Panel: New Horizons in Measuring the ROI of Sustainability
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Transcript of Panel: New Horizons in Measuring the ROI of Sustainability
KNOWLEDGE FOR ACTION
THE NET PRESENT VALUE OF SUSTAINABILITY:
Newmont’s Ahafo Mine in Ghana
KNOWLEDGE FOR ACTION
100
2003
00400
Mar
ket V
alue
01jan2007 01jan2008 01jan2009 01jan2010
Market Value (TSX) Resource valuation
What Explains the Market Capitalization Discount of Mining Companies?
KNOWLEDGE FOR ACTION
.51
1.5
Stak
ehol
der C
onfli
ct/C
oop
0.1
.2.3
.4.5
Mar
ket V
alue
01jan2007 01jan2008 01jan2009 01jan2010
Market Value / Valuation Stakeholder Conflict/Coop
4.1.6. Business value & stakeholder perceptionsStakeholder Sentiment
Ratio
of
/ Val
uatio
n
Witold Henisz
KNOWLEDGE FOR ACTION
Henisz, Dorobantu, Nartey 2011 – Analyze market capitalization of population of 21 gold mining firms on Toronto Stock eXchange with 1,2 or 3 gold mines
NPV of gold …………. 22%• Quantity of gold per year, total cost of extraction per
year, futures price of gold per year appropriately discounted
Political/Social ………. 45-65%• Credibility of political institutions (i.e., hard for
governments to renege on deals)• Support from political and social stakeholders (i.e.,
external stakeholders act or speak about the mine cooperatively > conflictually)
Residual ………………. 13-33%
Stakeholder Sentiment Worth 2 X Gold
Witold Henisz
KNOWLEDGE FOR ACTION
FVTOOL, Value Creation via Local Hiring
KNOWLEDGE FOR ACTION
FVTOOL, Value Protection
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Integration: FVTOOL, Monte Carlo Simulation
Monte Carlo is a:• Statistical technique
by which a quantity is calculated repeatedly
• Using randomly selected “what-if” scenarios.
• Results approximate the full range of possible outcomes
Value in Billions
Occ
urre
nces
Witold Henisz 7
KNOWLEDGE FOR ACTION
FVTOOL, NPV of sustainability
Dashboard - Total Sustainability Value Added
For $2billion CAPEX project, sustainability investments returned as much as $187 million of NPV.
Witold Henisz 8
KNOWLEDGE FOR ACTION