O slideshow foi denunciado.
Utilizamos seu perfil e dados de atividades no LinkedIn para personalizar e exibir anúncios mais relevantes. Altere suas preferências de anúncios quando desejar.

CITI: Guidance for Investor Relations Officers on Managing ESG Demand

821 visualizações

Publicada em

We were asked to speak to a group of CITI clients about the latest trends in #sustainability and #ESG. This presentation provides the latest information on the growth of the #ESG market, as well as real examples of corporate ESG data and how it is being presented to and used by intermediaries like Bloomberg, MSCI, Sustainalytics and others, as well as by asset owners and managers.

  • Entre para ver os comentários

CITI: Guidance for Investor Relations Officers on Managing ESG Demand

  1. 1. An ERM Group Company © 2018 BrownFlynn Ltd. All Rights Reserved. Mike Wallace, Partner / September 28, 2018 Navigating ESG Disclosure: Market Trends and Strategic Opportunities
  2. 2. / 2© 2018 BrownFlynn Ltd. All Rights Reserved. Agenda Investor Activity & Market Trends Understanding the ESG Ecosystem ESG Due Diligence Emerging Issues:  TCFD  Social & Human Capital Active Management of the ESG Ecosystem
  3. 3. © 2018 BrownFlynn Ltd. All Rights Reserved. Investor Activity & Market Trends
  4. 4. / 4© 2018 BrownFlynn Ltd. All Rights Reserved. Why Does Sustainability Matter? Stakeholder pressure that customers receive from the groups listed below drives the need for sustainability management. As pressure from these groups increases, customers enhance their management across their value chains, and the pressure transfers upstream to suppliers. Transparency on Sustainability Investors Employees Consumers Customers Suppliers Regulators/ Legislators Boards of Directors Local Communities Activists/ Advocacy Groups Industry Associations
  5. 5. / 5© 2018 BrownFlynn Ltd. All Rights Reserved. Investor Coalitions & Networks Interfaith Center on Corporate Responsibility (ICCR)  1972; nearly 300 members; representing over $400 billion Institutional Investors Group on Climate Change (IIGCC)  2001; over 150 members; representing over $20 trillion Carbon Disclosure Project (CDP)  2002; nearly 900 signatories; representing over $100 trillion Investor Network on Climate Risk (INCR)  2003; over 150 members; representing $25 trillion Principles for Responsible Investment (PRI)  2006; over 1,800 signatories; representing over $80 trillion United Nations Guiding Principles Reporting Framework  2013; over 67 investors; representing nearly $4 trillion Task Force on Climate-related Financial Disclosures  2015; over 32 members and 275 signatories; representing over $86.2 trillion
  6. 6. / 6© 2018 BrownFlynn Ltd. All Rights Reserved. Shareholders Voting with Values 435 shareholder resolutions were voted on in 2018 with a significant number focused on environmental and social topics. Source: 2018 Proxy Preview. As You Sow, Ceres
  7. 7. / 7© 2018 BrownFlynn Ltd. All Rights Reserved. UN Principles for Responsible Investment (PRI) The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. Source: http://www.unpri.org/ $7 $10 $13 $18 $21 $24 $32 $34 $45 $59 $62 $68 $82 63 185 361 523 734 890 1,050 1,186 1,251 1,384 1,501 1,714 1,961 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 UN PRI Growth Over Time Assets under management (US$ trillion) Number of Signatories
  8. 8. / 8© 2018 BrownFlynn Ltd. All Rights Reserved. UN PRI Signatories
  9. 9. / 9© 2018 BrownFlynn Ltd. All Rights Reserved. Investor Interests Investors are increasingly asking companies to disclose strategies for long-term value creation and incorporation of ESG into business strategies. I want to reiterate our request, outlined in past letters, that you publicly articulate your company's strategic framework for long-term value creation and explicitly affirm that it has been reviewed by your board of directors…you must also understand the societal impact of your business as well as the ways that broad, structural trends — from slow wage growth to rising automation to climate change — affect your potential for growth.” – Larry Fink, BlackRock Letter to CEOs, 2018 “As part of our stewardship review, we classify companies according to how they have: 1) identified material environmental and social sustainability issues; 2) assessed and, where necessary, incorporated the implications into their long-term strategy; and 3) clearly communicated their approach to sustainability and its influence on strategy.” – Ronald O’Hanley, State Street Letter to Board Members, 2017 “Shareholders rely on a strong board to oversee the strategy for realizing opportunities and mitigating risks. Thorough disclosure of relevant and material risks enables share prices to fully reflect all significant known risks and opportunities…Climate risk is an example of a slowly developing and highly uncertain risk—the kind that tests the strength of a board’s oversight and risk governance..” – F. William McNabb III, Vanguard Letter to Directors, 2017 Further Reading: Why the world’s largest asset managers are pushing long-term thinking, Mark Tulay, Director, Strategic Investor Initiative, CECP
  10. 10. / 10© 2018 BrownFlynn Ltd. All Rights Reserved. World’s Largest Asset Manager BlackRock encourages long-term planning. In his annual letter to the CEOs of the S&P 500 on January 12, 2018, Larry Fink once again highlighted the importance of understanding the impacts that will enable long-term financial growth. Among the key points of this year’s letter, Fink emphasized that every company should:  Demonstrate benefit to all its stakeholders, including shareholders, employees, customers, and the communities in which it operates  Build strong corporate governance practices that establish communication between the company and its shareholders  Describe its strategy for long-term growth and articulate its framework for long-term value creation
  11. 11. © 2018 BrownFlynn Ltd. All Rights Reserved. Understanding the ESG Ecosystem
  12. 12. / 12© 2018 BrownFlynn Ltd. All Rights Reserved. Investor Confusion Among ESG Raters and Rankers  The Problem: ESG raters take multiple assessment approaches, emphasizing subjectivity in analyzing and scoring environmental, social, and governance issues:  MSCI ranks Tesla as industry leader;  FTSE rates the company as laggard;  Sustainalytics in middle of the pack  Bottom Line: Investors should not treat ESG scores as objective truth, but as analyses that need to be understood before acted on
  13. 13. / 13© 2018 BrownFlynn Ltd. All Rights Reserved. Who makes up the ESG Ecosystem? Based on sustainability reporting standards and frameworks, there are 100+ organizations producing lists, rankings, ratings, and scorecards of the “top companies” and “most sustainable” companies.
  14. 14. / 14© 2018 BrownFlynn Ltd. All Rights Reserved. Mainstream Raters are Acquiring ESG Data Providers
  15. 15. / 15© 2018 BrownFlynn Ltd. All Rights Reserved. Mainstream Asset Managers are Acquiring ESG Assets
  16. 16. © 2018 BrownFlynn Ltd. All Rights Reserved. ESG Due Diligence
  17. 17. / 17© 2018 BrownFlynn Ltd. All Rights Reserved. Bloomberg ESG Data Usage Over Time - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2012 2013 2014 2015 2016 2017 14,935 Bloomberg subscribers used ESG data in 2018 (188% growth since 2012) Number of Bloomberg Customers using ESG Data Source: Bloomberg.com. August 2018. Retrieved from: https://www.bloomberg.com/impact/impact/sustainable-finance-solutions/
  18. 18. / 18© 2018 BrownFlynn Ltd. All Rights Reserved. Bloomberg ESG Data  By the end of 2018, Bloomberg will add over 20,000 metrics in 8 new data categories including ESG, Supply Chain, and Corporate Actions.  ESG data is fully integrated into the Bloomberg Terminal, with data accessible using its ESG Dashboard and through multiple functions.  There are currently over 900 ESG data points in Bloomberg.  Additionally, the Bloomberg Terminal includes scores from common third-party ESG research firms, such as Sustainalytics, CDP, ISS, and RobecoSAM.  Bloomberg provides their own rating, called an ESG disclosure score, consisting of a rating from 0-100 based on a company’s level of transparency (not performance). They also provide separate disclosure scores for E, S, and G. Bloomberg & ESG Disclosure Bloomberg covers more than 11,000 companies for ESG data and more than 16,000 companies for executive compensation data across 52 countries. Source: Bloomberg.com. August 2018. Retrieved from: https://www.bloomberg.com/professional/product/2018-reference-data/ Bloomberg ESG Dashboard
  19. 19. / 19© 2018 BrownFlynn Ltd. All Rights Reserved. Bloomberg ESG Dashboard Example Bloomberg users simply type [ESG] into the terminal, and can easily view ESG metrics for any publicly traded company. Source: BP PLC Single Security Data. Bloomberg. Data accessed 9/18/2018
  20. 20. / 20© 2018 BrownFlynn Ltd. All Rights Reserved. ESG Peer Comparison: Scores, Ratings, & Rankings Source: Bloomberg data accessed 9/20/18
  21. 21. / 21© 2018 BrownFlynn Ltd. All Rights Reserved. ESG Peer Comparison: Environmental Metrics Source: Bloomberg data accessed 9/20/18
  22. 22. / 22© 2018 BrownFlynn Ltd. All Rights Reserved. ESG Peer Comparison: Social Metrics Source: Bloomberg data accessed 9/20/18
  23. 23. / 23© 2018 BrownFlynn Ltd. All Rights Reserved. ESG Peer Comparison: Governance Metrics Source: Bloomberg data accessed 9/20/18
  24. 24. © 2018 BrownFlynn Ltd. All Rights Reserved. Task Force on Climate Related Financial Disclosures Emerging Issues
  25. 25. / 25© 2018 BrownFlynn Ltd. All Rights Reserved. Who makes up the ESG Ecosystem? Based on sustainability reporting standards and frameworks, there are 100+ organizations producing lists, rankings, ratings, and scorecards of the “top companies” and “most sustainable” companies.
  26. 26. / 26© 2018 BrownFlynn Ltd. All Rights Reserved. What is the TCFD? The Task Force on Climate-Related Financial Disclosures (TCFD) is an industry-led task force produced recommendations designed to bridge the gap between how companies currently disclose information and how investors would prefer that information be presented.  The TCFD seeks to improve market understanding and analysis of climate-related risks and opportunities by establishing a set of recommendations to “provide a common set of principles” and “guide disclosure to help financial markets assess and price climate-related risks and opportunities.”  The TCFD recommendations established a method for standardizing climate-related financial disclosures in a way that would be useful for investors, lenders, and insurance underwriters in understanding material risks posed by climate change.  TCFD’s recommendations “will help companies understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs.” Source: Frequently Asked Questions Understanding How SASB Standards and TCFD Recommendations Are Complementary
  27. 27. / 27© 2018 BrownFlynn Ltd. All Rights Reserved. Who Sits on the Task Force? The Task Force is made up of 32 member organizations from around the world, including: ① Large banks ② Insurance companies ③ Asset managers ④ Pension funds ⑤ Large non-financial companies ⑥ Accounting and consulting firms ⑦ Credit ratings agencies
  28. 28. / 28© 2018 BrownFlynn Ltd. All Rights Reserved. Notable Signatories as of June 2017
  29. 29. / 29© 2018 BrownFlynn Ltd. All Rights Reserved. Notable Signatories as of December 2017
  30. 30. / 30© 2018 BrownFlynn Ltd. All Rights Reserved. Notable Signatories as of September 2018
  31. 31. © 2018 BrownFlynn Ltd. All Rights Reserved. Social & Human Capital Emerging Issues
  32. 32. / 32© 2018 BrownFlynn Ltd. All Rights Reserved. Human Capital Activity CSHS Human Capital Project fair labor practices, health and safety, responsible contracting and diversity 20152014 workforce demographics; workforce stability; workforce composition; workforce skills and capabilities; workforce culture and empowerment; workforce health and safety; workforce productivity; human rights; and workforce compensation and incentives total headcount, “broken down by the division between full- time and part-time employees, gender, and diversity; Annual turnover—including both planned and regrettable turnover; Investment in training, skills, and professional development— including the rate of progression and promotion within the business; and Employee engagement score. 2016 gender diversity; employment type, such as full-time, part- time or agency workers; staff turnover; accidents, injuries and workplace illnesses; investment in training and development; pay ratios between the highest paid and median and lowest quartile workers across the company; and employee engagement scores. 2017 workforce composition, unionization, worker participation in decision-making, OHS practices, training and development and employee compensation policies. workforce composition, worker welfare, investment in skills and worker representation. Sources: Corporate Disclosure of Human Capital Metrics. October 2017. Retrieved from: https://lwp.law.harvard.edu/files/lwp/files/pension_paper_corporate_disclosure_of_human_capital_metrics_102317.pdf CSHS Human Capital Project. http://www.centershs.org/human-capital.php
  33. 33. / 33© 2018 BrownFlynn Ltd. All Rights Reserved.
  34. 34. / 34© 2018 BrownFlynn Ltd. All Rights Reserved.  hiring and retention,  employee engagement,  training,  compensation,  fair labor practices,  health and safety,  responsible contracting,  ethics,  desired company culture, and  diversity, both with respect to a company’s direct employees and to the employees of vendors throughout the company’s supply chain. Human Capital Management Coalition Views Human Capital Management (HCM) as encompassing a broad range of corporate practices related to the management of employees, including, but not limited to: Members: UAW Retiree Medical Benefits Trust AFL-CIO Office of Investment Amalgamated Bank LongView Funds California Public Employees’ Retirement System California State Teachers’ Retirement System Calvert Research and Management Connecticut Retirement Plans and Trust Funds CtW Investment Group Domini Impact Investments LLC Hermes Equity Ownership Services Illinois State Board of Investment Office of Illinois State Treasurer Michael W. Frerichs International Brotherhood of Teamsters Legal and General Investment Management LiUNA The Nathan Cummings Foundation Office of the New York City Comptroller Scott Stringer Office of the New York State Comptroller Thomas P. DiNapoli Ohio Public Employees Retirement System Pennsylvania Treasury Segal Marco Advisors Sycomore AM Trillium Asset Management UAW Employees Pension and Severance Plan UFCW Pension Plan for Employees Zevin Asset Management Source: Human Capital Management Coalition. 2018. Retrieved from: http://uawtrust.org/hcmc 2014 2015 2016 2017 2018
  35. 35. / 35© 2018 BrownFlynn Ltd. All Rights Reserved. A sample of some of the influential and global participants: • Louise Davidson, CEO, Australian Council of Superannuation Investors • Martin Whittaker, CEO, JUST Capital • Scott Connolly, Assistant Secretary, Australian Council of Trade Unions • Kerrie Waring, Executive Director, and Joyce Haboucha, Co-Chair, Disclosure and Transparency Committee; International Corporate Governance Network • Jeffrey P. Mahoney, General Counsel, Council of Institutional Investors • Ken Hall, General Secretary-Treasurer, International Brotherhood of Teamsters • Catherine Howarth, Chief Executive, ShareAction • Denise L. Nappier, State Treasurer, State of Connecticut • Gary Yee, Board Chair, British Columbia Municipal Pension Board of Trustees • Heather Slavkin Corzo, Director, Corporations and Capital Markets, AFL-CIO • Josh Zinner, Chief Executive Officer, Interfaith Center on Corporate Responsibility • Michael W. Frerichs, State Treasurer of Illinois • Ronald B. McKinley, Chair, ISO TC/260 • Paul Kearns, Chair, Maturity Institute • Anne Simpson, Investment Director, Sustainable Investments, California Public Employees Retirement System (CalPERS), and Anne Sheehan, Director of Corporate Governance, California State Teachers' Retirement System (CalSTRS) U.S. Securities & Exchange Commission Rulemaking Petition - https://www.sec.gov/comments/4-711/4-711.htm 2014 2015 2016 2017 2018
  36. 36. / 36© 2018 BrownFlynn Ltd. All Rights Reserved. Center for Safety & Health Sustainability – Human Capital Project Link: CSHS Website The Harvard research study looked at disclosure on twelve topics selected from the Human Capital section of RobecoSAM’s Corporate Sustainability Assessment (CSA).  Training Hours  Training Cost  Return on Training  Employee Development  Employee Development Business Benefits  Employee Development Qualitative  Operating Profit per Employee  OHS Framework  OHS Oversight  OHS Work Environment  Lost-Time Injuries  Fatalities Link to Harvard Research Report
  37. 37. / 37© 2018 BrownFlynn Ltd. All Rights Reserved. BlackRock: Social & Human Capital March 2018 Research has consistently shown the importance of human capital to company performance. Companies included in Fortune magazine’s “100 Best Companies to Work For” lists earned, over the long-term, excess risk-adjusted returns of 3.5%. When engaging boards on HCM we are likely to discuss:  Oversight of policies meant to protect employees (e.g., whistleblowing, codes of conduct, EEO policies) and the level of reporting the board receives from management to assess their implementation  Process to oversee that the many components of a company’s HCM strategy align themselves to create a healthy culture and prevent unwanted behaviors  Reporting to the board on the integration of HCM risks into risk management processes  Current board and employee composition as it relates to diversity  Consideration of linking HCM performance to executive compensation to promote board accountability  Board member visits to establishments or factories to independently assess the culture and operations of the company When engaging management teams, the topics covered may include:  Policies to encourage employee engagement outcomes and key drivers (e.g., wellness programs, support of employee networks, training and development programs, and stock participation programs)  Process for ensuring employee health and safety and complying with occupational health and safety policies  Voluntary and involuntary turnover on various dimensions (e.g., seniority of roles, tenure, gender, and ethnicity)  Statistics on gender and other diversity characteristics as well as promotion rates for and compensation gaps across different employee demographics  Programs to engage organized labor and their representatives, where relevant  Systems to oversee matters related to the supply chain (including contingent workers, contractors and subcontractors) Source: https://www.blackrock.com/corporate/literature/publication/blk-commentary-engagement-on-human-capital-march2018.pdf 2014 2015 2016 2017 2018
  38. 38. / 38© 2018 BrownFlynn Ltd. All Rights Reserved.  WBCSD is a global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world.  The Social & Human Capital Coalition is an initiative which aims to mainstream the measurement of social & human impacts for business – shifting the improvement of social & human performance from an optional extra to a core part of business decision making. The Protocol serves two purposes: 1. It provides a consistent process to guide companies through the journey of measuring, valuing and better managing social and human capital. 2. It provides a framework for collaboration to harmonize the currently fragmented landscape of social & human impact measurement and valuation, and to move towards standardized approaches for business. WBCSD’s Social & Human Coalition and Protocol The phrase “Social & Human Capital” is being defined through a public comment process that the WBCSD launched on April 17, 2018. Wbcsd & SHCC links 2014 2015 2016 2017 2018
  39. 39. / 39© 2018 BrownFlynn Ltd. All Rights Reserved. Who makes up the ESG Ecosystem? Based on sustainability reporting standards and frameworks, there are 100+ organizations producing lists, rankings, ratings, and scorecards of the “top companies” and “most sustainable” companies.
  40. 40. / 40© 2018 BrownFlynn Ltd. All Rights Reserved. 2018 Overview  Candidates: FORTUNE 1000, Global 500 companies, and other major non-U.S. companies  56 industry groupings: 211 non-U.S. companies from 28 countries and 475 U.S. companies  Questionnaires: customized per industry  Participants: Approximately 3,900 senior executives, outside directors, and industry analysts  Attributes: 9 attributes, developed prior to the inception of the Most Admired Companies rankings in the mid-1980s through a series of interviews with executives and industry analysts to determine the qualities that make a company worthy of admiration.  Scoring: Overall score is determined through a simple average of the individual attribute scores. Companies who rank in the top half of their industry are defined as “most admired” within their industry. What are the attributes of reputation on which companies are evaluated in determining the industry rankings? 1. Ability to attract and retain talented people 2. Quality of management 3. Social responsibility to the community and the environment 4. Innovativeness 5. Quality of products or services 6. Wise use of corporate assets 7. Financial soundness 8. Long-term investment value 9. Effectiveness in doing business globally FORTUNE Magazine’s World’s Most Admired Companies Each year, top executives and directors among eligible companies are surveyed to identify the top 50 companies with the strongest reputations. Source: “The World’s Most Admired Companies 2018.” Korn Ferry Institute. Retrieved from: https://www.kornferry.com/institute/fortune-admired-companies-2018
  41. 41. / 41© 2018 BrownFlynn Ltd. All Rights Reserved. Sorted Social & Human Capital Metrics on Bloomberg Social Human CapitalOverlap Employees Employee Turnover % Number of Part-Time Employees Number of Temporary Employees Number of Contractors Employee Diversity % Women in Management % Women in Workforce Gender Pay Gap Breakout Percentage Gender Pay Gap for Senior Management Percentage Gender Pay Gap Mid & Other Management Percentage Gender Pay Gap Employees Ex Management % Gender Pay Gap Tot Empl Including Management % Minorities in Management % Minorities in Workforce % Disabled in Workforce Community & Customers Community Spending Community Spending/Profit Before Tax Community Spending Percentage of EBITDA Community Spending Percentage of Total Equity Number of Customer Complaints Supply Chain Number of Suppliers Audited Number of Supplier Audits Conducted Social Supply Chain Management Number Supplier Facilities Audited Sustain Sup Guidelines Encomp ESG Area Pub Disclsd Employees Number of Employees - CSR % Employees Unionized Employee Average Age Policies Health and Safety Policy Equal Opportunity Policy Human Rights Policy Training Policy Business Ethics Policy Fair Remuneration Policy Employee Protection / Whistle Blower Policy Anti-Bribery Ethics Policy Policy Against Child Labor Accidents & Fatalities Workforce Accidents - Employees Lost Time from Accidents Fatalities - Contractors Fatalities - Employees Fatalities - Total Lost Time Incident Rate Fatalities - Third Party Fatalities per 1000 employees Accidents per 1000 employees Lost Time per Employee Total Recordable Incident Rate Total Accidents - Contractors Lost Time Incident Rate - Contractors Total Recordable Incident Rate - Contractors Employee Training Employee CSR Training Employee Training Cost Total Hours Spent by Firm - Employee Training Training Spending per Employee Other Sustainable Investment/Capital Expenditures Source: Bloomberg. Metrics as of 8/7/2018
  42. 42. © 2018 BrownFlynn Ltd. All Rights Reserved. Active Management of the ESG Ecosystem
  43. 43. / 43© 2018 BrownFlynn Ltd. All Rights Reserved. Resources
  44. 44. / 44© 2018 BrownFlynn Ltd. All Rights Reserved. What Can Companies do to Manage ESG? Link to website: https://brownflynn.com/resources/brownflynn-wbcsd/ Link to website: http://www.societycorpgov.org/governanceprofessionals/currenttopiclandingpages/sustainability/esg-briefs
  45. 45. / 45 ESG Ratings & Rankings Survey (Initial Results) 7-8 Responders: Bloomberg, MSCI 6-7 Responders: CDP, RobecoSAM, Sustainalytics 5-6 Responders: Vigeo-EIRIS, Thomson Reuters, EcoVadis 4-5 Responders: IW Financial, Other Other:  BlackRock  Calvert  Trucost (S&P)  GRI  Investor Groups  Mainstream shareholders: Wellington, Vanguard, BlackRock, etc.
  46. 46. / 46 ESG Ratings & Rankings Survey (Initial Results)
  47. 47. / 47© 2018 BrownFlynn Ltd. All Rights Reserved. Case Study
  48. 48. / 48© 2018 BrownFlynn Ltd. All Rights Reserved. Edwards Lifesciences Sustainability Journey Edwards Lifesciences’ 2014 sustainability report was a 7-page document with simple design and minimal content that was not aligned with the Global Reporting Initiative. Edwards retained BrownFlynn to provide strategic counsel, conduct a materiality assessment, and oversee the creation of its first online report. BrownFlynn supported Edwards in drafting, designing and launching its 2015 online sustainability report that meets all requirements for a GRI G4 Core level report. The report includes an interactive matrix showing how the company’s material sustainability topics align with its corporate aspirations. Leveraging the report content, BrownFlynn drafted Edwards’ 2016 Sustainalytics response, resulting in an increased score. This score was an input into the Harvard Business Review’s ranking of top global CEOs, which recognized Edwards CEO Mike Mussallem in late 2016. Another outcome of BrownFlynn’s work with Edwards is the company’s increase in its 2016 MSCI scores for several environmental and social indicators. MSCI Scores 2015 SCORE 2016 SCORE Environment Social
  49. 49. / 49© 2018 BrownFlynn Ltd. All Rights Reserved. Edwards Lifesciences Materiality Assessment  Engaged more than 60 stakeholders to identify, prioritize and validate the Company’s most significant sustainability impacts, risks, and opportunities, driving the Company’s strategy and goals, management approach, and reporting.  Interactive matrix published on Edwards.com. “Materiality & Stakeholder Engagement”. Edwards Lifesciences. https://www.edwards.com/sustainability/our- approach/materiality-stakeholder-engagement/
  50. 50. / 50© 2018 BrownFlynn Ltd. All Rights Reserved. Edwards Lifesciences Interactive Matrix Environment Social Governance
  51. 51. / 51© 2018 BrownFlynn Ltd. All Rights Reserved. Edwards Lifesciences ESG Data Disclosure • Published on Edwards.com • Disseminated to most influential ESG research firms • Positive feedback and increased engagement
  52. 52. / 52 Single Security Data Company reported ESG data is available at a single security level. Offering complete transparency, ratios and third party scores are also available. ESG Company data, disclosure scores, ratios and third party data
  53. 53. / 53 ESG Peer Analysis Analyze a company’s ESG performance to assess current and historical risks and opportunities ESG Performance and peer comparisons including ESG scores
  54. 54. / 54© 2018 BrownFlynn Ltd. All Rights Reserved. Next Steps
  55. 55. / 55© 2018 BrownFlynn Ltd. All Rights Reserved. Step 1: Understand ESG Ecosystem  What does the ESG ratings and rankings ecosystem look like today?  Are your competitors disclosing things you are not?  Can you disclose these things?  Do we want to connect the internal dots and do a report, or fill the immediate gaps? Step 2: ESG Research Firm and Shareholder Mapping & Assessment  Who is already looking at you and contacting you?  Which of your largest owners have an interest in ESG?  How important are those ESG research firms and owners to you? (Prioritize) Step 3: Strategic and Integrated Disclosure  What do we already have in-house that we’re not disclosing?  What are our most important (material) ESG issues?  Who are the internal SMEs that can help measure, manage and disclose ESG information? Is it time to create your own ESG narrative? …..Or are you going to let others do that for you?
  56. 56. / 56© 2018 BrownFlynn Ltd. All Rights Reserved. About ERM
  57. 57. An ERM Group Company © 2018 BrownFlynn Ltd. All Rights Reserved. For more information on BrownFlynn’s services, please visit www.brownflynn.com or contact us below. Thank You Mike Wallace Partner (424) 320 3501 mikew@brownflynn.com

×