Let’s talk: sustainability Q2 2014
A new point of view for business leaders
23 April 2014
Page 2 Let’s talk: sustainability Q2 2014
Disclaimer
► This material has been prepared for general informational
purposes ...
Page 3 Let’s talk: sustainability Q2 2014
Circular 230 disclaimer
► Any US tax advice contained herein was not intended
or...
Page 4 Let’s talk: sustainability Q2 2014
Today’s moderator
Leisha John
EY Americas Director of
Environmental Sustainabili...
Page 5 Let’s talk: sustainability Q2 2014
Let’s talk: sustainability
A new point of view for business leaders
Sustainabili...
Page 6 Let’s talk: sustainability Q2 2014
Today’s presenters
Nancy Gillis
Ernst & Young LLP
Climate Change and Sustainabil...
Page 7 Let’s talk: sustainability Q2 2014
Today’s agenda
► Nine key elements of a sustainability strategy
► Proxy season 2...
Page 8 Let’s talk: sustainability Q2 2014
Nine key elements that frame the
sustainability strategy discussion
Sustainabili...
Page 9 Let’s talk: sustainability Q2 2014
Today’s agenda
► Nine key elements of a sustainability strategy
► Proxy season 2...
Page 10 Let’s talk: sustainability Q2 2014
Proxy season 2014: preview of the
environmental and social shareholder proposal...
Page 11 Let’s talk: sustainability Q2 2014
Opinion check
Is your company actively engaging with your
investors on environm...
Page 12 Let’s talk: sustainability Q2 2014
Environmental and social (E&S) proposals
► Dominant category of shareholder pro...
Page 13
Top 10 most common shareholder proposals
in 2014 (publicly disclosed through March 21)
0 10 20 30 40 50 60 70
Adop...
Page 14 Let’s talk: sustainability Q2 2014
2014 E&S shareholder proposals
► First-time or enhanced sustainability reportin...
Page 15 Let’s talk: sustainability Q2 2014
Next steps
► Understand the environmental and social priorities of your
investo...
Page 16 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainabil...
Page 17 Let’s talk: sustainability Q2 2014
Banking on the benefits of accounting for
GHG emissions
Sustainability
Tax
impl...
Page 18 Let’s talk: sustainability Q2 2014
Measuring GHG emissions throughout the
value chain
Availability of
methods to
m...
Page 19 Let’s talk: sustainability Q2 2014
Response of financial institutions
► Develop and implement methods to measure b...
Page 20 Let’s talk: sustainability Q2 2014
Unlocking business value
► New business opportunities: focus on reducing
GHG em...
Page 21 Let’s talk: sustainability Q2 2014
What’s next
► Aligning with emerging standards for measuring
GHG emissions
► Wo...
Page 22 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainabil...
Page 23 Let’s talk: sustainability Q2 2014
Using sustainability for competitive
advantage in government procurement
Sustai...
Page 24 Let’s talk: sustainability Q2 2014
Opinion check
Does your company’s procurement function
consider the environment...
Page 25 Let’s talk: sustainability Q2 2014
Just like companies, government agencies:
► Look for ways to reduce costs
► Nee...
Page 26 Let’s talk: sustainability Q2 2014
Making sustainability a competitive
advantage in government procurement
Advanta...
Page 27 Let’s talk: sustainability Q2 2014
How to use sustainability for procurement
competitive advantage
Communicating y...
Page 28 Let’s talk: sustainability Q2 2014
Today’s agenda
Join now:
#EYSustainability
► Nine key elements of a sustainabil...
Page 29 Let’s talk: sustainability Q2 2014
Setting credible sustainability goals that
drive real business value
Sustainabi...
Page 30 Let’s talk: sustainability Q2 2014
Opinion check
Which of the following business drivers are most
relevant to your...
Page 31 Let’s talk: sustainability Q2 2014
Business value
► Environmental goals
► Many can be directly linked to driving c...
Page 32 Let’s talk: sustainability Q2 2014
Business value
► Goals should:
► Be relevant to your organization’s value drive...
Page 33 Let’s talk: sustainability Q2 2014
Challenges to setting relevant goals
► Defining commitments in a clear manner
►...
Page 34 Let’s talk: sustainability Q2 2014
Tips for goal setting
► Assemble the right team — get buy-in from executives
an...
Page 35 Let’s talk: sustainability Q2 2014
One-minute recap
Page 36 Let’s talk: sustainability Q2 2014
Continue the conversation
► Let’s talk: sustainability
A new point of view for ...
Page 37 Let’s talk: sustainability Q2 2014
Opinion check
Which of these topics would you like us to address
in an upcoming...
Page 38 Let’s talk: sustainability Q2 2014
Contact us
Nancy Gillis
Chris Hagler
@chrishagler
Leisha John
Ben Miller
@benle...
Page 39 Let’s talk: sustainability Q2 2014
Thanks for participating.
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Let's talk: sustainability Q2 2014 - A new point of view for business leaders

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This slide deck was designed to accompany a video webcast that included an interactive discussion by a moderator and three panelists, held on 23 April 2014

An effective corporate sustainability strategy includes staying on top of today’s trending topics. To help, we bring you this interactive series of discussions on sustainability issues.

This series is a companion to our Let’s talk: sustainability thought leadership, providing deeper insight on issues in this quarter’s publication. EY live webcasts give you the opportunity to join the conversation, ask questions, post comments and see how you compare with other participants through live polling.

This quarter, our Sustainability leaders will discuss:
• Proxy season 2014: preview of the environmental and social shareholder proposals
• Banking on the benefits of accounting for GHG emissions
• Using sustainability for competitive advantage in government procurements
• Setting credible sustainability goals that drive real business value

Feedback from our previous webcast:
“Really good, top-level summary of this emerging area."
—CFO, Healthcare

You are welcome to join the on-demand version of this interactive discussion and learn about current sustainability issues for business by going to Let's talk: sustainability Q1 2014: http://bit.ly/1geXYSI

This webcast is part of an ongoing series. Register for any webcast and you will be asked if you want to receive invitations to future webcasts.


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Let's talk: sustainability Q2 2014 - A new point of view for business leaders

  1. 1. Let’s talk: sustainability Q2 2014 A new point of view for business leaders 23 April 2014
  2. 2. Page 2 Let’s talk: sustainability Q2 2014 Disclaimer ► This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ► The views expressed by the presenters are not necessarily those of EY. ► This presentation is © 2014 EYGM Limited. All Rights Reserved. EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more of the member firms, of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
  3. 3. Page 3 Let’s talk: sustainability Q2 2014 Circular 230 disclaimer ► Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. ► These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.
  4. 4. Page 4 Let’s talk: sustainability Q2 2014 Today’s moderator Leisha John EY Americas Director of Environmental Sustainability #EYSustainabilityJoin today’s Twitter discussion:
  5. 5. Page 5 Let’s talk: sustainability Q2 2014 Let’s talk: sustainability A new point of view for business leaders Sustainability on the go Access our thought leadership anywhere with EY Insights, our new mobile app. ► Visit ey.com/us/sustainability to download the report
  6. 6. Page 6 Let’s talk: sustainability Q2 2014 Today’s presenters Nancy Gillis Ernst & Young LLP Climate Change and Sustainability Services Senior Manager Chris Hagler Ernst & Young LLP Climate Change and Sustainability Services Southeast Practice Leader Allie Rutherford Ernst & Young LLP EY Center for Board Matters Director — Corporate Governance Ben Miller Ernst & Young LLP Climate Change and Sustainability Services Senior Manager The information contained herein is a summary in nature. Viewers should consult their own professional advisors to address their individual circumstances and concerns.
  7. 7. Page 7 Let’s talk: sustainability Q2 2014 Today’s agenda ► Nine key elements of a sustainability strategy ► Proxy season 2014: preview of the environmental and social shareholder proposals ► Banking on the benefits of accounting for GHG emissions ► Using sustainability for competitive advantage in government procurements ► Setting credible sustainability goals that drive real business value Join now: #EYSustainability
  8. 8. Page 8 Let’s talk: sustainability Q2 2014 Nine key elements that frame the sustainability strategy discussion Sustainability Tax implications Climate change Beyond compliance Emissions Energy agendaInnovation Reporting Social impact Supply chain Join now: #EYSustainability
  9. 9. Page 9 Let’s talk: sustainability Q2 2014 Today’s agenda ► Nine key elements of a sustainability strategy ► Proxy season 2014: preview of the environmental and social shareholder proposals ► Banking on the benefits of accounting for GHG emissions ► Using sustainability for competitive advantage in government procurements ► Setting credible sustainability goals that drive real business value Join now: #EYSustainability
  10. 10. Page 10 Let’s talk: sustainability Q2 2014 Proxy season 2014: preview of the environmental and social shareholder proposals Sustainability Tax implications Climate change Beyond compliance Emissions Energy agendaInnovation Reporting Social impact Supply chain Beyond compliance Innovation Reporting Climate change Supply chain Social impact Emissions Join now: #EYSustainability
  11. 11. Page 11 Let’s talk: sustainability Q2 2014 Opinion check Is your company actively engaging with your investors on environmental sustainability, social topics (such as global labor) and/or supply chain topics? Select all that apply A. Yes, on environmental sustainability B. Yes, on social topics C. Yes, on supply chain D. No E. Don’t know or does not apply (EY, faculty, other)
  12. 12. Page 12 Let’s talk: sustainability Q2 2014 Environmental and social (E&S) proposals ► Dominant category of shareholder proposals ► More than half of all proposals submitted ► Leading area for proposals withdrawn prior to going to vote ► Due to successful company-investor engagement and agreement Join now: #EYSustainability
  13. 13. Page 13 Top 10 most common shareholder proposals in 2014 (publicly disclosed through March 21) 0 10 20 30 40 50 60 70 Adopt majority vote to elect directors Appoint independent board chair Limit executive compensation Eliminate classified board Increase diversity on the board Disclosure and oversight of lobbying spending Disclosure and oversight of political spending Assess and report on global labor practices/human rights Set and report on GHG emissions reduction targets Report on sustainability Environmental and labor sustainability Other proposals overlapping environmental sustainability Governance proposals
  14. 14. Page 14 Let’s talk: sustainability Q2 2014 2014 E&S shareholder proposals ► First-time or enhanced sustainability reporting ► Increased focus — supply chain and company-specific situations ► Greenhouse gas (GHG) emissions cuts ► Requests to adopt and disclose quantitative measures ► Environmental impact of a financial institution’s lending portfolio and financing activities ► Review of and reporting on global labor practices and human rights ► Risk assessments across a company’s global supply chain Join now: #EYSustainability
  15. 15. Page 15 Let’s talk: sustainability Q2 2014 Next steps ► Understand the environmental and social priorities of your investors ► Ensure there is a process in place to handle requests from shareholders on these topics ► Plan for ongoing dialogue to: ► Secure investor support ► Mitigate against receipt of future proposals ► Identify opportunities Join now: #EYSustainability
  16. 16. Page 16 Let’s talk: sustainability Q2 2014 Today’s agenda Join now: #EYSustainability ► Nine key elements of a sustainability strategy ► Proxy season 2014: preview of the environmental and social shareholder proposals ► Banking on the benefits of accounting for GHG emissions ► Using sustainability for competitive advantage in government procurements ► Setting credible sustainability goals that drive real business value
  17. 17. Page 17 Let’s talk: sustainability Q2 2014 Banking on the benefits of accounting for GHG emissions Sustainability Tax implications Climate change Beyond compliance Emissions Energy agendaInnovation Reporting Social impact Supply chain Reporting Emissions Beyond compliance Reporting Climate change Join now: #EYSustainability
  18. 18. Page 18 Let’s talk: sustainability Q2 2014 Measuring GHG emissions throughout the value chain Availability of methods to measure impact Impact Directly generated emissions Established standards exist Moderate to high Financed emissions — emissions of investment projects and loan portfolios Standards in development Potentially high Banks can reduce their direct energy use and emissions, but they may be able to have a bigger impact via their investments, loans and financial instruments.
  19. 19. Page 19 Let’s talk: sustainability Q2 2014 Response of financial institutions ► Develop and implement methods to measure both the operational and financed emissions ► Know the information — then decide how to use it ► Internal decision making ► External reporting ► Stay one step ahead ► Influential environmental groups and investors are armed with substantial information Join now: #EYSustainability
  20. 20. Page 20 Let’s talk: sustainability Q2 2014 Unlocking business value ► New business opportunities: focus on reducing GHG emissions may produce new opportunities for financial institutions ► Green bonds ► Green mortgages — financing for consumer homes ► Improved reputation ► Positions financial institution as a leader ► Demonstrates a clear commitment to strong ESG programs ► Increased transparency leads to credible measurement and reporting of sustainability efforts Join now: #EYSustainability
  21. 21. Page 21 Let’s talk: sustainability Q2 2014 What’s next ► Aligning with emerging standards for measuring GHG emissions ► World Resources Institute (WRI) working group to create Financial Sector Guidance for the Greenhouse Gas Protocol’s Corporate Value Chain (Scope 3) Accounting and Reporting Standard ► Beyond financial institutions to institutional investors ► Examine how this might be applicable to the supply chains (or value chains) of other industries Join now: #EYSustainability
  22. 22. Page 22 Let’s talk: sustainability Q2 2014 Today’s agenda Join now: #EYSustainability ► Nine key elements of a sustainability strategy ► Proxy season 2014: preview of the environmental and social shareholder proposals ► Banking on the benefits of accounting for GHG emissions ► Using sustainability for competitive advantage in government procurement ► Setting credible sustainability goals that drive real business value
  23. 23. Page 23 Let’s talk: sustainability Q2 2014 Using sustainability for competitive advantage in government procurement Sustainability Tax implications Climate change Beyond compliance Emissions Energy agendaInnovation Reporting Social impact Supply chain Reporting Innovation Join now: #EYSustainability Beyond compliance Supply chain Climate change
  24. 24. Page 24 Let’s talk: sustainability Q2 2014 Opinion check Does your company’s procurement function consider the environmental and social performance of your suppliers when making purchasing decisions? A. Yes B. No C. Don’t know or does not apply (EY, faculty, other)
  25. 25. Page 25 Let’s talk: sustainability Q2 2014 Just like companies, government agencies: ► Look for ways to reduce costs ► Need to meet requirements set by various stakeholders ► Federal Acquisition Regulation (FAR) 23.103 ► Office of Management and Budget (OMB) Sustainability and Energy Scorecard ► Think in terms of Total Cost of Ownership, i.e., add maintenance and disposal costs to the “price” If a company can demonstrate that its solution is more efficient to run and maintain, and less expensive to dispose of, those benefits equate to real cost savings for the agency. Why sustainability matters to government agencies (and other institutional purchasers)
  26. 26. Page 26 Let’s talk: sustainability Q2 2014 Making sustainability a competitive advantage in government procurement Advantage for supplier organizational sustainability ► Pass savings on to government ► Energy-efficient buildings ► Conferencing versus travel ► Package and ship efficiently ► Link your sustainability initiatives to a Strategic Sustainability Performance Plan (SSPP) ► Agencies must meet SSPP goals ► Agencies can leverage supplier initiatives ► Mitigate environmental risks that may cause supply disruptions ► Government is risk adverse Competitive advantage: highlight sustainability initiatives related to agency SSPP goals and risk concerns
  27. 27. Page 27 Let’s talk: sustainability Q2 2014 How to use sustainability for procurement competitive advantage Communicating your sustainability value effectively could make the difference between winning or losing an important contract. ► Know your sustainability benefits — company and product ► Effectively communicate them in procurements ► Link them to agency goals and risk concerns Join now: #EYSustainability
  28. 28. Page 28 Let’s talk: sustainability Q2 2014 Today’s agenda Join now: #EYSustainability ► Nine key elements of a sustainability strategy ► Proxy season 2014: preview of the environmental and social shareholder proposals ► Banking on the benefits of accounting for GHG emissions ► Using sustainability for competitive advantage in government procurements ► Setting credible sustainability goals that drive real business value
  29. 29. Page 29 Let’s talk: sustainability Q2 2014 Setting credible sustainability goals that drive real business value Sustainability Tax implications Climate change Beyond compliance Emissions Energy agendaInnovation Reporting Social impact Supply chain Reporting Beyond compliance Innovation Reporting Social impact Emissions Join now: #EYSustainability
  30. 30. Page 30 Let’s talk: sustainability Q2 2014 Opinion check Which of the following business drivers are most relevant to your sustainability goal setting? A. Brand reputation B. New revenue opportunities C. Operational/costs savings D. Social license to operate E. Risk mitigation F. Don’t know or does not apply (EY, faculty, other)
  31. 31. Page 31 Let’s talk: sustainability Q2 2014 Business value ► Environmental goals ► Many can be directly linked to driving cost savings Financial capital Dependency on natural capital Example: energy efficiency ► Social goals ► Reputational risks could be hiding in the supply chain and erode reputational capital ► Transparency with stakeholders through goal setting can build reputational capital Join now: #EYSustainability
  32. 32. Page 32 Let’s talk: sustainability Q2 2014 Business value ► Goals should: ► Be relevant to your organization’s value drivers and focused on the key resources and relationships your organization depends on for success ► Be specific, measurable and realistic Goal setting plays a crucial role in ensuring that an organization’s sustainability program is driving real business value. Join now: #EYSustainability
  33. 33. Page 33 Let’s talk: sustainability Q2 2014 Challenges to setting relevant goals ► Defining commitments in a clear manner ► Engaging top-level executives and middle management ► Determining what counts and setting priorities ► Identifying quantifiable metrics while balancing costs of reporting with usefulness of the output ► Building infrastructure to produce reliable and complete data for progress statements ► Maintaining focus on continuous improvement ► Sustainability isn’t ‘once and done’ ► Update goals and seek new sustainability opportunities Join now: #EYSustainability
  34. 34. Page 34 Let’s talk: sustainability Q2 2014 Tips for goal setting ► Assemble the right team — get buy-in from executives and frontline implementers ► Focus goals on material areas and do not over extend ► Identify instruments to measure and monitor performance before you finalize goals ► Provide relevant and meaningful context for goals that are relevant to your company’s impact to the business, the local community and the global community (science- based environmental goals) ► Be prepared for the naysayers — sustainability goals will be scrutinized, so clearly define key terms in your commitments
  35. 35. Page 35 Let’s talk: sustainability Q2 2014 One-minute recap
  36. 36. Page 36 Let’s talk: sustainability Q2 2014 Continue the conversation ► Let’s talk: sustainability A new point of view for business leaders — April 2014 ► Tomorrow’s investment rules Global survey of institutional investors on nonfinancial performance ► Let’s talk: sustainability Addressing risks, overcoming challenges and achieving results Connect with us: ► ey.com/us/sustainability ► @EYnews ► @EY_Sustainable
  37. 37. Page 37 Let’s talk: sustainability Q2 2014 Opinion check Which of these topics would you like us to address in an upcoming webcast? A. Conflict minerals reporting round-up B. Using the Environment, Health and Safety program to improve the culture of compliance C. Why carbon still matters D. Risks and opportunities in oil and gas E. Other (Use the QA feature to send your topic ideas) Select all that apply
  38. 38. Page 38 Let’s talk: sustainability Q2 2014 Contact us Nancy Gillis Chris Hagler @chrishagler Leisha John Ben Miller @benleemiller Allie Rutherford +1 703 3281493 nancy.gillis@ey.com +1 404 817 5799 chris.hagler@ey.com +1 305 415 1480 leisha.john@ey.com +1 604 891 8320 benjamin.l.miller@ca.ey.com +1 202 327 7026 allie.rutherford@ey.com
  39. 39. Page 39 Let’s talk: sustainability Q2 2014 Thanks for participating.

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