The Electronic Industry Citizenship
Coalition
Welcomes you to
Sponsored by
Exhibitors
CSR Rankings & Ratings
The Investment Community
Annie White
Senior Sustainability Lead
About Sustainalytics
3
We help clients turn vast quantities of environmental, social and governance
information into insig...
ESG Rating Reports
4
Best-of-sector approach
 42 industries
60 to 100 core & industry-
specific indicators
Policies, m...
Research Themes
5
Environment
(56)
Operations
(26)
Supply chain
(12)
Products
(18)
Growth in Responsible Investing
Strong Momentum
Growth in UN PRI Signatories from 2010-2013
• As of March
2013, 1172 signatories
in 53
countries, increase...
What is Driving RI Markets?
 Regulatory risk (legislation, treaties, conventions)
 Widen the client base
 Materiality a...
Corporates Willingness to Engage
• Companies covered by Sustainalytics have increased engagement
with analysts & clients b...
Emphasizing Risk & Preparedness
10
• Where does the company operate?
• In what industry?Exposure
• Evaluating
disclosure, policies, management systemsPrepare...
Unmanaged Risks
Unmanaged
ESG Risks
“ESG SHOCK”
Opportunities
Q Is the company aware of its unmanaged exposure
to ESG shocks?
Q Is the company’s ESG management a proxy fo...
Annie White
Senior Sustainability Lead
Sustainalytics
Boston
annie.white@sustainalytics.com
Controversy Assessment
16
 What is the impact of the incident?
 How exceptional is it within the industry?
 How direct ...
The Electronic Industry Citizenship
Coalition
Welcomes you to
Sponsored by
Exhibitors
Responsible Electronics 2013
Dara O‟Rourke
UC Berkeley and GoodGuide
iRatings, InstaRankings and
Consumer Demands for
Elec...
Consumers and Electronics
• More questions than ever before about Electronics
• Where did my phone/tablet/laptop come from...
Ratings/Rankings
• Greenpeace – Guide to Greener Electronics
• Electronics TakeBack Campaign Scorecard
• Raise Hope – Conf...
GoodGuide Ratings
32
Product & Company Ratings
• GoodGuide uses “ontologies” to
define the issues that matter
most
• Issue frameworks are based...
GoodGuide’s Ontology
Health Ontology
Environment Ontology
Ratings are done primarily at the company-level
Public information about the impacts of a company's
p...
Social Ontology
Ratings are done at the company-level It is virtually
impossible to acquire information about the impacts
...
Data on Electronics
• Hazardous Substances
• Environmentally Preferable Materials
• Sustainable Manufacturing Practices
• ...
Data Sources
• 1500 Data Sources
• Six Main Types:
• Manufacturer Self-Disclosure
• Government Data
• Socially Responsible...
GoodGuide Platform
Applications
APIs
Company, Product and Attribute Database
Informatics Tools: Entity Resolution & Data A...
Retailer Screening/Rating Tools
• Help retailers define and implement customized
sustainability standards
• Collect the da...
Landing Page for Manufacturer
Product Profiles
Product Components
Summary
Table View Ratings
Summary 2
What’s Next?
• Need to know what matters “scientifically”
• And what matters to consumers
• Need deep visibility into supp...
Changing Processes and Incentives
• Deeper Transparency and Smarter Monitoring
– Tracking Materials, Components, Modules, ...
Transparency and CSR Ratings
• Threat and Opportunity
• Need to Incentivize disclosure in supply chain
• Use new informati...
Moving Forward
• Electronics Industry is Uniquely Positioned
• To Reinvent/Redesign Products
• To Influence Manufacturing ...
Transparency is Here...
The Electronic Industry Citizenship
Coalition
Welcomes you to
Sponsored by
Exhibitors
Are You a Leader of Clean Capitalism?
The Secrets of CSR Rankings
Oct. 2, 2013
Landscape
56
▪ More than 11% ($3.31 trillion) of assets under professional
management in the U.S. are invested with social...
Landscape
57
▪ A handful of the most popular ratings/rankings are picked up in the
business media, and some are produced b...
Differences Between Methodologies
58
Transparent vs. Opaque (“Black Box”)
Qualitative vs. Quantitative
Narrow vs. Broad...
The Corporate Knights approach
59
▪ Mission: Information empowering markets to foster a better world
▪ Structure: Toronto-...
60
Corporate Knights is globally recognized as a leader
in measuring the financial value of sustainability
▪ Member of Adv...
61
Corporate Knights‟ flagship performance ranking:
The Global 100 Most Sustainable Corporations
▪ The Global 100 recogniz...
Overview of Global 100 ranking process
62
 All companies that had a market
capitalization in excess of $US 2 billion
The
...
The Global 100 KPIs: Link to sustainability performance
63
KPI Methodology Link to sustainability performance
Energy Produ...
Indicators are different for each industry group “Priority” = 10% Threshold
64
Energy
Produc-
tivity
Carbon
Produc-
tivity...
Electronics Industry
66
Captured by three industries within the Global Industry Classification
Standard (GICS):
----------...
Semiconductors & Equipment Companies
67
TOP RANKED (2013 Global 100 Universe)
1. ASML Holding NV (Netherlands)
 Disclosed...
Semiconductors and Equipment Companies
68
BOTTOM RANKED (2013 Global 100 Universe)
1. Orise Technology Co Ltd (Taiwan) – 9...
Disclosure Rates of Voluntary KPIs for
Semiconductors and Equipment Companies
69
 Innovation Capacity (96%)
 Energy (18%...
Technology Hardware & Equipment Companies
70
TOP RANKED (2013 Global 100 Universe)
1. Cisco Systems Inc (United States)
 ...
Technology Hardware & Equipment Companies
71
BOTTOM RANKED (2013 Global 100 Universe)
1. China TeleTech Holding Inc (China...
Disclosure Rates of Voluntary KPIs for
Technology Hardware & Equipment Companies
72
 Innovation Capacity (93%)
 Waste (1...
Consumer Electronics Companies (GICS sub-industry)
73
TOP RANKED (2013 Global 100 Universe)
1. Casio Computer Co Ltd (Japa...
Consumer Electronics Companies (GICS sub-industry)
74
BOTTOM RANKED (2013 Global 100 Universe)
1. China!
2. China!
3. Chin...
Disclosure Rates of Voluntary KPIs for
Consumer Electronics Companies
75
 Innovation Capacity (81%)
 Energy (23%)
 Carb...
Analyzing corporate sustainability disclosures:
The role of reporting companies
76
 Companies which do not report their s...
CK Ranker – “Kranker” mobile app
77
www.ckranker.com
CK Capital‟s suite of Clean Cap® and Integrated Cap® indices
help portfolio managers increase risk adjusted stock returns
...
CK Capital is the first research provider to integrate corporate
sustainability analysis into an enhanced indexing strateg...
Sustainability performance and research:
What lies ahead?
80
 Harmonization of sustainability reporting standards into on...
The Takeaway…
81
“As
sophistication, transparen
cy
and market interest in
environmental (and
social/governance)
performanc...
For more information
82
All inquiries can be directed to the Global 100 research team at
research@corporateknights.com
We ...
The Electronic Industry Citizenship
Coalition
Welcomes you to
Sponsored by
Exhibitors
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Responsible Electronics 2013: CSR Rankings
Upcoming SlideShare
Loading in …5
×

Responsible Electronics 2013: CSR Rankings

689 views

Published on

Presentations from the EICC conference Responsible Electronics 2013, Oct 1-3 in California.

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
689
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • This is a snapshot of a company’s final ESG report that our clients receive. It’s housed in our Global Platform and addresses sustainability policies, management systems,key performance indicators and a company’s involvement in controversial incidents.A report also includes the rating that a company is assigned, which essentially ranks a company’s ESG performance within its sector.At Sustainalytics, our methodology is underpinned by a best-of-sector approach to benchmarking company performance relative to industry peers. This approach enables us to identify leaders and laggards in each industry.  
  • This slide refers to the growth in UN PRI signatories. The United National Principles for Responsible Investing initiative is an international network of investors working together to implement the six Principles for Responsible Investment in to their investment decisions.In some ways, the growth of PRI signatories can be used as a proxy for the financial industry. Along the bottom axis you see the top 12 countries by number of PRI signatories, between 2010 to 2013Today, there is roughly $13.6 trillion invested in RI strategies (using broad definition of RI strategies)Source: Global Sustainable Investment Alliance (GSIA), Global Sustainable Investment Review, 2012Let’s take a look at where this growth is coming from…
  • What’s driving responsible investing varies, depending on the region and investor. But there are some common drivers across the boardRegulatory risk (legislation, treaties, conventions)Dodd-Frank and conflict mineralsDivestment from SudanGlobal CompactWiden the client baseFaith based organizationsNGOsAccess to a European client base (largest RI market)Materiality Risk managementCost controlsEarly to market innovationLong-term fiduciary duty
  • As the momentum towards improved responsible investing accelerates, the quality and quantity of ESG disclosure among companies is improving as well.When I say “ESG disclosure” what I am mainly referring to is annual Corporate Social Responsibility reporting.As ESG data and disclosure improves, it’s more reliable and comparable and therefore more valuable to the investor.
  • In order to evaluate company’s ESG risk profile, we’re looking at 3 critieraWhat is a company’s exposure to various country, industry and company-specific risks? It varies depending on the sector and geography. Electronics supply chain (Apple)How prepared is a company to face these risks? Does it have an externally audited, company-wide EMS in place? What programs are in place to mitigate its carbon footprint?What is the company’s impact in reality? Is it “walking the talk?” Are KPIs improving over time and benchmarked against what? Are these policies and programs actually working or does the company continue to face controversy?An investor can assess these three elements separately to gain some insight in to the company’s quality of management and its overall performance when it comes to ESG criteria. But something is still left out…
  • What about the company’s unmanaged ESG risks?The blind spots, the risks that aren’t being addressed, managed or disclosed. And what happens when these blind spots hit, what we call, an “ESG SHOCK.” >> An oil spill, a major human rights violation or financial fraud. It’s this relationship that responsible investors are increasingly paying attention to, in order to assess a company’s overall performanceIf repeatedly unprepared – in other words, its unmanaged risks continue to go unchecked - this can chip away at a company’s performance or lead to large-scale catastrophes,especially for companies already facing a tough business environment. BP oil and gas spillFoxconnlabour issues
  • Increasingly, our clients are favouring companies who demonstrate thatthey are fully identifying, then getting ahead of these ESG risks in their day-to-day management, while insulating and building resilience prior to an eventual ESG shock such as a worker strike, a major safety accident or an environmental catastrophe. To fulfil a broad ESG strategy, responsible investors will combine an assessment of a company’s ESG exposure, preparedness and impact and ask the following questions:Is the company even aware of is exposure to ESG risks and the shocks it might face?Is the company’s ESG management a proxy for the quality of overall management?Many of our clients report the belief that strong ESG management is a leading indicator of strong overall management and cultureAre safeguards in place well in advance?Does preparedness and strong communication in one area of business naturally spill over to others?Is the company’s overall ESG strategy a positive business driver?Forward thinkingFocused on innovationUsing ESG strategies to recruit and retain new staffCapturing early markets and a growing consumer base of “green” customersResponsible investors can use the answers to these questions to adjust their expectations of a company’s performance and capture externalities that may otherwise be ignored or wrongly valued. ____________Responsible investors will all say that ESG disclosure is valuable because it helps a company demonstrate that it is transparent, managing risk and has a track record of paying attention to its ESG performance, all of which helps to inform investment decisions.  As we’ve seen, this disclosure has been a key driver in the acceleration of responsible investment.But it’s not enough anymore. Influenced by an array of global interconnected trends, responsible investors are increasingly aware of ESG “shocks” a company is exposed to but also the gains a company stands to incur when it effectively manages its entire risk profile and subsequently builds resiliency.
  • An analysis of positive performance-related criteria is counterbalanced by a detailed assessment of environmental controversies and incidents, which often indicates the extent to which management systems are effectively implemented.Our analysts categorize controversies based on considerations including…[ref slide]A controversy is then assessed from a Level 1 representing the least serious, all the way up to a level 5. Our assessment is based on a company’s record over the last 3 years.
  • Professor at UC Berkeley. GoodGuide founder. 20 years of studying supply chains – Primarily in China, Vietnam, Thailand...Enviro, Health, OSH, Labor RightsApple Academic Advisory Board
  • But...also a tech nerd…Waited in line for 2 hours for first iPhoneKnew everything about the phone: screen size, resolution, memory, camera, apps, phoneBut knew almost nothing about the production of the phone. No one had even heard of a little firm: Hon Hai Precision Industry
  • Fast Forward 6 years – iPhone 5sPeople still want to know every spec...1000 rumor blogs. But now people are also asking about labor, environment, toxics,
  • Apple as poster boy for Sweatshops & GlobalizationManufacturingSuicides at FoxconnWorker Illnesses and AccidentsWages and Hours ViolationsLack of Worker Rights to OrganizeEnd of LifeRapid ObsolescenceeWasteOff-shoring of profits. Taxes. Privacy.
  • But Samsung also...
  • Even HPFirms that had been working on environmental and social issues for many years.
  • Conflict minerals
  • Ewaste
  • CO2 from “Cloud” Amazon. Microsoft. Facebook. Even Google. Particularly as they move into hardware.
  • Electronics Industry has become the new focus...People previously assumed electronics was clean and green.
  • Yourindustry has enabled us to do a lot of what we do. IT. Did an experiment 2 years ago. MVP on rating electronics. Experiment didn’t really work. Public data not very good. Couldn’t get “ingredients” of a cell phone. Couldn’tsee down supplychains.
  • Working right now on expanding out platform to support Conflict Mineral compliance. With UL verification services.
  • Dodd-Frank is going to be really interesting. Other mandates on transparency???
  • Material use intensity per product (with full externalities)Chemical toxicity per product - Design for TURProductivity per hour of workFull life cycle impacts - loops of products
  • Defined as KPIs that > 10%May change over time as companies are disclosing more and more. Important to monitor disclosure practices among a company’s closest peers
  • Defined as KPIs that > 10%May change over time as companies are disclosing more and more. Important to monitor disclosure practices among a company’s closest peers
  • Defined as KPIs that > 10%May change over time as companies are disclosing more and more. Important to monitor disclosure practices among a company’s closest peers
  • Defined as KPIs that > 10%May change over time as companies are disclosing more and more. Important to monitor disclosure practices among a company’s closest peers
  • Responsible Electronics 2013: CSR Rankings

    1. 1. The Electronic Industry Citizenship Coalition Welcomes you to Sponsored by Exhibitors
    2. 2. CSR Rankings & Ratings The Investment Community Annie White Senior Sustainability Lead
    3. 3. About Sustainalytics 3 We help clients turn vast quantities of environmental, social and governance information into insightful, value-added analysis to enable more informed investment and business decisions.
    4. 4. ESG Rating Reports 4 Best-of-sector approach  42 industries 60 to 100 core & industry- specific indicators Policies, management systems, key performance metrics Controversial incidents
    5. 5. Research Themes 5 Environment (56) Operations (26) Supply chain (12) Products (18)
    6. 6. Growth in Responsible Investing
    7. 7. Strong Momentum Growth in UN PRI Signatories from 2010-2013 • As of March 2013, 1172 signatories in 53 countries, increase of 110% since 2009 • U.S. has the highest absolute number of signatories (164) with 39% increase • Germany saw the strongest growth in signatories (225%) Source: UNPRI Annual Reports, Progress Reports 2010-2012, www.unpri.org 0 20 40 60 80 100 120 140 160 180 2013 2012 2011 2010
    8. 8. What is Driving RI Markets?  Regulatory risk (legislation, treaties, conventions)  Widen the client base  Materiality assessments
    9. 9. Corporates Willingness to Engage • Companies covered by Sustainalytics have increased engagement with analysts & clients by 20-30% over the past 5 years • TRIGGERS • Pressure from active investors • Sustainability ratings and rankings • Media coverage • RESULTS • Companies are broadening their understanding of stakeholder groups • Improving what they measure and how they talk about it.
    10. 10. Emphasizing Risk & Preparedness 10
    11. 11. • Where does the company operate? • In what industry?Exposure • Evaluating disclosure, policies, management systemsPreparedness • Absolute vs. relative vs. ‘context based’ key performance indicators • Controversies track record or ‘events’ Impact & Progress 11 Assessing ESG Risk Exposure
    12. 12. Unmanaged Risks Unmanaged ESG Risks “ESG SHOCK”
    13. 13. Opportunities Q Is the company aware of its unmanaged exposure to ESG shocks? Q Is the company’s ESG management a proxy for its overall management? Q Is the company’s ESG strategy a positive business driver?
    14. 14. Annie White Senior Sustainability Lead Sustainalytics Boston annie.white@sustainalytics.com
    15. 15. Controversy Assessment 16  What is the impact of the incident?  How exceptional is it within the industry?  How direct is the company’s involvement?  Is it an isolated incident or part of a trend?  Has the company responded to address consequences and prevent future occurrences?
    16. 16. The Electronic Industry Citizenship Coalition Welcomes you to Sponsored by Exhibitors
    17. 17. Responsible Electronics 2013 Dara O‟Rourke UC Berkeley and GoodGuide iRatings, InstaRankings and Consumer Demands for Electronics Transparency
    18. 18. Consumers and Electronics • More questions than ever before about Electronics • Where did my phone/tablet/laptop come from? • What‟s in it? • Is it safe? • Were workers treated fairly? • Are there Conflict Minerals in my phone? • What about Pollution? Toxics? • E-Waste? • Radiation?
    19. 19. Ratings/Rankings • Greenpeace – Guide to Greener Electronics • Electronics TakeBack Campaign Scorecard • Raise Hope – Conflict Minerals Ranking • IPE Rankings of IT Firms in China • EPEAT • Energy Star • AT&T – Eco-Rating • Sprint – Scorecard • O2 – Eco Ratings • Walmart • Best Buy
    20. 20. GoodGuide Ratings 32
    21. 21. Product & Company Ratings • GoodGuide uses “ontologies” to define the issues that matter most • Issue frameworks are based on current standards of practice in the relevant scientific domain: – Health: Modeled on the standard output of chemical risk assessments or nutritional evaluations – Environment: Modeled on the standard output of life cycle assessments – Society: Modeled on standardized reporting on corporate social responsibility, as defined by the Global Reporting Initiative • GoodGuide tracks over 1,500 indicators that provide evidence about how a product or company performs on an issue.
    22. 22. GoodGuide’s Ontology
    23. 23. Health Ontology
    24. 24. Environment Ontology Ratings are done primarily at the company-level Public information about the impacts of a company's policies and manufacturing operations almost never have product-level resolution Some product categories support environmental scores at the product-level, based on ascertainable product attributes like material choice, recyclability, energy efficiency, etc. If both product and company-level E scores are available, they are combined using weights that vary by product category, based on degree to which product-level scores address overall impacts in that category Availability of indicator data varies significantly between large and small companies • Coverage by third-party or regulatory databases (e.g., Toxics Release Inventory)
    25. 25. Social Ontology Ratings are done at the company-level It is virtually impossible to acquire information about the impacts a specific product has on social attributes such as worker rights, etc. A few product categories support social impact scores at the product-level (e.g., coffee, because of social focus of third-party certifications like Fair Trade) Availability of indicator data varies significantly between public and private companies • Coverage by third-party or regulatory databases • Maturity of governance structures • Availability of resources to fund benefits, philanthropy, etc. • Sophistication of policy positions or performance metrics
    26. 26. Data on Electronics • Hazardous Substances • Environmentally Preferable Materials • Sustainable Manufacturing Practices • Device and Charger Energy Efficiency • End-of-Life Management and Recycling Rates • Socially Responsible Manufacturing • Conflict Minerals • Potential Health Issues (e.g., SAR) • Device Certifications (such as ULE 110)
    27. 27. Data Sources • 1500 Data Sources • Six Main Types: • Manufacturer Self-Disclosure • Government Data • Socially Responsible Investment Research Firms • Academic Data and LCA Models • NGOs • Media (track last two trailing years of controversies)
    28. 28. GoodGuide Platform Applications APIs Company, Product and Attribute Database Informatics Tools: Entity Resolution & Data Acquisition Science Tools: Evaluative Frameworks & Ratings Engine Business-to-Business ServicesConsumer Services
    29. 29. Retailer Screening/Rating Tools • Help retailers define and implement customized sustainability standards • Collect the data needed from a supply chain to implement the standard • Integrate data into decision support tools • Address full range of attributes important for sourcing • Distribute sustainability and performance information to purchasers to create market demand for improving supply chains
    30. 30. Landing Page for Manufacturer
    31. 31. Product Profiles
    32. 32. Product Components
    33. 33. Summary
    34. 34. Table View Ratings
    35. 35. Summary 2
    36. 36. What’s Next? • Need to know what matters “scientifically” • And what matters to consumers • Need deep visibility into supply chains • And processes to communicate to stakeholders • Emerging Issues… • Water • Alternatives Assessment • Labor Conditions • Production Model
    37. 37. Changing Processes and Incentives • Deeper Transparency and Smarter Monitoring – Tracking Materials, Components, Modules, Workers • Root Cause Analysis – Evaluating Pressures/Constraints in Supply Chain • Collaborative Problem Solving – Real Stakeholder Participation • New Incentives to Find and Solve Problems – Real Data Systems and Feedback Loops • Continuous, Rapid Improvement • Big N Predictive Analytics + Deep Dive Problem Solving
    38. 38. Transparency and CSR Ratings • Threat and Opportunity • Need to Incentivize disclosure in supply chain • Use new information to identify opportunities – Hot spots and hot button issues – Potential risks in supply chain – Potential opportunities for product/process changes • Participate in an Open Conversation – Learn what stakeholders really care about – Admit challenges, work towards better products
    39. 39. Moving Forward • Electronics Industry is Uniquely Positioned • To Reinvent/Redesign Products • To Influence Manufacturing Systems – Ethical sourcing and purchasing • To Redesign Business Models – E.g., Leasing – take-back & upgrades • Collaborate across stakeholders • Build Platforms, Data, Apps for Supply Chain Management and Problem Solving
    40. 40. Transparency is Here...
    41. 41. The Electronic Industry Citizenship Coalition Welcomes you to Sponsored by Exhibitors
    42. 42. Are You a Leader of Clean Capitalism? The Secrets of CSR Rankings Oct. 2, 2013
    43. 43. Landscape 56 ▪ More than 11% ($3.31 trillion) of assets under professional management in the U.S. are invested with social responsibility in mind. “More than 50 distinct rating methodologies for assessing environmental and social performance have been developed, more than a third of them since 2005.” - Just-released McGill University and University of California, Los Angeles, study.
    44. 44. Landscape 57 ▪ A handful of the most popular ratings/rankings are picked up in the business media, and some are produced by the business media – i.e. Dow Jones Sustainability Index. ▪ Those corporations that rank high tend to highlight this as a “badge of honor” in their own marketing and communications to media, customers and investors.  The addition of sustainability indicators into Bloomberg terminals is a sign that assessing companies on ESG factors is going mainstream. It is becoming easier to access timely and accurate ESG measures, and such measures are expected to increase in number.  As more data becomes available and easily accessible, it is increasingly difficult for companies to portray their token accomplishments as meaningful – i.e. more than just green PR.
    45. 45. Differences Between Methodologies 58 Transparent vs. Opaque (“Black Box”) Qualitative vs. Quantitative Narrow vs. Broad (e.g. just carbon versus blend of ESG KPI) Publicly accessible data vs. private surveys Rankings can differ widely on how they screen companies & weigh KPIs.
    46. 46. The Corporate Knights approach 59 ▪ Mission: Information empowering markets to foster a better world ▪ Structure: Toronto-based, employee-owned B Corp, founded in 2002. CK is a signatory to the UN Principles for Responsible Investment. ▪ CK has three main segments: – Corporate Knights Capital ▫ Investment advisory services for asset owners and managers ▫ External research projects (e.g. Global 100® and Sustainable Stock Exchanges) – Corporate Knights – “Magazine of the Year” 2013 ▫ World's largest circulation magazine focused on sustainability ▫ Distributed in The Washington Post and Globe and Mail ▫ Reaches 130,000 of the world‟s most influential business and political decision-makers – Council for Clean Capitalism ▫ The council has ten (10) current members ▫ CEO-supported group catalyzing smart and efficient public policy ▫ Engages with leading public policy-makers
    47. 47. 60 Corporate Knights is globally recognized as a leader in measuring the financial value of sustainability ▪ Member of Advisory Council of Sustainability Accounting Standards Board (SASB) ▪ Participating in Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) ▪ Official respondent at Principles for Responsible Investment (PRI) academic conferences ▪ Panelist at Global Reporting Initiative (GRI) meetings "Corporate Knights is one of the most advanced practitioners seeking ESG correlation to core business metrics such as revenue growth, cost reduction, and profitability.“ -Michael Porter, Harvard Business School "I'm impressed with the rigor and methodology used by Corporate Knights.” -Marc Gunther, Fortune Magazine "Corporate Knights is one of the most advanced practitioners seeking ESG correlation to core business metrics such as revenue growth, cost reduction, and profitability.“ -Michael Porter, Harvard Business School "I'm impressed with the rigor and methodology used by Corporate Knights.” -Marc Gunther, Fortune Magazine
    48. 48. 61 Corporate Knights‟ flagship performance ranking: The Global 100 Most Sustainable Corporations ▪ The Global 100 recognizes companies that are best-positioned to thrive in a „clean capitalism‟ economy. Ranking unveiled annually at World Economic Forum in Davos. ▪ Measures companies‟ exposure to a series of mega-trends that are redefining economic growth in the 21st century: – Growing resource scarcity – Rising levels of generalized environmental stress – Increasing health & safety standards – The systematic transition to a „knowledge economy‟ – Heightening stakeholder expectations for corporate disclosure  Every industry is impacted by above trends. Clean capitalism is an economic system in which prices incorporate social, economic and ecological benefits and costs, and actors know the full impacts of their marketplace actions
    49. 49. Overview of Global 100 ranking process 62  All companies that had a market capitalization in excess of $US 2 billion The Global 100 Selection Screening Starting Universe  Mid, large, and mega-cap public companies Description Details  Companies that pass all four screens constitute the Global 100 Shortlist  Companies screened for : – Sustainability disclosure practices – Financial health – Product categories – Sanctions  Companies in the shortlisted are contacted to confirm and supplement the data we have collected  Companies only scored on the „priority KPIs‟ for their respective industry group  Companies in the Global 100 Shortlist are scored on up to 12 KPIs, covering resource, employee, and financial management  Each GICS sector is assigned a fixed number of slots in the final Global 100 list, (based on each sector‟s contribution to the total market cap of the Global 100‟s financial benchmark, the MSCI ACWI).  The Global 100 is populated  Consists of the top performing companies within each industry group
    50. 50. The Global 100 KPIs: Link to sustainability performance 63 KPI Methodology Link to sustainability performance Energy Productivity Revenue / energy use Rising energy prices Carbon Productivity Revenue / GHG emissions Regulations towards curbing GHG emissions. Costs from cap-and-trade/carbon tax Water Productivity Revenue / water use Environmental concern for scarce freshwater resources Waste Productivity Revenue / waste produced Increasing resources costs and scarcity Innovation Capacity R&D expenses / revenue Development of new and better products and services with increased efficiency Percentage Tax Paid Cash tax / EBITDA Fulfillment of social contract CEO-Average Worker Pay CEO compensation / average employee compensation Motivating employees Pension Fund Status Unfunded liabilities / market capitalization Responsibility towards services rendered by retired employees Safety Performance Fatalities and lost time incidents Ethical responsibility and regulations towards employee health and safety Employee Turnover Number of departures / average total employees Preservation of human capital Leadership Diversity Female representation on board of directors and executive team Equality of opportunity and talent Clean Capitalism Pay Link Senior executive pay linked to clean capitalism targets Integration of responsible outcomes into corporate strategy Resource management Financial management Employee management
    51. 51. Indicators are different for each industry group “Priority” = 10% Threshold 64 Energy Produc- tivity Carbon Produc- tivity Water Produc- tivity Waste Produc- tivity Innovation Capacity Employee Turnover Safety Perfor- mance CEO- Average Worker Pay Pension Fund Status % Tax Paid Leader- ship Diversity Clean Capitalism Pay Link Total Type of indicator Priority Priority Priority Priority Priority Priority Priority Priority Universal Universal Universal Universal Automobiles & Components P P P P P P P P P P P P 12 Banks P P P P P P P P P P 10 Capital Goods P P P P P P P P P P P P 12 Commercial & Prof. Services P P P P P P P P P P 10 Consumer Durables & Apparel P P P P P P P P P P 10 Consumer Services P P P P P P P P P 9 Diversified Financials P P P P P P P P P P 10 Energy P P P P P P P P P P P P 12 Food & Staples Retailing P P P P P P P P P P P 11 Food Beverage & Tobacco P P P P P P P P P P P P 12 Health Care Equip & Serv. P P P P P P P P P P 10 Household & Personal Products P P P P P P P P P P P P 12 Insurance P P P P P P P P P 9 Materials P P P P P P P P P P P P 12 Media P P P P P P P P P P P 11 Pharma & Biotech P P P P P P P P P P P P 12 Real Estate P P P P P P P P P P 10 Retailing P P P P P P 6 Semiconductors P P P P P P P P P P P P 12 Software & Services P P P P P P P P 8 Technology Hardware & Equip. P P P P P P P P P P 10 Telecommunication Services P P P P P P P P P P P P 12 Transportation P P P P P P P P P P P P 12 Utilities P P P P P P P P P P P P 12
    52. 52. Electronics Industry 66 Captured by three industries within the Global Industry Classification Standard (GICS): -----------------------------------------  Semiconductors and Equipment  Technology Hardware and Equipment  Consumer Durables and Apparel (which includes consumer electronics)
    53. 53. Semiconductors & Equipment Companies 67 TOP RANKED (2013 Global 100 Universe) 1. ASML Holding NV (Netherlands)  Disclosed 10 of 12 KPIs.  Strengths include perfect energy score, top quartile carbon score, top quartile water score, top quartile waste score, top quartile employee turnover score. 2. Intel Corp (United States)  Disclosed 10 of 12 KPIs.  Strengths include top quartile tax score, top quartile (almost perfect) leadership diversity score, existence of a clean capitalism pay link. 3. Q-Cells SE (Germany)  Disclosed 8 of 12 KPIs  Strengths include top quartile safety score
    54. 54. Semiconductors and Equipment Companies 68 BOTTOM RANKED (2013 Global 100 Universe) 1. Orise Technology Co Ltd (Taiwan) – 99th 2. Sanan Optoelectronics Co Ltd (China) – 98th 3. Dongbu HiTek Co Ltd (South Korea) – 97th Each company disclosed at most 5 of 12 KPIs
    55. 55. Disclosure Rates of Voluntary KPIs for Semiconductors and Equipment Companies 69  Innovation Capacity (96%)  Energy (18%)  Water (18%)  Waste (18%)  Employee Turnover (12%)  Carbon (10%)  CEO-Average Worker Pay (6%)  Safety (1%)
    56. 56. Technology Hardware & Equipment Companies 70 TOP RANKED (2013 Global 100 Universe) 1. Cisco Systems Inc (United States)  Disclosed 9 of 10 Priority KPIs.  Strengths include existence of a clean capitalism pay link and a top quartile innovation capacity score. 2. Apple Inc (United States)  Disclosed 8 of 10 KPIs.  Strengths include top quartile energy score, top quartile carbon score, top quartile water score, perfect waste score. 3. Alcatel-Lucent (France)  Disclosed 10 of 10 KPIs.  Strengths include top quartile leadership diversity score, perfect pension score (more than fully funded pension plan), top quartile innovation capacity score.
    57. 57. Technology Hardware & Equipment Companies 71 BOTTOM RANKED (2013 Global 100 Universe) 1. China TeleTech Holding Inc (China) – 259th 2. Telling Telecommunications Holding Co (China) – 259th 3. Minal Industries Ltd. (India) – 259th Each company disclosed at most 3 of 10 KPIs
    58. 58. Disclosure Rates of Voluntary KPIs for Technology Hardware & Equipment Companies 72  Innovation Capacity (93%)  Waste (18%)  Water (18%)  Energy (16%)  Carbon (12%)  CEO-Average Worker Pay (5%)
    59. 59. Consumer Electronics Companies (GICS sub-industry) 73 TOP RANKED (2013 Global 100 Universe) 1. Casio Computer Co Ltd (Japan)  Disclosed 9 of the 10 Priority KPIs  Strengths include top quartile (vs. other Consumer Durables & Apparel companies) waste score, top quartile taxes paid score, and top quartile innovation capacity score. 2. Harman International Industries (United States)  Disclosed 7 of 10 KPIs.  Strengths include top innovation capacity score. 3. Sharp Corp (Japan)  Disclosed 9 of 10 KPIs.  Strengths include a perfect waste score and a top quartile innovation capacity score.
    60. 60. Consumer Electronics Companies (GICS sub-industry) 74 BOTTOM RANKED (2013 Global 100 Universe) 1. China! 2. China! 3. China! Each company disclosed at most 1 of 10 KPIs
    61. 61. Disclosure Rates of Voluntary KPIs for Consumer Electronics Companies 75  Innovation Capacity (81%)  Energy (23%)  Carbon (19%)  Waste (15%)  Water (15%)  CEO-Average Worker Pay (0%)
    62. 62. Analyzing corporate sustainability disclosures: The role of reporting companies 76  Companies which do not report their sustainability performance data may miss out on an opportunity to be recognized as a sustainability leader.  Companies are encouraged to: 1. Disclose sustainability data to the market in a timely manner. E.g. Australian and Japanese companies were found to be among the fastest to come to market with their sustainability performance data. 2. Ensure that sustainability data aggregators such as Bloomberg have their data on their platform 3. Report sustainability data points in accordance with a globally accepted reporting standards 4. Strive to report data points for 100% of a given company‟s global operations. 5. Provide Sustainability contact for the company in the same way as contact details are provided for “Investor Relations.”
    63. 63. CK Ranker – “Kranker” mobile app 77 www.ckranker.com
    64. 64. CK Capital‟s suite of Clean Cap® and Integrated Cap® indices help portfolio managers increase risk adjusted stock returns 78 ▪ CK Capital uses a rules-based quantitative research process to identify sustainability and financial factors linked to risk adjusted stock returns for companies in each GICS Sector*. ▪ Clean Cap® indices use company performance on a basket of sustainability factors collectively predictive of same- sector alpha to tilt companies off of a mkt cap-weighted benchmark. ▪ Integrated Cap® indices reweight securities from a mkt- cap weighted benchmark using a combination of sustainability and financial factors collectively predictive of same-sector alpha. © 2013 CK Capital - Proprietary and Confidential Index type: Clean Cap® Integrated Cap® Investment objective: Outperform benchmark Outperform benchmark Approach: Tilting (each security‟s index weight capped at +/- 20% from benchmark weight). Each security in the benchmark is wholly re- weighted. Factor Selection: Sustainability Sustainability + fundamentals Geographic coverage: US, Canada, UK, Europe, Australia, Japan Rebalance: Annually Monthly Suitability: Passive investors focused on sustainability integration Passive and active investors * Global Industry Classification Standard (GICS).
    65. 65. CK Capital is the first research provider to integrate corporate sustainability analysis into an enhanced indexing strategy 79 ▪ CK Capital‟s suite of Clean Cap® and Integrated Cap® indices use sustainability and financial factors linked to alpha to offer investors superior risk adjusted returns. © 2013 CK Capital - Proprietary and Confidential Performance of the Integrated Cap ® US Index , the Clean Cap® US Index and the S&P 500*^ * As of August 31 , 2013, all figures are gross of fees. Historical performance from 1-Jan-08 to 31-Dec-12 Live performance from 1-Jan-13 ^S&P500 is the property of Standard and Poor‟s, all data used was taken from publically available sources. $45 $65 $85 $105 $125 $145 $165 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 ValueofInvestment Integrated Cap US Index Clean Cap US Index S&P 500 $158.23 $134.04 $126.14
    66. 66. Sustainability performance and research: What lies ahead? 80  Harmonization of sustainability reporting standards into one single and global set of acceptable standards in the same way as IFRSs are for financial reporting.  Reliance on audited data: the lack of auditing may limit the potential of sustainability data.  For rankings, transparency and understandability are key criteria for credibility.  Building legitimacy of rankings, for example through more stakeholder consultation.  Focus on exclusively quantitative and hence objective sustainability assessment methodologies.  Increasing convergence of sustainability research to respond to the needs of investor decision-making.
    67. 67. The Takeaway… 81 “As sophistication, transparen cy and market interest in environmental (and social/governance) performance increase, investors are likely to become increasingly judicious in deciding which actions taken by a firm are truly substantive and which are pursued symbolically.” “Investment managers are likely to be better served by thoroughly understanding the key advantages and disadvantages of each rating methodology available to them, and selecting from among them a set of indicators small enough to be manageable yet large enough to capture a comprehensive array of non-overlapping indicators.” A couple of interesting paragraphs from the recent McGill/UoC(LA) study:
    68. 68. For more information 82 All inquiries can be directed to the Global 100 research team at research@corporateknights.com We welcome feedback from all stakeholders www.corporateknights.com Twitter: @corporateknight
    69. 69. The Electronic Industry Citizenship Coalition Welcomes you to Sponsored by Exhibitors

    ×