Financial materiality and clarity in multi stakeholder reporting amara goeree

Zürich, October 14, 2014

Financial Materiality and Clarity in Multi-stakeholder Reporting

RobecoSAM at a glance

• Investment specialist focused exclusively on Sustainability Investing since 1995

• Offering complementary capabilities to Sustainability Investing

• Powering the Dow Jones Sustainability Indices since 1999

• USD 11.8 billion total assets (as per 30.06.2013)

• In 2013, 50% of total stock market capitalization in the world, or $26 trillion, were analyzed and €100 billions of managed assets is integrating RobecoSAM corporate sustainability information in the investment decisions

• Servicing a global and diversified client base

• Approximately 110 employees headquartered in Zürich, Switzerland

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RobecoSAM Corporate Sustainability Assessment

Overview

• Over 3,000 companies invited annually

• 830 companies participated in 2014

Methodology

• Integrated assessment of economic, environmental and social criteria with a strong focus on long-term shareholder value

• Rules-based methodology and use of primary research

• Focus on best-in-class companies. Yearly review of component selection and continuous monitoring of companies

• Assurance of the assessment process by Deloitte

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RobecoSAM Definition of Corporate Sustainability

+

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A company‘s capacity to prosper in a hypercompetitive and changing global business environment

anticipating and managing current and future economic, environmental and social opportunities and risks

focusing on quality, innovation and productivity to create competitive advantage and long-term value

by

How we use sustainability reporting

• Verification of submitted answers and data

• Reporting on targets and progress of sustainability initiatives

• Identification of material issues and the stakeholder engagement process

• How sustainability initiatives align with long-term corporate strategy

• The business and financial benefits of sustainability initiatives

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RobecoSAM Corporate Sustainability Assessment – Data Collection

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Social

EnvironmentalEconomic

RobecoSAM defines Materiality as “Any factor which might have a present or future impact on companies‘ value drivers, competitive position, and thus on long-term shareholder value creation“

Financial Materiality Framework

Key Question: How do different forms of capital impact financial performance?

RobecoSAM’s Definition of Materiality of Sustainability

Forms of Capital:

● Intellectual capital ● Customer capital● Manufactured capital● Human capital ● Environmental capital ● Social capital ● Financial capital & business

model

Impact on Financials:

● Growth (Revenue)● Profitability (Costs)● Capital Efficiency● Risk profile

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Materiality in Reporting

Is your company publically reporting on the processes and tools used to identify and prioritize critical environmental issues within the sustainability strategy, including a consideration of impact on the company’s business performance

Elements of Materiality Framework

1 - Process description available

2 - External Stakeholders involved in process

3 - Internal Stakeholders involved in process

4 - Material issues identified and disclosed

5 - Material issues prioritized

8Source: RobecoSAM Corporate Sustainability Assessment 2014. Data based on all participating companies and additional companies assessed based on publicly available information (1,813 companies)

Materiality in Reporting

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Is your company publically reporting on the processes and tools used to identify and prioritize critical environmental issues within the sustainability strategy, including a consideration of impact on the company’s business performance

Elements of Materiality Framework

1 - Process description available

2 - External Stakeholders involved in process

3 - Internal Stakeholders involved in process

4 - Material issues identified and disclosed

5 - Material issues prioritized

Source: RobecoSAM Corporate Sustainability Assessment 2014. Data based on all participating companies and additional companies assessed based on publicly available information (1,813 companies)

Source: RobecoSAM Corporate Sustainability Assessment 2014. Data based on all participating companies and additional companies assessed based on publicly available information (1,813 companies)

Reporting on materiality

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Quantification in Reporting

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Reporting on Environmental/Social Cost Savings in CSR Report

Environmental Social

Source: RobecoSAM Corporate Sustainability Assessment 2014. Data based on all participating companies and additional companies assessed based on publicly available information (1,813 companies)

Quantification in Reporting

Environmental Social

Reporting on Environmental/Social Revenue Generation in CSR Report

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Source: RobecoSAM Corporate Sustainability Assessment 2014. Data based on all participating companies and additional companies assessed based on publicly available information (1,813 companies)

Focus on financial materiality

How useful do investors find the different types of non-financial information when making investment decisions?*

Source: EY Tomorrow’s investment rules - Global survey of institutional investors on non-financial performance, April 2014

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Annual Report32%

Integrated Report18%

Corporate website

18%

Press coverage13%

ESG data providers

9%

Sustainability report

7%

Sustainability rankings3%

Social media2%

Evolution of Corporate Reporting

Reporting : Moving Towards Integration

Integrated reporting is designed to enhance the concept of primary report, a report that combines the financial performance, management discussion, corporate governance, remuneration disclosure, and sustainability reporting into a single report. Such a report enhances transparency and accountability, which are essential in building trust and resilience. The concept of integrated reporting is to provide a clear and concise representation of how an organization demonstrates stewardship on all its resources and how it creates and sustains value.

Source: Source: IIRC (2011) “Towards Integrated Reporting”

1960

FinancialStatements

ManagementCommentary

Governanceand

Remuneration

EnvironmentalReporting

FinancialStatements

ManagementCommentary

Governanceand

Remuneration

Sustainability

Reporting

FinancialStatements

FinancialStatements

ManagementCommentary

Governanceand

Remuneration

SustainabilityReporting

IntegratedReporting

202020001980

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Shifting focus of sustainability reporting – DOs and DON’Ts• Focus on materiality – financial materiality vs. stakeholders perception

• Integrated vs. decentralized reporting

• Who are we reporting for? – Completeness without too much fluff

• What do we report? Quality vs. Quantity

• Third-party verification

• Comparable metrics

• Storytelling AND measuring

• How often do we report?

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Thank you. Questions?

Amara GoereeJr. Sustainability Operations [email protected]+41 44 653 12 58

Disclaimer

No warranty This publication is derived from sources believed to be accurate and reliable, but neither its accuracy nor completeness is guaranteed. The material and information in this publication are provided "as is" and without warranties of any kind, either expressed or implied. RobecoSAM AG and its related, affiliated and subsidiary companies disclaim all warranties, expressed or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Any opinions and views in this publication reflect the current judgment of the authors and may change without notice. It is each reader's responsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice, services or other information provided in this publication.

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