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ESM 281 Corporate Environmental Management

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Sustainability reports, Environmental reports, Health and safety reports, Social ... Insurance cover adequacy. EcoValue'21 : Quantifying Eco-Value: ... – PowerPoint PPT presentation

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Title: ESM 281 Corporate Environmental Management


1
ESM 281 Corporate Environmental Management
Socially Responsible Investing
  • Magali Delmas

2
What is Socially Responsible Investing (SRI)?
  • Integrating personal values and societal concerns
    with investment decisions
  • Socially Responsible Investing (SRI) is an
    investment process that considers social and
    environmental consequences of investments, both
    positive and negative, within the context of
    rigorous financial analysis.
  • Social investors include individuals and
    institutions such as corporations, universities,
    hospitals, foundations, insurance companies,
    pension funds, nonprofit organizations, churches
    and synagogues.

3
Content and Method
  • Three core SRI strategies measured
  • Social and Environmental Screening
  • Shareholder Advocacy
  • Community Investing

4
Screening
  • Inclusion or exclusion of corporate securities in
    investment portfolios based on social or
    environmental criteria. Socially concerned
    investors generally seek to own profitable
    companies with respectable employee relations,
    strong records of community involvement,
    excellent environmental impact policies and
    practices, respect for human rights around the
    world, and safe and useful products.

5
Assets in SRI - 2005
  • SRI strategies
  • Screening 1,685 billion
  • Shareholder Advocacy 703 billion
  • Screening Advocacy (117 billion)
  • Community Investing 20 billion
  • Total 2.29 trillion

6
SRI in the US - 2005
7
DJSI World (December 1993 Oct. 2001, USD,
Price Index)
8
SAM Corporate Sustainability Criteria
http//http//www.sam-group.com/htmle/main.cfm
9
SAM- Economic
10
SAM- Environment
11
SAM- Social
12
SAM information sources
  • SAM Questionnaires Specific to each of the DJSI
    industry groups are distributed to the CEOs and
    heads of investor relations of all the companies
    in the DJSI investable stocks universe.
  • http//www.sam-group.com/downloads/research/Genera
    l_Questionnaire_2004.pdf
  • Company DocumentationSustainability reports,
    Environmental reports, Health and safety reports,
    Social reports, Annual financial reports etc
  • Publicly available information Media, press
    releases, articles, and stakeholder commentary
    written about a company over the past year.
  • Personal Contact with CompaniesEach analyst
    personally contacts individual companies to
    clarify open points arising from the analysis of
    the questionnaire and company documents.

13
SAM
  • Opportunities and Risks Assess the opportunities
    and risks deriving from economic, environmental
    and social dimensions of each of the eligible
    companies in the DJSI investable stocks universe.
  • Diversifying Information Sources For each
    company, the input sources of information for the
    Corporate Sustainability Assessment consist of
    the responses to the Corporate Sustainability
    Assessment Questionnaire, submitted
    documentation, policies and reports, publicly
    available information and analyst's direct
    contact with companies.
  • Verification To ensure quality and objectivity
    an external audit and internal quality assurance
    procedures, such as crosschecking of information
    sources are used to monitor and maintain the
    accuracy of the input data, assessment procedures
    and results.

14
SAM Chemical Industry Benchmarking
www.sustainability-index.com Industry Overviews
Runner up
15
SAM Corporate Sustainability Assessment Company
Benchmarking Report
16
EcoValue21 Quantifying Eco-Value
EcoVALUE 21 analyzes 60 key variables using
over 20 data sources
  • Historical Contingent Liabilities
  • Superfund
  • State and hazardous waste sites
  • RCRA
  • Toxic torts
  • Financial Risk Efficiency Capacity
  • Balance sheet strength
  • Insurance cover adequacy
  • Managerial Efficiency Capacity
  • Strategic corporate governance
  • capability
  • Environmental management
  • systems strength
  • Environmental audit/accounting
  • capacity
  • Supply chain management
  • Training capacity and intensity
  • Generic environmental management protocols
  • Relationships with stakeholders
  • Industry-specific protocols
  • Operating Risk Exposure
  • Toxic emissions
  • Product risk liabilities
  • Hazardous waste disposal
  • Waste discharges
  • Supply chain management risk

EcoVALUE 21 RATING
  • Eco-Efficiency and Sustainability Risk
  • Energy intensity and efficiency
  • Raw materials natural efficiency and
    intensity
  • Product life-cycle durability/ recyclability
  • Exposure to shifts in consumer values
  • Strategic Profit Opportunities
  • ability to profit from
  • environmentally-driven industry
  • and market trends

17
EcoValue21
Key variables are summarized in a Scoring
Matrix. Raw scores are weighted using Innovests
proprietary algorithms, and a final score is
generated). This score is based on the companys
environmental performance relative to its
competitive set. In this case, Georgia-Pacific
received the highest score in the Forest Products
sector and Louisiana-Pacific received the lowest.
The scores are converted to alphabetical
ratings similar to the familiar ratings on
corporate bonds (from AAA - best to CCC - worst).
18
EcoValue21 Quantifying Eco-Value
Analysis of 60 environmental performance
variables per firm, within an industry, using
publicly available data and interviews with
management, to evaluate each firms
Environmental risk profile, both operating
historic, Environmental management capacity
and strategy, Capacity to capitalize on
strategic environmental business opportunities.
19
Conclusion
  • Ideally good environmental performance indicators
    should be
  • Comparable
  • Credible (verification by third party)
  • Include Input (organization) as well as Output
    (performance)
  • Process and product (i.e. life-cycle of product)
  • We are still far from this idealand you have a
    lot to contribute
  • Next we will study the competitive landscape of
    SRI
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