An introduction to ESG and its relevance to today's businesses.

1. ESG 101
SEPTEMBER 22, 2021

2. Key topics covered
1. Setting the context for ESG
2. Introduction to ESG
4. ESG Building Blocks & Ecosystem
5. A Case Study and Key Takeaways
3. Business Case for ESG
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3. Sustainability
• /səsteɪnəˈbɪlɪti/
Noun: sustainability
the ability to be maintain an activity or resource at a certain rate or
level.
e.g., "the sustainability of economic growth“
avoidance of the depletion of natural resources in order to maintain an
ecological balance.
e.g., "the pursuit of global environmental sustainability"
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4. ECONOMIC
Examples include:
• Shift from a carbon
economy to a
Knowledge-based
economy.
• Job creation, poverty
alleviation etc.
Examples include:
• Issues such as gender
equality, diversity and
inclusion.
• A company’s direct
effect on communities it
operates.
Examples include:
• Climate Change.
• Dependance on
renewable sources of
energy such as solar
power .
• Reducing GHG emissions
SOCIAL ENVIRONMENTAL
The 3 pillars of Sustainability
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5. 17
GOALS
169
TARGETS
244
TOPICS
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6. PAGE 05 OF 20

7. PAGE 06 OF 20

8. ESG
• Environmental Social Governance
Financial Lexicon:
“a generic term used in capital markets and employed primarily by:
• investors to evaluate corporate behaviour, environmental and societal
impact to determine the future financial performance of companies.
• companies to report their sustainability impact and measure
progress”.
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9. PAGE 08 OF 20

10. ENVIRONMENT
• GHG Emissions
• Air Quality
• Energy Management
• Water Management
• Waste & Hazardous
Management
• Ecological Impacts
• Labor Practices
• Employee Health &
Safety
• Diversity, Inclusion &
Equity
• Human Rights
• Community Relations
• Data Security
• Access & Affordability
• Selling Practices
• Business Ethics
• Competitive Behaviour
• Legal & Regulatory
Compliance
• Critical Rick
Management
• Competitive Behavior
SOCIAL GOVERNANCE
Key components of ESG
ECONOMIC
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11. STRATEGIC
• Brand Reputation
• Business Model
Innovation
• New service / product
growth opportunity
• Risk Mitigation –
Environmental,
Regulatory.
• Technological resilience
• Increased market share
• Enhance Corporate
Purpose
• Better access to capital
• Lower cost to capital
• Boost Investor
confidence
• Operating cost reduction
• Compliance to regional
regulatory requirements
• Market forces – price
volatility, market
disruption
• Resource efficiency
• Process optimization
• Supply Chain disruption
• Waste reduction
• Stranded Assets – Assets
that have been affected
FINANCIAL OPERATIONAL
Business case for ESG – The Why
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12. STRATEGIC
• Brand Reputation
• Business Model
Innovation
• New service / product
growth opportunity
• Risk Mitigation –
Environmental,
Regulatory.
• Technological resilience
• Increased market share
• Enhance Corporate
Purpose
Strategic case for ESG
A 2021 RepTrak survey said, 56% of respondents are not going to
buy from companies handling Co-vid poorly.
In 2009, Harvard study identified Sustainability as a key driver for
corporate innovation and product ingenuity.
Companies who have factored in ESG into their strategy has
shown higher technological resilience, e.g. utilities, telecom.
Sustainability has emerged as key component in defining
corporate purpose, irrespective of the perspective.
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13. FINANCIAL
• Better access to capital
• Lower cost to capital
• Boost Investor
confidence
• Operating cost reduction
• Compliance to regional
regulatory requirements
Financial case for ESG
BlackRock, world’s largest asset manager with AUM of ~9T $,
states that non-ESG compliance may cut-off full funding.
Moody’s 2021 report identifies disclosure on significant ESG issues
will increasingly affect valuations in high-risk sectors.
In 2020, a Standard Chartered survey found 76% of Middle East
investors saw climate change as a grave issue with tragic results.
EU, US and APAC regulators are already signalling a form of
sustainability reporting by multinationals.
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14. OPERATIONAL
• Market forces – price
volatility, market
disruption
• Resource efficiency and
Waste reduction
• Process optimization
• Supply Chain disruption
• Stranded Assets
Operational case for ESG
3 out of the Top 10 risks identified by World Economic forum 2021
is directly linked to ESG: Infectious Diseases, Livelihood, Climate.
Global giants like FedEx have reported over 22% reduction in their
fuel consumption using ESG operational assessments.
KPMG survey of 378 CEOs found process optimization linked to
sustainability have resulted in over 31% saving over 3 years.
Fitch Ratings 2021 study reports Climate Change driver GHG
emissions could render coal, oil and gas as ‘stranded assets’.
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15. CUSTOMERS
• Improves customer
satisfaction by
significant numbers
• Positively increases
brand loyalty
• Activation of New
customer segments
• Attract Millennial and
Gen Z customers
What are Customers saying?
A 2020 Customer Global Survey report states that 47% of the
current consumers would pay more for a sustainable product.
Demonstrating shared values of customers results in 72% sharing
to at least 6 people of their positive experiences.
Fashion brands like H&M have stated used-clothes buy back
scheme as a big winner in enhancing their brand and profitability.
Gen Z, who will make the majority of the consumer market in the
coming years is willing to pay 50% more for sustainable products.
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16. EMPLOYEES
• Employee Engagement
• Employee Retention
• Diversity & Inclusion
• Gender Equality
• Mental Health &
Wellbeing
• Health & Safety
• Attract next generation
talent
What is in it for Employees?
A 2018 CNBC study shows that 9 out of 10 millennials are willing
to take a pay cut to work for sustainability-focused companies.
A BCG study that looked at 1700 companies, saw that firms with
diverse management had 19% higher revenue due to innovation
Post Co-vid, Mental Health and Wellbeing, one of the elements in
‘S’ of ESG has been deemed critical for businesses globally
A 2021 study by Anthesis reveals that 67% of Gen Z surveyed
found sustainability important while choosing an employer
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17. Reporters
Software
Providers
Auditors
Frameworks /
Standards
Data Providers
Analytics
Platforms
End Users Regulators
Reporters
(usually
corporate
enities) Collect,
validate, setup
internal controls,
procedures,
involve internal
audit, involve
external audit
and then publish
the information
Software
providers and
disclosure
platforms enable
filers to collect
and report
information.
Software
providers also
help standard
setters to build
taxonomies and
information
validation
pathways.
Auditors use
standards as
criteria against
which they
provide external
assurance, and
other related
services.
Conceptual
frameworks
Disclosure topics
Disclosure
requirements
Data providers
aggregate
information and
make it available
through
technology
tools.
Analytics
platforms
provide ratings
and advanced
analysis
capabilities.
Investors and
other
stakeholders
such as civil
society
communities,
senior
executives,
employees,
customers,
governments,
and suppliers
will consume the
available data
and analysis.
Regulators are
increasingly
interested in
sustainability
information,
with some
moving to
mandate it in
accordance with
standards.
Information producers Information users
ESG Ecosystem
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18. FRAMEWORKS
Provides principles and guidance for
how information is structured and
presented. Higher level, macro,
principle-based
STANDARDS
Focuses on what information must
be presented based on relevance to
key stakeholders, namely investors,
regulators and corporates. Due
process, prescriptive, granular
REGIONAL REGULATORS
European Union, Non-Financial Reporting Directive (NFRD)
Flow of Information
Corporates
Users of Non-
Financial
Information
(NFI): Investors,
Regulators,
Stakeholders
Building Blocks of ESG Reporting
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19. Commonly used ESG Reporting Standards and Frameworks
GRI SASB TCFD
UN PRI Vigeo EIRIS UN SDG
UN WEP CDP WEF SCM
UN GC CDSB BITC
IIRC MSCI B Corp
Oekom Sustainalytics FTSE4Good
DJSI SBTi ISO
EP100 EV100 RE100
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20. OPERATIONAL
In 2009, FedEx used to
deploy a fleet of 700 aircraft
and 44,000 motorized
vehicles that consume 4
million gallons of fuel a day.
FedEx – An operational case for ESG through Innovation
Introduced Fuel Sense Program, which reduced the company’s fuel
consumption by 36% while increasing capacity by 20%.
Introduced Boeing 777s and replaced its B 757s which reduced
fuel consumption by a further 18%.
Developed a set of 30 software programs that help optimize
aircraft schedules, flight routes, the amount of extra fuel on board.
Hybrid vans that are 42% more fuel efficient and replaced more
than 25% of its fleet with smaller, fuel-efficient vehicles.
In April 2021,
Federal Express raised
US$3.25B equivalent
through Sustainable
Financing using its strong
ESG performance, making
its debut sustainable bond. FedEx improved its packaging solutions by sourcing recycled
material and ensuring their products are 100% recyclable.
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21. Key Takeaways
The current market trends are pointing towards a strong adoption of ESG both globally and in the
region.
There exists a robust business case for companies to adopt and report on ESG, be it from a strategic,
financial or operational perspective.
It is about identifying the right ESG performance metrics that ensure a win-win for businesses to
achieve financial profitability, while contributing to the sustainable development of the region.
As an industry or a service expert, it is worthwhile to develop a deeper understanding of the various
ESG components that you directly or indirectly influence.
Both customers and employees are strongly aligned to companies that integrate ESG components
into their business and operational models.
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22. THE END
THANK YOU FOR YOUR TIME!