ESG ISSUES Environmental, Social and Governance February 23, 2015 1.
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Transcript of ESG ISSUES Environmental, Social and Governance February 23, 2015 1.
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ESG ISSUES
Environmental, Social and GovernanceFebruary 23, 2015
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ENVIRONMENTAL ISSUES
Biodiversity/land use
Carbon emissions
Climate change risks
Energy usage
Raw material sourcing
Regulatory/legal risks
Supply chain management
Waste and recycling
Water management
Weather events
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SOCIAL ISSUES
Community relations
Controversial business
Customer relations/products
Diversity issues
Employee relations
Health and safety
Human capital management
Human rights
Responsible marketing and R&D
Union relationship
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GOVERNANCE ISSUES
Accountability
Anti-takeover measures
Board structure/size
Bribery and corruption
CEO duality
Executive compensation schemes
Ownership structure
Shareholder rights
Transparency
Voting procedures
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CORPORATE VIEW ON ESG
93% of CEOs agreed with the statement - “demonstrating a visible and authentic commitment to ESG is especially important...to regain and build trust from the public and other key stakeholders, such as consumers and governments—trust that was shaken by the recent global financial crisis.”
Goldman Sachs found “research at both the corporate and university levels suggests that this next generation of employees and consumers have specific needs at work that are dramatically different from previous generations. High among these is a desire to align personal and corporate values. To attract and retain this group, we believe that companies need to provide rewards beyond financial gain.”
McDonalds is serving Fair Trade Coffee
Coca Cola is using plant-based bottles
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USING ESG FOR COMPETITIVE ADVANTAGE
Reducing Risks
Improving Performance Process innovation Product innovation
Reputation Attracting employees Attracting customers
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ESG PRACTICES AND STOCK PRICE
•More sustainable firms generally outperform less sustainable firms
•Stocks of well-governed firms out perform better than stocks of poorly-governed firms
•Good employee relations and employee satisfaction contribute to better stock market performance
•Using positive screens substantially outperforms negative screens