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2. Evaluating Impact, Outcomes and Trade-Offs
Alan McGill – Sustainability Reporting and Assurance Partner, PwC
Tom Beagent – Impact Measurement Advisor, PwC
Liz Prescott, IIRC
Luciana Villa Nova – Sustainability Manager, Natura
Mark Gough – Head of Sustainability, The Crown Estate

3. Overview Impact measurement: an overview Impact measurement landscape
Business benefits of impact measurement
The Brewers Dilemma
Wrap up

4. Impact measurement: An overview
The drivers for impact measurement
Defining impact measurement
An example: PwC’s TIMM framework

5. The drivers of impact measurement Megatrends
Megatrends – 5 global trends which:
have a major influence on the economic and commercial landscape over the next decade;
permeate across all sectors of the economy and society; and
fundamentally disrupt industries and the way we do business.

6. The drivers of impact measurement: Value creation process

7. Building on the current model

8. Defining impact measurement
Traditional reporting
Impact measurement
Input
Output
Outcome
Impact
Value of impacts
What has changed as a result of the business activities?
What activities have been done?
What resources have been used for business activities?
How much of that outcome wouldn't have happened otherwise?
What is the value of impact?

9. Defining impact measurement
Traditional reporting
Value of impacts
Impact
Outcome
$20m new income created per annum
4,000 of the 5,000 borrowers had no access to finance prior to the initiative
Output
Recipients generate income of $25m per annum
5000 borrowers receive funding to start or expand their business venture
Input
$10m invested in micro-finance for remote villages in Africa
Impact measurement

10. Example: PwC’s TIMM Framework

11. How are companies using impact measurement
Innovation
New lens for product/services innovation
New Markets
More sustainable products
Options appraisal
Investments and capital projects
Sourcing decisions
Optimise impacts
Reduce risk
Monitoring and evaluation
Setting targets and evaluating progress
Simple communication
Communicating complex issues in reporting or to specific stakeholders

12. TIMM: Supporting strategic decisions & trade-offs
A mining company is conducting a feasibility study on the transportation of ore from a mine to an off-site processing plant, including an appraisal of access routes in a south- east Asian country for haulage trucks.

13. Option 1: Build a new road

14. Option 2: Widen & repair an existing road

15. Impact measurement landscape

16. Current state
Sustainability is perceived to be very important by CEO´s:
93% believe that sustainability will be important to the future success of their business.
80% view sustainability as a route to competitive advantage in their industry.
Situation
Complication
However CEO´s find sustainability difficult to implement and quantify:
38% believe they can accurately quantify the value of their sustainability efforts.
37% see the lack of a link to business value as a barrier to accelerating progress.
Source: UN Global Compact-Accenture CEO study on Sustainability 2013

17. The effort to measure broad business impacts adds value
90% of the studies on the cost of capital show that sound sustainability standards lower the cost of capital of companies.
88% of the research shows that solid ESG practices result in better operational performance of the firm.
80% of the studies show that stock price performance of companies is positively influenced by good sustainability practices
Source: From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Performance; Oxford University and Arabesque Partners, 2014

18. The World Business Council for Sustainable Development

19. WBCSD is not new to the impact measurement space
Social Profit & Loss Account
Feasibility Study

20. WBCSD Redefining Value

21. Current development: Natural Capital Protocol
Sector guides for Food & Beverage + Apparel
Pilot testing
Generic Natural Capital Protocol

22. Some general learnings
Focus
Cost value trade-off
Consider whole value chain
Hot spot first
Engage stakeholders
Multi-disciplinary approach

23. Business benefits of impact measurement

24. Luciana Villa Nova, Sustainability Manager
password: 4040

25. Mark Gough, Head of Sustainability
Total Contribution

26. The Brewers Dilemma

27. The Brewers Dilemma
Case study background:
A brewer is entering a new market in Africa with a 5 year investment. One of the key decisions is the sourcing strategy for cereals. The bottling plant will need to be near to the market so water for brewing will need to be sourced locally. But there is a choice of where to source the cereal.
Objective of exercise:
Play the role of the management team of the brewer and choose the cereal sourcing strategy for the new brewery.

28. The two options………….. Option 1 Import barley from global market
Option 2 Grow an alternative crop locally in East Africa

29. Round 1: Commercials Option 1 - Import $m Comments
Option 1 - Import $m
Comments
Supply chain infrastructure (in Africa)
Capex ($m – annualised cost)
(1.0)
e.g. Storage facilities
Opex ($m – annualised cost)
(1.5)
Global distribution costs
Commodity cost (barley)
Cost per tonne ($/t)
170
Demand (t)
14,700
Estimated annual cost ($m)
(2.5)
Total
(5.0)
Option 2 – Source locally $m
Comments
Supply chain infrastructure (in Africa)
Capex ($m – annualised cost)
(2.0)
e.g. Storage facilities, farm to storage infrastructure
Opex ($m – annualised cost)
(1.5)
Supply chain development, community investment and local staff and offices
Commodity cost (Sorghum)
Cost per tonne ($/t)
140
Demand (t)
14,700
Estimated annual cost ($m)
(2.1)
Total
(5.6)

30. Summary Import Source locally Financial cost Externalities: Economic
$8m $6m $4m $2m $2m $4m $6m $8m
Financial cost
Externalities:
Economic
Profits
Investments
Wages
Environmental
Land use
GHGs
Water consumption
Social
Livelihoods
H&S
Education

31. Summary Import Source locally Financial cost Externalities: Economic
$8m $6m $4m $2m $2m $4m $6m $8m
Financial cost
Externalities:
Economic
Profits
Investments
Wages
Environmental
Land use
GHGs
Water consumption
Social
Livelihoods
H&S
Education