activities
– Develop more sophisticated
metrics to capture the financial value
– Build better tools and methods to
communicate that value to internal and external stakeholders
Meeting the demands of existing metric systems
Getting recognition from the market for effective ESG
value, but are not fully taking it into account
▪ Many companies create real value from ESG
activities, but most do not measure that value, and even fewer communicate the value
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Valuing Corporate Social Responsibility and Sustainability
Research methodology
Initiative white paper, with analysis of ESG measurement issues and recommendations
▪ Examination of ESG
programs today, the challenge of measuring value, and methods for assessing and communicating value
▪ Examined existing metric
systems
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CFO, Investor, ESG Professional McKinsey Quarterly survey
▪ 238 CFOs and investment
professionals
Growth New customers/market share ▪ Use ESG to engage consumers and build knowledge of expectations and behaviors
Innovation
▪ Develop cutting edge technology and innovative products and services for unmet social or environmental needs that could translate to business uses, patents, proprietary knowledge, etc.
DRAFT
BCCCC Presentation March 2009
CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibiteiciency
Reputation/Price premium
▪ Enable bottom line cost savings through environmental operations and practices (e.g., energy and water efficiency, less raw materials needed, etc.)
▪ 127 ESG professionals and
socially responsible institutional investors through BC CCC
▪ Range of industries
and regions
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Reputational risk
▪ Mitigate risks by complying with regulatory requirements, industry standards, and NGO demands
▪ Facilitate uninterrupted operations and entry in new markets using local ESG efforts and community dialogue to engage citizens and reduce local resistance ▪ Secure consistent, long term, and sustainable access to safe, high quality raw materials and products by engaging in community welfare and development
▪ There is a real opportunity for ESG professionals
to fill this gap
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▪ Develop 10 best practices
for designing strategic ESG programs
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What are your “pain points” as an ESG practitioner?
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Getting adequate resources, traction and integration internally
Establishing and monitoring metrics to assess impact of program
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Key findings
▪ ESG activities create value along the four
▪ Avoid negative publicity and boycotts by addressing ESG issues
Management quality
Leadership development Adaptability Long term strategic view
▪ Develop leadership skills and improve employee quality through ESG participation ▪ Build ability to adapt to changing political and social situations by engaging local communities ▪ Develop long term strategy encompassing ESG issues
▪ Reduce costs generated by employee attraction and turnover by using ESG to build morale ▪ Develop employees’ skills and increase productivity through participation in ESG activities
areas traditionally valued by the market:
– Growth – Return on Capital – Risk Management – Management Quality
▪ Investors and CFOs believe ESG activities create
SOURCE: Team analysis
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▪ Tie ESG to value along
4 dimensions typically used by market: growth, return on capital, risk management, management quality
▪ Gain access to new markets and market share through exposure from ESG programs ▪ Create products to meet unmet social needs and increase differentiation