How$ESG$drives$business$ performance - Bursa … · • Company$case$studies$by$value$driver$ ......
Transcript of How$ESG$drives$business$ performance - Bursa … · • Company$case$studies$by$value$driver$ ......
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How ESG drives business performance Benjamin McCarron Managing Director, Asia Research and Engagement Specialist Consultant, Asian Corporate Governance AssociaBon
Sustainable Development Forum October 8, 2015
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How ESG drives business performance Benjamin McCarron Managing Director, Asia Research and Engagement Specialist Consultant, Asian Corporate Governance AssociaBon
Sustainable Development Forum October 8, 2015
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Making money and sustainability Benjamin McCarron Managing Director, Asia Research and Engagement Specialist Consultant, Asian Corporate Governance AssociaBon
Sustainable Development Forum October 8, 2015
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• Studies on the business benefits • What is ‘corporate sustainability’ • Company case studies by value driver
– Turnover growth and innovaBon – Risk management – ProducBvity improvement
Making money and sustainability
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MulBple studies find ESG adds value
Source: Arrabesque Partners and Oxford University, From the Stockholder to the Stakeholder, March 2015
Type of study ProporBon where ESG adds value
Cost of capital 90%
OperaBng performance 88%
Stock price 80%
Review of 190 studies on economic relevance of ESG
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What is corporate sustainability?
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A sustainable business roadmap
Philanthropy
Community Investment
Corporate Responsibility
Sustainable Business
Level 0
Level 1
Level 2
Level 3
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The M&S Journey
Philanthropy
Community Investment
Corporate Responsibility
M&S Plan A 2007 -‐ 100 commitments 2010 -‐ 80 commitments 2015 -‐ 100 commitments
Sustainable Business
Zero Carbon, zero waste, fair and healthy
1980 1990 2000 2010 2015 2030
Level 0
Level 1
Level 2
Level 3
Source: Marks and Spencer (adapted)
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Turnover growth and innovaBon
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Old companies, new growth • GE – ecomaginaBon sales of USD 200 billion in 10 years • Philips – EUR 11.1 billion green product sales in 2014 • Toyota – hybrids >40% of Japan unit sales • Dow – USD 13 billion sustainable advantaged sales in 2014 • BRI – microcredit is 32% of loans
Turnover growth and innovaBon
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Toyota -‐ hybrids go mainstream
Source: Toyota 2014 Annual Report, page 11
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Dow – boosBng sustainable sales
Source: Dow Chemical Sustainability Summary 2014, page 8
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ProducBvity improvement
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Resource efficiency • M&S – GBP 160 million savings from Plan A • GE – USD 350 million savings from environmental efficiency
Human capital management • Gender balance • Employee engagement • OccupaBonal health and safety
ProducBvity improvement
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M&S – growing net benefits
Source: Marks and Spenceer various reports
-‐50
0
50
100
150
200
2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
GBP million
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Risk management
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ReputaBon/ license to operate and grow • Vedanta • Volkswagen • Lynas • Palm oil
Safety (operaBonal and product) • Oil spill, BP, 2010 • Nuclear incident, TEPCO, 2011 • Food safety scare, Nestle India’s Maggi noodles, 2015 • Malaysia airlines
Risk management
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Picking the wrong fight
Source: Survival International
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Vedanta – loses the bajle
Source: yahoo finance
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
4-‐Jan-‐10 4-‐Feb-‐10 4-‐Mar-‐10 4-‐Apr-‐10 4-‐May-‐10 4-‐Jun-‐10 4-‐Jul-‐10 4-‐Aug-‐10 4-‐Sep-‐10 4-‐Oct-‐10 4-‐Nov-‐10 4-‐Dec-‐10
FTSE 100 (rebased) Vendata Resources (rebased)
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How investors use the informaBon
Screening
Engagement
Integration
Source: Asia Research and Engagement
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BNI – responsible lending
Source: BNI Sustainability Report 2013, page 14
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To conclude
Corporate sustainability and reporBng helps • idenBfy new growth areas • improve risk management • idenBfy cost/ efficiency savings • have more talented, more producBve staff • ajract longer term investors