Sustainable Value In Automobile Production  An analysis of the sustainability performance of automobile manufacturers worl...
Outline <ul><ul><li>Introduction to the Sustainable Value approach </li></ul></ul><ul><ul><ul><ul><li>Rationale </li></ul>...
Sustainable Value approach in a nutshell <ul><li>Sustainable Value </li></ul><ul><ul><li>has been developed by Prof Frank ...
Financial market perspective versus Sustainability perspective <ul><li>Financial markets only focus on economic capital. <...
When are resources used in a value-creating way? <ul><li>In general, value is created whenever the return exceeds costs: <...
Easy in theory – difficult in practice © Hahn, Figge & Barkemeyer 2008 - > 0 Challenge: We need to express this in the sam...
The Value-Oriented Approach <ul><li>How much return is created? </li></ul><ul><ul><li>How much € return is created per ton...
Assessing Economic Performance... © Hahn, Figge & Barkemeyer 2008 Sources: Annual Report BMW Group 2005, Annual Reports of...
…  and Environmental Performance, analogously.  © Hahn, Figge & Barkemeyer 2008 Sources: Annual Report BMW Group 2005, Sus...
The Assessment in 5 Steps:  The BMW Case © Hahn, Figge & Barkemeyer 2008
Scope of the Survey (i) <ul><li>Car manufacturers: BMW Group, Daihatsu, DaimlerChrysler, Fiat Auto, Ford, GM, Honda, Hyund...
Scope of the Survey (ii) <ul><li>Operating profit (EBIT) from ordinary activities as the return figure.  </li></ul><ul><li...
Explanatory power of the absolute Sustainable Value  <ul><li>A company creates Sustainable Value whenever it uses its reso...
Sustainable Value of Car Manufacturers (in thousand €) © Hahn, Figge & Barkemeyer 2008
Sustainable Value of Car Manufacturers © Hahn, Figge & Barkemeyer 2008
Sustainable Value and Company Size <ul><li>The absolute Sustainable Value shows the amount of value that has been created ...
Sustainable Value per Sales:  Sustainable Value Margin © Hahn, Figge & Barkemeyer 2008
Sustainable Value Margin Trends: Europe © Hahn, Figge & Barkemeyer 2008
Sustainable Value Margin Trends: Asia © Hahn, Figge & Barkemeyer 2008
Sustainable Value Margin Trends: North America © Hahn, Figge & Barkemeyer 2008
Ranking: Sustainable Value Margin © Hahn, Figge & Barkemeyer 2008
Sustainable Value Margin: PSA versus Renault © Hahn, Figge & Barkemeyer 2008
PSA‘s Sustainable Value 1999-2005 (Million €) © Hahn, Figge & Barkemeyer 2008
Renault‘s Sustainable Value 1999-2005 (Million €) © Hahn, Figge & Barkemeyer 2008
Resource specific Ranking  Sustainable Value Margin 2005 © Hahn, Figge & Barkemeyer 2008
Limits and Outlook <ul><li>Life cycle issues  </li></ul><ul><ul><li>At this stage, Sustainable Value does not cover resour...
Data Collection and Verification:  An Example of Ford <ul><li>There is less mineral waste worldwide than in North America!...
Data Collection and Verification: Sometimes it’s just hard to believe…  © Hahn, Figge & Barkemeyer 2008 Mitsubishi Motors ...
Value of Sustainable Value  <ul><li>Sustainable Value applies the logic of investment performance assessment to environmen...
More information on the internet: <ul><li>The study and more information on the Sustainable Value approach are freely avai...
www.sustainablevaluecalculator.com © Hahn, Figge & Barkemeyer 2008
Contact information  © Hahn, Figge & Barkemeyer 2008 Dr Tobias Hahn Associate Professor of Corporate Sustainability, CSR a...
<ul><li>Thank you very much! </li></ul>© Hahn, Figge & Barkemeyer 2008
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Sustainable Value In Automobile Production. An analysis of the sustainability performance of automobile manufacturers worldwide.

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A presentation by Ralf Barkemeyerat TBLI CONFERENCE EUROPE 2008.

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  • Sustainable Value In Automobile Production. An analysis of the sustainability performance of automobile manufacturers worldwide.

    1. 1. Sustainable Value In Automobile Production An analysis of the sustainability performance of automobile manufacturers worldwide Dr Tobias Hahn Euromed Management School , Marseille (F) Ralf Barkemeyer, Prof Frank Figge Queen’s University Management School, Belfast (UK) TBLI Conference Europe 2008, Amsterdam, 12-14 November 2008
    2. 2. Outline <ul><ul><li>Introduction to the Sustainable Value approach </li></ul></ul><ul><ul><ul><ul><li>Rationale </li></ul></ul></ul></ul><ul><ul><ul><ul><li>How to calculate Sustainable Value </li></ul></ul></ul></ul><ul><ul><li>Application to the car manufacturing sector worldwide </li></ul></ul><ul><ul><ul><ul><li>Survey design </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Some key results </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Limitations & outlook </li></ul></ul></ul></ul>© Hahn, Figge & Barkemeyer 2008
    3. 3. Sustainable Value approach in a nutshell <ul><li>Sustainable Value </li></ul><ul><ul><li>has been developed by Prof Frank Figge (Queen’s University Management School, Belfast/UK) and Dr Tobias Hahn (Euromed Management School Marseille/France). </li></ul></ul><ul><ul><li>is the first value-oriented approach to assess corporate sustainability performance. </li></ul></ul><ul><ul><li>assesses environmental and social resources analogously to the way economic resources are valued using opportunity cost. </li></ul></ul><ul><ul><li>expresses the sustainable performance of a company in monetary terms (like e.g. in €). </li></ul></ul><ul><ul><li>shows which companies use their economic, environmental and social resources in a value-creating way. </li></ul></ul>© Hahn, Figge & Barkemeyer 2008
    4. 4. Financial market perspective versus Sustainability perspective <ul><li>Financial markets only focus on economic capital. </li></ul><ul><li>Objective: above average (risk-adjusted) return on capital. </li></ul><ul><li>This falls short of the sustainability concept </li></ul><ul><li>Companies not only use economic capital but also environmental and social resources. </li></ul><ul><li>Without environmental and social resources there is no return. </li></ul><ul><li>From the viewpoint of sustainability focussing only on return on capital is insufficient. </li></ul><ul><li> How can we determine if a company has created value with its economic, environmental and social resources? </li></ul>© Hahn, Figge & Barkemeyer 2008
    5. 5. When are resources used in a value-creating way? <ul><li>In general, value is created whenever the return exceeds costs: </li></ul><ul><li>Value = Return – Costs </li></ul><ul><li>This rule is fundamental to any economic assessment of corporate performance. </li></ul><ul><li>Sustainable Value extends this basic rule to environmental and social resources. </li></ul>© Hahn, Figge & Barkemeyer 2008
    6. 6. Easy in theory – difficult in practice © Hahn, Figge & Barkemeyer 2008 - > 0 Challenge: We need to express this in the same unit!
    7. 7. The Value-Oriented Approach <ul><li>How much return is created? </li></ul><ul><ul><li>How much € return is created per ton of CO 2 ? </li></ul></ul><ul><ul><li>How much € return is created per ton of VOC? </li></ul></ul><ul><li>Compare the return of alternative uses (opportunity costs) </li></ul><ul><ul><li>When used in another place – how much more return is created (opportunity cost)? </li></ul></ul><ul><ul><li>Value is created only if the return exceeds the opportunity costs. </li></ul></ul>© Hahn, Figge & Barkemeyer 2008
    8. 8. Assessing Economic Performance... © Hahn, Figge & Barkemeyer 2008 Sources: Annual Report BMW Group 2005, Annual Reports of other car manufacturers, own calculations.
    9. 9. … and Environmental Performance, analogously. © Hahn, Figge & Barkemeyer 2008 Sources: Annual Report BMW Group 2005, Sustainability Report BMW Group 2007/2008, Annual and Sustainability/Environmental Reports of other car manufacturers, own calculations.
    10. 10. The Assessment in 5 Steps: The BMW Case © Hahn, Figge & Barkemeyer 2008
    11. 11. Scope of the Survey (i) <ul><li>Car manufacturers: BMW Group, Daihatsu, DaimlerChrysler, Fiat Auto, Ford, GM, Honda, Hyundai, Isuzu, Mitsubishi, Nissan, PSA, Renault, Suzuki, Toyota, Volkswagen. </li></ul><ul><li>Indicators: </li></ul>© Hahn, Figge & Barkemeyer 2008
    12. 12. Scope of the Survey (ii) <ul><li>Operating profit (EBIT) from ordinary activities as the return figure. </li></ul><ul><li>Timeframe: 1999-2005 </li></ul><ul><li>Average efficiency of the resource use of the car manufacturers used as benchmark. </li></ul><ul><li>The assessment is based on the environmental, social, sustainability and annual reports of the car manufacturers. </li></ul><ul><li>The research project has been supported by BMW Group. </li></ul>© Hahn, Figge & Barkemeyer 2008
    13. 13. Explanatory power of the absolute Sustainable Value <ul><li>A company creates Sustainable Value whenever it uses its resources more efficiently than a benchmark. </li></ul><ul><li>A positive Sustainable Value shows which companies use their economic, environmental, and social resources more efficiently than the sector on average. </li></ul><ul><li>A positive Sustainable Value shows the excess profit that is created because the resources have been used by a car manufacturer instead of by the sector on average. </li></ul><ul><li>Sustainable Value provides a monetary assessment of the sustainable out- or under-performance of a company. </li></ul>© Hahn, Figge & Barkemeyer 2008
    14. 14. Sustainable Value of Car Manufacturers (in thousand €) © Hahn, Figge & Barkemeyer 2008
    15. 15. Sustainable Value of Car Manufacturers © Hahn, Figge & Barkemeyer 2008
    16. 16. Sustainable Value and Company Size <ul><li>The absolute Sustainable Value shows the amount of value that has been created by the use of the set of environmental, social and economic resources by a company in comparison to the car manufacturing sector on average. </li></ul><ul><li>Bigger companies tend to produce higher Sustainable Value indicators (positive as well as negative) as they produce more. </li></ul><ul><li>To correct for firm size, Sustainable Value can be divided by sales (Sustainable Value Margin). </li></ul><ul><li>The Sustainable Value Margin expresses Sustainable Value created by a company as the percentage of the sales of a company. </li></ul>© Hahn, Figge & Barkemeyer 2008
    17. 17. Sustainable Value per Sales: Sustainable Value Margin © Hahn, Figge & Barkemeyer 2008
    18. 18. Sustainable Value Margin Trends: Europe © Hahn, Figge & Barkemeyer 2008
    19. 19. Sustainable Value Margin Trends: Asia © Hahn, Figge & Barkemeyer 2008
    20. 20. Sustainable Value Margin Trends: North America © Hahn, Figge & Barkemeyer 2008
    21. 21. Ranking: Sustainable Value Margin © Hahn, Figge & Barkemeyer 2008
    22. 22. Sustainable Value Margin: PSA versus Renault © Hahn, Figge & Barkemeyer 2008
    23. 23. PSA‘s Sustainable Value 1999-2005 (Million €) © Hahn, Figge & Barkemeyer 2008
    24. 24. Renault‘s Sustainable Value 1999-2005 (Million €) © Hahn, Figge & Barkemeyer 2008
    25. 25. Resource specific Ranking Sustainable Value Margin 2005 © Hahn, Figge & Barkemeyer 2008
    26. 26. Limits and Outlook <ul><li>Life cycle issues </li></ul><ul><ul><li>At this stage, Sustainable Value does not cover resource use up and down the value chain. </li></ul></ul><ul><li>Data availability and quality </li></ul><ul><ul><li>Data from corporate reporting insufficiently standardised. </li></ul></ul><ul><ul><li>Definitions of indicators vary. </li></ul></ul><ul><ul><li>Reported environmental and social data often does not cover the scope of financial information. </li></ul></ul><ul><li>Inclusion of social indicators remains difficult </li></ul><ul><ul><li>Not all social information is available in quantified absolute terms. </li></ul></ul><ul><li>Benchmark does not define a state of sustainability. </li></ul>© Hahn, Figge & Barkemeyer 2008
    27. 27. Data Collection and Verification: An Example of Ford <ul><li>There is less mineral waste worldwide than in North America! </li></ul>© Hahn, Figge & Barkemeyer 2008 http://www.ford.com/en/company/about/ sustainability/report/envDataWaste.htm
    28. 28. Data Collection and Verification: Sometimes it’s just hard to believe… © Hahn, Figge & Barkemeyer 2008 Mitsubishi Motors Corp. Environmental Sustainability Report 2004, p. 48 Daihatsu Group Environmental Report 2005, p. 49
    29. 29. Value of Sustainable Value <ul><li>Sustainable Value applies the logic of investment performance assessment to environmental and social resources. </li></ul><ul><li>To create value the return on environmental resources must cover the costs of the resources. </li></ul><ul><li>Sustainable Value compares the resource use of a company to a benchmark and thus defines the cost of a resource via opportunity costs. </li></ul><ul><li>Sustainable Value can be used with different benchmarks. </li></ul><ul><li>As a result, Sustainable Value expresses corporate environmental or sustainable performance in monetary terms. </li></ul><ul><li>Integrated triple bottom line assessment. </li></ul>© Hahn, Figge & Barkemeyer 2008
    30. 30. More information on the internet: <ul><li>The study and more information on the Sustainable Value approach are freely available at: </li></ul><ul><li>www.sustainablevalue.com </li></ul>© Hahn, Figge & Barkemeyer 2008
    31. 31. www.sustainablevaluecalculator.com © Hahn, Figge & Barkemeyer 2008
    32. 32. Contact information © Hahn, Figge & Barkemeyer 2008 Dr Tobias Hahn Associate Professor of Corporate Sustainability, CSR and Environmental Management Euromed Management School Domaine de Luminy - BP 921 13 288 Marseille cedex 9, France E-Mail: [email_address] Professor Frank Figge Professor of Management and Sustainability Queen's University Management School 25 University Square Belfast BT7 1NN, Northern Ireland, UK E-Mail: figge@sustainablevalue.com
    33. 33. <ul><li>Thank you very much! </li></ul>© Hahn, Figge & Barkemeyer 2008

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