CFO barometer sustainability & integrated reporting

CFO Barometer 2012: De rol van de CFO in Sustainability

CFO Magazine en Ernst & Young 24 september 2012

Vertrouwelijk – alle rechten voorbehouden – Ernst & Young

“Over duurzaamheid en de rol van de CFO” door Harry Everaerts,

Bedrijfsrevisor en Partner Sustainability & Cleantech Services Ernst & Young

http://purplefolie.centerblog.net/


The triple bottom line

2

Today’s stakeholders (including shareholders) expect you to meet standards on social, environmental and economic performance


Rol van de CFO in het Nieuw Maatschappelijk relevant bedrijfsmodel

3

Vijf acties die een CFO kan nemen om in te spelen op het groeiend belang van niet-financiële informatie in organisaties:

1. Actief een sustainability programma en rapportering stimuleren 2. Verzekeren dat het sustainability team niet geïsoleerd werkt 3. Ga transparante dialoog aan met de stakeholders 4. Maak top management bewust van de business case 5. Overweeg niet-financiële performance indicatoren in beloningssytemen van management

•Het (meetbare) duurzaamheidsverhaal vertellen: met Investor Relations en rating agentschappen werken • ‘Show them the money’: transparant externe rapportering en verificatie brengt vertrouwen aan interne en externe stakeholders • Green management: operationeel ‘controllership’ and financieel risicobeheer betekent CO2- en gegevensbeheer

Vertrouwelijk – alle rechten voorbehouden – Ernst & Young Proposal title 4

Novo Nordisk 2012 Best Integrated Report

Altron The Value-added Statement

Examples


“Integrated Reporting: wat, waarom en wat betekent het voor de CFO?” door Nancy Kamp-Roelands,

Expert Integrated Reporting & Assurance, Executive Director Sustainability & Cleantech Services Ernst & Young Nederland



Four drivers of global change, impacting behaviour of many organization

Growing world population Scarcity of natural resources

New rising middle class, aging population, urbanization, diversity, and globalization

Emissions and Climate change

13

29

30

43

44

61

64

75

148

161

∞

indium*

silver*

antimony*

oil

copper

gas

iron ore

phosphate

coal

aluminium

sodium carbonate


The importance of the intangibles in establishing market value

Components of S&P 500 Market Value

Source: Ocean Times.

Definition

Intangible assets are non-monetary and non-physical but nonetheless have the potential to create value for an organization.


Sustainability is a strong driver for business value creation

Revenue generation

Long- term value

creation

Cost control Risk

Management

Intangible Material value

Pro

mo

te

Pre

ve

nt

Philips earns 38% of total revenue from „green

product‟ sales (up from 31% in 2009).

One of the three drivers of Rosy Blue‟s strategy is to

manage risks (Legal, Operational, Reputational, Protect company‟s brand.)

GE’s brand value increased by 17% after the launch of

„Ecomagination‟, a business initiative to meet customer

demand for more energy-efficient products

KPIs can be used to measure sustainability performance against sustainability goal setting

AB InBev strives to be the “best beer company in a

better world”, which means protecting and preserving

the environment, promoting responsible drinking and

making a difference in the communities where we live

and work.


Example of successful value chain collaboration YARA – Biopark Terneuzen

Fertilizer producer YARA delivers their waste heat and CO2 emissions to horiculte business of Biopark Terneuzen. The Horticulturers use these waste products to heat their greenhouses. The plants use the CO2 to grow. To facilitate this collaboration the partners have set up the energycompany WarmCO2. The energy company is used to deliver the waste heat and CO2 to the horticulturers across a several kilometers long pipenetwork. Yearly more than 1633 TeraJoules (TJ) sustainable heat energy is utilised in this manner. This heat is always available and almost independent of market energy prices. This matches the reuse of about 70.000 tons of CO2 that would otherwise be emmitted to the atmosphere as heat.


Changes in external reporting: Integrated Reporting

Mid 2010 IIRC creation 2011 2012 2013

2015 Complete

framework Development of IR Framework

Discussion paper with IR guidelines

1st Pilot program (First IR experiment)

G20 proposal « Bring IR to

politics » 2nd Pilot program

(Test draft framework)

Mission

Actions

Reach a consensus about IR

Develop a framework for IR Determine whether IR

standards should be voluntary or mandatory

Identify priority areas

IIRC’s role


Value creation in different areas

11


Compliance

Risks & Opportunities

Strategic sustainable value creation

Sustainable Growth Business Model Three basic stages

Va

lue

to

so

cie

ty

Value to organization


Integrated Thinking: From performance to impact Unilever Sustainable Living Plan

Arial 24 punt r100 g100 b100

Arial 20 punt

Arial 18 punt

Arial 16 punt

► Arial 16 punt


Differences with financial reporting

Attribute Reporting Status Quo

Integrated Reporting Model Key Differences

Thinking Isolated Integrated Business decisions are not taken in isolation from company’s environmental, social & economic impacts; they are made within context of company’s short-, medium- and long-term business performance.

Stewardship Financial capital All forms of capital The company reports on the contribution of all forms of capital (financial, manufactured, human, intellectual, natural and social) to its business performance and the inter-relationship between these capitals, as well as usage, risks and opportunities across the economic value chain.

Focus Past, financial Past & future, connected, sustained value creation Company financial reports currently focus on past financial

performance and rarely make meaningful connections with other business reports, such as sustainability or CSR. An Integrated Report addresses both past and future business performance, making connections with underlying sustainability impacts, and provides an opportunity to communicate a broader understanding of value (future, intangible and extended).

Timeframe Short-term Short-, medium- and long-term Integrated Reporting focuses not only on short-term business

performance (<1 year) but also on the medium- and long-term, so that the contribution of decisions and investments made by the business to long-term value creation can be assessed.

Trust Narrow disclosure Greater transparency In contrast to the narrow financial disclosure of the Annual Report, an Integrated Report communicates a broader explanation of how a company creates value, set within the context of the company’s business model and the company’s net impact on the environment, society and economy.


“Presentatie van de resultaten van de CFO Barometer rond duurzaamheid” door Harry Everaerts,

Bedrijfsrevisor en Partner Sustainability & Cleantech Services Ernst & Young


Vertrouwelijk – alle rechten voorbehouden – Ernst & Young 16

CFO Barometer rond Sustainability Inleiding

Onafhankelijk onderzoek van de redactie van CFO Magazine in samenwerking met Ernst & Young.

Eén actueel CFO-topic per maand

Bevraging van 200 Belgische CFO’s van middelgrote tot grote multinationale ondernemingen.

De focus van de CFO Barometer is lokaal: representatief voor België, benchmarktool.

De resultaten worden in de extra CFO Barometer katern weergegeven en becommentarieerd door specialisten of geïllustreerd met praktijkervaringen.


CFO Barometer rond Sustainability Enkele sleutelresultaten


26,1 %

47,8 %

26,1 %



12,0 %

18,0 %

8,0 %

8,0 %

2,0 %

12,0 %

18,0 %

14,0 %

2,0 %

6,0 %




Duurzaamheidsrapportering wordt stilaan een vaste maatstaf: creatie van toegevoegde waarde is relevant in het huidig economisch model.

Voorloping nog een groot onbenut potentieel: vandaag onvoldoende interesse door CFO’s, maar veel potentieel om als managementtool te gebruiken.

CFO’s gebruiken het vandaag al voor interne beslissingsname. Immers, rapporteren over duurzaamheid heeft te maken met strategische en verantwoorde lange termijn beleidsvoering.

Rapporteringsprocessen en standaarden: duidelijk gebrek aan kennis van standaarden zoals de Global Reporting Initiative.


Harry Everaerts

Tel.: +32 2 774 94 34

Email: [email protected]

Ernst & Young

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