valuing non-financial performance
TRANSCRIPT
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Valuing non-financialperformance
John Swannick
Executive Director
EABIS
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ar e va ue
Source: Accenture 2004
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Brand and asset value
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.....and increasing volatility?
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E l
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A three-year study across 40 global companiesA 12-month study across 50 global companies
Employee engagement
Source: ISR-Towers Perrin
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Top Ten Global Engagement Drivers
Top 10 Engagement Drivers (2007)1. Senior management interest in employee well-being
2. Opportunities to improve skills and capabilities
3. Organization's reputation for social responsibility
4. Input into decision-making
5. Organization quickly resolves customer concerns
6. Setting high personal standards
7. Career advancement opportunities
8. Challenging work assignments that broaden skills
9. Good relationship with supervisor
10. Organization encourages innovative thinking
Source: Towers Perrin 2007 Workforce Study Global
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Engagement key drivers by sector(ISR survey 2006)
EmployeeEngagement
SupportiveCulture
Social
Responsibility& Image
CompetitivePosition
Leadership
My Job
OrganisationalResponsibility
My Job
CorporateResponsibility
& Integrity
Leadership
Imageand CorporateSustainability
My Work
CustomerFocus
Chemicals FMCG Pharmaceuticals Logistics
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Th I tit t f B i Ethi D Ethi P h
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The Institute of Business Ethics Does Ethics Pay research
showed a relationship between NFP and p/e ratios. In thiscase, ethical performance and p/e ratio stability ( strongoutperformance).
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The blockages
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The blockages
V l i fi i l f
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Valuing non-financial performance:
the collaborative ventureCompany
performanceMeasurement
Management
Integration
Investorvalue
Core drivers
Materiality
Regulatory
InfluenceESG Disclosure
Investor salience
Th j t
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The company project
Strategy
What is the company strategy? How does NFP support the strategy? How should NFP support the strategy?
Management
Who manages NFP? How is it managed?
What are the performance improvement processes?
Results
What are the companys Key Performance Indicators?
How does NFP relate to the company Key Performance Indicators?
How can NFP drive performance improvement?
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MaturityCoherence in
measurement ANDmanagement ofnon-financialperformance
IntegrationDeliveringperformanceimprovement throughcore managementprocesses
StrategicResults linked to corebusiness strategy andKEY Performance
Indicators
The desired flightpath?
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Phase 1: initial conversations
16 companies
10 different sectors
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Employees Satisfaction Engagement
Customers Satisfaction Advocacy
Public OpinionReputation
tracking
Common core areas: perception indicators
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Emissions Waste
Resource useEnvironment
R&D investment as % of revenue New productsInnovation
Code of ethics/conduct
Code implementation & KPIs
Corporate
Governance
Common performance indicators
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Total shareholder returns
Earnings per share
Revenue
EBITDA Free Cash Flow
CAPEX
Net assets
KEYKPIs
The big challenge
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Convergence
Working group of asset managers Comparison of quantitative and qualitative analysis of non-financial drivers of
financial performance Identify long list of core non-financial drivers
Consensus
Test long list with wide group of asset managers Quantitative assessment of materiality
Identify short list of superfactors
Validation
Test superfactors with asset owners Promote results to mainstream investors
Investor Value