Sustainability, CSR and Governance

Sustainability, CSR and Governance

By:

Dr. Tilo Klinner

Regulator’s Perspective / Stock Exchange

By:

Mr. Nadeem Naqvi

Linking Sustainability with governance and strategy

Syed Asad Ali Shah Managing Partner Deloitte Pakistan

Agenda 200 year old economic model Parallel crises Impact of climate change & excessive waste, in Pakistan Concept of sustainable development New Governance / Economic Model Governance, Strategy and Sustainability Sustainable Enterprise Triple bottom line reporting Integrated Reporting Global and local Practices on sustainability reporting. Way forward.

200-Year Old Economic Model

• Based on two false assumptions : – That there were limitless resources

in nature – Nature had an infinite capacity to

absorb waste

200 years of development

• 19th and 20th Centuries – mechanization & industrialization

• 20th Century – Acceleration in consumption of fossil fuels and Co2 emissions

• Deforestation : more land under agriculture

• More in urban areas – overpopulation • Resource depletion and pollution at rapid

pace

200 Years

Take, Make and Waste Natural capital at no cost As a result, natural resources

depleted, water polluted and greenhouse gasses (GHG) into sewer in the sky Business cannot be conducted as

usual

Parallel Crises

• Financial crisis > Sovereign Debt Crisis > Economic Crisis

• Climate change crisis • Ecosystem/natural resources crisis –

two-thirds of our most important ecosystems – like tropical forests, farm land, fresh water and marine resources – are used beyond nature’s capacity to regenerate them

Global warming is the continuing rise in the average temperature of Earth's atmosphere and oceans. Global warming is caused by increased concentrations of greenhouse gases in the atmosphere, resulting from human activities such as deforestation and burning of fossil fuels.

http://en.wikipedia.org/wiki/Greenhouse_gas

http://en.wikipedia.org/wiki/Attribution_of_recent_climate_change

http://en.wikipedia.org/wiki/Attribution_of_recent_climate_change

The Economics of Ecosystems and Biodiversity (TEEB)

• Nature provides human society with a vast diversity of benefits such as food, fibres, clean water, healthy soil and many more. Though our well-being is totally dependent upon the continued flow of these “ecosystem services”, they are predominantly public goods with no markets and no prices, so are rarely detected by our current economic compass. As a result, biodiversity is declining, our ecosystems are being continuously degraded and we, in turn, are suffering the consequences

Fresh Water Crisis

• No water – no existence • 1% of world’s waters • Contain 40% of aquatic biodiversity • Sea occupies 75% of the earth’s surface • Only 60% of fish species

Impact of climate change & excessive waste, in Pakistan Rapid Melting of Glaciers due to climate change Deforestation Floods of 2010 & 2011 have made over 25 million homeless Water Pollution Water wastage in irrigation & agriculture have caused water

logging and soil erosion Poor solid waste management practices Poor safety standards (Karachi Baldia factory fire incident) Energy Crisis owing to uneconomic use of resources Pressure of Growing population, urbanization Over 1/3rd living below poverty Poverty, Unemployment, food insecurity, energy crisis

contributing to escalating crime, religious extremism

Causes of global warming

1- Natural Causes

Greenhouse effect.

2- Man-made Causes

Carbon Dioxide ( Car’s, Airplanes& Buildings).

Burning fossil fuels.

Population. Cutting Down trees.

Poverty & pollution

Beach scene, Clifton area, Karachi, Pakistan. The water is so polluted by oil spills that no one baths in the water. The beach is littered with plastic bags.

http://www.villagevoice.com/related/to/Clifton+(Staten+Island)

Fires burning along the banks of the Lyari River, Karachi, Pakistan. The river is completely polluted with sewage and toxic waste. It is Karachi's main waterway.

Garbage pollution

Two children on banks of a canal filled with toxic waste from Karachi's tanneries, Korangi Town, Karachi, Pakistan.

Fires burning along the banks of the Lyari River, Karachi. The river is completely polluted with sewage and toxic waste. It is Karachi's main waterway.

Karachi Factory Fire : nearly 300 people died owing to lack of appropriate safety standards

The New Governance Model

• Business as unusual • Making more with less • Reduce waste & conserve resources

• Especially energy & water • Renewables and Recycle • Governance, strategy and sustainability are

inseparable!

Concept of Sustainable Development.

Brundtland Report by World Commission on Environment and Development defined the concept of sustainable development as:

‘Development that meets the needs of the present without compromising the ability of future generations

to meet their own needs’

Limit to Growth

Silent Spring

The Population Bomb

Agenda 21

Inspirations:

New Vision : New Economic Model Incorporate Sustainability into Governance &

Strategy, Culture, not only just the way we do business, but also the way we live

“Sustainable Corporation is one that creates Profit

for its Shareholders while Protecting the Environment and

Improving the Lives of those with whom it Interacts”

Profitability & doing the Right Thing Sustainable Companies Find Ways to Make “Doing Good” and

“Doing Well” synonymous, thus Avoiding the Implied Conflict between

Society and Shareholders.

New Economic Model

Focusing on Profit Alone can Backfire

Businesses are Accountable to more People than they Realize

Bad things can Happen to Good Companies that Fail to take a Broad View of Accountability

Stakeholder Engagement is an increasingly Critical Component of Successful Management

Typi

cal M

easu

res

Economic Environmental Social

Sales, Profit, ROI Air Quality Labor Practices

Taxes Paid Water Quality Community Impacts

Monetary Flows Energy Usage Human Rights

Jobs Created Waste Produced Product Responsibility

Total Total Total

Triple Bottom Line (3BL) 3BL reporting is a method of demonstrating a Commitment to the Community. Reporting on Sustainability is not enough, as organizations must also include the Principles of Sustainability into their overall Business Strategy.

The Global Reporting Initiative Framework(GRI)

• Non-profit organization that promotes economic, environmental and social sustainability.

• The cornerstone of this framework is the Sustainability Reporting Guidelines, the most recent version is G3.1.

• GRI Application Level system provides organizations with a pathway towards continuous improvement of their sustainability reporting.

• The Application Level system is less concerned with the quality of the information provided and applies to the number of KPI’s to be reported.

• An Application Level with a plus sign (+) indicates that the report has been externally assured.

• Application Levels can be either self-declared by the reporting company, or checked by GRI in addition.

United Nations Global Compact (UNGC)

• UNGC is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.

• Objectives: Mainstream the ten principles in business activities around the world and catalyze actions in support of broader UN goals, including the Millennium Development Goals.

• The Global Compact is a practical framework for the development, implementation, and disclosure of sustainability policies and practices, offering participants a wide spectrum of work-streams, management tools and resources.

The World • The Stiglitz Report, France (relates to measurement of economic &

social well being of the people-including environment / sustainability )

• Danish Financial Statements Act (promotion of business-driven social responsibility; CSR through state activities; encouraging businesses to be environmentally friendly & Action plan on corporate social responsibility

• UK Companies Act (requires quoted companies to report on employees, environmental matters, social and community issues)

• German Commercial Code • IFAC (sustainability framework) • Harvard and SEC • A4S (set up by HRH The Prince of Wales in 2004 “To help ensure that

sustainability – considering what we do not only in terms of ourselves and today, but also of others and tomorrow – is not just talked and worried about, but becomes embedded in organizations’ “DNA”

World

• GRI • IIRC • King III – integrated reporting • Stop reckless business

Integrated Reporting

Companies will eventually Cease to Issue Separate Environmental or Sustainability Reports and will instead Integrate all Material and Relevant Data in one form that Presents the Complete Package of Information that a Prudent Investor or other Stakeholder would Want to Know.

Integrated Reporting

IFAC Sustainability Framework 2.0

The IFAC Sustainability Framework Targets Professional Accountants Working in Commerce, Industry, Financial Services, Education, , Public and Not-for-profit Sectors.

IFAC strongly believes that these Professional Accountants can Influence the Way Organizations Integrate Sustainability into their Mission, Goals and Objectives, Strategies, Management and Operations, Definitions of Success, and Stakeholder Communications.

IFAC Sustainability Framework 2.0 IFAC assumes that Professional Accountants in all types of Organization have a Significant role in:

Challenging Conventional Assumptions of Doing Business, Identifying Risks, and Seizing Opportunities

Integrating Sustainability Issues into Strategy, Operations, and Reporting

Redefining Success in the context of achieving Sustainable Value Creation

Establishing Appropriate Performance Goals and Targets

Encouraging and Rewarding the Right Behaviors

Ensuring that the Necessary Information, Analysis, and Insights are available to Support Decision Making

Global Trends Over 50% of the Fortune 500 Companies and S&P’s 100 Companies Issue Triple Bottom Line Reports.

Fortune 500 Companies indeed Prove that Social and Environmental Investments Do Make Economic Sense in the Long Run

Reporting by Type

Global Trends – Best Corporate Responsibility Report 2010

Global Trends – Best Integrated Report 2010

Environmental Sustainability Report include Future Environmental Goals as well as Environmental Targets that have been Achieved: Using 100% Renewable or Recycled Materials for all products and

packaging Having Zero Consumer Waste go to Landfills

Social Responsibility Section Reports their Philanthropic Work, such as: P&G and Shiksha:

Increasing Access to Education in India P&G and Feeding America:

Fighting Hunger

P&G prepares:

Global Trends

Environmental Sustainability

Lead the Industry By Incorporating at least 10% Recycled PET

Committed to Improve Water-use Efficiency by 20% per Unit of Production by 2015.

Human Sustainability

Committed to Reduce the Average Amount of Saturated Fat per Serving by 15 Percent By 2020

Eliminate the Direct Sale of Full-sugar Soft Drinks to Primary and Secondary Schools around the Globe by 2012.

Economic Sustainability

Consolidated Financial Statements

Global Trends

Microsoft publish Citizenship Report to Highlight Social Services by:

Educating People to Use, Create, And Value Technology

Encourage Employees to Offer Volunteer Services

Working to Unlock Technology's Potential To Enable A More Energy-

efficient Economy.

Focusing on Incorporating Sustainable Practices into Operations and

Minimizing Own Environmental Footprint while Growing Business.

Promoting Positive Environmental and Social Outcomes

Global Trends

Sustainability Reporting in Pakistan

• A number of Pakistani companies are beginning to recognize social responsibility / sustainability as an element of their reports.

• Over 70% of KSE 100 index companies are issuing some reports on sustainability or social responsibility..

KSE 100 - Status of Sustainability Reporting

Sustainability is gaining greater acceptance in Pakistan; KSE 100 currently has 19 companies that are issuing sustainability reports.

10 companies issue dedicated sustainability reports, out of which 8 are based on the GRI Framework. These include Unilever Pakistan, Security papers, Engro Corp, Engro Polymer, ICI Siemens, Attock Refinery, Fauji Fertilizer, Al Ghazi Tracors and Lucky Cement.

Of the companies issuing sustainability reports, Fauji Fertilizer, Al Ghazi Tractors, Unilever Pakistan and Engro Polymer refer to the UNGC’s ten principles.

Engro Corp, Engro Polymer, Lotte PPTA, ICI, Attock Refinery & Security paper are obtaining third party assurance on their reports.

Awards on sustainability Joint committee of ICAP and ICMAP has established

the ‘Best Sustainability Report Award’ to promote reporting on sustainability.

Recipient of 2011 ‘Best Corporate and Sustainability Report Award’ was “Fauji Fertilizer Company”

ACCA-WWF have also been issuing awards on sustainability since 2008.

ICI Pakistan was the winner of ACCA-WWF award for 2011.

Unilever Publish Sustainability Report & salient Features of Current Issue are:

Over 500 Students Benefitted from Early Childhood Education Programme with Surf Excel

Unilever Employees Contributed an Equivalent of 82,000 Meals through the Payroll Programme for its Partner United Nations World Food Programme.

Reduced Carbon Footprint by 16%

Local Trends

Siemens publish Sustainability Report and Current Version covered:

The United Nations and Siemens joined hands to make Cities more Livable and Promote Sustainable Urban Development

Administering a Companywide Environmental Program Aimed at achieving 20% Improvement in Energy

Efficiency, Co2 Emissions, and Water Consumption; and

15 Percent Reduction in Waste Volume

Local Trends

Local Trends Abbot publish Environmental and Social Achievements: Improve the Efficiency and Sustainability of our Business Activities

and Products, Reducing Greenhouse Gas Emissions, Water and Waste Use

Established a School “Roshan Mustaqbil” for Internally Displaced Persons in one of the Flood Affectees Camp.

Abbott Pakistan has Supported “Poor Patient Aid Society, Civil Hospital Karachi” which resulted in Treatment of approximately 2 Millions Patients this year.

Local Trends

Lucky Cement has taken bold steps on implementing sustainable change, and published sustainability report

application level “A” of GRI G 3.1 framework.

• Waste Heat Recovery Plant: Installation of the plant reduced CO2 emissions (approx 70,000 tons per annum)

• Estimated cost saving due to use of waste head recovery process is estimated at Rs. 260 million.

• This not only benefitted environment but also reaped financial savings and qualified for carbon credit allowances.

Engro publishes Sustainability Report. Highlights of the Reports are: People Improved the Quality of the Physical Infrastructure for Community

around Manufacturing Sites Played an Admirable Role in Responding to the Floods.

Planet Successfully Implemented several Policies to Reduce Carbon

Footprint and Green House Emissions Engro Vopak initiated 15 Projects to Reduce its Energy

Consumption and Carbon Footprint. Profit Engro’s Investments in Agriculture, Energy and Chemicals Were

Designed to take advantage of Pakistan’s Economic Needs.

Local Trends

Local Trends

Values revolve around Ethics & Integrity, Health & Safety, Innovation, Community and People… (GR1 B+)

• Electronic communication: Led to a 24 per cent reduction in paper usage.

• Engro Enven Plant: most energy efficient fertilizer plant in the country. Despite gas curtailment it has achieved lowest gas consumption per ton of urea produced of around 24 MMBtu/ton compared to 28.25 MMBtu/ton of old urea plants

• Uses 10% of gas as fuel while old plants burned roughly 20%. Hence, larger proportion of gas is converted to urea. would free up energy for other uses in the country.

• Gas bill of a new plant would be approx Rs.2.1 billion per annum lower compared to an old plant.

Local Trends

The sustainable strategy is based on core principles of people, planet, profit & society…

• The company has taken energy efficient strategies head-on and focuses on efficiency gains in particular.

• Energy conservation: Lotte’s sustainability strategy has led to a reduction in consumption of electric power, natural gas and water, by more than 26 per cent, 37 per cent and 40 per cent, respectively.

• The company generated Rs. 58.4 billion of economic value and invested Rs. 11.5 million via voluntary contributions and investing funds in the broader community.

Way forward Governance and Sustainability should be an integral part of

corporate strategy. Integrated reporting on governance and sustainability (triple

bottom line) need to be encouraged and rewarded. Profit, People and Planet The Code of Corporate governance needs to enhance the

reporting to cover sustainability on the pattern of King III. The companies who act as responsible citizens, demonstrate care

for society, people and environment (by consuming less / or using renewables ) are bound to achieve long term success.

PICG should work with KSE / SECP / ICAP to create awareness on sustainability, & to incorporate sustainability into CCG.

Sustainability is key to transform, not just the corporate sector, but our country’s economy as a whole

Deloitte.

Conference on Sustainability Reporting, Corporate Social Responsibility and Governance

Industry Perspective and Supply Chain Guenter Zwickl Siemens Pakistan

Overview

Sustainability at Siemens

Sustainability and Supply Chain

SCM at Siemens: Brief History and Achievements

Code of conduct for suppliers that encompasses Sustainability Governance and CSR

- Our actions are governed by the fundamental resolve to act responsibly on behalf of future generations to ensure economic, environmental and social progress

- We are providing innovative products and solutions to improve both our own eco-balance and those of our customers and suppliers in area of environment

- We are focusing on long-term value creation in the area of business

- We are fostering our own employees and striving to be good citizens in all the communities in which we are active in the area of society

Sustainability at Siemens

Business Environment

Society

Sustainability

What Sustainability means for our business

- Sustainability is a synchronized relationship among environmental, social and economic performance within supply chain management domain. - Environmental and social problems and challenges do not stop at the gates of single companies, but have to be considered along the supply chains as the entities across which related material and information flows are organized.

- Environmental management systems and green SCM complement sustainability; one of the key objective is to reduce environmental harm while adopting green SCM.

- Solution lies in expanding focus beyond organizational boundaries and utilize green SCM practices to minimize system-wide environmental impacts

- Through integration of environmental, social, and economic criteria, organizations tend achieve long-term economic viability which is based on resource dependence, transaction cost economics and population ecology.

Sustainability and Supply Chain

332 million tons of carbon dioxide emissions were reduced for customers by our environmental portoflio

In 2008, for the first time in the company’s history, a Supply Chain Management (SCM) function with company-wide responsibility was established at Managing Board level.

SCM at Siemens: Brief History & Achievements

SCM has since made a major contribution to the positive development of Siemens’ profitability. Today, 55 percent of the company’s total procurement volume is bundled. In 2008, the figure was slightly less than 30 percent. Emerging countries now account for 26 percent of Siemens’ procurement volume, compared to 20 percent in 2008. Between 2009 and 2012, the accumulated contributions to profit attributable to SCM were in the upper single-digit-billion euro range

55% Is the total procurement volume bundled across Siemens globally

We consider legal compliance to be one of our primary duties. As part of our corporate responsibility, we also expect this from our suppliers. As a Siemens supplier you commit yourself to comply with the laws of the applicable legal system(s).

Code of Conduct for suppliers Legal Compliance

We conduct our business with the highest performance with the highest ethical standards

Siemens works against all forms of corruption and no contraventions will be tolerated. We expect that our suppliers to tolerate no form of and do not engage in any form of corruption or bribery, including any payment or other form of benefit conferred on any government official for the purpose of influencing decision making in violation of law.

Code of Conduct for suppliers Prohibition of Corruption and Bribery

Ethical, law biding behavior is expected of all stakeholders in the company

Siemens expects its suppliers to respect the basic human rights of employees as defined in the international conventions of the United Nations (UN), the International Labor Organization (ILO), the Organization for Economic Cooperation and Development (OECD) and the UN Global Compact Initiative. This means that you as our supplier have to, for example: respect the personal dignity, privacy and rights of each individual comply with the maximum number of working hours laid down in the applicable laws.

Code of Conduct for suppliers Respect for basic human rights of employees

Siemens expects its suppliers to only employ workers with a minimum age of 15. In exceptional cases only, we will accept a minimum age of 14 provided that a statutory minimum age of 14 applies under the ILO Convention 138 in the country where the affected supplier maintains its business establishment. As a Siemens supplier you are not allowed to employ workers under the age of 15 or, in those countries subject to the developing country exception of the ILO Convention 138, to employ workers under the age of 14.

Code of Conduct for suppliers Prohabition of Child Labour

Siemens takes responsibility for the health and safety of its employees and its mission is to control hazards and take the best reasonably possible precautionary measures against accidents and occupational diseases to provide training and ensure that employees are educated in health and safety issues to set up or use a reasonable occupational health & safety management system 1) .

Code of Conduct for suppliers Health and safety of employees

Zero Harm Culture Program was implemented across Siemens to increase emphasis on a safety ensured and healthy work environment, on the field and work sites

Siemens acts in accordance with the applicable statutory and international standards regarding environmental protection and its aims to to minimize environmental pollution and make continuous improvements in environmental protection; to set up or use a reasonable environmental management system 1) .

Code of Conduct for suppliers Environmental protection

40% of Siemens‘ revenue is generated through eco friendly products

Siemens uses reasonable efforts to promote among its suppliers compliance with this Code of Conduct and undertakes to comply with the principles of non discrimination with regard to supplier selection and treatment. We also ensure in turn that their suppliers adhere to the international standards as well

Code of Conduct for suppliers Supply chain

In 2012, the prestigious Dow Jones Sustainability Index confirmed Siemens’ pioneering role by awarding the company the top ranking for supply chain management.

Dow Jones confirms Siemens pioneering role

Leader in the Dow Jones Sustainability Index (DJSI) for the first time, in the category “Industrial Goods and Services”

Sheikh Zayed Future Energy Prize for Siemens.

Siemens has won the Sheikh Zayed Future Energy Prize 2013 in recognition of its efforts in reducing emissions and energy consumption through innovative green technologies.

Thank you for

your attention

© 2013 KPMG Taseer Hadi & Co., Chartered Accountants, a Pakistani partnership firm 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.

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KPMG Taseer Hadi & Co. Chartered Accountants

Expect the Unexpected Building Business Value in a Changing World

http://www.picg.org.pk/index.php

http://www.picg.org.pk/knowledge-base/newsletters/Conference-Flyer-Registration-Form.pdf


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Agenda

Business Environment – 20 Years On Since Rio Earth Summit[…]

How has business adapted to these global changes?

The Way We Do Business

Sustainability Megaforces

The Systems Approach to Sustainability: Planning for Change

Call to Action: Business Strategies & Policy Formation

Conclusion


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Business Environment – 20 Years On Since Rio Earth Summit

Globalization, digital connectivity, accelerated consumption and disparate prosperity have combined with ecological decline, a lack of global sustainability governance and resource scarcity to transform the playing field for businesses.


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Globalization

Digital connectivity

Accelerated consumption

Disparate prosperity

Ecological decline

Resource scarcity

Lack of global governance


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Global scenario

Mobile phone subscriptions rose by 23,000 percent from 1992, to 5 billion by 2010

India and China together added 300 million mobile phone subscribers during the year 2010 alone

The number of Internet users grew by 29,000 percent from 1992 to 2 billion people in 2010

Facebook, launched in 2004, had more than 800 million active users by 2011

Resource use has grown faster than the population, which itself surged by 1.5 billion people since 1992, reaching 7 billion by 2011

Over a billion people moved into cities during this time and a new middle class emerged, especially in Asia, with more resource intensive diets and life-styles

Pakistan scenario:

Mobile phone subscribers increased to 118.317 millions

Broadband subscribers increased to 1.9 million

Number of motor vehicles tripled to 9.08 millions with four fold increase in motor cycles to 5.3 million

Population grew by 64 million to 180.71 million (2010-11). Urban population grew by 100% to 67.55 million.

Consumption increase:

Petro products by 5.280 MMTs to 18.505 MMTs

Gas from by 724,000 mmcft to 1,275,000 mmcft

Electricity by 43,211 gwh to 77,099 gwh


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Accelerating Human Footprint


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The 20 years since Rio 1992:

36 percent increase in global CO2 emissions

9 percent increase in CO2 concentration in Earth’s atmosphere

0.4–0.6 degrees Celsius increase in mean surface temperature

18 of the 20 hottest years on record

melting of ice sheets and thawing of permafrost in northern latitudes

0.5 degrees Celsiuss warming of ocean waters

global sea level rise of 2.5 mm per year from thermal expansion

growing acidity of the world’s oceans threatening marine life

rapid diminishment of mountain glaciers in terms of annual mass balance; and

steady decline in the annual minimum extent of Arctic sea ice.


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In 2008, the world’s 3,000 largest public companies were estimated to be causing US$2.15 trillion of environmental damage

.


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How Has Business Adapted To These Global Changes?

Sustainability increasingly seen as a source of innovation and growth rather than cost reduction and risk management.

Sustainability-related investments grown substantially – Bloomberg New Energy Finance in 2012 reported the trillionth dollar of investment in clean energy.

The Carbon Disclosure Project in 2012 reported that companies with a strategic focus on climate change provided investors with approximately double the average total return of the Global 500 from January 2005 to May 2011.

Recent polls of senior executives reveal that many of the world’s largest 250 corporations are increasingly embracing sustainability as a core foundation of successful business and publicly report about their performance.

However, there remains a long way to go.


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The Way We Do Business

For 20 years or more the world has recognized that the way we do business has serious impacts on the world around us.

It is increasingly clear that the state of the world around us affects the way we do business.

The resources are becoming more difficult to access and more costly.

Increased strain on infrastructure and natural systems as patterns of economic growth and wealth change.

Physical assets and supply chains are being affected by the unpredictable results of a changing climate.

Businesses can expect more complex sustainability legislation.

Challenge of decoupling human progress from resource use and environmental decline, one of the biggest sources of future success for business.

Increasing recognition that there is value and opportunity in a broader sense of responsibility.

What is good for people and the planet can also be good for the long term bottom line and shareholder value.

BU

T TH

IS IS

NO

T TH

E W

HO

LE S

TORY


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Sustainability Megaforces

Physical, Regulatory, Reputational,

Competitive, Social & Litigation

Annual output loss estimated at 1-5 %

IEA predicts price of crude to rise to US$ 120/barrel by

2035

Demand for material resources will soar while supply will become

increasingly difficult

Lack of clean water will reduce the

viable agricultural land, leading to

migration to cities

Significant supply challenges and price volatility

Resource use per capita grows as income rises. Billions more middle class

consumers will emerge over next 20 years Where improvements in urban

infrastructure lag behind population & economic growth, slums expand and

the gap between rich and poor widens

Global food prices are expected to increase by 70-90 % by 2050

Dependence on critical services these ecosystem provide

The area covered by the primary forest, those undisturbed by the human activity, have fallen by 40 million hectares, an area larger then Germany

and Japan, since 2000

Global sustainability megaforces will affect the future of every business. Climate Change

Material Resource Scarcity

Energy & Fuel

Water Scarcity

Population Growth

Wealth

Urbanization

Food Security

Ecosystem Decline

Deforestation


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The Systems Approach to Sustainability: Planning for Change

Trend projections prepared without consideration of the entire system of megaforces no longer provide an adequate basis for strategic business decisions

The sustainability megaforces reinforce, compete with, or balance the effects of others.

Increasing wealth and the growth of the global middle class will accelerate demand for consumer goods and services, putting further pressure on the natural and material resources needed to produce them.

Companies may already be using systems thinking, in strategic planning, revenue management or supply chain planning to assess and manage new risks and uncover risks that were previously unidentified.

Systems thinking around sustainability embraces the entire structure of megaforces rather than its individual constituents.

These megaforces act as a complex and unpredictable system, feeding, amplifying or ameliorating the effects of others


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The Nexus Approach

The nexus approach has been widely used by the World Economic Forum and others to explore the driving forces behind the challenge of water security.

Regional freshwater availability could struggle to keep pace with the agricultural production necessary to feed the growing population.

Urbanization predictions generally do not account for the potential impacts of climate change refugees migrating from areas where water and food scarcity hit hardest.

Food production projections rarely factor in deteriorating soil quality and the competing demands for agricultural land.

Potential water shortages pose a threat to business growth and expansion and conflicts over water supplies may create a security risk


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The Footprint Nexus

The forces behind mankind’s escalating “footprint” on the planet are interlinked through a complex network of relationships.

Businesses can expect significant supply challenges and price volatility as result of rapid growth in the number of people


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The Erosion Nexus

The Erosion Nexus helps to explore in greater detail the many challenges and opportunities businesses could face as a result of the interactions between sustainability megaforces.


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The Innovation Nexus

The Innovation Nexus is an example of how the systems approach can be used to develop business opportunities by innovating solutions to sustainability problems.


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The Essentials of Business Action Understand and assess risks.

Use integrated strategic planning and strategy development.

Measure and report on sustainability.

Seek collaboration with business partners on sustainability issues.

Build strategic partnerships.


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The Essentials of Government Action Continuity and coherence in policy.

Reducing complexity in policy.

Coordinated international collaboration.

Creation of enabling “green” investment environment.

Increased collaboration with private sector through Public Private Partnerships (PPPs).


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Public-Private Partnerships as a Tool for Green Growth The PPP process cannot be rushed

PPPs sometimes require significant upfront costs

Governments must play an active role in monitoring and regulating the project

PPP structures must be designed to include clear and formal methodologies

A single-minded focus is essential for developing transparent and competitive procurement procedures


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Conclusion

The business community needs clear global rules, powerful regulatory incentives and a level-playing field to support it in moving to sustainable growth

Without action and planning for the complex future, risks will multiply and opportunities will be lost

The transition to a sustainable economy is possible, but requires widespread global support from businesses, governments and civil society.

We can never know the future. But it is good business sense to be prepared for the possibilities.

TO EXPECT THE UNEXPECTED

The new global deal, if it eventuates, will not be agreed until 2015 and will not come into force until 2020


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Thank you Masoud Naqvi Senior Partner KPMG Taseer Hadi & Co.


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© 2013 KPMG Taseer Hadi & Co., a Partnership firm registered in Pakistan 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”).

By:

Mr. Parvez Ghias

“In God we trust, all others bring data”!

Anonymous

Concern Beyond Cars

Toyota Road Traffic Injury

Research Project 2007-11

Toyota Road Traffic

Congestion Research Project

2012-13

Indus Motor Company Limited

http://hospitals.aku.edu/karachi/?saveCookie=no

Over 1.2 million people die each year on the world’s roads, and between 20 and 50 million suffer non-fatal injuries Over 90% of the world’s fatalities on the roads

occur in low income and middle income countries, which have only 48% of the world’s vehicles Road traffic injuries will rise to become the fifth

leading cause of death by 2030

Global Status Report on Road Safety

Objective Quantify and assess the severity of traffic accidents by

the different road user group victims brought to the 5 major (partnering) hospitals of Karachi

Deliverables Establish database and leverage with partners to

Address poor road engineering design issues Enable hospitals to better deal with accident emergencies Better enforcement – traffic code, helmet use, license issue

Children Road Safety Education at schools Driver training and fleet maintenance at businesses

Road Traffic Injury Research Project

Accidents Recorded 2007-12

60%

22%

11%

3% 5%

Total Injuries

39%

38%

13% 4% 6%

Total Fatalities

Rider/Pillion Rider Pedestrian Passengers Drivers Unknown

Reasons: •Non compliance of Helmet laws •Lack of riding/driving skills •Violation of traffic rules

93,701 34,276

17,305

7,639 4,348

2,219

2,205

740 372 217

14%

17%

20%

15%

9% 7%

5% 4%

2% 3% 3%

0%

5%

10%

15%

20%

25%

Below 15 16~20 21~25 25~30 31~35 36~40 41~45 46~50 51~55 56~60 61+

Age Group of Accident Victims (2007-11 Average)

86%

14%

Male

Female

18%

18%

1% 1% 5%

45%

5% 6% 1%

Pedestrian Error

Driver / Rider error

Passenger error

Distractions

Behavior

Injudicious Action

Road Fault

Vehicle Fault

Vision or Special

Causality Contributory Factors

493

853

1119

457

393

1316

545

745

628

40

22

32

12

26

36

20

24

19

161

113

111

96

70

93

78

74

75

217

355

362

179

212

239

221

139

170

54

36

56

27

28

55

19

14

13

0 200 400 600 800 1000 1200 1400 1600 1800 2000

Nationa Highway

Korangi Road

Shahrah-e-Faisal

Korangi Industrial Area

Mauripur Road

MA Jinnah Road

Ch Fazal Ellahi Road

Nawab Sadiq Ali Khan Road

Shahrah-e-Sher Shah

Rider/pillion Rider Driver Passenger Pedestrian Unknown

Road User Causalities on Major Roads

Accident Victim Mode of Arrival at Hospital

http://www.google.com/url?q=http://www.flickr.com/x/t/0097009/photos/ungc/7474133324/&sa=D&sntz=1&usg=AFQjCNEQFzwRMdD-tjFv7ZP4xXFUEr3vXg

http://decadeofaction.sandbaghq.com/index.php/

Toyota Research on Traffic Congestion Objective

Quantifying the economic cost of traffic congestion

Deliverables Traffic Parameters Behavior Identification of Congestion Points and estimation of

delays Quantification of Congestion Cost

Research Study Area 54,000 vehicles daily

55,000 vehicles daily

First Stage (Preliminary Results) Identification of daily and peak volume traffic of 4,000

vs. road design of 3,500 per hour

Daily time loss 4,500+ man hours based average delay of 8 minutes

Identification of precise locations and causes of delay

Yearly congestion cost estimate Rs 500 million

Toyota Research on Traffic Congestion

Work in Progress (Second Stage – Jan/Jun’13) Stakeholder data collection Overlay seasonal factors of commodity movements Future automotive growth estimates

Toyota Research on Traffic Congestion

170 240

350

0

100

200

300

400

FY14 FY17 FY20

1700 2200 2400

0

1000

2000

3000

FY14 FY17 FY20

Passenger Cars & LCV Motor Cycles In ‘000 In ‘000

Good Data for

Good Government!

Thank You

Sustainability, CSR and Governance

Documents

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