results linked to existing business management model Supply chain management Public perception Results linked to performance management Ethical integrity Results reported externally Innovation Source: VNFP Project 2012, CSR Europe This material may not be reprinted or redistributed without the express written consent of CSR Europe
  • 8. 3. Integration: linked to strategy but not really to business Integration is the degree to which non-financial performance is linked to the core strategy & management processes of the business Five drivers of integration 1. Strategy and decision-making Centralised and coordinated CSR strategy and objectives, feeding into the core business strategy. 2. Management model Capacity to gather and bring on board stakeholder expectations 100% Intensive cooperation between operational divisions to implement CSR strategy 5. Stakeholder engagement CSR fully integrated Direct involvement of executives and strategic divisions in CSR decisionmaking/corporate planning 4. Collaboration Average percentage, n=18 CSR is part of your management processes 3. Organisational structure Integration of NFP Management 61% CSR not integrated 0% Integration Source: VNFP Project 2012, CSR Europe This material may not be reprinted or redistributed without the express written consent of CSR Europe
  • 9. 4. Good story telling for better evaluation • Context is king • Not every performance aspect is quantifiable • Reliable and robust datasets on non-financial performance • Communicate strategic goals and targets on material nonfinancial areas • Define communications format according to habits of stakeholders targeted how do investors read sustainability reports? 9
  • 10. Good story telling for better evaluation • Clarity on expectations – from investors towards companies • Good understanding of sector risks • Define how to bring it into conversations, how to communicate 10
  • 11. Conclusion For better risk assessment and value-setting over the mid-term: – Prepare robust and credible materiality assessment for strategic use – Ensure material financial and non-financial issues are managed in a mature way – Integrate non-financial management into the standard business processes – Communicate with audiences in ways appropriate for them to understand and use your story 11
  • 12. European Action Plan on Integrated Performance and Reporting MISSION To equip companies, governments, investors, analysts and financial markets in Europe with the knowledge and tools to enhance integrated performance through efficient management and reporting with a view to improve business performance and to comply with legislation. THE WORK Based on the activities of existing frameworks and networks (such as GRI, IIRC, WBCSD, CDSB, etc.) develop capacity building and awareness raising instruments to support companies, governments, associations, investors, analysts and financial markets and contribute to European monitoring of integrated performance and reporting.