Ahead on Sustainability

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2015

3 July 2015

UN climate negotiations - Bonn

Leaders are coming together at the end of this year at Conference of Parties (COP) 21 in Paris to agree a deal on climate change.

The latest round of UN climate negotiations, before COP 21 took place in Bonn between 1-11 June 2015. Governments spent two weeks trying to slim down an 80-plus page negotiating document. There was little progress with the basic editing and even less on substance. But officials suggested that more progress was made with the political negotiations and building trust than is reflected on paper. The meeting concluded with an agreement that the co-chairs should edit the text down to a more workable length before the next negotiating session at the end of August.

PwC’s Jonathan Grant who is Director of Sustainability & Climate Change in UK reviewed the climate change negotiations that took place last week. A full report on the outcome of the discussion is attached below. Some key highlights of what you will find in this report are as follow:

  • Insights on how the meeting went and discussions that took place
  • Insights from G7 leaders' discussion on climate change further down the road, literally and metaphorically. Among key outcomes is a call for an ambitious and inclusive Paris agreement which tracks progress towards targets and promotes increased ambition over time. Carbon markets got a welcome nod of approval as did the role of the private sector in mobilizing climate finance. The G7 also pledged to increase support for vulnerable countries and committed to eliminate fossil fuel subsidies
  • Status of decarbonisation of the global economy over the course of this century to meet with Paris targets equivalent to annual reductions of 3.1% for Japan, 3.9% for Canada and the EU and 4.1% for the US (against 1-2% per year currently)
  • Insights on what will be agreed in Paris, and discussions on critical component of the agreement which covers the process for reporting and reviewing national progress on emissions with the aim of ratcheting up the ambition
  • Concerns regarding the negotiating text that needs to catch up with the progress that is being made in bilateral discussions between countries and in other fora. The concern is that governments plan to agree a legal document in Paris and need time to get the language right
  • Outcome of the meeting and next steps before the next Bonn session starting on the 31st August

For more insights

Refer to the report that presents Jonathan Grant’s review on the UN climate negotiations in Bonn last week.

17 July 2015

China's latest climate plan

Earlier this week, China published its climate targets (or Intended Nationally Determined Contribution) following Monday the recent UN climate summit with the EU. The 20-page INDC includes targets for carbon intensity, energy, and forest carbon, details on the policies needed to achieve these targets, and its point of view on the different sections of the draft Paris agreement. PwC's analysis shows that China's Paris target for 2030 is roughly on the same track as its Copenhagen target to 2020.

Jonathan Grant, Director for PwC UK's Sustainability & Climate Change practice, and his team reviewed China's INDC and prepared a full analysis, attached below. Here are some key highlights of what you will find in this review:

  • A summary of China's main climate targets announced in the INDC, including a 60-65% reduction in carbon intensity compared to 2005 levels, and a roughly 20% increase in the share of primary energy consumption from non-fossil fuels

  • A review of how these new targets compare to the 2020 targets previously voiced in Copenhagen, and the regulatory and business implications for China, which may include more stringent climate laws, the incorporation of climate-related goals into the national development plan, and lower coal consumption

  • A global viewpoint to place China's decarbonisation objectives into the global context, compared to the EU and US target. China's targets will require faster decarbonisation than its global peers, with an expected peak around 2030 or earlier

  • Insights based on PwC's Low Carbon Economy Index model to determine the level of ambition of China's targets, and 2030 projections for China's emissions and carbon intensity levels based on different action scenarios. Depending on assumptions regarding China's economic growth rate over the next 15 years, PwC's model suggests the emissions peak may occur as early as 2020

For more insights

Please refer to the analysis of China's INDC by Jonathan Grant and his team.

To view all PwC's analyses of the G20 targets, please visit our Paris2015 page, linked below:

http://www.pwc.co.uk/sustainability-climate-change/paris-2015/our-insights/how-ambitious-are-the-g20s-national-targets.html

25 September 2015

Road to Paris 2015

Hosted in association with PwC, BusinessGreen launched the Road to Paris Hub that aims to help businesses navigate the global efforts to tackle climate change. The Hub is a space to facilitate a Solutions Agenda between business, financiers and governments that will complement the United Nations Framework Convention on Climate Change conference (COP 21) in Paris at the end of the year. To achieve this Agenda, the Hub will focus on the economic and business implications that will occur as a result of the Paris agreement, and will feature:

  • The latest news on negotiations
  • In-depth analysis of what it means for businesses
  • Exclusive interviews with senior business leaders, ministers and diplomats

Please follow the Road to Paris Hub here

For more information, please visit our website here

What is the COP 21?

The COP 21 will occur from 30 November to 11 December this year, and 196 UNFCCC member countries will meet to sign a new climate change agreement in an effort to make a significant difference to the ability of individual countries to tackle climate change. The agreements should provide a clear target for businesses and guide investment toward low carbon outcomes.

Pre-conference discussions are in full-swing, and most recently, governments met in Bonn, Germany for the latest round of climate talks. The co-chairs agreed to develop a new document which will reflect the feedback given by countries and provide a better basis for actual negotiation and compromise. Additionally, the co-chairs will also establish a new drafting committee a the next session, starting on the 19th of October, which should accelerate the development of the Paris agreement.

2 October 2015 

The UN's Sustainable Development Goals: Global impacts, local results

Global goals are ratified this month that tackle the planet’s major issues with the launch of the Sustainable Development Goals (SDGs) by the UN in September at the UN Summit. The SDGs are the result of multi-stakeholder engagements with 193 governments agreeing to focus on the poverty, economic growth, infrastructure, and energy issues, with the overarching theme of the UN Summit being "inclusive and transparent intergovernmental process open to all supporters".  Once ratified, governments will formulate new regulation, incentives and strategies to support attainments of the SDGs. Hence, expectations on businesses will be high as they are seen as the driving force in achieving the 17 goals and 169 indicators posed by the SDGs. 

To better appreciate the approaches and opinions of the SDGs globally, PwC conducted a survey to reach out across the business and citizen landscapes. In total, 986 responses were received from the business community across 90 countries, and 2,015 citizens across 37 countries. PwC's Global Sustainability and Climate Change leader, Malcolm Preston, was able to share the survey highlights at the UN Private Sector Forum in New York on 26th September.

Key highlights from the survey:

  • SDG awareness is high amongst the business community (92%) compared to the general population (33%)
  • Governments are viewed as having prime responsibility of achieving the SDGs by both businesses (49%) and citizens (44%)
  • Businesses are already taking active steps in preparing to respond to the SDGs (71%), but only 13% have identified the tools needed and 29% are setting goals
  • 90% of citizens recognise that it is important for businesses to sign-up for the SDGs and that they would be more likely to buy goods and services from these businesses (78%)

More results and key implications can be found in PwC's global publication, "Make it your business: Engaging with the Sustainable Development Goals", which can be found our website: www.pwc.com/sdg

21 October 2015

Sustainable Development Goals: Perspectives from businesses and citizens in South East Asia

Following the previous issue of Ahead on sustainability featuring the Global results from the SDGs Engagement Survey, this issue provides specific highlights for South East Asia.

The Sustainable Development Goals serve as a guide to the post-2015 development agenda, which was ratified in September at the UN Summit as the result of an inter-governmental set of targets for "people, planet and prosperity". Businesses should recognise the potential impacts the Goals can bring to the economic landscape, business marketplace and regulatory environment, because governments that adopt the Goals are likely to formulate new regulation, incentives and strategies to support attainment of the Goals. Hence, expectations on businesses will be high as they are seen as the driving force in achieving the 17 goals and 169 indicators posed by the SDGs.

PwC's Sustainability and Climate Change team collected over 300 survey responses from businesses and citizens in South East Asia.

Key highlights from the survey include:

  • Businesses and citizens believe that the top action to respond to the SDGs is identifying the Goals relevant to each business
  • 80% of citizens say they are more likely to use an organisations' goods and services if it signed up to the SDGs
  • 87% of citizens believe it is important for businesses to sign up to the SDGs, however, only 45% of businesses plan to assess their impacts on the Goals
  • 97% of businesses have plans to address the SDGs in the next five years
  • Taking urgent action to combat climate change and its impacts is not only high on the list of Goals that businesses can impact, but also what citizens think is most important

More results and key implications can be found in our SDGs Survey highlights for South East Asia. It features:

  • A summary of the purpose of the SDGs
  • Highlights of key results and insights on what this means for the South East Asian marketplace
  • Steps that businesses can take to successfully engage with the SDGs

Download

SDGs Paving the Way To Market Leadership

PwC conducted a survey in order to understand South East Asian business and citizen perceptions of the Sustainable Development Goals (SDGs) in advance of the launch by the United Nations in September 2015.

For more information, please visit our website: pwc.to/1Xj3eeD.

Additionally, global results and key implications can be found in PwC's global publication, "Make it your business: Engaging with the Sustainable Development Goals", which can be found on our Global website: www.pwc.com/sdg.

22 October 2015

Low Carbon Economy Index 2015

The rapid decoupling of emissions from economic growth is essential to avoid the worst impacts of climate change. Since 2009, the year of the Copenhagen Summit, our Low Carbon Economy Index has tracked the progress G20 countries have made to decarbonise their economies. Our report shows that while countries have made progress in decarbonising their economies since 2000, emissions continue to rise. The carbon intensity of the global economy, however, has fallen by 1.3% on average each year since 2000, driven by energy efficiency improvements and the shift to less carbon intense service sectors.

The 2014 numbers particularly suggest a turning point: carbon intensity fell by 2.7%, the steepest decline on record. Despite this, there is still a big gap between current progress and what’s needed to meet the Intergovernmental Panel on Climate Change (IPCC) 2°C carbon budget.

Key messages from the 2015 Low Carbon Economy Index are:

  1. A rapid uncoupling of emissions from economic growth in 2014. The global average annual reduction in carbon intensity since 2000 is 1.3%, however this increased to 2.7% in 2014. The EU, China and Australia all had rapid reductions in carbon intensity last year.
  2. The Paris targets are ambitious. Achieving them will require a steep change in effort, but they fall short of the 2°C goal governments have agreed. Given the breadth of national climate plans submitted, in some respects Paris has already been a success, however it will need to include a mechanism to review progress and raise ambition in the future if it is to achieve the 2°C goal.
  3. National regulation introduced to achieve the Paris targets will have big impacts on business. Obviously, coal is being targeted (through efficiency and emissions standards and carbon pricing) and low carbon infrastructure is being supported (energy mix & capacity targets). But the national plans are less clear on how the financial services sector will deliver the investment needed to achieve these goals.
 

For detailed global results and key implications, see PwC's global publication, "Low Carbon Economy Index 2015 | Conscious Uncoupling?", which can be found on our website: www.pwc.co.uk/services/sustainability-climate-change/insights/low-carbon-economy-index.html

27 November 2015

What is the COP 21?

The COP 21 will occur from 30 November to 11 December this year, and 196 UNFCCC member countries will meet to sign a new climate change agreement in an effort to make significant difference to the ability of individual countries to tackle climate change. 

Pre-conference discussions are in full-swing, and most recently, governments met in Bonn, Germany for the latest round of climate talks. The co-chairs agreed to develop a new document which will reflect the feedback given by countries and provide a better basis for actual negotiation and compromise.  

Our pre-COP briefing report, as attached, highlights the current content of the draft Agreement, which includes:

  • Limiting temperature increases to 1.5°C or 2°C
  • Reducing emissions through global and national targets, mechanisms and time frames 
  • Amplifying cooperation between countries, offering financial support to developing countries and implementing reporting requirements
  • Implementing and improving the pricing of greenhouse gas emissions
  • Reporting national action on emissions and the provision of finance

Download

Making business sense of the UN Climate Summit

Making business sense of the UN Climate Summit. #Paris2015 Pre-COP briefing. Jonathan Grant gives a preview of the climate negotiations which start on 30th November in Paris.

For more information, please visit our website at www.pwc.co.uk/services/sustainability-climate-change/paris-2015.html and follow the Road to Paris Hub at www.businessgreen.com/bg/special/2415256/road-to-paris-hub

8 December 2015

Mid COP update

At the half-way point of the climate summit, negotiators handed over a draft agreement for the next phase of the talks.  There was a rather self-congratulatory mood on Saturday afternoon despite the fundamental differences that remain in the draft and the fractious negotiations seen earlier in the week. 

Ministers, who arrive on Monday to manage the closing stages of the COP, will need to find compromises on the critical issues of finance and the mitigation targets* and bridge the divide between developing and developed countries. 

Despite the rhetoric from heads of state at the opening ceremony of the summit, their negotiating teams failed to lift off at Le Bourget airport where the event is being hosted.  Predictably, there was negligible progress made on paper during the first week. In fact the gap between developed and developing countries appeared to widen.  

The bloc of ‘Like-minded developing countries’, mostly emerging economies including China, India, Malaysia and Saudi Arabia, were particularly vocal and dominated the interventions of the whole developing country group.  This limited progress on nearly all aspects of the agreement – with little consensus found in either the plenary discussions (the ADP contact group) or in the facilitated (spin-off) groups focusing on particular sections or Articles of the agreement.

As is typically the case for week 1 of a COP, with little to report on the actual negotiations, the news vacuum is filled with announcements by companies and governments. These included:

  1. Low carbon alliances: Indian Prime Minister, Narendra Modi, launched the International Solar Alliance which includes over 100 countries and (unusually) business partners such as Areva, Engie and HSBC France.  Their aim is to install 175GW of solar capacity by 2022 in primarily tropical countries.  At around the same time, another group of governments and investors announced their Mission Innovation, designed to support the development of clean technologies such as innovative energy generation, storage and transport.
  2. The Governor steps in: Mark Carney, Governor of the Bank of England and Chairman of the G20’s Financial Stability Board, announced that Michael Bloomberg will head a taskforce to assess the financial exposure of companies to the risks of climate change.  The taskforce is expected to recommend principles for voluntary disclosure by companies, so that investors are better informed of climate risks.

The handover of the draft to the French Presidency at the halfway stage was significant as it gives the hosts the authority to manage the talks and help build consensus.  Typically at COPs, the negotiators or subsidiary bodies retain control of the text until the last minute, making it hard for the Presidency to exert influence on the direction and conclusion.  But the French have managed the job well so far by openly setting out a clear timeframe and approach and providing excellent facilities in the ‘blue zone’.

It is encouraging at least that all countries are still round the table.  The issues to watch in week two are finance, the mitigation process, loss and damage, short term actions (pre-2020) and the long term targets.  Recently, attention has focused on policy developments and actions in the US, China and India.  Perhaps, this week is the EU’s opportunity to take the lead and build a ‘coalition of ambition’, as they did in Durban, including developing countries most vulnerable to the impacts of climate change.  The Paris summit will only succeed if countries can bridge the gap between developing and developed.  

Andrew Chan, PwC's South East Asian Sustainability & Climate Change Leader is in Paris for the summit as the firm has strong presence at COP events and facilitates a number of sessions.

* Strictly speaking, they are not targets, but ‘contributions’, and they are not being negotiated in Paris as they are ‘nationally determined’. But the contentious point in this section of the agreement is the timing and approach to reporting on national progress and raising ambition in future.

For more information, please visit our website at www.pwc.co.uk/services/sustainability-climate-change/paris-2015.html and follow the Road to Paris Hub at www.businessgreen.com/bg/special/2415256/road-to-paris-hub

14 December 2015 

COP21 Post Summit Report

To a standing ovation and some tears of joy, all governments adopted the Paris Agreement on Saturday night. The deal is more substantial and, with a 1.5°C temperature goal, more ambitious than many expected. 

The attached report highlights the outcome of the Summit and outlines some of the main Articles of the agreement, which include:

  • Purpose & objective – One of the more surprising outcomes of the Agreement is that it raises global ambition by aiming to limit warming to 1.5°C (Article 2).
  • Mitigation – Article 3 of the Agreement formally recognises the nationally determined contributions and states the need for progression over time.
  • Reducing emissions from deforestation and forest degradation (REDD+) – The Coalition for Rainforest Nations finally have their approach to REDD+  recognised in Article 5 of the Agreement.
  • International Emissions Trading – Article 6 describes how countries can pursue voluntary cooperation in the implementation of their nationally determined contributions, or in other words trade emissions.
  • Adaptation; loss and damage – The Kyoto Protocol was once described as a mitigation agreement. This time in Paris, countries included as much detail on adaptation, and loss and damage, (Articles 7 and 8) as in the mitigation articles.
  • Finance – Article 9 states that developed countries shall provide financial resources to developing countries for both adaptation and mitigation. The mobilisation will continue through to 2025 and the collective goal should rise from a floor of US$100 billion per year.
  • Differentiation – The division of responsibilities and actions of countries is described in many aspects of the agreement.

Download

PwC COP21 briefing: Paris Climate Summit

To a standing ovation and some tears of joy, all governments adopted the Paris Agreement on Saturday night. The deal is more substantial and, with a 1.5°C temperature goal, more ambitious than many expected.

2014

21 July 2014

De-central energy access through cross sector partnership

Globally, some 1.3 billion people in developing countries (20% of the world’s population) do not have access to electricity and lighting, 84% of them live in rural areas. Southeast Asia is the region besides sub-Saharan Africa, with most need for access to energy.

According tandrewo the International Energy Agency (IEA) in Indonesia 63 million (27% of population), in Myanmar 26 million (51%), in Philippines 16 million (17%) and in Cambodia 10 million (69%) people do not have access to reliable and affordable cooking facilities and a first access to electricity. Without energy access and clean cooking appliances, more than two million premature global deaths occur annually as a result of indoor air pollution.

Access to affordable modern forms of energy is not only a prerequisite for economic prosperity, but it is also a necessity for local growth and sustainable development. Despite low incomes, US$ 37 billion/year is already being spent on meeting basic energy needs with US$ 18 billion spent on electricity and lighting services alone.

The market opportunity for business is substantial. This view is supported by experts who state that innovative, market based, financially viable and long-term sustainable business models are critical for scaling energy access, even where the necessary financing and policies are in place.

The World Economic Forum, in collaboration with PwC, has been developing a cross-industry framework that can help the energy access ecosystem grow. Contributions from more than 40 experts from the private, public and civil sector have helped to identify the barriers preventing private sector investment at scale.

The partnership framework that has been developed brings together energy providers (utilities, technology providers, energy service providers) with other industries that would benefit from having access to energy. This includes for example the telecom industry, consumer electronics industries, agriculture and local small and medium sized enterprises working together to provide off-grid energy access. The framework is particularly designed to help private sector co-investment, scaling up of working solutions and replication at global level.

The provision of access to energy has direct and indirect impact in the economic, social and environmental dimension. Real life examples show an increase in commercial activity by 17%, growth of sales related to access to electricity of 70% for television sets, 50% for fridges and also 10% for increased use of mobile phones.

Other impacts are the reduction of greenhouse gas emissions, reduced dependency on fossil fuels, or increase in indoor air quality, safety through street lighting and improvement of school work. Pilot projects testing the implementation of parts of the framework are currently underway.

Source: World Economic Forum, “Scaling up energy access through cross-sector partnerships”, August 2013

For more insights

To find out more about how the cross sector partnership framework can help to scale up decentralised energy access, read Scaling up Energy Access through Cross-sector Partnerships.

Look out for more from us

We’ll be using "Ahead on Sustainability” as the platform to share developments and "nice to know" matters on the sustainability & climate change agenda. We hope you’ll find this useful and interesting and we look forward to your feedback or questions.

2013

6 February 2013

We understand that in today’s market, businesses need to be prepared for unpredictability. Whether that’s policy, climate or consumer change. And that these businesses need tools to help analyse the impact of significant policy or market uncertainty on a decision. Extreme weather events look set to become more common, and business continuity will be a key challenge in future.

Yang Amat Berhormat Datuk Seri Najib Tun Razak, Prime Minister of Malaysia has committed to a 40% reduction in carbon intensity of GDP by 2020 based on 2005 emissions levels.

A practical first step towards carbon management is measuring carbon emissions followed by identifying operational improvement and carbon reduction opportunities.

Many businesses have found that once they start measuring their emissions they are able to identify ways to do things differently that not only reduce carbon emission but save them money.

Here are some of the benefits of managing carbon in businesses:

  • Enables identification of cost saving opportunities through improving energy efficiency of operations by reducing emissions and driving technological innovations
  • Enables reporting and dialogue around emissions and risks with stakeholders
  • Improves brand reputation and meets customer demands who in current times are increasingly more aware of issues related to climate change and carbon emissions
  • Drives competitive advantage in the market place and future-proofs business against new markets and regulations that may be adopted

For more insights

Here are a few additional materials to help you familiarise yourself with carbon measurement and management and how to incorporate it into your corporate strategy:

20 March 2013

PwC is pleased to share our February 2013 edition of Global Green Policy Insights (GGPI). In this edition you'll find articles reporting on the latest developments in environmental taxes, regulations and other green policies around the world.

The report presents PwC’s analysis on the recent COP 18 which was held in Doha to assess the development of climate change post-Kyoto. The success of the COP18 summit was more of a milestone than a landmark event in its own right. Key outcomes and accomplishments from the 2012 summit are available on pages 29 and 30 of the report.

Other interesting articles that you can browse through covers topics related to:

  • China's 'green growth' priorities under new leadership
  • New carbon markets of California, Quebec and Kazakhstan
  • Vietnam's planned carbon market
  • UK's draft Finance bill including details of carbon price support scheme
  • Japan’s bilateral carbon offset scheme with Mongolia
  • France's 'doubled' target for solar energy
  • Italy's new renewable heat incentive scheme

...and a whole lot more!

For more insights

Click here to access the February edition of GGPI.

27 May 2013

Here at PwC, we are interested in how companies have started realising the importance of assuring their sustainability reports. Globally, with the increase of sustainability reporting, there has also been an increase in sustainability assurance.

The Global Reporting Initiative (GRI), a non-profit organization that promotes sustainability and provides a globally accepted Sustainability Reporting Framework reported that organizational transparency is improving and the practice of sustainability reporting is growing fast. The GRI recommends that sustainability reports be externally assured.

A PwC survey, covering 50 companies, representing 12 different industries across 18 different countries identified that more than 75% of companies seek assurance on their CR reports to increase its credibility. Here are some benefits that companies gain from assuring their sustainability reports:

  • Externally, it helps build credibility and reputation in the market place as well as provides a sense of transparency of the report
  • Internally, application of globally recognized assurance standard provides comfort to senior management that existing management systems, controls and external disclosures are functioning

Reporting Standards

Currently there are two main reporting standards which are the International Standard on Assurance Engagements (“ISAE”) 3000 and the AA1000 Assurance Standard (“AS”). Each assurance standard provides different types and levels of assurance and can be suited to the different industries.

Assurance provider that possess relevant industry and sustainability experience and expertise will be able to provide valuable recommendations to improve reporting processes and systems.

For more insights

  • Global Reporting Initiative (GRI) guideline version version G3.1. Note that the version G4 is scheduled to be released in May 2013. Download it here
  • ISAE3000 - Download it here
  • AA1000 - Download it here

20 August 2013

The ASEAN region is home to some of the world’s more diverse landscapes and ecosystems, making it particularly vulnerable to the impact of climate change. Concerned companies are therefore starting to incorporate climate change mitigation strategies into their business plans.

Companies within the region are starting to realise that there are risks to alleviate and opportunities to be seized by addressing climate change. Preparing for the future will not only help companies enhance their brand and reputation, but also create opportunities along the value chain.

In July 2013, PwC Malaysia's Sustainability and Climate Change team launched a report entitled, Pulse Check on Climate Change. The report highlights some interesting perspectives on the maturity of climate change management and reporting in the region.

For more insights

Read our report on the how companies are responding to the call to adopt low-carbon strategies at a time when regulatory requirements are still growing within the region.

The report presents finding from an online survey conducted among prominent companies across different industries in Malaysia, Thailand, Indonesia, Philippines and Vietnam. The survey was conducted between August and September 2012 primarily to explore how companies embed sustainability into their business practices. Part of the survey specifically focused on climate change management and reporting practices.

With more than 200 companies responding to the survey, here are some interesting insights on how companies are approaching climate change management within the region:

  • Most companies see energy and carbon related risks as one of the main sustainability drivers in the next 5 years
  • Less than 50% of companies measure and monitor their greenhouse gas (GHG) emissions
  • Nearly 30% of companies set target to reduce GHG emissions
  • Only 26% of companies disclose GHG emission externally

Regionally companies are acknowledging the risks and opportunities of climate change. Although currently there is a lack of regulatory requirement, companies are moving beyond compliance, agreeing that in the near future, energy and carbon related cost will be the number one sustainability driver within the region.

This report also highlights a case study on how PwC assisted a global conglomerate measure their carbon footprint and identify reduction initiatives. In doing so the company discovered many other benefits to managing and reporting on climate change.

2012

3 September 2012

Here at PwC, we are interested in how companies have used the sustainability agenda as a strategic advantage to move beyond short-term profitability towards long term sustainability. Ever wondered what it would cost for a company to be sustainable? Here are some interesting testimonies of how doing business in a sustainable way pay off:

In 2011, IBM estimated that its environmental savings and cost avoidance worldwide totalled US$139.1 million. Marc Bolland, CEO of Marks and Spencer was quoted saying “our environmental and ethical plan not only makes us a more efficient business, it contributed a net benefit of £105m.”

Nestlé Malaysia, winner of ACCA Malaysia Sustainability Reporting Awards 2011 (ACCA MaSRA), for best sustainability report, registered a turnover of RM4.7 billion in 2011, 16.8% higher than the same period last year.

These are just a few examples of companies which have successfully used the sustainability agenda to move beyond short-term profitability towards long term sustainability. In line with this, there is growing interest from investors on what companies are doing to be sustainable.

For more insights

Find out what is expected of companies from an investor’s perspective. Read the report“Translating environmental, social and governance factors into sustainable business value”, jointly published by the World Business Council for Sustainable Development (WBCSD) and United Nations Environment Programme Finance Initiative (UNEP FI).

29 October 2012

There are many reasons why businesses should establish and nurture relationships with their stakeholders today. The following is just a few of them:

Companies are no longer answerable only to their shareholders

We inhabit a pluralistic society consisting of people with a variety of interests, expectations and demands as to what businesses ought to provide to accommodate people’s lives and lifestyles. Only by responding to their expectations can businesses create the conditions needed for continuing business success.

Stakeholders are becoming more empowered

This is true now more than ever with the growth of social media. Online platforms of self-expression such as Facebook, Youtube and Twitter are freely accessible to millions and are able to make or break a firm’s reputation in an instant. Stakeholder engagement becomes a necessary tool in corporate communications and reputational risk mitigation.

Intangible assets are increasing in importance

The shift towards a more globalised and knowledge-based economy has also shifted the emphasis on tangible assets, such as property and equipment, to intangible assets, such as human and social capital, as sources of value creation.

Conversations with stakeholders may be a source of innovation

Meaningful and transparent conversations with stakeholders may yield insights and intelligence that help businesses serve their communities more efficiently and effectively. They are also opportunities for companies to solicit feedback and innovation on their products and/or services and foster co-creation. In this way, value is created and everybody wins.

Indeed, many leading global corporations have taken steps towards building a dialogue with their stakeholders.

Some examples are as follow:

Air France-KLM includes stakeholder engagement tables in their sustainability report that detail their diverse stakeholder groups, the various initiatives taken to engage them, along with the outcomes of those engagements. For details, please refer to the 2011 Air France-KLM Sustainability Report (p. 68).

Big consumer brands such as Nike and Puma have turned to using social networking websites such as Facebook and twitter to allow interaction with its stakeholders to build relationships and continuously seek feedback to be more sustainable.

Find a second case study example of innovative stakeholder engagement. Perhaps one of the big consumer brands has used twitter or facebook to innovate products e.g. Nike, Puma etc.

For more insights

Here are a few additional materials to help you get started on your stakeholder engagements:

30 November 2012

Here at PwC, we understand the importance of incorporating sustainability into the business decision making process to manage new risks and grow business opportunities.

Developing and integrating sustainability into a company’s overall corporate strategy is becoming increasingly imperative to enhance a company’s long term performance. Companies that have inculcated sustainable solutions into their supply chains and business processes are ahead of their peers and are building public trusts.

Bursa Malaysia in its publication “Sustainable Guide for Directors” highlights that “companies are seeing increasing benefits from sustainability, i.e. cost reduction, better risk asset management, attracting and retaining talent. Sustainability has been identified as one of the three pillars in the New Economic Model and is the key to support the nation’s transition to a high income economy”

Going forward

On 29 March 2012, the Securities Commission (SC) released the Malaysian Code on Corporate Governance 2012 (MCCG 2012). It sets specific recommendations which companies should adopt in making good corporate governance an integral part of their business dealings and culture, effective 31 December 2012.

The MCCG sets out 8 broad principles followed by 26 corresponding recommendations which focus on:

  • Laying a strong foundation for the Board and its committees to carry out their roles effectively
  • Promoting timely and balance disclosure
  • Safeguarding the integrity of financial reporting
  • Emphasising the importance of risk management and internal controls
  • Encouraging shareholder participation in general meetings

Interestingly, the code’s first principle, “establishing clear roles and responsibilities” recommends that the Board ensures that the company’s strategy promotes sustainability. In view of this, companies should make an early transition to the principles and recommendations elaborated in this new code.

For more insights

An overview of MCCG 2012 and our point of view on the key issues highlighted in the code is available here.