Donna Bebb, Research Fellow Steyer-Taylor Center for …...ii Cheng Beiting, Ioannis Ioannou, and...
Transcript of Donna Bebb, Research Fellow Steyer-Taylor Center for …...ii Cheng Beiting, Ioannis Ioannou, and...
2016
Donna Bebb, Research Fellow
Steyer-Taylor Center for Energy Policy and Finance
STSTANFORDS
Introduction
The Need to Integrate ESG Metrics
Challenges of Integrating ESG Metrics
The Case for Separating E
Relative Climate Value (RCV) Method
Methodology
Results
Long-term Policy Changes and Long-term Climate Shifts
Short-term Severe Weather Events
Hypermarkets
Sorted by largest index weight
Scope 1
MSCI ACWI Carbon Electricity Sea Level U.S. U.S. U.S. U.S.
Company Index Weight Tax Price Increase Drought Rise West Midwest Southeast Northeast Australia Europe Asia
Hypermarkets 0.80%
Walmart 0.48% Overweight Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral
Costco 0.12% Overweight Overweight Neutral Neutral Underweight Neutral Neutral Neutral Overweight Overweight Overweight
Walmart Mexico 0.08% Neutral Overweight Neutral Neutral Overweight Neutral Neutral Neutral Overweight Overweight Overweight
Wesfarmers 0.07% Underweight Underweight Neutral Neutral Overweight Neutral Neutral Neutral Underweight Overweight Neutral
Carrefour 0.05% Underweight Neutral Neutral Neutral Overweight Neutral Neutral Neutral Overweight Underweight Neutral
Overweight Company will outperform peers based on this factor
Neutral No relative impact on performance from this factor
Underweight Company will underperform peers based on this factor
Long-term ClimateLong-term Policy Short-term Severe Weather
Auto Manufacturers
Sorted by largest index weight
Scope 1
MSCI ACWI Carbon Electricity Sea Level U.S. U.S. U.S. U.S.
Company Index Weight Tax Price Increase Drought Rise West Midwest Southeast Northeast Europe Asia
Automobile Manufacturers 1.62%
TOYOTA MOTOR CORPORATION 0.44% Neutral Neutral Neutral Underweight Underweight Underweight Underweight Neutral Overweight Underweight
Daimler AG 0.19% Overweight Neutral Neutral Overweight Overweight Overweight Overweight Underweight Underweight Underweight
VOLKSWAGEN AKTIENGESELLSCHAFT 0.14% Underweight Neutral Neutral Overweight Overweight Overweight Underweight Overweight Underweight Overweight
BMW 0.14% Overweight Neutral Neutral Overweight Overweight Neutral Underweight Overweight Underweight Neutral
HONDA MOTOR CO., LTD. 0.12% Underweight Neutral Neutral Underweight Underweight Neutral Underweight Neutral Overweight Underweight
FORD MOTOR COMPANY 0.12% Neutral Neutral Neutral Neutral Neutral Underweight Overweight Underweight Neutral Underweight
GENERAL MOTORS COMPANY 0.10% Underweight Neutral Neutral Neutral Neutral Underweight Overweight Underweight Neutral Underweight
NISSAN MOTOR CO., LTD. 0.09% Neutral Neutral Neutral Neutral Neutral Overweight Underweight Neutral Overweight Neutral
HYUNDAI MOTOR COMPANY 0.06% Neutral Neutral Neutral Underweight Underweight Overweight Underweight Overweight Overweight Overweight
RENAULT S.A. 0.06% Underweight Neutral Neutral Overweight Overweight Overweight Overweight Underweight Underweight Underweight
TESLA MOTORS, INC. 0.06% Overweight* Not available Neutral Overweight Underweight Overweight Overweight Overweight Overweight Overweight
Fuji Heavy Industries Ltd. 0.05% Overweight Neutral Neutral Underweight Underweight Overweight Overweight Underweight Overweight Underweight
TATA MOTORS LIMITED 0.05% Overweight Neutral Neutral Overweight Overweight Overweight Overweight Overweight Underweight Underweight
Overweight Company will outperform peers based on this factor Sea Level Rise and Drought: Only occurrences in U.S. were considered; sea level rise in certain
Neutral No relative impact on performance from this factor Chinese and Japanese locations would significantly impact almost all
Underweight Company will underperform peers based on this factor automakers but was not included here
* Adjusted Tesla revenues and EBITDA to compensate for status as start-up
Long-term Climate Short-term Severe WeatherLong-term Policy
Conclusions:
Acknowledgements
i Sustainable Investing: Establishing Long-Term Value and Performance,” Deutsche Bank, June 2012 ii Cheng Beiting, Ioannis Ioannou, and George Serafeim, Corporate Social Responsibility and Access to Finance
(Harvard Business School Working Paper Number 11-130, 2010) iii “CalPERS gives its managers ESG ultimatum.” Amanda White, May 22, 2015. Top1000funds.com iv Sustainable Investing: Establishing Long-Term Value and Performance,” Deutsche Bank, June 2012
Appendix 1
EBITDA Impact of Carbon Tax (mils)$USD
2013 2013 FY2014 FY2014 Scope 1 Scope 1 EBITDA EBITDA Mgn Diff in Index
Company Scope 1&2 Scope 1 Revenue EBITDA Carbon Tax $ % of EBITDA Margin w/Tax EBITDA Mgn Weight
Automobile ManufacturersTata Motors 353,112 81,277 36,788 5,635 3 0.1% 15.3% 15.3% (0.0%) 0.05%
BMW 1,415,641 492,798 97,269 14,629 18 0.1% 15.0% 15.0% (0.0%) 0.14%
Fuji Heavy Industries 441,351 151,368 23,887 4,049 6 0.1% 17.0% 16.9% (0.0%) 0.05%
Daimler AG 3,356,000 1,052,000 157,119 19,002 39 0.2% 12.1% 12.1% (0.0%) 0.19%
Hyundai (in bil KRW) 2,440,285 841,978 80,330 9,090 31 0.3% 11.3% 11.3% (0.0%) 0.06%
Nissan 3,430,215 791,682 94,414 7,992 29 0.4% 8.5% 8.4% (0.0%) 0.09%
Toyota 7,840,000 2,979,200 226,047 29,521 110 0.4% 13.1% 13.0% (0.0%) 0.44%
Ford 4,822,287 1,482,020 142,100 11,420 55 0.5% 8.0% 8.0% (0.0%) 0.12%
Volkswagen 9,038,463 4,288,061 244,934 27,946 159 0.6% 11.4% 11.3% (0.1%) 0.14%
Tesla 54,575 18,906 3,198 115 1 0.6% 3.6% 3.6% (0.0%) 0.06%
Honda 5,207,000 1,409,000 104,968 8,426 52 0.6% 8.0% 8.0% (0.0%) 0.12%
Renault 1,260,493 677,890 49,668 3,764 25 0.7% 7.6% 7.5% (0.1%) 0.06%
General Motors 8,416,034 2,802,461 154,230 10,170 104 1.0% 6.6% 6.5% (0.1%) 0.10%
Hypermarkets & Super CtrsCostco 1,663,953 485,320 115,640 4,550 18 0.4% 3.9% 3.9% (0.0%) 0.12%
Walmart 21,435,137 6,501,715 485,520 35,880 241 0.7% 7.4% 7.3% (0.0%) 0.48%
Walmart de Mexico 1,755,582 741,589 29,886 2,982 27 0.9% 10.0% 9.9% (0.1%) 0.08%
Carrefour 3,375,000 1,775,000 90,379 4,643 66 1.4% 5.1% 5.1% (0.1%) 0.05%
Wesfarmers 4,240,752 1,568,933 48,963 3,548 58 1.6% 7.2% 7.1% (0.1%) 0.07%
$37Recommended carbon price (CDP, OMB)