CFO barometer sustainability & integrated reporting

CFO Barometer 2012:
De rol van de CFO in Sustainability
CFO Magazine en Ernst & Young
24 september 2012

“Over duurzaamheid en de rol van de CFO”
door Harry Everaerts,
Bedrijfsrevisor en Partner Sustainability & Cleantech Services Ernst & Young

Vertrouwelijk – alle rechten voorbehouden – Ernst & Young

The triple bottom line
Today’s stakeholders (including shareholders) expect you to meet
standards on social, environmental and economic performance

Vertrouwelijk – alle rechten voorbehouden – Ernst & Young 2

Rol van de CFO in het Nieuw Maatschappelijk relevant
bedrijfsmodel
Vijf acties die een CFO kan nemen om in te spelen op het groeiend belang van niet-
financiële informatie in organisaties:
1. Actief een sustainability programma en rapportering stimuleren
2. Verzekeren dat het sustainability team niet geïsoleerd werkt
3. Ga transparante dialoog aan met de stakeholders
4. Maak top management bewust van de business case
5. Overweeg niet-financiële performance indicatoren in beloningssytemen van
management

•Het (meetbare) duurzaamheidsverhaal vertellen: met Investor
Relations en rating agentschappen werken
• ‘Show them the money’: transparant externe rapportering en
verificatie brengt vertrouwen aan interne en externe stakeholders
• Green management: operationeel ‘controllership’ and financieel
risicobeheer betekent CO2- en gegevensbeheer


Examples Altron
The Value-added Statement

Novo Nordisk 2012
Best Integrated Report

Vertrouwelijk – alle rechten voorbehouden – Ernst & Young Proposal title 4

“Integrated Reporting: wat, waarom en wat betekent het
voor de CFO?” door Nancy Kamp-Roelands,
Expert Integrated Reporting & Assurance,
Executive Director Sustainability & Cleantech Services Ernst & Young Nederland


Four drivers of global change, impacting behaviour of many
organization
Growing world population Scarcity of natural resources

sodium carbonate ∞

aluminium 161

coal 148

phosphate 75

iron ore 64

gas 61

copper 44

oil 43

antimony* 30

silver* 29

indium* 13

Emissions and Climate change New rising middle class, aging population,
urbanization, diversity, and globalization


The importance of the intangibles in establishing
market value

Components of S&P 500 Market Value

Source: Ocean Times.

Definition

Intangible assets are non-monetary and non-physical but nonetheless have the potential to create value for an
organization.

Sustainability is a strong driver for business value creation

Promote
Philips earns 38% of total GE’s brand value increased
revenue from „green Long- term by 17% after the launch of
product‟ sales (up from Revenue „Ecomagination‟, a business
value initiative to meet customer
31% in 2009). generation demand for more
creation energy-efficient products

Material value Intangible
AB InBev strives to be the
“best beer company in a
better world”, which means One of the three drivers of
protecting and preserving Risk Rosy Blue‟s strategy is to
Cost control manage risks (Legal,

Prevent
the environment, promoting
responsible drinking and Management Operational, Reputational,
making a difference in the Protect company‟s brand.)
communities where we live
and work.

KPIs can be used to measure sustainability performance against sustainability goal setting

Example of successful value chain collaboration
YARA – Biopark Terneuzen

Fertilizer producer YARA delivers their waste heat and CO2
emissions to horiculte business of Biopark Terneuzen. The
Horticulturers use these waste products to heat their
greenhouses. The plants use the CO2 to grow.
To facilitate this collaboration the partners have set up the
energycompany WarmCO2. The energy company is used to
deliver the waste heat and CO2 to the horticulturers across a
several kilometers long pipenetwork.
Yearly more than 1633 TeraJoules (TJ) sustainable heat
energy is utilised in this manner. This heat is always available
and almost independent of market energy prices.
This matches the reuse of about 70.000 tons of CO2 that
would otherwise be emmitted to the atmosphere as heat.


Changes in external reporting: Integrated Reporting

Mission
Reach a consensus about IR Identify priority areas

IIRC’s
role
Determine whether IR
Develop a framework for IR standards should be
voluntary or mandatory

Discussion paper with
Actions IR guidelines

G20 proposal
« Bring IR to 2nd Pilot program
politics » (Test draft
framework)

Mid 2010 2015
IIRC creation 2011 2012 2013 Complete
framework
Development of IR Framework

1st Pilot program
(First IR experiment)


Value creation in different areas


Sustainable Growth Business Model
Three basic stages

Strategic
sustainable
Value to society

value creation

Risks &
Opportunities

Compliance

Value to organization


Integrated Thinking: From performance to impact
Unilever Sustainable Living Plan

Arial 24 punt r100 g100 b100
Arial 20 punt
Arial 18 punt
Arial 16 punt
► Arial 16 punt


Differences with financial reporting
Reporting Status Integrated Reporting
Attribute Quo Model Key Differences
Thinking Isolated Integrated Business decisions are not taken in isolation from company’s
environmental, social & economic impacts; they are made within
context of company’s short-, medium- and long-term business
performance.
Stewardship Financial capital All forms of capital The company reports on the contribution of all forms of capital
(financial, manufactured, human, intellectual, natural and social) to
its business performance and the inter-relationship between these
capitals, as well as usage, risks and opportunities across the
economic value chain.
Focus Past, financial Past & future, connected,
sustained value creation Company financial reports currently focus on past financial
performance and rarely make meaningful connections with other
business reports, such as sustainability or CSR. An Integrated
Report addresses both past and future business performance,
making connections with underlying sustainability impacts, and
provides an opportunity to communicate a broader understanding of
value (future, intangible and extended).

Timeframe Short-term Short-, medium- and long-
term Integrated Reporting focuses not only on short-term business
performance (<1 year) but also on the medium- and long-term, so
that the contribution of decisions and investments made by the
business to long-term value creation can be assessed.

Trust Narrow disclosure Greater transparency In contrast to the narrow financial disclosure of the Annual Report,
an Integrated Report communicates a broader explanation of how a
company creates value, set within the context of the company’s
business model and the company’s net impact on the environment,
society and economy.

“Presentatie van de resultaten van de CFO Barometer rond
duurzaamheid” door Harry Everaerts,
Bedrijfsrevisor en Partner Sustainability & Cleantech Services Ernst & Young


CFO Barometer rond Sustainability
Inleiding

 Onafhankelijk onderzoek van de redactie van CFO Magazine in
samenwerking met Ernst & Young.

 Eén actueel CFO-topic per maand

 Bevraging van 200 Belgische CFO’s van middelgrote tot grote
multinationale ondernemingen.

 De focus van de CFO Barometer is lokaal: representatief voor België,
benchmarktool.

 De resultaten worden in de extra CFO Barometer katern weergegeven en
becommentarieerd door specialisten of geïllustreerd met
praktijkervaringen.


Enkele sleutelresultaten



26,1 %

47,8 %

26,1 %



12,0
%
18,0 %

8,0 %

8,0 %

2,0 %

12,0 %

18,0 %

14,0 %

2,0 %
6,0 %


Duurzaamheidsrapportering wordt stilaan een vaste maatstaf: creatie van
toegevoegde waarde is relevant in het huidig economisch model.

Voorloping nog een groot onbenut potentieel: vandaag onvoldoende interesse
door CFO’s, maar veel potentieel om als managementtool te gebruiken.

 CFO’s gebruiken het vandaag al voor interne beslissingsname. Immers,
rapporteren over duurzaamheid heeft te maken met strategische en
verantwoorde lange termijn beleidsvoering.

Rapporteringsprocessen en standaarden: duidelijk gebrek aan kennis van
standaarden zoals de Global Reporting Initiative.


Ernst & Young Harry Everaerts

Assurance | Tax | Transactions | Advisory Tel.: +32 2 774 94 34
Email: harry.everaerts@be.ey.com
2012 Ernst & Young Transaction Advisory Services
All rights reserved.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax,
transaction and advisory services. Worldwide, our
152,000 people are united by our shared values
and an unwavering commitment to quality. We
make a difference by helping our people, our
clients and our wider communities achieve their
potential.

Ernst & Young refers to the global organization of
member firms of Ernst & Young Global Limited,
each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to
clients.

For more information about our organization,
please visit www.ey.com/be.
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CFO barometer sustainability & integrated reporting

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CFO barometer sustainability & integrated reporting