Redefining Value

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COMPLEX PUZZLE

Complicated World

Ecological Footprint = 1,5

Collaboration

Improve Business Case

Bu

sin

ess

So

lutio

ns

Today

Scaling up requires 3 key elements

PRIORITY AREAS

ACTION2020

TO REACH SOCIETAL MUST-HAVES

IMPROVE THE BUSINESS CASE

Long-term vision

True cost, True value management

Traditional managementFinancial

Capital

Natural Capital

Social Capital

Business Manageme

nt

Transformation Needed

Collaboration

Improve Business Case

Bu

sin

ess

Solu

tion

s

Today

PRIORITY AREAS

ACTION2020

TO REACH SOCIETAL MUST-HAVES

Cost of Risk

Radical Transparency

Changing the rulesof the game

Capital Market Valuations

WBCSD Redefining Value

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Integrate natural and social capital measurement and valuation into corporate performance management.

Improve the effectiveness of non-financial internal and external reporting.

Measurement, valuation and reporting reflect the true value of a company and discloses true profit and true cost.

Accelerate progress to a world where more sustainable companies are recognized and rewarded, and therefore are more successful.

TRENDS in CORPORATE REPORTING

Reporting is a dynamic processAnd not a goal in itself, but an instrument to:

1. improve the effectiveness of corporate investments in sustainability

2. trigger internal changes towards integrated decision-making

Key role to play in accelerating transition towards true value

A complex landscape requiring business leadership!

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Disclosure Measurement

ValuationRating & Investment

MVR Disclosure

MVRMeasurement

ValuationTechniques

Ratings & Investment

LowImpact

Lower Impact

Low Impact

Changing the Rules of the

Game

LowerImpact

A process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.

IIRC uptake: dependencies on capitals

Votorantim Group

And more …

• SASB established in the US in 2013 aims to develop sustainability accounting standards to support publicly-listed corporations disclose material factors in compliance with the US SEC requirements

• GRI G4 guidelines issued in 2013 with a strengthened focus on materiality (stakeholder approach)

• CDSB is expanding its Climate Change Reporting Framework to include information about environmental matters in mainstream corporate reports to be launched in 2015

• EU passed legislation to require member businesses (>500 employees and/or public interest) to disclose sustainability performance last April

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INTEGRATED REPORTING

Financial Accounts

Accounting Principles- GAAP -

Management Accounts

FINANCIAL CAPITAL

Non-Financial Reporting

Non-Financial Principles- GASP -

NATURAL CAPITAL

SOCIAL CAPITAL

HOW-WHAT

Meaningful transparency

Comparability& Materiality

Better informed decisions

EP&L and other methodologies

SP&L and other methodologies

Natural Capital Protocol

Social Capital Protocol

TRUE VALUE

INTEGRATED VALUATION

What about corporate practice? Less than 12% of reports reviewed reflect those sustainability

issues considered to be material to the business.

80% of WBCSD members produce a stand-alone

sustainability report with the rest developing self-declared

integrated reports

75% use the GRI Guidelines with an upward trend to

combine the use of several frameworks

60% of total reports reviewed have some form of assurance

on their sustainability disclosures with limited level as the

dominant form

When known, the average time period between year-end and

the publication date is approximately six months reflecting a

disconnect between sustainability and financial reporting

cycles

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Internal decision-making → External disclosureManagement tools →Reporting frameworks

WBCSD is not new to this space…

Social Profit & Loss AccountFeasibility Study

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Natural and Social Capital Protocol Components

Protocol Frameworks

Sector Initiativesstandardized metrics / methodologies by

sector

Measurement & Valuation of Action 2020 Priority AreasMinimum standards > best practice > methodologies > KPIs

Practical Methodologies & Guidelines

Approaches to measurement & valuation, e.g. S P&L; E P&L; others

Metrics

Key Performance Indicators > Units of Measurement, incl. from SASB; GRI

Purpose > Principles > Scope & boundaries > Overview of Components

Human Rights

Skills & Employment

Inclusive Business

Rural Livelihoods

WaterClimate &

EnergyEcosystems &

Land Use

Sustain-able

Lifestyles

Chemicals

Forests Mobility Cement

Top-down Elements

Bottom-up Elements

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• Generic Natural Capital Protocol

• Sector guides for Food & Beverage + Apparel

• Pilot testing

• Overall coordination• Multi-stakeholder

consultation process

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