MPMA Sustainability Conference 2013

MPMA – Sustainability Conference 2013 Sustainability ratings: how ... Product innovation Increasing market share Brand enhancement Value Creation INCR...

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MPMA – Sustainability Conference 2013 Sustainability ratings: how transparency can drive performance 3rd September 2013

Sustainability is at the core of people, planet and profit dimensions

The company’s degree of social responsibility, including the fair and beneficial business practices towards labour and the community

The measurement of a company’s environmental responsibility through minimising ecologically destructive practices

The economic value generated through the organisation’s operations after costs PwC

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The evolution from philanthropy to sustainability Sustainability CR CSR Corporate Philanthropy

Economic

Social

Environment

Source: Adapted from Khazanah National Berhad

Sustainability ratings: How transparency can drive performance? PwC

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Companies should aim to achieve leadership and growth from their sustainability efforts INCREASING VALUE Opportunity

Revenue growth Where leaders are heading

Value Creation Product innovation

Operational efficiency Value Protection

Where some organisations are heading

Increasing market share Brand enhancement

Operations cost savings

Risk Management Where many organisations start Operational risk

Supply chain cost savings Implement reporting systems

Regulatory compliance Reputational risk

Risk

Compliance & Risk management

Operational Effectiveness

Sustainability ratings: How transparency can drive performance? PwC

Strategic Advantage

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Why do sustainability reporting?

• Measure, track and improve sustainability performance to attract sustainable investments, e.g. SRI funds • Identify & address risks and opportunities • Demonstrate responsibility and contributions to society and the environment • Promote transparency & accountability to stakeholders

Sustainability ratings: How transparency can drive performance? PwC

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Sustainability reporting is on the rise in the ASEAN region Over 61% of ASEAN companies report on sustainability in some form

21% of ASEAN companies have a standalone sustainability report

Sustainability ratings: How transparency can drive performance? PwC

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Globally, there are many different sustainability frameworks and standards

Companies can choose not to adopt or adopt multiple frameworks and standards for their sustainability reporting. Sustainability ratings: How transparency can drive performance? PwC

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GRI Guidelines • A set of flexible, voluntary guidelines which help define report content and quality and provide guidance on how to set reporting boundaries • Consists of a set of Principles for defining report content and quality, and Standard Disclosures made up of Performance Indicators • There are a total of 84 ‘core’ and ‘additional’ performance indicators, spread across 6 disclosure categories • Core Indicators have been developed through GRI’s multi-stakeholder processes, which are intended to identify generally applicable Indicators and are assumed to be material for most organisations • Additional Indicators represent emerging practice or address topics that may be material for some organisations, but are not material for others

G4 has been launched as an update to G3.1 in May 2013 • Report on what really matters and where it matters • Material topics are more important than “showing that you are ready to disclose indicators” • Moves sustainability report to strategic level Source: GRI website

Sustainability ratings: How transparency can drive performance? PwC

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Dow Jones Sustainability Index 1

First global indexes tracking the financial performance of the leading sustainability-driven companies worldwide.

2

Provide a rationale and consistent methodology in benchmarking the performance of investments in sustainability companies and funds.

3

Basis for derivatives and funds focused on sustainability companies.

4

Assessment is based on RobecoSAM's corporate sustainability assessment.

5

More than 70 DJSI licenses are held by asset managers in 16 countries managing over 7 billion USD based on the DJSI.

6

DJSI data is made publicly available in monthly updates, newsletters and factsheets. Licensee holders gain access to more commercially sensitive information.

Source : http://www.robeco.com/professionals/insights/markets/2012/the-dow-jones-sustainability-index-allowing-investors-to-remainahead-of-the-curve.jsp Sustainability ratings: How transparency can drive performance? PwC

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DJSI participation brings internal and external gains RobecoSAM research and a Harvard Business School study that used RobecoSAM data confirm that, in the long run, the most sustainable companies are more successful than their less sustainable counterparts.

2012: 1,544 companies analysed

340 companies listed in DJSI World

Source : Petra Segal, Insight

Internal gains (regardless of whether companies make the Index)

External gains

Benchmark report helps identify strategic and operational improvement areas

Recognition as leading sustainability company in sector

Increase internal awareness of sustainability

Credible benchmark of sustainability performance used by investors, buyers and other stakeholders

Develop internal sustainability reporting Source : http://www.robeco.com/professionals/insights/markets/2012/the-dow-jones-sustainability-index-allowing-investors-to-remain-aheadof-the-curve.jsp Sustainability ratings: How transparency can drive performance? September 2013 PwC 10

Stock exchanges worldwide have been responding to the demand for sustainability data reporting & management

Sustainability ratings: How transparency can drive performance? PwC

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Summary of presentation • Sustainability is at the core of people, planet and profit. Therefore, companies should aim to achieve leadership and growth from their sustainability efforts • Sustainability reporting is on the rise in the ASEAN region. Why do sustainability reporting then? – Measure, track and improve sustainability performance – Identify & address risks and opportunities – Demonstrate responsibility and contributions – Promote transparency & accountability • We have seen stock exchanges responding to demand for sustainability measures. How does indexes drive sustainable business? – Allows recognition as leading sustainability company in sector – Serve as credible benchmark of sustainability performance used by investors, buyers and other stakeholders – Benchmark report helps identify strategic and operational improvement areas – Increase awareness of sustainability internally through the development of sustainability reporting measures

Sustainability ratings: How transparency can drive performance? PwC

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Thank you

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