@GRIAusConf_Linking Sustainability Data To Value - Annabelle Bennett

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  • External costs are incurred whenever a natural resource is used or emissions are made to air, land or water. The external cost of using an environmental resource, such as water, or emitting a pollutant, such as carbon dioxide, is the cost that is borne by society through the degradation of the environment but which is not borne by the company that uses the resource or emits the pollutant. Trucost prices the damage that is done to society and human capital by pollutants and natural resource use, including quantifying associated human health costs. Trucost, and many leading academics, believe that pricing these resources and pollutants in financial terms provides the most suitable weighting factor to differentiate the relative damage of a range of impacts. The same approach was applied by the Stern Review on the Economics of Climate Change, a study commissioned by the UK government in 2006. The costs provide a good proxy for potential exposure to policy measures that seek to apply the “polluter pays” principle. Companies are increasingly required to contribute to external costs through regulations or economic instruments, which often “internalise” costs per unit of resources used and emissions released (i.e, through carbon taxes or allowances). The external environmental costs of a company's operations give a good long-term indicator of the environmental sustainability of the company's activities.
  • External costs are incurred whenever a natural resource is used or emissions are made to air, land or water. The external cost of using an environmental resource, such as water, or emitting a pollutant, such as carbon dioxide, is the cost that is borne by society through the degradation of the environment but which is not borne by the company that uses the resource or emits the pollutant. Trucost prices the damage that is done to society and human capital by pollutants and natural resource use, including quantifying associated human health costs. Trucost, and many leading academics, believe that pricing these resources and pollutants in financial terms provides the most suitable weighting factor to differentiate the relative damage of a range of impacts. The same approach was applied by the Stern Review on the Economics of Climate Change, a study commissioned by the UK government in 2006. The costs provide a good proxy for potential exposure to policy measures that seek to apply the “polluter pays” principle. Companies are increasingly required to contribute to external costs through regulations or economic instruments, which often “internalise” costs per unit of resources used and emissions released (i.e, through carbon taxes or allowances). The external environmental costs of a company's operations give a good long-term indicator of the environmental sustainability of the company's activities.
  • @GRIAusConf_Linking Sustainability Data To Value - Annabelle Bennett

    1. 1. Linking SustainabilityData To ValueChair: Eszter Vitorino Füleky, Network Relations Manager,Global Reporting InitiativeDr Maria Balabat, Senior Lecturer, University of New South WalesAnnabelle Bennett, Account Director, TrucostDr Lara Jefferson, Manager, Environment and Approvals, CrosslandsResources Limited co-presenting withKylie Ashenbrenner, Principal Consultant Strategic Projects at ERM
    2. 2. Natural Capital AssessmentPuma Environmental Profit & Loss AccountGRI Conference AustraliaAnnabelle Bennett annabelle.bennett@trucost.comMarch 27th 2012
    3. 3. Trucost helps organisationsunderstand the true cost of business in order to use resources more efficiently, today and tomorrow.
    4. 4. Trucost data The world’s most comprehensive data on corporate environmental impacts Greenhouse Gases Air Pollutants Water Land and Water Pollutants Waste Natural Resource Usage
    5. 5. Trucost Trucost has analysed the environmental performance of >5,000 suppliers, representing $100billion expenditure. Trucost has conducted environmental footprint analysis of funds worth $2.7trillion. Trucost data drives $582million AUM in environmentally optimised funds. Trucost data is used by 15 academic institutions (including Harvard, Yale & Oxford University) and is supported by an International Academic Advisory Panel. Trucost has been researching, standardising and validating the world’s most comprehensive data on corporate environmental impacts for +10 yrs.
    6. 6. Trucost clients
    7. 7. Natural Capital Assessment
    8. 8. What is an Externality? An externality is a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services
    9. 9. Example: Air pollution
    10. 10. Environmental damage caused by world’slargest 3,000 companies$2.2tn >50% Proportion of company earnings that could be at risk from environmental costs
    11. 11. What is an Ecosystem Service? Ecosystem services are the benefits that people and economies obtain from ecosystems e.g. Fresh water, timber and fisheries, climate regulation, erosion control and recreation
    12. 12. Water Scarcity
    13. 13. Future Costs of Water in Asia
    14. 14. Future Costs of Water in Asia
    15. 15. PUMA CASE STUDY:ENVIRONMENTALPROFIT & LOSS ACCOUNT
    16. 16. Puma’s Supply Chain Manufacturing: Apparel, shoes and accessories Tier 1 Outsourcing: Embroiderers, printers, outsole producers Tier 2 Processing: Tanneries, chemical companies, oil refiners Tier 3 Raw materials: Cotton farming, oil drilling
    17. 17. E P&L approach EngagementQuantification Refine E and data Valuation E P&Lof E KPIs KPIs collection• Calculated • Engaged strategic • Refined • GHG and water • GHGsupply chain suppliers calculations of consumption emissionsimpacts back to supply chain valuation co- and water useraw materials • Collected supplier impacts efficients derived valued in specific data economic• Over €1bn • PUMA operational termsexpenditure • Established E KPI data addedanalysed locations of raw material flows (E KPIs) x (GHG & Water Valuation) = E P&L Best available techniques used: Spend Analysis, Hybrid Environmental Input-Output Modelling, Life Cycle Assessment, Production Flow Analysis, environmental economics - valuation of alternative cost models
    18. 18. Water and GHG dependencyPUMA GHG usage (2010): 716.6 ktCO2e PUMA water usage (2010): 77,493,100 m3
    19. 19. EP&L Results € 145m € 83m Tier 4 Tier 3 Tier 2 Tier 1 Operations € 137m € 8m
    20. 20. EP&L results
    21. 21. We are still responsible “Once we know and are aware, we are responsible for our action and our inaction. We can do something about it or ignore it. Either way, we are still responsible.” Jean Paul Sartre

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