TBLI EUROPE 2015 - ESG Analyses and Indices - Gustavo Pimentel
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Transcript of TBLI EUROPE 2015 - ESG Analyses and Indices - Gustavo Pimentel
TBLI Europe 2015 Workshop C1 ESG Analysis and Indices
Gustavo Pimentel Managing Director [email protected]
20 Nov 2015
Specialists in Sustainable Finance and Responsible Investing § ESG Advisory for
Responsible Investors
§ LatAm-focused ESG research: sector and thematic
§ ESG Risk Mgmt for banks and insurers
11th best house, 2nd best SRI analyst worldwide
(Extel IRRI 2013)
Chair of ESG Integration WG PRI Brazil Network
Impact Investing IDB beyondBanking Award 2011
About SITAWI
EIRIS Sales and Research Partner (South America)
“Not everything that can be counted counts, and
not everything that counts can be counted”
(Albert Einstein OR William Bruce Cameron)
3
8
1.86
1.90
1.94
2.11
2.17
2.17
2.19
2.20
2.25
1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30
Specialized Consumer Services (Education)
Integrated Oil & Gas
Home Construction
Broadline Retail
General Mining
Transportation Services
Apparel Retail
Iron & Steel
Food Product
Average Relevance Score per Sector
Source: survey of Brazilian PRI signatories on materiality of EFFAS KPIs for ESG, 2013
O&G lower materiality: industry context in Brazil or problem with KPIs list?
Ethics and corruption did not make the cut of the most material ESG issues…probably because of inadequate KPIs
9
76%
67%
67%
65%
60%
50%
12%
11%
22%
12%
30%
40%
0%
0%
0%
6%
10%
0%
12%
22%
11%
18%
0%
10%
Accidental oil/gas spills
Emissions to Water
Remediation
Leakages
GHG Emissions
Maintenance & Safety
Most material ESG themes for Integrated Oil & Gas
High Med Low Null
Source: survey of Brazilian PRI signatories on materiality of EFFAS KPIs for ESG, 2013
Corruption-related KPIs
Percentage of revenues in regions with Transparency International corruption index below 6.0
Contribution to political parties as a percentage of revenues
ESG ratings may differ significantly among agencies
10
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oekom Corporate Rating / Last Modification: 2013-11-29 1 © oekom research AG
oekom Corporate Rating
CPFL Energia SA
Industry:GICS Industry:Country:ISIN:Bloomberg Ticker:
UtilitiesElectric UtilitiesBrazilBRCPFEACNOR0CPFE3 BZ Equity
Status Not PrimeRating C-
poor medium good excellent
Strengths and Weaknesses
+ electricity generation almost entirely based on renewable energy sources+ very low carbon intensity of electricity generation
- recurring accidents with several fatalities in company operations in the lastthree years
- only limited information on measures to ensure the sustainable operation ofhydropower stations
- comparatively long duration of average interruption of power supply per yearper customer
- no information on measures to ensure the sustainable production of biomass
Rating History
Company Profile
CPFL Energia S.A., through its subsidiaries, distributes, generates and commercializes electricity in Brazil. The Company also commercializeselectricity and provides electricity-related services to its affiliates as well as unaffiliated parties.
Industry
Universe Results Key ESG Issues in the Industry
• Climate protection through increased useof renewable energies and energyefficiency
• Environmentally sound operation of plantsand infrastructure
• Secure and reliable energy and watersupply for all parts of the population
• Fair business practices• Worker safety and accident prevention
Rating UniverseScouting Universe
11
§ Global KPI / metrics are good starting points: suitable to large universes
§ Ratings disaggregation is critical to uncover tail risk
§ (Mis) leading indicators vs. KPI optimum range
§ Company specific analysis and materiality (“nothing compares to you”)
§ Integration into DCF is a strong trend: suitable for smaller universes
§ Be careful with the data fetish
Thoughts
Gustavo Pimentel
[email protected] +55 21 2247 1136
SITAWI
Av. Ataulfo de Paiva 658 / 401 - Leblon
Rio de Janeiro – RJ