Transcript ESGin10 Presentationsx

ESG issues that will impact investment in next 10 years
United States of America
1.
2.
3.
4.
5.
6.
7.
8.
9.
Financial regulatory policy
Supply and price of energy/commodities
Healthcare costs and coverage
Political wrangling
Tax policy
Infrastructure and transportation deficiencies
Immigration
Waste management
Supply chain labor management
Source: Ryan Yanaro, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
Major ESG factors likely to impact investment in India over
next 10 years
Environment:
•
With stricter environment norms globally, only companies that are environment and energy
efficient will survive in the export markets.
•
Indian Government is also likely to introduce policies for environment protection. Strong boost
to renewable energy sector.
Social:
•
Inflation will continue to impact people for the next few years. As India progresses to global
standards, inflation will eventually subside to global levels.
•
Burgeoning middle class and rising spending levels will make India an attractive market for
foreign investments.
Governance:
•
India is plagued by corrupt governance, and the recent scandals in coal block and 2G
spectrum allocation have dented investment sentiments in the country. Anti-corruption move
is on the rise, and it is inevitable that major changes in the way the country is governed will
take place, pushing up investments in the future.
Governance/social: Government is likely to allow FDI in Retail Sector. This will severely impact
the local grocery stores but in the long term benefit the society as inflation will come down
with the organization of the sector.
EC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 |
Suchit Saraf
| [email protected]
2
ESG ISSUES IN SPAIN IN NEXT 10 YEARS
1.
Unemployment: structural, women, “juniors”.
–
2.
Real state bubble remnants
–
3.
Privatization of welfare state (education, pension,..)
Debt payment, bail-out
CO2 emission limits: urban areas.
Water scarcity
–
8.
Ageing, low birth rate, lower immigration.
Government budget:
–
–
6.
7.
Subsidies in greener energies, energy deficit.
Population decay:
–
5.
Property losses, “bad bank”.
Energy mix and production
–
4.
Black market jobs, “lost generation”.
High costs on transportation and treatment.
Forest fires
–
Value of land and properties.
Source: Marc Ferrer Capdevila, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
[email protected] | www.sincosinco.com
3
ESG issues that impact investment in next 10 years in India
1.
2.
3.
4.
5.
6.
7.
8.
9.
Lack of basic infrastructure to support a high GDP
Corruption of government officials
Lack of educated and qualified work force
High carbon monoxide emissions in metro cities
High rates of respiratory disorders in the urban areas
Increased water pollution due to industrial wastes leading to
diseases
High noise pollution
Over population in urban areas leading to declining standard of
living
High rates of inflation leading to spiraling prices of basic
commodities
Source: Rahat QAZI, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
Major ESG issues likely to impact investment over next 10 years in France
• ENVIRONMENTAL:
• Energy Mix (policy regarding shale gas resources appraisal, transition
of the nuclear park, authorization for offshore wind farms).
• Agricultural policy (GOMs, organic farming, fertilizers).
• Transportation of persons (gasoline engines versus electrical, fuel cell
or hybrid propulsion)and goods (road versus river or rail transportation).
• SOCIAL:
• “Made in France” competitiveness (labor cost, corporate taxes).
• Correctness of policy towards health, scholar and housing systems.
• Debt burden & retirement system not balanced.
• GOVERNANCE:
•Same people sitting on the board of directors of CAC40 companies
as a result of cross holding. General lack of diversity in terms of gender,
nationality and academic background.
• Cap for top executive’s compensation.
• Top tier business schools and engineering schools not providing the
appropriate material for their students to develop ethics and
governance skills.
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
Matthieu GASNOS
ESG Investment in U.S.









Governance:
Government influence on healthcare
Corporate regulation on salary
Social:
Attitudes toward climate change
Consumer confidence
Political climate
Environmental:
Oil prices
Cleanliness of oil operations
Ryan Rastegar
HEC Paris MBA Sustainable Investment Masterclass 19 – 22 September 2011 | [email protected] | © SinCo 2011
6
SLID 2: ESG issues that impact investment in next 10 years in
China
1. Severe air pollution - increase the possibility to address the
ESG issues
2. Overgrazing, land abuse
3. Lack of public awareness – challenge the implementation
4. Lack of government support
5. Lack of related regulations and policies
6. Insufficient experiences - NGOs can hardly develop
7. Little concerns from local enterprises
8. Expensive innovation costs
9. Lack of trust in the society
Source: Peina Wang, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
ESG issues that impact investment in next 10 years in Mexico
Security and impunity  Impacts investment of companies, consumer
confidence, and generally speaking economic development.
2. Public education policy  Public education fails at creating a pool of talent
that satisfies labour needs.
3. Labour policies and regulation  impact how companies hire, develop and
retire working population
4. Energy regulation  Lack of competitiveness in several state owned entities
responsible for energy
5. Population integration & social support  High levels of segregation
among indigenous communities.
6. Water/ waste/ recycling policies  Underdeveloped programs
7. Immigration to U.S.  High dependency on foreign immigration law to settle
an ongoing concern.
8. Political reform  Policies that improve how people chose governments,
maintain good performers for larger periods, and assess underperforming
public actors.
9. Urban development and migration  High level of concentration in cities
10. Pollution and ecologial impact  Out of country project and political
Source: Carlos Tejada, HEC Paris MBA, Sep 2012
agenda
1.
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
ESG issues likely to impact investments in France in 10 years
•
Environment:
– Approval/Refusal of use of shale gas resources
– Focus on trying to save French transport manufacturing even if products
are not the most environmentally friendly
•
Social:
– Pension funding
– High labor cost
– Refusal to do things differently
•
Governance:
– Top executive all come from same schools and are bound by the same
idea of what is ethical.
– Very few French CEOs have ever been ‘punished’ for bad governance
Source: Rym Sullivan, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
9
Shohei MAEKAWA
Major ESG issues likely to impact investment over next 10
years in Japan
•
E: Accountability regarding safeness of foods
 After the earthquake damaged nuclear plant in Fukushima, people started
concerning about food safety. Discussions are mainly about a level of
radioactivity, but will soon shift to broader accountability of food safety as health
is also a great concern.
•
E: Further energy efficiency and shift to renewable energy
 Especially after Fukushima, best mix of energy is the main focus of energy
policy. We cannot rely too much on nuclear power, but we cannot go back to
fossil fuels because of emissions.
•
S: Diversification of Employee (more woman and international employees)
 Japan is aging and shrinking. Companies to gather talent need to diversify
its employees.
•
G: HR policy enables the diversification
 Work&Life balance of Japanese working environment is out dated. Women
and foreigners would not be attracted to such conditions or they will suffer a lot.
To attract talents from non-conventional pool of human resource,
comprehensive change of HR policy will be necessary.
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
10
ESG issues that impact investment in the US in next 10 years
1.
2.
3.
4.
5.
6.
Healthcare Issues
Energy Policy (Natural Gas, Nuclear Energy, Coal)
Financial Regulation
Environmental Regulation
Corporate Governance / Executive Compensation
Consumer Protections
Daniel Georges
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
The major ESG issues likely to impact
investment over next 10 years
Environment
• Energy supply (nuclear or alternative)
Social
• Aging (increasing social securities demand)
• Falling birthrate (decreasing labor force/ shrinking market)
• Temporary workers (necessary as a buffer or their rights should be
more protected)
Governance
• External directors
Source: Yukihiro Yoshida, HEC Paris
MBA, Jan 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
ESG issues in JAPAN
• Customer
– Customer Satisfaction: S
• Company
–
–
–
–
Composition of Board Members: G
Board Members’ Compensation: G
Consideration for ESG issues by Suppliers: S
Development of Environmental-conscious products & services: E
• Employees
– Life & Work Balance: S
• Others
– Greenhouse gases emissions: E
– Control of water resources: E
SAKAMOTO Atsuki (HEC Paris MBA, Class of 2013)
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
Ian Sessions
ESG Investment Issues in the US
•
•
•
•
•
•
•
Climate change
Pesticides and food risk
Financial regulation
Hydraulic fracturing
CO2 emissions
Health care
Tax subsidies for renewable energy
Sources: Risk Metrics Group,
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
14
ESG issues that impact investment in next 10 years in China
1, population expansion on one hand and consequence
on the one child policy on the other (S-labour cost)
2,corruptions (G-risk)
3, pollution （E）
4, food safety (S)
5, gap between the poor and the wealth(G,S-risk)
6, materialism (S-consumption trend)
7,war and conflict (S,G-risk)
8, traffic jam (E)
source: CAI Zilan 2012 HEC
Exchange
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
15
ESG issues that impact investment in next 10 years in the US
1.
2.
3.
4.
5.
6.
7.
8.
9.
Financial regulation
Higher education cost and financing
Environmental legislation, regulation and limitations
Health care coverage and costs
CO2 emission schemes
Energy subsidies and mix
Government policy uncertainty
Tax policy and changes
Poverty reduction
Source: Steven Southwick, HEC Paris MBA, Sep 2012
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
ESG issues that impact investment in next 10 years in
Mainland China
1.
2.
3.
4.
5.
6.
7.
8.
9.
Air pollution in major cities – Air purification machine and medical
instruments in treating lung and other diseases related to pollution.
Legislation on vehicle emission.
Fresh water access in the north-western part of China – Utility
development of the government
Land degradation and dessert expansion in Inner Mongolia and Xin
Jiang – opportunity for land protection industry
Immigration to cities – construction, property price, transportation,
etc.
Food safety – imported food
Overfishing
Global warming causing more unstable weathers and climate
change in Tibet
Waste management – Veolia and other environmental companies
Increasing gap between the rich and the poor – BOP strategy
Source: Rick SHI, HEC Paris MBA, Sep 2013
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
Major environmental, social and governance (ESG) issues
likely to impact investment over next 10 years
•
Social
- Cap in the retail sector for FDI due to a large unorganized sector. The
unorganized sector can get hurt badly and lead to people being
unemployed, in spite of jobs being created
- Impact on the local communities
•
Governance
- Political instability and Corruption
- Infrastructure
- Federal Challenges: The implementation of rules and policies
- Threat of terrorist attacks
•
Environmental
- Irreversible Damage to the surrounding area
- Waste Mangement
Source: Prerna Sabarwal, HEC Paris MBA, Jan 2011
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |
18
Key ESG issues that will affect investment in the UK over the
next decade
Environmental
1. Global warming: reducing CO2 and GHG emissions
2. Waste management
3. Energy mix / renewable energy
Social
1. Workplace diversity
2. Income inequality
3. Education reform
Governance
1. Transparency in financial / CSR reporting
2. Executive compensation
Robert Moore
HEC Paris MBA Sustainable Investment Masterclass 10-15 September 2012 | © SinCo 2012 | @SinCOESG |