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.
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.
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.
Page 55
Conference on Sustainability Reporting, Corporate Social Responsibility and Governance
Industry Perspective and Supply Chain Guenter Zwickl Siemens Pakistan
Page 56
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
Page 57
Sustainability at Siemens
Business Environment
Society
Sustainability
What Sustainability means for our business
Page 58
- 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
Page 59
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
Page 60
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
Page 61
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
Page 62
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
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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
Page 64
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
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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
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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
Page 67
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”
Page 68
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
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KPMG Taseer Hadi & Co. Chartered Accountants
Expect the Unexpected Building Business Value in a Changing World
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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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Business Environment – 20 Years On Since Rio Earth Summit
Globalization
Digital connectivity
Accelerated consumption
Disparate prosperity
Ecological decline
Resource scarcity
Lack of global governance
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Business Environment – 20 Years On Since Rio Earth Summit
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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Business Environment – 20 Years On Since Rio Earth Summit
Accelerating Human Footprint
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Business Environment – 20 Years On Since Rio Earth Summit
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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Business Environment – 20 Years On Since Rio Earth Summit
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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Call to Action: Business Strategies & Policy Formation
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.
© 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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Call to Action: Business Strategies & Policy Formation
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).
© 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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Call to Action: Business Strategies & Policy Formation
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
© 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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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
© 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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Thank you Masoud Naqvi Senior Partner KPMG Taseer Hadi & Co.
© 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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© 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
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
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
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