This document discusses the investor perspective on sustainability. It notes that investors are increasingly interested in sustainability issues as drivers of market value have changed to focus more on innovation, human capital, risk management, and other intangible factors. More shareholder proposals related to environmental and social issues are reaching threshold levels of support. Stock exchanges are also encouraging or requiring ESG disclosure. Emerging reporting standards like SASB, GRI, and IIRC are focusing on materiality. Most companies now publish sustainability reports, with 72% of S&P 500 companies publishing reports in 2013.

1. The Investor’s Perspective of Sustainability
Chris Hagler
Southeast Practice Leader, Climate Change & Sustainability Services
Ernst & Young

2. SPARK15 Conference
The investor perspective
November 10, 2015

3. Page 3 The investor perspective │ Spark15, November 2015
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 panelists are not necessarily those of Ernst & Young LLP.

4. Page 4 The investor perspective │ Spark15, November 2015
How companies are reacting2.
Why investors care and how we know they do
Emerging standards3.
4.
What’s next?5.
What’s in store
1.
So what?

5. Page 5 The investor perspective │ Spark15, November 2015Page 5 The investor perspective │ Spark15, November 2015
1. Why investors care and how we know they do

6. Page 6 The investor perspective │ Spark15, November 2015
The drivers of market value have changed
Investors care about what drives market value
► Innovation and intellectual capital
► Human capital
► Risk management
► Brand management
► Carbon exposure, etc.
Market value 100%
Book value in % of market value
Physical and financial assets
Other factors
Source: Intangible Asset Market Value Study,” Ocean Tomo, 2015.
*January 1, 2015
Ocean Tomo study – components of S&P 500 market value
0%
20%
40%
60%
80%
100%
1975 1985 1995 2005 2015*

7. Page 7 The investor perspective │ Spark15, November 2015
Support for shareholder E+S proposals by threshold in the past six years
2008 2009 2010 2011 2012 2013
> 30% support 15% 18% 27% 31% 23% 30%
> 20% support 30% 38% 44% 52% 45% 54%
> 10% support 40% 48% 52% 59% 62% 65%
Increasing shareholder proposals focusing on ESG – many
focused on transparency
► Proposals focusing on environmental and social (E+S) topics
account for 60% of shareholder proposals submitted as a
broad category compared to 45% in 2013.1
► A growing number of these proposals are reaching the
threshold level of 30% support, the level at which many
boards take note.
Source: Taking flight: environmental sustainability proposals gain more attention, Ernst & Young LLP, 2013.
1Other major proposal categories are board-focused, compensation and anti-takeover/strategic proposals.
2014 top E+S proposal topic areas

8. Page 8 The investor perspective │ Spark15, November 2015
Question

9. Page 9 The investor perspective │ Spark15, November 2015
The number of companies that file an
integrated report
A reasonable water use ratio for a
packaging company
The number of countries whose
governments or exchanges require or highly
recommend sustainability reporting
The percentage of water to bourbon in a
mint julep
Answer
56is …
H2O

10. Page 10 The investor perspective │ Spark15, November 2015
Stock exchanges, as representatives of investors, are driving
increased transparency
The governments or stock exchanges of 56 countries have required or encouraged some level of sustainability reporting:
Australia France Malaysia South Africa
Argentina Germany Malta South Korea
Austria Greece Mexico Spain
Bangladesh Hong Kong Netherlands Sweden
Belgium Hungary Nigeria Switzerland
Brazil Iceland Norway Taiwan
Bulgaria India Pakistan Thailand
Canada Indonesia Philippines Turkey
China Ireland Poland UK
Croatia Italy Portugal US
Czech Republic Ivory Coast Republic of Cyprus Zimbabwe
Denmark Japan Romania
Ecuador Latvia Russia
Estonia Lithuania Singapore
Finland Luxembourg Slovakia
Source: “Corporate social responsibility disclosure efforts by national governments and stock exchanges,” Harvard Kennedy School’s Hauser Institute for Civil Society, http://hausercenter.org/iri/wp-
content/uploads/2015/04/CSR-3-27-15.pdf, March 2015; “Sustainability reporting policies worldwide — today’s best practice, tomorrow’s trends,” Global Reporting Initiative,
https://www.globalreporting.org/resourcelibrary/carrots-and-sticks.pdf, 2013.

11. Page 11 The investor perspective │ Spark15, November 2015
Stock exchanges are encouraging or requiring ESG disclosure:
INCR proposal
► Governance and ethical oversight
► Environmental impact
► Government relations and political
involvement
► Climate change
► Diversity
► Employee relations
► Human rights
► Product and service impact and integrity
► Supply chain and subcontracting
► Communities and community relations
► ESG materiality assessment in financial
disclosure
► ESG issues disclosure
► ESG disclosure index link to Global
Reporting Initiative (GRI)
► Exchange monitoring of overall level of
disclosure and quality
The Investor Network on Climate Risk (INCR) recommended a listing
standard on corporate sustainability disclosure to include:
Source: “Investor Network on Climate Risk,” INCR, http://www.ceres.org/investor-network/incr/incr, accessed 2015.

12. Page 12 The investor perspective │ Spark15, November 2015
Question

13. Page 13 The investor perspective │ Spark15, November 2015
Answer
61is …
The number of NGOs that are focused on
carbon reduction
The current temperature outside
The % of investors that consider
sustainability information relevant to all
sectors
The % of companies that say that their
shareholders are the primary audience for
their sustainability report


14. Page 14 The investor perspective │ Spark15, November 2015
Increasing interest from investors on all fronts
Percentage of respondents who …
Consider corporate social responsibility or sustainability reports
essential or important when making investment decisions
Believe companies are motivated to report nonfinancial
information to demonstrate management risk
Consider mandatory board oversight of nonfinancial
performance reporting essential or important
Consider nonfinancial data relevant to all sectors
Use a structured, methodical evaluation of environmental and
social impact information
Consider integrated reports essential or important when
making investment decisions
2015 20142015 2014
Source: “Non-Financial Performance Reporting and Investment Decision Making,” prepared for EY by Institutional Investor Research, 10 February 2015. For more information see EY.com’s
Climate Change and Sustainability Services page.

15. Page 15 The investor perspective │ Spark15, November 2015
Number of customers using ESG data
76% increase from 2013 to 2014
Investors are pulling information from Bloomberg when making
decisions
“Bloomberg collects ESG data from published company
material and integrates it into the Equities, Bloomberg
Industries and Fixed Income platforms. Bloomberg covers
more than 10,000 companies with ESG data and more
than 16,000 companies with executive compensation data in
52 countries. ESG data is fully integrated with all of
Bloomberg’s analytics.”
“Customers using ESG data increased 76% in 2014,” Bloomberg, http://www.bloomberg.com/bcause/customers-
using-esg-data-increased-76-in-2014, accessed 2015.
2012
7,779
2011
5,747
2010
4,704
2009
2,415
Unique users
2013
9,669
ESG data distribution – user type
2014
17,010
32%
26%
5%
4%
4%
4%
2% 2% 2% Analyst
Portfolio
Manager
Investor
Relations
Portfolio manager
Analyst
Trader
Investor relations
Risk/mid/back office
Salesperson

16. Page 16 The investor perspective │ Spark15, November 2015
Investors are including a more complete understanding of
performance
How do you and your investment team evaluate nonfinancial disclosures that relate to the environmental and social
aspects of a company’s performance?
Source: “Non-Financial Performance Reporting and Investment Decision Making,” prepared for EY by Institutional Investor Research, 10 February 2015. For more information see EY.com’s Climate
Change and Sustainability Services page.
We usually conduct a
structured, methodical
evaluation of environmental
and social impact statements
and disclosures.
We usually rely on guidelines or
information from third parties,
such as the UN Principles for
Responsible Investments or
other relevant guidelines.
We usually evaluate
environmental and social impact
statements informally.
We conduct little or no review.
37.0%
19.6%
15.6%
12.9%
26.5%
31.9%
20.9%
35.6%
2014 2015

17. Page 17 The investor perspective │ Spark15, November 2015
Investment decisions change with a more complete picture of
performance
— Analyst with $425 billion asset
management firm
How would the following disclosures about a prospective investment affect your investment decision?
Reconsider investment
Rule out investment immediately
No change in investment plan
Source: “Non-Financial Performance Reporting and Investment Decision Making,” prepared for EY by Institutional Investor Research, 10 February 2015.
For more information see EY.com’s Climate Change and Sustainability Services page.
Risks in supply
chain not addressed
Risk or history of
poor environmental
performance
Human rights risk
from operations
Risk from resource
scarcity – e.g., water
No link to financial
performance
Risk from
climate change
2015 2015
9.1%
15.4%
72.6%
12.0%
9.1%
75.6%
15.3%
19.1%
63.2%
17.7%
13.5%
68.6%
17.9%
15.5%
57.0%
27.5%
8.7%
61.5%
29.8%

18. Page 18 The investor perspective │ Spark15, November 2015
Investors vote with their dollars
Sustainable, responsible and impact investing trends
$1.72 trillion in US-domiciled assets
at the start of 2014 held by
202 institutional investors or money
managers that filed shareholder
resolutions on ESG issues from 2012
through 2014
$3.74
$6.57
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
2012 2014
After eliminating double-counting for
assets involved in both strategies, the
overall total of socially responsible
investment (SRI) assets was $6.57
trillion.
$6.20 trillion in US-domiciled
assets as of January 1, 2014, held
by 480 institutional investors,
308 money managers and
880 community investment
institutions
Source: "The Report on US Sustainable, Responsible and Impact Investing Trends," Forum for Sustainable and Responsible Investment (US SIF),
http://www.ussif.org/blog_home.asp?Display=55, 2014.
Trillions

19. Page 19 The investor perspective │ Spark15, November 2015Page 19 The investor perspective │ Spark15, November 2015
2. How companies are reacting
Investors’ desire for more transparency

20. Page 20 The investor perspective │ Spark15, November 2015
A wide variety of stakeholders are asking for increased
transparency
SRI
groups
Certifications
GRI
Carbon
Disclosure
Project
(CDP)
Expectations
for more
sustainable
products
SEC –
disclosure
guidance
FTC – green
guides
Corporate
initiatives
Human
Rights Watch
EPA – GHG
reporting
Government
NGOs
Investors
Recruiting
and retention
Industry
associations
(ACC, NAIC,
ICMM, AAFA)
Employee
engagement
programs
EmployeesSupply chain
and industry
Customers
Communities
Permitting or
expansion
challenges
“License to
operate”
Shareholder
resolutions
Customer
surveys/
questionnaires
Increasing
number of climate
change and
sustainability
lawsuits
International Integrated
Reporting Council (IIRC) and
Sustainability Accounting
Standards Board (SASB)

21. Page 21 The investor perspective │ Spark15, November 2015
Question

22. Page 22 The investor perspective │ Spark15, November 2015
The age of my youngest child
The number of NGOs that are focused
on carbon
The current temperature outside
The % of companies that say that their
shareholders are the primary audience for
their sustainability report
Answer
15is …


23. Page 23 The investor perspective │ Spark15, November 2015
3%
6%
7%
7%
15%
22%
37%
Suppliers
Analysts
Policymakers
NGOs
Shareholders
Employees
Customers
Who do you perceive to be the most important audiences for
your sustainability report?
Rank the top three stakeholder groups in order of importance in driving your
sustainability initiatives:
(weighted average)
Source: Six trends in corporate sustainability, EY, 2013.

24. Page 24 The investor perspective │ Spark15, November 2015Page 24Page 24 The investor perspective │ Spark15, November 2015
3. Emerging standards

25. Page 25 The investor perspective │ Spark15, November 2015
Legend
Sustainability reporting standards and frameworks
Key differences: geography • stakeholders • scope
GRI: Global Reporting Initiative
SASB: Sustainability Accounting Standards Board
IIRC: International Integrated Reporting Council
CDP: formerly Carbon Disclosure Project
Emerging standards
Global reporting standard designed to provide organizations
guidance on reporting non-financial information to a broad group of
stakeholders
Sector- and industry-specific sustainability disclosure standards for
reporting material non-financial information, encouraging
disclosure in 10K filings with the Securities and Exchange
Commission (SEC)
A reporting standard designed to demonstrate the linkages
between an organization’s strategy, governance and financial
performance and the social, environmental and economic context
within which it operates
Investor and customer requests drive reporting on climate, water,
supply chain and forest
Stakeholders

26. Page 26 The investor perspective │ Spark15, November 2015
Materiality is the common thread among reporting frameworks
Framework Definition
SASB SASB adheres to the US Supreme Court definition
of materiality, defined as “presented a substantial
likelihood that the disclosure of the omitted fact
would have been viewed as having significantly
altered the ‘total mix’ of information made available.”
GRI G4 Aspects that reflect the organization’s significant
economic, environmental, or social impacts [in
terms of whether they positively or negatively
influence the organization’s ability to deliver its
vision and strategy], and substantially influence the
assessments and decisions of stakeholders.
IIRC Aspects that are material to assessing the
organization’s ability to create value [for the
providers of financial capital] in the short, medium
and long term.

27. Page 27 The investor perspective │ Spark15, November 2015
Company-wide materiality matrix
Example 1:
Management
would
determine line
placement in
the materiality
matrix.
Likeliness to occur
Low
Medium
High
Magnitude of effect
Low
Medium
Low High
LowHigh
Financial
performance
Innovation
Materials and
scarcity of resources
Energy consumption
Water consumption
Biodiversity
Emissions and
effluents
Diversity and
inclusion Labor relations
Health and safety
Training and
development
Employee turnover
Human rights
Customer health
and safety
Strategic giving
Local development
(poverty reduction)
Product safety
Product labeling and
packaging
Product/service
transport
Brand loyalty
Governance and
ethics
Environmental
compliance
Influenceonstakeholders’assessmentsand
decisions
Impact on organization

28. Page 28 The investor perspective │ Spark15, November 2015
Company-wide materiality matrix
Impact on organization
Influenceofstakeholders’assessmentsanddecisions
Magnitude of effect
Low
Medium
High
Diversity and
inclusion
Water consumption
Governance
Financial performance
Brand loyalty
Environmental
compliance
Human rights
Product safety
Customer health and
safety
Transportation
Product and packaging
labeling
Strategic giving
Local development
Biodiversity Employee turnover Training
Health and safety
Energy consumption
Materials and scarcity
of resources
Emissions
Example 2:
Likeliness to occur
Low
Medium
High
Management would determine the grids in the materiality matrix.

29. Page 29 The investor perspective │ Spark15, November 2015
Question

30. Page 30 The investor perspective │ Spark15, November 2015
A reasonable number of lost days for a
manufacturing company
My age in dog years
The percentage of global 50 that has a
focus on water reduction and
replenishment
The percentage of S&P 500 companies that
published a sustainability report in 2013
Answer
72is …

31. Page 31 The investor perspective │ Spark15, November 2015
Current reporting trends
“Trends in External Assurance of Sustainability Reports: Update on the USA,” GRI, July 2014.
90% of the world’s largest 250 companies issued a
corporate responsibility report
82% of which refer to the GRI guidelines
10% of the world’s largest 250 companies did not issue a
report
0% 50% 100%
S&P 500 companies that published a
sustainability report
2011
2013
US-based companies that published a third-
party assured, GRI-based sustainability report
0% 5% 10% 15% 20%
2013
2011

32. Page 32 The investor perspective │ Spark15, November 2015Page 32 The investor perspective │ Spark15 November 2015
4. So what?

33. Page 33 The investor perspective │ Spark15, November 2015
Why this matters to you?
The whole picture

34. Page 34 The investor perspective │ Spark15, November 2015Page 34Page 34 The investor perspective │ Spark15, November 2015
5. What’s next?

35. Page 35 The investor perspective │ Spark15, November 2015
Where we see this going
Need for transparency on ESG issues will only
increase
More demand from global stock exchanges,
investors and regulators
Better understanding of how environmental and
social issues impact the economic performance of
an organization and how they intersect
More use of non-financial information in business
and investment decision-making
– Head of sustainability research at a UK
asset management firm, EY’s Tomorrow’s
Investment Rules 2.0 report

36. Page 36 The investor perspective │ Spark15, November 2015
Continue the research
A new point of view for business leaders
ey.com/us/sustainability

37. Page 37 The investor perspective │ Spark15, November 2015
Continue the conversation
Chris Hagler
Southeast Region Leader,
Climate Change and Sustainability Services
Atlanta, GA
+1 404 817 5799
chris.hagler@ey.com

38. EY | Assurance | Tax | Transactions | Advisory
About EY
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.
Ernst & Young LLP is a client-serving member firm of
Ernst & Young Global Limited operating in the US.
© 2015 Ernst & Young LLP.
All Rights Reserved.
1510-1721157
ED None
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.
ey.com