Daniel Dellham. Head of Sustainability Consulting, KPMG Sverige

Transcription

1 Daniel Dellham Head of Sustainability Consulting, KPMG Sverige

2 Measuring stakeholder sensitivity in sustainability Daniel Dellham, Head of Sustainability Consulting KPMG Advisory 3 June 2015

3 Poor reputation incur costs 2

4 EXTERNALITIES: the age of internalization is here Environmental externalities on average 40% of EBITDA % % % -43% -87% % -71% 26-59% % -23% -2,5% 3

5 Societal expectations of a firm ; Social and actual license to operate Internalization of externalities is not new New Expectations - Latent Semi-formal - Emerging 1970 Environment Today 1990 Corruption & Bribery ? Human Rights Responsible Tax Next big issue Semi-formal - Established Today Formal - Institutionalized Today Today 4

6 THREE KEY DRIVERS: increasing the rate of internalization Regulations & Standards New laws Product standards Pricing Subsidies Taxes Disclosure regulations Certification standards Stakeholder Action Labour strikes Loss of license to operate NGO criticism Consumer pressure Terminated contracts with suppliers Market Dynamics Scarcity and pricing Extreme weather New markets 5

7 Quantify and visualize societal impact New Report Open Source kpmg.com/truevalue 6

8 Stakeholder analysis model developed with Prof. Wahlund Stakeholder analysis model developed in cooperation between Prof. Wahlund and KPMG Developed during 2013 to establish data-driven model for measuring stakeholder reactions respondents 13 controversial issues Three stakeholder groups Professor Richard Wahlund Professor in Business Administration Prefect of the Department of Marketing and Strategy Head of the Centre for Media and Economic Psychology Stockholm School of Economics 7

9 Risks and opportunities arise from stakeholders reactions Basis for reactions (theory): Moral philosophy (ethics) and prospect theory Corporations: Actions Mediating parties: Mass media, social media, NGOs etc. Primary stakeholders: React -> Reputation & acting Secondary stakeholders/ decision-makers: Government/parliament, institutions, investors, regulators etc. Changed laws, regulations, investment policies, supplier criteria etc. 8

10 Impartial analysis model measures stakeholder reactions Initial perception of the company (image) Information about company behaviour (experimental setup) 3 reactions Opinion about company behaviour Change in perception of the company (new/changed image) Change in stakeholder behaviour Risk Index 9

11 Corporate Risk Survey 2013 Responsibility issues sorted by level of risk (stakeholder reactions on unethical behaviour) Child labour -70 Data privacy Sales methods Human rights EXTREME RISK Corruption -56 Public sector profits -47 Minimum wages -43 Tax evasion -41 Benefits & bonuses CO2-emissions HIGH RISK Resource utilisation -40 Product labelling -37 Regulated working hours -23 MODERATE RISK

12 Risk-mitigating actions and communications can reduce risk Supplier in low-wage country pays minimum wage Communication Negative comm. Positive comm. Sponsoring/ charity Control of working conditions Actions Sector-wide influencing Construct own factories

13 but efficiency in actions is often overstated, leading to poor priorities Communication Actions Positive comm. Control of working conditions Sector-wide influencing Construct own factories Supplier in low-wage country pays minimum wage Sponsoring/ charity Base Study Executive management/bod (seminars) 12

14 Risk-mitigating actions are less effective in issues of data privacy Example: Data privacy Sells/ forwards customer information Communication Negative comm. Positive comm. Add-on service Anonymise information Actions Only sell to relevant companies Engage in active dialogue Customers approves sale

15 Older are more susceptible to arguments than younger people Example: Data privacy (segmentation) yrs yrs yrs yrs 0 Male Female Poor data privacy -80 with explanation/argument 14

16 Older react stronger than younger people 0 Sales methods Tax planning Bonuses yrs yrs yrs yrs 15

17 Level of sensitivity varies across stakeholder groups, emphasising the importance of adapting information and positioning Opportunity Employees react more strongly, with direct effect on work motivation Level of sensitivity in each stakeholder group (all issues) Employee 62 Consumer 55 Shareholder 49 Shareholders are the least sensitive of the three groups Risk

18 Strong opportunities in sustainability, in contrast to traditional association as a risk Reactions to responsible behaviour (opportunity) Reactions to irresponsible behaviour (risk)

19 Model generates scientifically valid results Results Clear indicators of stakeholder reactions to possible scenarios Mitigating effects from additional corporate actions and initiatives Possibility to segment results to identify key demographics 18

20 Thank you! Daniel Dellham

21 10 mega forces challenge existing business models 20

22 Questions

23 Gold Plenary Day Afternoon Sponsor