branding sustainable development invesmtent in emerging
TRANSCRIPT
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Branding Sustainable Development Invesmtent in Emerging Markets: Our Promise, Our Impact, and Our Opportunities
Marc de Sousa-ShieldsEnterprising Solutions
International Conference on Sustainable Finance November 22 to 25th, São Paulo, Brazil
Introduction
ObjectiveExplore product experiences and brand images to understand the potential for existing and future product opportunities for sustainable development
Branding Opportunity
Deconstructing Brands
Brands & Opportunities
Part One
Branding Opportunity
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Branding Our Opportunities
• Products• Sector• National• International
Branding Opportunity
Development TradableInvestments Securities
Branding Opportunity
A brand is the identity of a product or services that differentiates it from those of its competitors. Creates a relationship between customers and the product or service.
Brands & Branding
The unique sets of associations in the minds of customers generating an implicit product PROMISE ....
Brand Image
The set of functional and mental associations a brand aspires to create or maintain�. The STRATEGIC GOAL for a brand in the minds of its creators
Brand Identity
Branding Opportunity
The SRI Brand = Creating Opportunity
US SRI Market
1984 USD 40 billion
1995 USD 639 billion
2003 USD 2.3 trillion
1 in 9 dollars
Emerging SRI Market
2003 USD 3.0 billion
2016 USD 48 billion
2024 USD 172 billion
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Part Two
Deconstructing The SRI Brand
Brand Positioning
Deconstructing Brands
Current Conventional Wisdom
�Market Space� a brand occupies in the mind of clients...
Milton Friedman…“un-American”and “subversive” Bloomberg … carries a lower rate of return,
but provides society with many benefits
Lipper… sector bias underweighted in manufacturing and energy favoring technology and services
US Sector Brand Identity
Deconstructing Brands
Image: Advancing key social & environmental concerns throughcompetitive investments
Promise: You don�t loose while changing the world
1) Past performance
2) Sustainable development indicators more accurately predict corporate performance
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Deconstrucing Brand
Image: Nurturing, educational, modest, trustworthy, financially responsible, open, transparent, honest�
Domini Social Investments
Promise: Social performance and issue leadership...
Three P�s
� Performance� Products� Practice
Deconstructing Brands
The Fourth Imutable Law of Marketing
Marketing is not a battle of products, its a battle of perceptions
Promise meets Reality
Deconstructing Brands
Bad News for SRI Branding
"socially responsible investing" is so broad that it is meaningless
90 percent of Fortune 500 companies
Haliburton, tobacco-maker Altria (formerly Phillip Morris)Weapons maker Raytheon oil ExxonMobil; genetically modified
seeds Monsanto
Paul Hawken, Director Natural Capital Institute
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Deconstructing Brands
Product Level .... plethora of studies on Financial Performance
63 financial studiesPaucity of studies on social and environmental impact
Difficult to understand or apply, anecdotal, static, not representative....
Developing Value: The Business Case for Sustainabilityin Emerging Markets
SustainAbility and International Finance Corporation
Must Read
Mutual Fund Screen Types
245.8
157.9
124
93
31
28.9
28.8
23.8
22
16.6
14.1
11.2
10.3
0 50 100 150 200 250 300
Alcohol, Tobacco, Gambling
All others
Tobacco
Alcohol
Labour Relations
Environment
Gambling
Defense/Weapons
Equal Opp. Employment
Product/Services
Other
Human Rights
Community Impact
Mu
tual
Fun
d S
cree
n b
y T
ype
USD billions
Deconstructing Brands
Tobacco, Alcohol, Gambling 70%
Others 30%
Deconstructing Brands
The sustainable development “Holy Grail”.. would be to find a direct link between a company's financial performance and its competence in sustainability reporting, hopefully with a link back to its governance structure... Frankly, we are still a long way off."
Peter Zollinger, Executive Director of SustainAbility 1
The convergence of financial and non-financial worlds is now under way... bad news is that most companies still fail to identify material, strategic and financial risks, and opportunities associated with the economic, social, and environmental impacts captured bythe 'triple bottom line' agenda."
Risk & Opportunity: Best Practice in Non-Financial ReportingSustainability, United Nations Environment Programme and Standard & Poor’s1
1 Quoted in Social Funds.comNovember 16, 2004
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Deconstructing Brands
Brand Identity
Address some sustainable development concernsbut need to be competitive to grow
PromiseProbably will not save the world but may slow the damage,
but we really don�t really know for sure.... and you wont loose return in the process.
Brand ImageLimited & Incremental change... doing what we can
US Sector BrandImage: Advancing key social & environmental concerns throughcompetitive social investments
Promise: You don�t loose while changing the world
Deconstructing Brands
International Image: Impossible unclearity of risk & return...
Emerging Market SRI
(Broken) Promises...Significant risk, returns, impacts, challenges...
� Decorrelation and diversification....� Ethical Funds Inc. Global Equity Fund (formerly Asia Pacific Fund)� Calvert South Africa Fund� Progressive Assets Fund
Deconstructing Brands
The Emerging, Emerging Market Brand Image
Product-Investment Level
� Charitable activity� Government sponsored� Lower returns than conventional
investments� Marginal� Developed countries led agenda
Sector Level
� Regional NGO organziations� Corporate governance initiatives� Corporate social responsibility initiatives� Sustainability NGOs and agitators� Growing business interest� Shareholder advocates
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Part Three
Creating Opportunity
Creating Opportunity
Over the next five years Branding Process will be one of the most important long term consideration for growth....
To define what we want to achieve and the impact we want have...
Branding in Process
� Brand Image....� Brand Promise....
� Develop and manage your brands
� Sector level� Business level
� Measure on your terms
Creating Opportunity
Invests in small and medium sized businesses in India
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Avisharkaar India Micro Venture Capital Fund
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Creating Opportunity
Invests in 70 Microfinance Institutions (MFIs) worldwide
International MFI portfolio securitization
Four Traunches and OPIC insurance protecting institutional investors
USD 80 million adding 3.0% to SRI mmerging markets Total
Several millions loans to microentreprenuers
Creating Opportunity
Shareholder ActivismNumber of Shareholder Actions Percentage Vote on Resolution
2001 2002 2003 2001 2002 2003Environment Resource Use 24 34 33 7.2 9.3 11.3 CERES 9 8 13 9.2 7.8 0 GMO 19 13 13 7.9 5.7 4.4 Climate Change 6 21 21 9.5 18.8 16.3
Environment Total 58 76 80 8.45 10.4 831.0% 5.3%
Total 236 270 282 7.9 8.3 10.5
% Total 24.6% 28.1% 28.4%
Global Labour 48 48 47 8.5 8.8 10.3
% Total 20.3% 17.8% 16.7% -0.6 -0.5 0.2
Creating Opportunity
USD $200 million cooperatively owned debt & equity fund
2% dividend to owners
2.5% tax credit to investors from Dutch Government
Foreign currency reserve fund
Invests in over 400 Small buisness and MFIs around the world
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Creating Opportunity
USD $5 million securitization of SHARE Microfin portfolio
ICICI credibility and buyer(s)
Grameen Foundation provided $400,000 guarantees
Local currency avoids FX risk and develops local appetite while supporting secondary market creation
Frees equity and maximizes leverage
$18 million in loans to women microentreprenuers
Creating Opportunity
Dedicated to promoting corporate social responsibilityand sustainable investment practice in the Asia Pacificregion.
Ongoing industry information
Research, conferences
Buy, sell, trustees, IFA, Communities, Business
Creating Opportunity
Sector Brand is as important as Business Brand
Define terms of the promise
Sustainable Development or Incremental Social & Environmental Change?
Manage brand poorly at your own peril
Global and Local Considerations
SRI alone.....?
Conclusions