A New Vision of Value The role of external value in business performance

Båstad

July 11, 2014

1 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Requirements on corporate responsibility is increasing…

2 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

…for the large ones and the small ones!

3 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

As a response corporate responsibility reporting become mainstream among the largest ones

4 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

“No business will be done on a dead planet”

(David Brower)

5 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Globalization International trade and foreign

investments tripled

Digital connectivity Mobile phone and internet use

exploded (up 20,000%)

Accelerated consumption Our population has grown

by one quarter

Disparate prosperity 1.3 billion people have no

access to energy

Resource scarcity 4 billion people are affected

by water scarcity

Ecological decline 80% of fish stocks are over,

or fully, exploited

Source: The World Bank, World Development Indicators (2011). Source: UNEP: Keeping Track of our Changing Environment (2011). Source: United Nations Population Fund, The State of the World Population (2011).

Source: IEA, World Energy Outlook (2011). Source: Heinberg. Peak Everything. (2007). Source: UNFAO. World Review of Fisheries & Agriculture. (2010)

The world has changed since the 1992 Rio Earth Summit

6 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Ten mega forces will put the business model in focus

TEN INTERCONNECTED ENVIRONMENTAL AND SOCIAL MEGAFORCES

RISKS

Competitive

Reputational

Physical

Regulatory

Legal

Social

OPPORTUNITIES

Cost

Growth

Brand

Capital

7 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

2010 EBITDA 2010 total environment cost as a % of EBITDA

Source: Trucost 2012.

22

153

84 100

223

89 97

26

134

670

482

0

100

200

300

400

Airlines Automobiles Beverages Chemicals Electricity Food Producers

Industrial Metals

Marine Transportation

Mining Oil & Gas Producers

Telecom & Internet

US

D b

illio

ns

800

700

600

500

52% 22% 42% 43%

87% 224%

71%

59%

64% 23%

2.5%

The big picture – trends and mega forces Average external environmental costs 41 US cents per USD of earnings

40% of profit in general

8 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The evolution of corporate value

9 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The evolution of corporate value Tangible and intangible components of S&P 500 market value

Källa: RobecoSAM 2014 (S&P 500)

0%

20%

40%

60%

80%

100%

1975 1985 1995 2005 2010

Tangible Assets Intangible Assets

Panel

Magnus Lindquist Triton

Niclas Kjellström-Matseke Postkodlotteriet

Maria Borelius Författare

Daniel Dellham Askus

11 © 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

© 2014 KPMG AB, a Swedish limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).

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