A New Vision of Value: Connecting corporate and societal value creation KPMG Advisory Sustainability Services 11 November 2014 Välkommen!
Jul 02, 2015
A New Vision of
Value: Connecting
corporate and societal
value creation
KPMG Advisory
Sustainability Services
11 November 2014
Välkommen!
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client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
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Vårt erbjudandekpmg.se/sustainablebusiness
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client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
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client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
A New Vision of
Value: Connecting
corporate and societal
value creation
6© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
Introduction
‘A New Vision of Value – Connecting corporate and societal value creation’
A New Vision of Value - 2014
Two years of studies
Smith School, University of Oxford
50+ senior investors, business leaders, academics,
policy experts
KPMG’s contribution to ongoing development
Expect the Unexpected - 2012
Presented 10 global mega trends
40% of the operating result may disappear
Businesses, governments and civil society need to act
How can companies calculate their true value?
7© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
Introduction
Sustainability and corporate responsibility in three dimensions
Human & Labor Rights
Occupational Health & Safety
Human Capital Development
…
Wages
Tax
Corruption
…
Climate Change
Water usage
Biodiversity
…
8© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
Introduction
Why is KPMG’s True Value methodology relevant?
3 key results
1. Insight on societal value creation
2. Insight on value at risk and opportunities for value creation
3. Insight on financial and societal return of potential strategic actions
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
9
What are externalities?
Externalities are “Costs and benefits that haven’t been priced into the market, and
which affect a party who did not choose to incur those costs or benefits”
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
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22
153
84 100
223
89 97
26
134
670
482
0
100
200
300
400
500
600
700
2010 EBITDA (billion USD) 2010 total environmental costs as percentage of EBITDA
224%
Environmental externalities on
average 40% of EBITDA
52%22% 42% 43%
87%
71%
59%
64%
23%
2.5%
11© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
Regulations &
Standards
■ New laws
■ Product standards
■ Pricing
■ Subsidies
■ Taxes
■ Disclosure regulations
■ Certification standards
Stakeholder Action
■ Labour strikes
■ Loss of license to operate
■ NGO criticism
■ Consumer pressure
■ Terminated contracts with
suppliers
Market Dynamics
■ Scarcity and pricing
■ Extreme weather
■ New markets
THREE KEY DRIVERS: increasing the rate of internalization
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
12
STEP 1
Assess the company’s ’true’ earnings – a true value bridge
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
13
Step 2 and 3
Understand future earnings at risk and calculate NPV and opportunities
Based on scenario’s, assess likelihood of internalization and risk to earnings.
Assess effects on operating margin and calculate net Present Value of investment needs.
Assess the opportunities.
Key externalities prioritized by likelihood of internalization
© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
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KPMG’s TRUE VALUE METHODOLOGY
3 steps approach
ASSESS THE COMPANY’S
‘TRUE’ EARNINGS
by identifying and quantifying
its material externalities
UNDERSTAND FUTURE
EARNINGS AT RISK
by analyzing exposure to the
forces of internalization
CREATE CORPORATE
AND SOCIETAL VALUE
by developing business cases
that capture value, create
opportunities and reduce risk.
1
2
3
15© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
Anna Ryott Swedfund
Johan ByggeEQT
Parul SharmaThe Academy for
Human Rights in
Business
Paneldiskussion
16© 2014 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no
client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind
any member firm. All rights reserved. . Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.
TACK!
Helena Mueller
+46 733 272 254
Daniel Dellham
+46 70 580 70 40