Redefining Value 1

COMPLEXPUZZLE

Complicated World

Ecological Footprint = 1,5

Collaboration Improve Business Case Business Solutions Today Scaling up requires 3 key elements PRIORITY AREAS ACTION2020 TO REACH SOCIETAL MUST-HAVES

IMPROVETHE BUSINESS CASE

Long-term vision True cost, True value management Traditional management Financial Capital Natural Capital Social Capital Business Management

Transformation Needed Collaboration Improve Business Case Business Solutions Today PRIORITY AREAS ACTION2020 TO REACH SOCIETAL MUST-HAVES

Cost of Risk

Radical Transparency

Changing the rules of the game

Capital Market Valuations

WBCSD Redefining Value 14  Integrate natural and social capital measurement and valuation into corporate performance management.  Improve the effectiveness of non- financial internal and external reporting.  Measurement, valuation and reporting reflect the true value of a company and discloses true profit and true cost. Accelerate progress to a world where more sustainable companies are recognized and rewarded, and therefore are more successful.

TRENDS in CORPORATE REPORTING

Reporting is a dynamic process And not a goal in itself, but an instrument to: 1.improve the effectiveness of corporate investments in sustainability 2.trigger internal changes towards integrated decision-making Key role to play in accelerating transition towards true value

A complex landscape requiring business leadership! 17 DisclosureMeasurement Valuation Rating & Investment MVR Disclosure MVR Measurement Valuation Techniques Ratings & Investment Low Impact Lower Impact Low Impact Changing the Rules of the Game Lower Impact

A process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.

IIRC uptake: dependencies on capitals Votorantim Group

And more … SASB established in the US in 2013 aims to develop sustainability accounting standards to support publicly-listed corporations disclose material factors in compliance with the US SEC requirements GRI G4 guidelines issued in 2013 with a strengthened focus on materiality (stakeholder approach) CDSB is expanding its Climate Change Reporting Framework to include information about environmental matters in mainstream corporate reports to be launched in 2015 EU passed legislation to require member businesses (>500 employees and/or public interest) to disclose sustainability performance last April 20

INTEGRATED REPORTING Financial Accounts Accounting Principles - GAAP - Management Accounts FINANCIAL CAPITAL Non-Financial Reporting Non-Financial Principles - GASP - NATURAL CAPITAL SOCIAL CAPITAL Meaningful transparency Comparability & Materiality Better informed decisions EP&L and other methodologies SP&L and other methodologies Natural Capital Protocol Social Capital Protocol INTEGRATED VALUATION

What about corporate practice?  Less than 12% of reports reviewed reflect those sustainability issues considered to be material to the business.  80% of WBCSD members produce a stand-alone sustainability report with the rest developing self-declared integrated reports  75% use the GRI Guidelines with an upward trend to combine the use of several frameworks  60% of total reports reviewed have some form of assurance on their sustainability disclosures with limited level as the dominant form  When known, the average time period between year-end and the publication date is approximately six months reflecting a disconnect between sustainability and financial reporting cycles 22

23 Internal decision-making → External disclosure Management tools →Reporting frameworks

WBCSD is not new to this space… Social Profit & Loss Account Feasibility Study

25 Natural and Social Capital Protocol Components Protocol Frameworks Sector Initiatives standardized metrics / methodologies by sector Sector Initiatives standardized metrics / methodologies by sector Measurement & Valuation of Action 2020 Priority Areas Minimum standards > best practice > methodologies > KPIs Measurement & Valuation of Action 2020 Priority Areas Minimum standards > best practice > methodologies > KPIs Practical Methodologies & Guidelines Approaches to measurement & valuation, e.g. S P&L; E P&L; others Metrics Key Performance Indicators > Units of Measurement, incl. from SASB; GRI Purpose > Principles > Scope & boundaries > Overview of Components Human Rights Skills & Employment Inclusive Business Rural Livelihoods Water Climate & Energy Ecosystems & Land Use Sustain- able Lifestyles Chemica ls Forests Mobility Cement Top-down Elements Bottom-up Elements

26 Generic Natural Capital Protocol Sector guides for Food & Beverage + Apparel Pilot testing Overall coordination Multi-stakeholder consultation process

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