DJSI 2017: Human Capital Development & Operational Eco-Efficiency November 2017

Transcription

1 DJSI 2017: Human Capital Development & Operational Eco-Efficiency November 2017

2 Agenda Human Capital Development Manjit Jus, Head of Sustainability Application & Operations Operational Eco-Efficiency Roland Hengerer, PhD, Senior Energy Analyst Q&A 2

3 2017 Methodology Human Capital Development Review 3

4 Human Capital Development Questions Overview The Human Capital Development criterion consists on four questions: 1. Training & Development Inputs 2. Employee Development Programs 3. Human Capital Return on Investment 4. Return on Employee Development Investment 4

5 Human Capital Development Average question scores across regions Source: RobecoSAM Corporate Sustainability Assessment

6 1. Training & Development Inputs Question structure 2017 Methodology Review Source: RobecoSAM Corporate Sustainability Assessment

7 1. Training & Development Inputs Definitions Average hours of training and development per FTE: Total number of hours of training and development provided in the last fiscal year Total number of FTEs Average amount spent on training and development per FTE: Total amount spent on training and development in the last fiscal year Total number of FTEs Percentage of open positions filled by internal candidates: Total number of open positions filled by company s own employees Total number of vacancies in the company in the last fiscal year 7

8 1. Training & Development Inputs Average percentage of open positions filled by internal candidates across GICS sectors Source: RobecoSAM Corporate Sustainability Assessment

9 1. Training & Development Inputs Average percentage of open positions filled by internal candidates across regions Source: RobecoSAM Corporate Sustainability Assessment

10 2. Employee Development Programs Question structure Source: RobecoSAM Corporate Sustainability Assessment

11 2. Employee Development Programs Employee Development Program, please specify two different examples: RobecoSAM s expectations: Employee development programs that go beyond basic or mandatory training programs and are designed to enhance, upgrade and improve employee skills Acceptable examples: Leadership / management development programs Advanced occupational health and safety training Young talent development programs World class manufacturing programs Project management trainings Retail customer care programs Sales programs 11

12 2. Employee Development Programs Employee Development Program, please specify two different examples: Non acceptable examples: Programs providing employees with the basic skills they need to carry out their daily work Basic health & safety programs 2017 Mandatory Methodology compliance training Training for new board members Review Standard graduate / trainee / intern trainings 12

13 2. Employee Development Programs Partial leading practice Employee Development Program, please specify two different examples: Company name: Prysmian SpA Industry: Electrical Components & Equipment (ELQ) Prysmian s Professional School aims at sharing, developing and consolidating knowledge and technical skills through a wide range of employee development programs, including: Manufacturing Academy (e.g. Lean Six Sigma, Advanced Manufacturing) Supply Chain Academy (e.g. Advanced Supply Chain) R&D Academy (e.g. Advanced Cable Design, Advanced Factory) Public Link: Click here to access Prysmian website and the list of training programs offered by the company 13

14 2. Employee Development Programs Description of business benefits RobecoSAM s expectations: Qualitative description of the business benefits that the company derives from providing the employee development program Clear link between the employee development program and the company s business benefits 2017 Methodology Acceptable examples: Review Revenue generation Cost savings Decreased turnover Addressing employment or skill shortages Increase in employee engagement Increased competitiveness Efficiency gains Output gains 14

15 2. Employee Development Programs Quantitative impact of business benefits (monetary or non-monetary) RobecoSAM s expectations: Quantification of the company s business benefits linked to the training program using a monetary or nonmonetary quantitative metric 2017 Methodology Acceptable examples include quantitative metrics (monetary or non monetary) linked to: Revenue generation Review Cost savings Decreased turnover Understaffed positions filled Increase in employee engagement Increased customer satisfaction Efficiency gains Output gains 15

16 2. Employee Development Programs: leading practice Quantitative impact of business benefits (monetary or non-monetary) Company name: Scottish and Southern Energy (SSE) PLC Industry: Electric Utilities (ELC) The company has identified two major employment challenges a skills shortage and lack of diversity. The company has reported that by 2023, half of the energy industry s workforce is due to leave or retire creating a massive shortage of skilled labor. Additionally, the energy industry lacks diversity, which has been identified as a key driver of innovation and commercial success Methodology Review SSE reports that for every 1 GBP invested in Barnardo s Works programme, a youth employability program which operates mainly in Scotland, generated return of 7.67 GBP over five years. Public Link: Click here to access SSE PLC s Report. 16

17 3. Human Capital Return on Investment Question structure 2017 Methodology Review 17

18 3. Human Capital Return on Investment Average return on investments on human capital across GICS sectors 18

19 4. Return on Employee Development Investment Question Structure 2017 Methodology Review 19

20 4. Return on Employee Development Investment We use a third-party methodology (e.g., the Kirkpatrick Model, Level 3 Behavior or Level 4 Results) to identify the value of training to our business and resulting ROI, please briefly specify: RobecoSAM s expectations: The business benefits of the training programs are quantified by using monetary metrics or other quantitative performance metrics based on third-party methodologies 2017 Methodology Acceptable examples: Review Kirkpatrick Model Phillips ROI methodology 20

21 4. Return on Employee Development Investment The Kirkpatrick Model Source: Kirkpatrick Partners 21

22 4. Return on Employee Development Investment Phillips ROI Model Level Measures Issue Input Volume, Cost, Time How many employees are involved, their time and cost? Reaction Learning Application Impact Return on Investment (ROI) Relevance, Importance and Necessity Skills and Knowledge Acquisition Extent of Use, Frequency of Use and Success with Use Productivity, Quality, Cost, Time, Satisfaction, Image, Engagement and Stress Benefit Cost Ratio and ROI Expressed as a Percent How did they react to the program? Did the employees learn how to make the program successful? Did the employees implement the program? What was the impact (consequence) of the program? What was the payoff? Source: Six Ways to Show the Value of HR Programs - Jack J. Phillips and Patti P. Phillips, Ph.D. 22

23 4. Return on Employee Development Investment Acceptable examples: Reduction in manufacturing costs linked to world class manufacturing or lean six sigma training programs Comparison between the costs of hiring external managers and the company s investments in employee development to prepare internal candidates for future managerial positions: (cost of external recruitment) * (number of new managers hired during the last FY) (investment in training for future managers) 23

24 4. Return on Employee Development Investment Metrics adopted by companies to measure the business benefits of employee development investments (in%) 24

25 2017 Methodology Operational Eco - Efficiency Review 25

26 Operational Eco-Efficiency - Definition Eco-efficiency Eco-efficiency means doing more with less; creating goods and services while using fewer resources and creating less waste and pollution. Operational eco-efficiency Refers to the eco-efficiency of manufacturing and service operations. The aim of any company should be to improve operational eco-efficiency by reducing the resources used and emissions/waste during manufacturing or the provision of services. 26

27 Operational Eco-Efficiency Rationale Reducing the overall environmental footprint of companies in both the manufacturing and services sectors is crucial, as the risks of financial and reputational costs linked to environmental litigation increase. Producing more with less material is essential for many industries affected by growing natural resource scarcity. For all industries, minimizing natural resource consumption and waste-generating activities can lead to lower costs and in some cases, new business opportunities. The key focus of this criterion is on the inputs and outputs of business operations. It assesses trends in natural resource consumption and the production of environmental waste products specific to each industry. 27

28 Operational Eco-Efficiency Rationale for investors Investors are interested in knowing whether companies are able to consistently increase their operational eco-efficiency, and whether they are transparent in this respect. In addition, investors are interested in company s targets and their progress towards achieving these targets. Investors believe that Operational Eco-Efficiency (OEE) enhances companies competitiveness through reductions in: Direct operational costs (e.g. commodity price exposure) Regulatory risks (e.g. stricter regulations or new taxations schemes in future) Reputational risks (e.g. due to environmental pollution or future litigations) Operational risks (e.g. higher probabilities of potential accidents) Source: RobecoSAM Corporate Sustainability Assessment

29 Environmental Footprint Report of Investment Products The financial industry has an important role to play in minimizing their environmental footprint and facilitating the transition to a low-carbon economy. An increasing number of investors are reporting on the environmental footprint of their investments and therefore prefer companies that can help them to lower their overall environmental impact. RobecoSAM Global Environmental Impact Solution MSCI World [t CO2-eq/mUSD] [MWh/mUSD] [m3/musd] [t/musd] Impact per musd invested GHG Emissions - Scope 1 & 2 Energy Consumption Water Use Waste Generation Unit per year [t CO2-eq/mUSD] [MWh/mUSD] [m3/musd] [t/musd] Impact Impact (%) 57% 39% 13% 35% Savings/mUSD* Source: RobecoSAM 29

30 Operational Eco-Efficiency Scope Generally Applicable Questions Greenhouse Gas Emissions Direct Greenhouse Gas Emissions (Scope 1) Indirect Greenhouse Gas Emissions (Scope 2) Energy Consumption Water Consumption Waste These questions are used for environmental impact valuation, which is a basic criterion for our core investment universes. Industry-specific Questions In addition, we ask certain sectors industry-specific questions (25 in total, see next slide). Source: RobecoSAM Corporate Sustainability Assessment

31 Other OEE Questions (Industry Specific) AOX Ash and Gypsum Waste Biological Oxygen Demand Chemical Oxygen Demand Data Center Efficiency Direct Mercury Emissions Dust Emissions Energy Intensity Hazardous Waste Hydrocarbon Spills Methane Emissions Mineral Waste NOx Emissions SOx Emissions SF6 Emissions Perfluorocarbons Emissions Volatile Organic Compounds Emissions Construction Sites Environmental Safety Measures Share of Renewable Energy in Data Centers Specific Fuel Consumption for Cargo Transport Specific Fuel Consumption for Passenger Transport Specific NOx Emissions for Cargo Transport Specific NOx Emissions for Passenger Transport Total Business Travel Ultra-Pure Water Usage Source: RobecoSAM Corporate Sustainability Assessment

32 Operational Eco- Efficiency Operational Eco-Efficiency - Assessment Aspect Expected practice Trend Decreasing normalized trend*! At least 3 years of data are needed to calculate the trend Target Consistent and meaningful target Target achieved! Thresholds set per industry, based on industry means and variances Coverage High data coverage! Coverage used as a multiplier to the trend score External Verification Third-party verification! Verification needs to be relevant for the specific indicator *Revenues or some other denominator (e.g. FTEs, Area, Mmboe, MWh, Production in tons, Units etc.) are used to normalize OEE data reported. Companies in certain industries have the choice to select among a few relevant denominators. Source: RobecoSAM Corporate Sustainability Assessment 2017

33 Average Scores for Criterion Overall Performance Across Sectors 2017 Methodology Review Source: RobecoSAM Corporate Sustainability Assessment participating companies 33

34 Average Scores for Criterion Overall Performance Across Regions 2017 Methodology Review Source: RobecoSAM Corporate Sustainability Assessment participating companies 34

35 Average Coverage for Criterion Overall Coverage Across Sectors Source: RobecoSAM Corporate Sustainability Assessment participating companies 35

36 Greenhouse Gas Emissions Direct Greenhouse Gas Emissions (Scope 1) It refers to ALL the six main GHGs that are covered by the Kyoto Protocol; Carbon Dioxide - CO2, Methane - CH4, Nitrous Oxide - N2O, Hydrofluorocarbons - HFCs, Perfluorocarbons - PFCs and Sulphur Hexafluoride - SF6 GHG emissions should be reported as metric tons of CO2-equivalents. GHG emissions that have been offset do not need to be reported. Indirect Greenhouse Gas Emissions (Scope 2) This refers to indirect greenhouse gas emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g. chilled water) generated upstream from the organization. The measurement of Scope 2 emissions is recommended to be performed according to the market-based method of the Greenhouse Gas Protocol. However the location-based method is equally accepted. Source: RobecoSAM Corporate Sustainability Assessment

37 Energy Consumption What we were looking for: Simplified version (for low impact industries) Non-renewable energy consumption (including transport fuels) Renewable energy consumption Total cost of energy consumption Extended version (for high impact industries) Non-renewable energy listed separately by fossil fuels (including transport fuels and nuclear fuels) electricity steam/heating/cooling Total non-renewable energy sold (if applicable) RobecoSAM Expectations: Grey energy (electricity) to be reported as non-renewable energy Hydroelectric power to reported as renewable energy (regardless of plant s capacity) Source: RobecoSAM Corporate Sustainability Assessment

38 Water Consumption What we were looking for: Simplified version (for low impact industries) Total water use (from all sources) Extended version (for high impact industries) Water withdrawal from municipal supplies fresh surface water fresh ground water Water returned to the source at same or higher quality Total municipal water suppliers (or from other water utilities): all water supplied directly by the municipality and/or other public or private water utilities Surface fresh water: includes water from wetlands, rivers, lakes. Do not include sea water Ground fresh water: fresh water from below the surface. Do not include brackish ground water Source: RobecoSAM Corporate Sustainability Assessment

39 Water Consumption (extended version) RobecoSAM Expectations: What we accepted Water discharged at similar quality What we didn t accepted Water discharged back to municipality or water utility Water discharged at lower quality Figures including salt or brackish water Common mistake: Many companies provided wrong calculations in their water consumption reporting: they reported water withdrawals as water consumption (A+B+C-D E) Source: RobecoSAM Corporate Sustainability Assessment

40 Waste What we were looking for: Total solid waste disposed (i.e. waste not recycled or reused) It is defined as waste that is land filled, subject to deep well injection, or incinerated without energy recovery (either on-site and off-site) For companies in industries that have a separate question on mineral waste or hazardous waste, this data should be reported separately Common mistake: Figures reported included recycling waste and/or incinerated waste for energy recovery Source: RobecoSAM Corporate Sustainability Assessment

41 Operational Eco-Efficiency - Data consistency What has it changed in calculation method since 2016? We need at least 3 years of data Not applicable only accepted if reasonable explanation is provided Relevant options should be marked in case of : Data provided is different from the data publicly reported Temporary coverage reduction due to corporate actions Data in absolute terms are not available Data reported do not follow RobecoSAM definitions Source: RobecoSAM Corporate Sustainability Assessment

42 Direct Greenhouse Gas Emissions: leading practice Company name: Grupo Argos SA/Colombia Industry: Construction Materials (COM) The company s normalized Direct GHG emissions have decreased from 2014 to The company has also set and met its target for the most recent reporting year. In addition, the data is verified by an independent third party. Public Link: Click here to access Grupo Argos Integrated Report 2016, page 98 Source: RobecoSAM Corporate Sustainability Assessment 2017

43 Energy Consumption: leading practice Company name: Cie Generale des Etablissements Michelin Industry: Auto Components (ATX) The company has a decreasing trend of energy consumption over the last years. The company has also set and met its target for the most recent reporting year. In addition, the data is verified by an independent third party. Public Link: Click here to access Michelin s 2016 Registration Document, page 188 Source: RobecoSAM Corporate Sustainability Assessment 2017

44 Questions? Contact us: RobecoSAM CSA Helpline Methodology Visit the CSA website: Review 44

45 Disclaimer No warranty This publication is derived from sources believed to be accurate and reliable, but neither its accuracy nor completeness is guaranteed. The material and information in this publication are provided "as is" and without warranties of any kind, either expressed or implied. RobecoSAM AG and its related, affiliated and subsidiary companies disclaim all warranties, expressed or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Any opinions and views in this publication reflect the current judgment of the authors and may change without notice. It is each reader's responsibility to evaluate the accuracy, completeness and usefulness of any opinions, advice, services or other information provided in this publication. Limitation of liability All information contained in this publication is distributed with the understanding that the authors, publishers and distributors are not rendering legal, accounting or other professional advice or opinions on specific facts or matters and accordingly assume no liability whatsoever in connection with its use. In no event shall RobecoSAM AG and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of any opinion or information expressly or implicitly contained in this publication. Copyright Unless otherwise noted, text, images and layout of this publication are the exclusive property of RobecoSAM AG and/or its related, affiliated and subsidiary companies and may not be copied or distributed, in whole or in part, without the express written consent of RobecoSAM AG or its related, affiliated and subsidiary companies Methodology No Offer The information and opinions contained in this publication constitutes neither a solicitation, nor a recommendation, nor an offer to buy or sell investment instruments or other services, or to engage in any other kind of transaction. The information described in this publication is not directed to persons in any jurisdiction where the provision of such information would run counter to local laws and regulation. Review 2017 RobecoSAM AG 45

46 2017 Methodology Q&A Review 46