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KPMG True Value webinarThe Sustainability P&L
Moderator: Raajeev B BatraSpeakers: Arjan de Draaijer and Santhosh Jayaram
25 October 2016
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
2
A short history of KPMG’s True Value
20142013 2015 2016 2017
2015Holcim publishes firstever integrated P&L statement
2016True Value of Mitsubishi Elevators
2016KPMG supports launch of Natural Capital Protocol
2015KPMG (with WBCSD) publishes Social Capital in decision making
2014KPMG publishes A New Vision of Value
2013True Value of Ambuja Cement
2015VolvoTrue Value ofelectric buses
2015VodafonepublishesEP&L
2014Dutch Railwayspublishes social impact
2015True Value Safaricom M-PESA payment system
*The logo and brands are the intellectual properties of the respective owners
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
3
Why? How?
The why and how of True Value
Quantify positive and negative externalities in financial terms
Assess rates of internalization and thelikely impact on future earnings
Develop business cases that drivestrategy by capturing value, creatingopportunities and reducing risks
1DRIVE STRATEGY
— Provide fact-based quantitative analysis to buildnext generation strategies
— Increase future revenues— Reduce and/or avoid future costs— Identify risks to future earnings— Improve internal decision-making
INCREASE INFLUENCE
— Build objective base for advocacy with policy makers and stakeholders
— Improve investor relations by describing integrated costs and benefits in financial terms
2
3
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
5
Ambuja Cement
“Such a 360-degree strategy to drive sustainability can enable us to maximize future profitability along with inclusive growth” – Ajay Kapur, CEO
DRIVESTRATEGY
INCREASE INFLUENCE
Ambition Business impact
• Lead the Indian cement industry• Cement leadership position
within the Holcim group
• Set clearer targets• Integrate targets into strategy
• Lead the green building segment
• Improved communication with all stakeholders
• Mid-term scenario based planning
• True value as part of capital investment decisions
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
6
Ambuja Cement
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
7
Ambuja Cement
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
8
Ambuja Cement
STEP 3 / Prioritize future investments to create societal as well as corporate value.
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
9
Volvo Buses
DRIVESTRATEGY
INCREASE INFLUENCE
Ambition Business impact
To become the world leader in sustainable transportation
Targets for sustainable transportation, shared values and responsible behavior
Shifting to fully electric buses in cities, starting in Gothenburg
True total cost of ownership
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
10
True total cost of ownership (True TCO)
https://home.kpmg.com/content/dam/kpmg/pdf/2015/10/volvo-group-kpmg-true-value-case-study.pdf
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
11
Vodafone (NL)
“If we are to be a leader in our sector, we need to assess our company not only on the traditional financial ratios, but on the value we create for society at large.” Rob Shuter, CEO Vodafone NL
DRIVESTRATEGY
INCREASE INFLUENCE
Ambition Business impact
Improve transparency for stakeholders
Help customers to save 25 times the amount of carbon Vodafonegenerates though own activities
Use results to support sales of new products and services
Use insights to sharpen risk strategies and make better investment decisions
https://www.vodafone.nl/_assets/downloads/algemeen/environmental_profit_and_loss_account_2014_2015.pdf
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
12
Dutch Railways (NS)
DRIVESTRATEGY
INCREASE INFLUENCE
Ambition Business impact
• To be a leader in transparency• Started measuring True Value in
2013
By 2018, NS wants to source all electricity from wind farms and cut energy use by a third
First company in Netherlands to publish monetized information in its annual report in 2014
Use True Value to inform investment decisions
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Document Classification: KPMG Confidential
13
Some NS statistics
https://home.kpmg.com/content/dam/kpmg/pdf/2015/06/ns-dutch-railways.pdf
kpmg.com/socialmedia kpmg.com/app
© 2016 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE and Oman, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Thank youRaajeev B BatraPartnerHead of Risk Consulting
KPMG in the UAE and [email protected]
Arjan de DraaijerPartner | Climate Change and Sustainability
KPMG in the [email protected]
Santhosh JayaramPartner | Climate Change and Sustainability
KPMG in [email protected]