Martina Macpherson

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TBLI CONFERENCE™ EUROPE 2011- London - United Kingdom

TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing.

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  • What’s driving ESG integration?It is the financial risk and opportunity dimension but with asset managers it is also driven by client demand, particular large pension funds outside of Europe, and the pressure to compete with asset managers that are leading on ESG integration.
  • What’s driving ESG integration?It is the financial risk and opportunity dimension but with asset managers it is also driven by client demand, particular large pension funds outside of Europe, and the pressure to compete with asset managers that are leading on ESG integration.
  • MSCI ESG Research is the successor to KLD and Innovest. At MER, our goal is to change the way investors manage moneyWith one of the largest research staffs in the world, we have achieved a scale that enables us to specialize in data and analysis – and is global in scope, global in the location of our teamsMSCI is a PRI signatory, and is directly engaged in the benchmarking project and fixed income workstreams
  • Martina Macpherson

    1. 1. Integrated ReportingMartina MacphersonVP, Marketing and Commercial Relationships,MSCI ESG Research and IndicesTBLI Europe Conference, November 2011 msci.com msci.com
    2. 2. Integrated Reporting – TBLI Conference Discussion “A key challenge for leadership is to make sustainability issues mainstream. Strategy, risk, performance and sustainability have become inseparable.” King Code of Governance for South Africa, 2009 Martina Macpherson (Moderator), Vice President Marketing & Commercial Relationships Overview & Q&A - MSCI ESG Research and Indices - UK Steve Waygood (Speaker 1), Head of “Towards a Convention on Corporate Sustainability Research and Engagement - Aviva Investors Global Services Limited – UK Sustainability Reporting at Rio+20” Estelle Mironesco (Speaker 2), Director of Vigeo “The Benefits of Integrated Reporting Rating - Vigeo Group – France for Analysts” Daniela Carosio (Speaker 3), Senior ESG “Assessing Integrated Reporting as a Reseacher - ECPI Group – Italy Driver of Value” msci.com 2
    3. 3. Integrated Reporting – Understanding the Challenge  Integrated reporting refers to the integrated representation of a company’s performance in terms of both financial and non-financial results. Definition  Integrated Reporting provides greater context for performance data, clarifies how sustainability fits into operations or a business, and may help embed sustainability into company decision making.  Corporate reporting on financial and non-financial information has grown as SRI / ESG has grown Integration faster than the investment industry overall.  ESG Integration into investment processes is becoming mainstream. – Phase 1  Companies that produce integrated reports include BASF, Philips, Novo Nordisk, United Technologies Corporation (UTC) and American Electric Power (AEP).  EC released new European strategy on CSR to define CSR as ‘the new responsibility of enterprises for their impact on society’ and to outline an ‘agenda of actions 2011-14 ‘ (25.10.2011)  FAC, GRI, and The Princes Accounting for Sustainability Project: Intl. Integrated Reporting Frameworks Committee (IIRC) for global integrated reporting standards (2011) = HSBC, BBVA, Coca Cola, – Phase 2 Microsoft, AEGON, Danone.  Helping multinational companies operate responsibly: OECD-GRI partnership (2010).  The Prince of Wales Accounting for Sustainability Project: Connected Reporting Framework (2007) = Aviva, BT and HSBC. msci.com 3
    4. 4. Integrated Reporting – Announcements msci.com 4
    5. 5. ESG Research, Analysis, Ratings and Indices - Introducing MSCI Provides products and services to MSCI ESG asset managers Research*: and asset owners MSCI is the only Global staff of MSCI Inc. is a A new business worldwide: major index 130+, including signatory to the unit established - ESG risk ratings provider with in- more than 85 Principles forin 2010 based on house ESG research and data - Impact analysis Responsible the legacies of research and analysts. Investment. KLD (1988) and - Screening data expertise. Innovest (1998). - Custom research - Indices MSCI ESG Research and Indices - A Holistic Offering*Certain products and services of MSCI ESG Research, including products and services utilized in MSCI ESG Indices, are provided by Institutional Shareholder Services Inc. ("ISS") and/orKLD Research & Analytics, Inc. (“KLD”), which are both indirect wholly-owned subsidiaries of MSCI. msci.com 5
    6. 6. For further information Americas + 1.212.804.5299 Asia Pacific + 612.9033.9339 Europe, Middle East and Africa + 44.207.618.2510 esgclientservice@msci.com www.msci.com/esg msci.com msci.com 6
    7. 7. Notice and Disclaimer  This document and all of the information contained in it, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of MSCl Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”) and is provided for informational purposes only. The Information may not be reproduced or redisseminated in whole or in part without prior written permission from MSCI.  The Information may not be used to create derivative works or to verify or correct other data or information. For example (but without limitation), the Information may not be used to create indices, databases, risk models, analytics, software, or in connection with the issuing, offering, sponsoring, managing or marketing of any securities, portfolios, financial products or other investment vehicles utilizing or based on, linked to, tracking or otherwise derived from the Information or any other MSCI data, information, products or services.  The user of the Information assumes the entire risk of any use it may make or permit to be made of the Information. NONE OF THE INFORMATION PROVIDERS MAKES ANY EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE INFORMATION (OR THE RESULTS TO BE OBTAINED BY THE USE THEREOF), AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH INFORMATION PROVIDER EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF ORIGINALITY, ACCURACY, TIMELINESS, NON-INFRINGEMENT, COMPLETENESS, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE) WITH RESPECT TO ANY OF THE INFORMATION.  Without limiting any of the foregoing and to the maximum extent permitted by applicable law, in no event shall any Information Provider have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits) or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited, including without limitation (as applicable), any liability for death or personal injury to the extent that such injury results from the negligence or wilful default of itself, its servants, agents or sub-contractors.  Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results.  None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), any security, financial product or other investment vehicle or any trading strategy.  MSCI’s indirect wholly-owned subsidiary Institutional Shareholder Services, Inc. (“ISS”) is a Registered Investment Adviser under the Investment Advisers Act of 1940. Except with respect to any applicable products or services from ISS (including applicable products or services from MSCI ESG Research Information, which are provided by ISS), none of MSCI’s products or services recommends, endorses, approves or otherwise expresses any opinion regarding any issuer, securities, financial products or instruments or trading strategies and none of MSCI’s products or services is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.  The MSCI ESG Indices use ratings and other data, analysis and information from MSCI ESG Research. MSCI ESG Research is produced by ISS or its subsidiaries. Issuers mentioned or included in any MSCI ESG Research materials may be a client of MSCI, ISS, or another MSCI subsidiary, or the parent of, or affiliated with, a client of MSCI, ISS, or another MSCI subsidiary, including ISS Corporate Services, Inc., which provides tools and services to issuers. MSCI ESG Research materials, including materials utilized in any MSCI ESG Indices or other products, have not been submitted to, nor received approval from, the United States Securities and Exchange Commission or any other regulatory body.  Any use of or access to products, services or information of MSCI requires a license from MSCI. MSCI, Barra, RiskMetrics, ISS, CFRA, FEA, and other MSCI brands and product names are the trademarks, service marks, or registered trademarks or service marks of MSCI or its subsidiaries in the United States and other jurisdictions. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and Standard & Poor’s. “Global Industry Classification Standard (GICS)” is a service mark of MSCI and Standard & Poor’s. © 2011 MSCI Inc. All rights reserved. RV May 2011 msci.com msci.com 7
    8. 8. Appendix - Aviva Earth Summit Convention Initiative Speaker 1 - Steve Waygood (Speaker 1), Head of Sustainability Research and Engagement - Aviva Investors Global Services Limited – UK: “Towards a Convention on Corporate Sustainability Reporting at Rio+20” Aviva has convened a Corporate Sustainability Reporting Coalition of more than 50 like minded organizations, including institutional investors managing approximately $2 trillion of funds under management as well as the Association of Chartered and Certified Accountants, EIRIS, FTSE Group, and the Global Reporting Initiative. They have formal support from the PRI Advisory Council and the CDP and are working with UNCTAD, UNEP, UN Stakeholder Forum, and UN Global Compact. This coalition calls on United Nations member-states to adopt at the 2012 Earth Summit a binding international commitment to develop national regulations which mandate the integration of material sustainability issues in the Annual Report & Accounts; and which provides effective mechanisms for investors to hold companies to account on the quality of their disclosures, including for instance through an advisory vote at the AGM. Aviva believe that an international policy framework should adhere to four key principles: § 1. Transparency - Companies should be required to integrate material sustainability issues within their report and accounts – or to explain to the market why they cannot do this § 2. Accountability – There should be effective mechanisms for investors to hold companies to account on the quality of their disclosures, including for instance through an advisory vote at the AGM. § 3. Responsibility - Board duties should explicitly include setting the company’s values and standards and ensuring that its obligations to its shareholders and other stakeholders are understood and met. § 4. Incentives - Companies should state in remuneration reports whether the remuneration committee consider ESG factors which are of material relevance to the sustainability and long term interests of the company when setting remuneration of executive directors; aligning remuneration with the interests of shareholders and other key stakeholders, including customers and employees. Corporate boards should be required to consider the future sustainability of the firm that they govern. The sustainability strategy should include performance targets; recent trend data and some level of external assurance. We would expect it to consider factors such as: use of natural resources; levels of workforce training; impact on local communities; the business model and the regulatory context. Companies will also have the option of publishing the explanation as to why the board considers such a strategy to be unnecessary We would also like to formally invite you all to sign on to Aviva’s initiative! msci.com 8
    9. 9. Appendix – Speaker Topics Estelle Mironesco (Speaker 2), Director of Vigeo Rating - Vigeo Group – France: “The Benefits of Integrated Reporting for Analysts”  Integrated Reporting – Integrated Comms  CSR - Risks and Opps  CSR – a PR exercise?  Integrated ESG analysis – an outline for investment analysts Daniela Carosio (Speaker 3), Senior ESG Reseacher - ECPI Group – Italy: “Assessing Integrated Reporting as a Driver of Value”  Integrated Reporting – Company Value  Profitability - Sustainability  Materiality of Sustainability  Sustainability analysis – comparability of data  ESG Integration – Integrated Reporting, processes and key performance indicators msci.com 9
    10. 10. Q&A - AVIVA How is the promotion of sustainability reporting relevant to shareholder value creation? Are you setting out a standard that all companies must adopt? Why have you focused on asking boards to publish their thinking rather than for example proposing a sustainability reporting regulation? Won’t producing these reports and presenting them to the AGM cost companies an excessive amount of time and money? Could a principle-based international reference framework for reporting on Sustainability improve the comparability and relevance of CSR reporting? msci.com 10
    11. 11. Q&A - ALL Don’t most listed companies now produce some kind of sustainability report and strategy? What are the real benefits? Is there any evidence that non-financial reporting helps companies to better integrate social and environmental issues into business operations and strategies? We know that many investors are disengaged in the ownership process. Why do you think investors will engage with companies on CSR issues? What would be the consequences of the adoption of more detailed reporting requirements (i.e. Key Performance Indicators)? What level of detail would be desirable and what could be a possible method in developing indicators? What role do you think better disclosure of non-financial information could play in building higher level of trust in business and increasing the accountability of companies? msci.com 11

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