ESG + Digital Integrated Transformation for Sustainability Innovation

ESG + Digital
ESG + Digital
Integrated Transformation
Integrated Transformation
for
for
for
for
Sustainability Innovation
Sustainability Innovation
October 5 2021
October 5 2021
October 5, 2021
October 5, 2021
Alex G Lee
Alex G Lee
©2021 TechIPm, LLC All Rights Reserved www.techipm.com
Alex G. Lee
Alex G. Lee

ESG Sustainability Imperative
©2021 TechIPm, LLC All Rights Reserved

ESG Investing and Management Consideration Core Factors
Impacts (Value Creation)
increase positive impact
limit negative impact
g p
Intended/unintended impact
Opportunities (Return) Risks (Cost)
universal risks
(e.g., climate change)
industry specific risks
b i ifi i k
market competitiveness
better placed to win investment
rise of company value
return on reputation business specific risks
ESG issue specific risks
(e.g., Environmental
physical/transition/liability
return on reputation
employees' better performance
regulation compliance
business resiliency
Source: Bradley, Brendan. ESG Investing For Dummies, Wiley (2021)
physical/transition/liability
risks)
circular business model

ESG + Digital Integrated Transformation (ESGDX) Imperative
Source. The European double up https://www.accenture.com/us-en/insights/strategy/european-double-up

How ESGDX Can Create New Revenue Streams?
Digital transformation is the adoption and integration of digital technologies to transform all areas of
business functions. It can fundamentally change how a business operates internally and
t f l d th t i Di it l t f ti i l b t lt l
transform employees and the customer experience. Digital transformation is also about cultural
change over an organization’s way of working.
Technology is the engine of digital transformation, data is the fuel, process is the guidance
t d i ti l h bilit i th l di Th t f ti ll t th
system, and organizational change capability is the landing gear. They must function well together.
Business model describes how a company creates and captures value: customer value
proposition is to offer the created value, operating model is to deliver the created value, product
d i i ti i t t th l d l t i t ti th t d l
and service innovation is to create the value, and value capture is to monetize the created value
through the pricing mechanism and cash flow generation.
The essential part of digital transformation is using data and digital capabilities to reshape
t l iti t f i ti d l f t t i t ti
customer value propositions, transforming operating models for greater customer interaction
through the efficiency and productivity gains, and accelerating product and service innovation,
which introduce a new digital business model, and then, lead to new revenue streams and new
revenue opportunities.
Sustainable Digital Business Model:
By Integrating ESG sustainability into value propositions, operating models and innovation
process of products and services of the digital business model, a company can generate cost
i d d b i d ESG i k t i bl i b i ili
savings, reduced business and ESG risks, sustainable resource use, improve business resilience,
customer trust, and expanded market opportunities through new customer experiences.

ESGDX for ESG Sustainability Management
Real-time informed decision-makings regarding the management of
t t i d t i l ESG i b
strategic and material ESG issues by:
Integrated and centralized ESG data management for transparency
Continuous tracking/improvement of ESG management performance KPIs
Continuous assessments of ESG management performance
Continuous assessments of ESG management performance
Scenario analyses for identifying and reducing exposure to ESG risks and
assessments of ESG impacts
p
Implementation of virtual collaboration tools
Visibility/traceability across the value/supply chain

ESG Sustainability Management/Assessment Issues &
Challenges & Solutions

Forum for ESG + digital transformation (DX) integrated management for
ESG DX Forum
Forum for ESG + digital transformation (DX) integrated management for
sustainability impacts & digital technology innovation for sustainable
development acceleration.
LinkedIn Group: https://www.linkedin.com/groups/8956651/
p p g p
Facebook Group: https://www.facebook.com/groups/822562128365739

Digital Twin Metaverse for Enterprise Digital System Innovation Webinar
Metaverse is the converged world of physical world and virtual world that is hyper-connected,
hyper-visualized hyper-interacted and hyper-reality enabled Metaverse is a collection of fully
hyper visualized, hyper interacted, and hyper reality enabled. Metaverse is a collection of fully
connected interoperable physically augmented digital worlds with physical persistence that are
converged with the virtually augmented physical world in which people and digital representations
of people (digital people) can fully interact with one another and digital objects/environments
(including digital twins) with full reality
(including digital twins) with full reality.
This webinar is designed to discuss potential applications of digital twin based metaverse
for innovative enterprise digital system development, especially for ESG sustainable
management
management.
Agenda:
-Digital twin technology/applications/patents analysis
-Metaverse industry ecosystem
Metaverse industry ecosystem
-Digital twins for metaverse
-Enterprise digital twins
-Metaverse enterprise management system
-Applications in ESG sustainable management
Applications in ESG sustainable management
Time:
October 13 Wed, 2021 07:00 PM EDT / 04:00 PM PST (US and Canada)
Registration:
https://www.linkedin.com/events/6848235538693033985/

References
References
References
References
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ESG Knowledge Map

SDG-SASB-GRI-WEF ESG Metrics Mapping

ESG + Digital Transformation Integrated Management
Conduct assessment to determine which ESG risks, opportunities, and
impacts are of strategic significance to the company and stakeholders;
Monitor and measure them with data
Monitor and measure them with data-
-driven tools
driven tools
Monitor and measure them with data
Monitor and measure them with data-
-driven tools
driven tools
Set and communicate long
Set and communicate long-
-term value creation and
term value creation and
ESG sustainability strategy, supported by targets,
resources and technology foundations; Establish
metrics and KPIs that enable management to monitor
performance against goals; Embed management of
ESG sustainability issues in wider business processes
Set and communicate long
Set and communicate long-
-term value creation and
term value creation and
Define governance structure to embed ESG
sustainability throughout the digital transformation
strategy; Ensuring the entire C
strategy; Ensuring the entire C-
-suite
suite
understands how ESG sustainability issues are
relevant to their respective areas of responsibility.
strategy; Ensuring the entire C
strategy; Ensuring the entire C-
-suite
suite
Integrate ESG sustainability into value
propositions and customer experiences,
enabled by digital
enabled by digital-
- and data
and data-
-driven efficiencies
driven efficiencies
for end users; Set a data
for end users; Set a data-
-and
and-
-analytics
analytics
enabled by digital
enabled by digital-
- and data
and data-
-driven efficiencies
driven efficiencies
for end users; Set a data
for end users; Set a data-
-and
and-
-analytics
analytics
Provide employees with the digital
and data tools and capabilities to
deliver innovation aligned to the
company purpose and ESG
sustainability KPIs; Effectively
communicate the company’s long
communicate the company’s long-
-
communicate the company’s long
communicate the company’s long-
- ;
; y
y
strategy to collect ESG sustainability data
across business units and create new revenue
streams by making this data available to
customers and partners.
;
; y
y
Build capabilities needed to adopt digital business
term growth plans, including any
digital and ESG goals; Continuously
improve KPIs that combine digital
transformation and ESG
sustainability goals
models that improve ESG sustainable resource use
through intelligent provisioning, coordination or
optimization; Enable data
optimization; Enable data-
-sharing across isolated
sharing across isolated
organizational groups to optimize and track the ESG and
economic savings realized by digitally enabled business
models, and to understand the aggregated impact of
these outcomes; Facilitate a data
these outcomes; Facilitate a data-
-sharing with real
sharing with real-
-time
time
l i d i i i h l d d d
optimization; Enable data
optimization; Enable data-
-sharing across isolated
sharing across isolated
these outcomes; Facilitate a data
these outcomes; Facilitate a data-
-sharing with real
sharing with real-
-time
time
Develop/ implement measurement tools and impact
assessment frameworks to value ESG externalities and
return on investment; Incorporate digital tools into
financial assessment processes in order to conduct
sound assessments of ESG sustainability impacts
within a defined set of future scenarios; Integrate and
centralize data in order to report performance against
centralize data in order to report performance against analytics and optimization to match supply and demand;
analytics and optimization to match supply and demand;
Use digital platforms and channels to collect more
distributed, inclusive customer feedback for ESG
sustainable digital business model innovation
Develop a roadmap for investment in IT capabilities to
Exchange data insights in organization and value chain, using
diverse sources to inform action while ensuring data compliance,
environmental KPIs aligned to global sustainability
reporting standards
reporting standards
reporting standards
reporting standards
p p p
p p p
support transparent and integrated data
support transparent and integrated data-
-led efficiency
led efficiency
improvements; Factor ESG considerations into
operational decision
operational decision-
-making criteria where impacts are
making criteria where impacts are
most significant; Enable intelligent workflows and
process automation to create measurable efficiency
gains and improve resource use
p p p
p p p
support transparent and integrated data
support transparent and integrated data-
-led efficiency
led efficiency
operational decision
operational decision-
-making criteria where impacts are
making criteria where impacts are
Create a control
Create a control-
-tower solution that integrates real
tower solution that integrates real-
-time
time
data across the supply chain with external data sources
to improve visibility and resilience; Design a data model
that integrates internal and external data sources to
identify and reduce exposure to acute and chronic
ESG risks (e.g. weather events, supply volatility), as well
Create a control
Create a control-
-tower solution that integrates real
tower solution that integrates real-
-time
time
privacy and security; Ensure ESG sustainability data is a core
factor of decision
factor of decision-
-making; Conduct continuous ESG assessments
making; Conduct continuous ESG assessments
using data analytics, combined with AI technology, to monitor
changes in strategic issues and make real
changes in strategic issues and make real-
-time decisions;
time decisions;
Democratize access ESG impact data/insights through self
Democratize access ESG impact data/insights through self-
-service
service
portals for all employees, including a dashboard that tracks
company
company-
-wide KPIs aligned with ESG sustainability reporting
wide KPIs aligned with ESG sustainability reporting
factor of decision
factor of decision-
-making; Conduct continuous ESG assessments
making; Conduct continuous ESG assessments
changes in strategic issues and make real
changes in strategic issues and make real-
-time decisions;
time decisions;
Democratize access ESG impact data/insights through self
Democratize access ESG impact data/insights through self-
-service
service
company
company-
-wide KPIs aligned with ESG sustainability reporting
wide KPIs aligned with ESG sustainability reporting
( g , pp y y),
( g , pp y y),
as tracking performance against environmental goals
( g , pp y y),
( g , pp y y),
standards
standards
standards
standards
Source. Bridging Digital and Environmental Goals: A Framework for Business Action
http://www3.weforum.org/docs/WEF_Bridging_Digital_and_Environmental_Goals_2021.pdf

Next Generation ESG Digital Solution/Platform Development
Management Platform Assessment Platform
Integrated Platform
modular based flexible component solutions
development
-data management solution
modular based flexible component solutions
development
-data management solution
AI & big data analytics-driven automatic real-
time data capture, processing, and storing
standardized analytically rigorous metrics
AI & big data analytics-driven automatic real-
time data capture, processing, and storing
g
g
-data analysis solution
-performance management solution
- ...
data governance solution for data
g
-data analysis solution
-performance management solution
- ...
measurement ways to ensure consistency and
comparability
capture business/industry/jurisdiction-specific
dynamic and time-sensitive material ESG
measurement ways to ensure consistency and
comparability
capture business/industry/jurisdiction-specific
dynamic and time-sensitive material ESG
Linking Solution
availability/visibility/transparency and quality control
-end to end data flow management with advanced
search capabilities
assessment solution for ESG sustainability-related
availability/visibility/transparency and quality control
-end to end data flow management with advanced
search capabilities
assessment solution for ESG sustainability-related
dynamic and time sensitive material ESG
sustainability considerations based on double
materiality approach
provide a reliable foundation for cross-company
comparisons
dynamic and time sensitive material ESG
sustainability considerations based on double
materiality approach
provide a reliable foundation for cross-company
comparisons
blockchain
based
secure and
assessment solution for ESG sustainability related
risks, opportunities, real-world impacts
-development of new metrics that can represent the
processes and systems governing outcomes and
impacts
assessment solution for ESG sustainability related
risks, opportunities, real-world impacts
-development of new metrics that can represent the
processes and systems governing outcomes and
impacts
comparisons
use of right framework to evaluate ESG
sustainability-related information critically and
appropriately
comparisons
use of right framework to evaluate ESG
sustainability-related information critically and
appropriately
credible data
sharing
solution for maturity evaluation
-forward-looking analytic tools for assessing likely
future performance
solution for tracking the ROI of ESG sustainability
solution for maturity evaluation
-forward-looking analytic tools for assessing likely
future performance
capture matters that potentially significant,
monetary implications over time
link between a company’s management in ESG
sustainability related risks opportunities and
capture matters that potentially significant,
monetary implications over time
link between a company’s management in ESG
sustainability related risks opportunities and
management efforts across enterprise
management efforts across enterprise
sustainability-related risks, opportunities and
impacts and its financial performance over time
sustainability-related risks, opportunities and
impacts and its financial performance over time

TCFD Scenario Analysis Steps One Page Summary
The objective of the scenario analysis is to evaluate the impacts of climate change
The objective of the scenario analysis is to evaluate the impacts of climate change-
-related risks and
related risks and
opportunities on business and examine the resilience of current climate change
opportunities on business and examine the resilience of current climate change-
-related strategy.
related strategy.
The scenario analysis is used as an essential tool for organization’s strategic plans or risk management
processes
processes
The objective of the scenario analysis is to evaluate the impacts of climate change
The objective of the scenario analysis is to evaluate the impacts of climate change-
-related risks and
related risks and
opportunities on business and examine the resilience of current climate change
opportunities on business and examine the resilience of current climate change-
-related strategy.
related strategy.
processes
processes
The scope of analysis can
include value/supply chain
beyond direct operations, to
achieve a more comprehensive
The identified time frames are short (2025),
medium (2035) and long term (2050).
•Identify core problem
(leadership/stakeholders)
•Define scope/boundary and level of
analysis
•Set time horizon
•Identify core problem
(leadership/stakeholders)
•Define scope/boundary and level of
analysis
•Set time horizon
processes.
processes.
processes.
processes.
understanding of the possible
indirect impacts of change
indirect impacts of change-
-
related risks and opportunities
on business. After familiar with
the qualitative scenario
analysis, a data
analysis, a data-
-driven
driven
quantitative analysis can be
indirect impacts of change
indirect impacts of change-
-
analysis, a data
analysis, a data-
-driven
driven
Acquire information to predict trends/uncertainties in
environmental and socio
environmental and socio-
-economic conditions such as changes
economic conditions such as changes
in policies/regulations, market/technology/investment shifts,
energy supply/demand, changes in population/ GDP.
environmental and socio
environmental and socio-
-economic conditions such as changes
economic conditions such as changes
Material risks include climate
Material risks include climate-
-related risks (transition and physical risks).
related risks (transition and physical risks).
Material risks include climate
Material risks include climate-
-related risks (transition and physical risks).
related risks (transition and physical risks).
Specify plan to decrease greenhouse gas
(GHG) emission (e.g., halve GHG
emissions by 2030 for Scope 1/2/3
1. GOAL AND
SCOPE
DEFINITION
2. ANALYZE
EXTERNAL
5 STRATEGIC
added to further develop the
possible pathways to the
scenarios. The scope of impact
can extend to the impact of a
company’s activities to climate
change (financial v. ES
materiality).
materiality).
materiality).
materiality). •Identify the key forces and uncertainties
•Identify the key forces and uncertainties
Specifically, transition risks include climate change
Specifically, transition risks include climate change-
-related policy and regulation,
related policy and regulation,
technology development, and reputation. Physical risks include chronic longer
technology development, and reputation. Physical risks include chronic longer-
-term
term
climate shifts, such as sustained higher temperatures, sea level rise and acute
event
event-
-driven extreme weather, such as heat waves, water stress, wild fires, floods,
driven extreme weather, such as heat waves, water stress, wild fires, floods,
drought, and hurricanes.
Specifically, transition risks include climate change
Specifically, transition risks include climate change-
-related policy and regulation,
related policy and regulation,
technology development, and reputation. Physical risks include chronic longer
technology development, and reputation. Physical risks include chronic longer-
-term
term
event
event-
-driven extreme weather, such as heat waves, water stress, wild fires, floods,
driven extreme weather, such as heat waves, water stress, wild fires, floods,
•Develop narrative
•Implement strategy
•Develop narrative
•Implement strategy
y p
y p
emission) and implement the net zero
roadmap to achieve net zero by 2050.
y p
y p
EXTERNAL
AND INTERNAL
ENVIRONMENT
5. STRATEGIC
RESPONSES
•Identify material risks
•Identify opportunities
•Identify material risks
•Identify opportunities
Climate change
Climate change-
-related opportunities include resource efficiency,
related opportunities include resource efficiency,
energy source, new products and services, markets, revenue
generation, and resilience.
Climate change
Climate change-
-related opportunities include resource efficiency,
related opportunities include resource efficiency,
Commonly used reference scenarios are the physical scenarios such as the
Implement strategy
•Derive action plan
•Monitor developments
Implement strategy
•Derive action plan
•Monitor developments
Reference Books
Reference Books
3. SCENARIO
BUILDING
4.
ASSESSMENTS
Commonly used reference scenarios are the physical scenarios, such as the
Intergovernmental Panel on Climate Change (IPCC) scenarios and the transition
scenarios, such as the International Energy Agency (IEA) scenarios. Other
publicly available climate change scenarios include the International Renewable
Energy Agency (IRENA) scenarios and the Network for Greening the Financial
Systems’ (NGFS) Transition scenarios.
•Evaluate impacts of each
identified risk on business for
each scenario per defined time
•Evaluate impacts of each
identified risk on business for
R f TCFD R t
R f TCFD R t •Select the right public scenarios
•Develop scenarios through internal modeling under
key uncertainties
•Select the right public scenarios
•Develop scenarios through internal modeling under
key uncertainties
Climate change scenarios are can be developed using projections
of what can happen by creating plausible, coherent and internally
flame (scenario analysis
outcomes)
flame (scenario analysis
outcomes)
To assess a risk until a time frame, a selection of
relevant external variables can be used to
Reference TCFD Reports
Reference TCFD Reports
BNP Paribas TCFD Report 2020
Chevron TCFD Report 2020
Daimler TCFD Report 2020
Eaton TCFD Report 2021
M i TCFD R t 2020
M i TCFD R t 2020
M i TCFD R t 2020
M i TCFD R t 2020
pp y g p , y
pp y g p , y
consistent descriptions of possible climate change pathways
towards certain goals such as the Paris Agreement targets of 2
towards certain goals such as the Paris Agreement targets of 2°
°C
C
(or less) of global temperature warming.
pp y g p , y
pp y g p , y
towards certain goals such as the Paris Agreement targets of 2
towards certain goals such as the Paris Agreement targets of 2°
°C
C
simulate a scenario. These variables can include
carbon pricing and sectoral carbon intensities.
For example, for a policy transition risk, carbon
price of around 2$ per ton by 2025 with low
financial impacts was expected.
Macquarie TCFD Report 2020
Moodys TCFD Report 2020/Decarbonization Plan 2020
Nasdaq TCFD Report 2020
Nestlé's TCFD Report 2020/Net Zero Roadmap 2021
Wells Fargo TCFD Report 2020

Balancing Green (MIT Press) One Page Book Summary
S
Sustainability
ustainability-
-focused
focused
stakeholders' forces
regarding environmental
impacts create economic
S
Sustainability
ustainability-
-focused
focused
Examination of sustainability risks, opportunities, and impacts in a
company and across a supply chain is crucial because the vast majority
of environmental (and the associated potential improvements) issues
take place outside the four walls of most companies
Companies can achieve both of environmental and financial goals within the grayed region.
This is the case with initiatives motivated by eco
This is the case with initiatives motivated by eco-
-efficiency, eco
efficiency, eco-
-risk management, and/ or
risk management, and/ or
eco
eco-
-segmentation considerations. However, once companies reach the Pareto frontier,
segmentation considerations. However, once companies reach the Pareto frontier,
This is the case with initiatives motivated by eco
This is the case with initiatives motivated by eco-
-efficiency, eco
efficiency, eco-
-risk management, and/ or
risk management, and/ or
eco
eco-
-segmentation considerations. However, once companies reach the Pareto frontier,
segmentation considerations. However, once companies reach the Pareto frontier,
1 The Growing Pressures
1 The Growing Pressures
incentives for corporate
environmental initiatives.
take place outside the four walls of most companies.
a. Life cycle assessment (LCA) and Greenhouse Gas Protocol (GGP) are
example methodologies for estimating a product's total environmental
impact.
impact.
b. Materiality assessment plays a crucial role in allowing companies to make
sound business decisions about which impacts to tackle.
impact.
impact.
sound business decisions about which impacts to tackle. Trade
Trade-
-off between financial and
off between financial and
Trade
Trade-
-off between financial and
off between financial and
g , p ,
g , p ,
without radical change, they will face unavoidable trade
without radical change, they will face unavoidable trade-
-offs between environmental and
offs between environmental and
financial performance.
g , p ,
g , p ,
without radical change, they will face unavoidable trade
without radical change, they will face unavoidable trade-
-offs between environmental and
offs between environmental and
1. The Growing Pressures
1. The Growing Pressures
3. Impact Assessment
3. Impact Assessment
2. The Structure of Supply Chains
2. The Structure of Supply Chains
12. The Travails of Scale
12. The Travails of Scale
13. A Road to Sustainable Growth
13. A Road to Sustainable Growth
Carbon footprint
Carbon footprint
Carbon footprint
Carbon footprint
BASF environmental
BASF environmental
BASF environmental
BASF environmental
environmental performance
environmental performance The set of options
The set of options
available for creating
new opportunities to
achieve both economic
growth and a reduction
in environmental
in environmental
impacts.
impacts.
The set of options
The set of options
in environmental
in environmental
impacts.
impacts.
4. Making with Less Taking
4. Making with Less Taking
5. The Sorcery of
5. The Sorcery of
Sustainable Sourcing
Sustainable Sourcing 10. Managing Sustainability
10. Managing Sustainability
11. Creating Deep Sustainability
11. Creating Deep Sustainability
evaluation of the supply
chain of bananas sold in
the United States.
the United States.
the United States.
the United States.
BASF environmental
BASF environmental
materiality assessment
BASF environmental
BASF environmental
Case studies of sustainability improvements
regarding carbon footprint, water consumption, and
toxin emissions
toxin emissions
toxin emissions
toxin emissions
In
In-
-depth case studies of three “deep green”
depth case studies of three “deep green”
companies: Dr. Bronner's Magic Soaps,
Patagonia and Seventh Generation
In
In-
-depth case studies of three “deep green”
depth case studies of three “deep green”
Fundamental challenges of replicating deep green
practices on a larger scale
6. Moving More, Emitting Less
6. Moving More, Emitting Less
7. All’s Well That Ends Well
7. All’s Well That Ends Well 8. Green by Design
8. Green by Design
9. Talking the Walk:
9. Talking the Walk:
Communicating Sustainability
Communicating Sustainability
Upstream supply chain sustainability case studies: IKEA
and Starbucks cases for reducing negative environmental
impacts and the risk of reputational damage
Examples that show how companies can make significant
reductions in GHG emissions through transportation and
distribution management
P d t d i d i i h th t k dl
Sustainability
Sustainability-
-related labeling, annual corporate social
related labeling, annual corporate social
responsibility reporting and other marketing
Sustainability
Sustainability-
-related labeling, annual corporate social
related labeling, annual corporate social
Patagonia, and Seventh Generation
Management issues regarding sustainability
initiatives across an organization
Sustainability improvements at the end
Sustainability improvements at the end-
-of
of-
-life of the product
life of the product
and beyond (circular economy)
Sustainability improvements at the end
Sustainability improvements at the end-
-of
of-
-life of the product
life of the product
Product design and engineering changes that can markedly
affect environmental impact across the full product life cycle
including packaging design and design for recycling
Chapter 16: Circularity for Design
responsibility reporting, and other marketing
communications
communications
communications
communications
p y g
p y g
-
-Redesigning Design
Redesigning Design
-
-Recognizing the Problems Designers
Recognizing the Problems Designers
-
-Face Creating a Framework for Circular Design
Face Creating a Framework for Circular Design
p y g
p y g
-
-Redesigning Design
Redesigning Design
-
-Recognizing the Problems Designers
Recognizing the Problems Designers
-
-Face Creating a Framework for Circular Design
Face Creating a Framework for Circular Design

ESG Investing For Dummies (Wiley) One Page Book Summary
climate change: rapid reduction in GHG emissions + offsetting
(e.g., carbon credits) to reach net carbon zero; energy efficiency:
decrease hydrocarbon
decrease hydrocarbon-
-sourced energy consumption by displacing
sourced energy consumption by displacing
it with clean energy sources, or to integrate systems to improve
energy usage; global water crisis: water access, pollution, and
decrease hydrocarbon
decrease hydrocarbon-
-sourced energy consumption by displacing
sourced energy consumption by displacing
Social performance indicators: customer satisfaction, data security and privacy, gender and
ethnic equality, diversity and inclusion, employee engagement, community relations, , human
rights, labor standards, health, safety, and wellbeing
Understanding Why ESG Is
Important:
Important:
global sustainability challenges;
interest of millennial investors in
ESG; producing more systematic,
quantitative, impartial, and
financially applicable approaches to
hi hli ht th ESG f t
Important:
Important:
The ‘E’ in ESG considers the company’s use of
natural resources and the effect its operations have
on the environment, in terms of direct operations
and throughout its supply chains.
scarcity; air and water pollution: pollutant emissions ; biodiversity
and deforestation crisis; waste management: circular economy,
waste
waste-
-to
to-
-energy solutions
energy solutions
waste
waste-
-to
to-
-energy solutions
energy solutions Qualitative nature of social performance and the
Qualitative nature of social performance and the
wide range of related issues make ‘S’ to be the most
difficult to analyze, measure, and integrate into
investment strategies.
g , , , y, g
g , , , y, g
g , , , y, g
g , , , y, g
Corporate governance principally describes the systems a company uses to balance
the competing demands of its diverse stakeholders,
Evaluating governance: board responsibilities
and composition, audit committee structure,
bribery and corruption, executive compensation,
lobbying, political contribution, whistleblower
schemes
schemes
schemes
schemes
1 Entering the World of ESG
1 Entering the World of ESG
2. Evolution and Growth of ESG Investing
2. Evolution and Growth of ESG Investing
3. Environmental Component
3. Environmental Component Greenwashing appears to have become more prevalent,
Greenwashing appears to have become more prevalent,
but it’s difficult to prove, given the lack of a common
definition for what constitutes good corporate behavior.
Part 1: Getting to Know ESG
4. Social Component
4. Social Component
5. Governance Component
5. Governance Component
6. Greenwashing
6. Greenwashing
highlight the core ESG factors.
g pp y
g pp y
g pp y
g pp y the competing demands of its diverse stakeholders,
Part 4: The Part of Tens
16. Ten Frequently Asked Questions
16. Ten Frequently Asked Questions
17. Ten Issues Surrounding ESG Portfolio
17. Ten Issues Surrounding ESG Portfolio
1. Entering the World of ESG
1. Entering the World of ESG
7. Approaches to
7. Approaches to
ESG Investing
ESG Investing
15. Elaborating the ESG Endgame
15. Elaborating the ESG Endgame
14. ESG Performance and Reporting
14. ESG Performance and Reporting
ESG Investing Consideration Core Factors: industry
sectors, ESG strategies, material indicators
P t 2 I ti i ESG
P t 2 I ti i ESG
P t 2 I ti i ESG
P t 2 I ti i ESG P t 3 A l i ESG Phil h
P t 3 A l i ESG Phil h
g
g
Construction
Construction
18. Ten Factors Influencing the Growth of ESG Investing Climate Change
18. Ten Factors Influencing the Growth of ESG Investing Climate Change
ESG strategies have mostly outperformed
the most popular conventional passive
ETFs.
ETFs.
ETFs.
ETFs.
ESG evolved to mainstream strategy
8. Equity
8. Equity-
-Based Instruments
Based Instruments
12. Creating Value through ESG
12. Creating Value through ESG
10. Derivative and Alternative Instruments
10. Derivative and Alternative Instruments
11. Geographical Differences
11. Geographical Differences
p g
p g
Impact investing is an
approach to investing in
initiatives, organizations, and
funds that pursue the
development of both financial
returns and quantifiable social
and environmental impact.
Benefits of integrating ESG
factors into organization’s
management, strategy, and
13 Devising an ESG Policy
13 Devising an ESG Policy
Part 2: Investing in ESG
9. Fixed Income Instruments
9. Fixed Income Instruments
Using ESG factors to inform fixed income investment (Bond) decision
Using ESG factors to inform fixed income investment (Bond) decision-
-
making is primarily about identifying risks and opportunities that might
otherwise be overlooked
Using ESG factors to inform fixed income investment (Bond) decision
Using ESG factors to inform fixed income investment (Bond) decision-
-
Part 3: Applying ESG Philosophy
Investors' key
Investors' key
considerations to
considerations to
Investors' key
Investors' key
considerations to
considerations to
a. criteria and metrics for material
ESG factors for performance
measurement b. frameworks for
related reporting of the data behind
material ESG factors
A t i lit l i i th d d t
goal and effective ESG
practices: generating
enhanced returns;
enhanced returns;
attracting more customers;
reducing costs; increasing
productivity and attracting
talent
talent
enhanced returns;
enhanced returns;
talent
talent
Socially Responsible
Investing SRI);
Investing SRI);
Impact Investing;
Impact Investing;
Green Investing;
Green Investing;
Faith
Faith-
-based
based
Investing
Investing
Investing SRI);
Investing SRI);
Impact Investing;
Impact Investing;
Green Investing;
Green Investing;
Faith
Faith-
-based
based
Investing
Investing
Positive screening strategies based on ESG scores
can raise the ESG quality of both passive and active
traditional and smart beta portfolios, without
reducing risk
reducing risk-
-adjusted returns. However, instead of
adjusted returns. However, instead of
focusing on maximizing financial performance from
ESG criteria, many investors are now concentrating
on maximizing ESG performance subject to risk
reducing risk
reducing risk-
-adjusted returns. However, instead of
adjusted returns. However, instead of
otherwise be overlooked.
ESG indexes are becoming
fundamental building
blocks for asset allocation.
Derivative and alternative
instruments can achieve
passive returns using ESG
indexes
indexes
indexes
indexes
considerations to
considerations to
develop an ESG
develop an ESG
framework:
framework:
material ESG
material ESG
metrics, internal
metrics, internal
governance
governance
structure, peer
structure, peer
reviews
reviews
considerations to
considerations to
develop an ESG
develop an ESG
framework:
framework:
material ESG
material ESG
metrics, internal
metrics, internal
governance
governance
structure, peer
structure, peer
reviews
reviews
A materiality analysis is a method used to
pinpoint and prioritize the issues that are
most important to an organization’s value
chain and its stakeholders. ESG ratings
grade companies against given ESG
standards, evaluating their performance
on a sustainability scale.
g
g
g
g
Integrating ESG Strategies into equity
Integrating ESG Strategies into equity-
-based investment
based investment
funds are either actively managed (the portfolio manager
decides where and what to invest in) or passively
managed.
managed.
Integrating ESG Strategies into equity
Integrating ESG Strategies into equity-
-based investment
based investment
managed.
managed.
on maximizing ESG performance subject to risk-
-
return constraints.
return constraints.
on maximizing ESG performance subject to risk-
-
return constraints.
return constraints.
Integration of ESG factors into
fixed income portfolio
strategies: positive/negative
screening, best
screening, best-
-in
in-
-class,
class,
engagement, thematic
screening, best
screening, best-
-in
in-
-class,
class,
indexes.
indexes.
indexes.
indexes.
ESG investing is expected
to top US$50 trillion in the
next 20 years confirms that
it has moved from niche to
mainstream.
mainstream.
mainstream.
mainstream.
reviews
reviews
reviews
reviews

On Leading Digital Transformation (HBR Press) One Page Book Summary
Identifies a problem, describes what a
solution would achieve, and proposes a
way to measure progress on that
solution
solution
solution
solution
Identify metrics that are more closely
linked to the specific improvements you
hope digital transformation initiatives
will bring about
will bring about
will bring about
will bring about
Bonus. Digital
Bonus. Digital
Transformation Comes
Transformation Comes
They must function
They must function
well together.
well together.
They must function
They must function
well together.
well together.
The Apple Model: The company
is organized around functions,
and expertise aligns with
The essential part of digital
The essential part of digital-
-transformation strategy is using data and digital capabilities to
transformation strategy is using data and digital capabilities to
create new value for customers. A key part of discovery
create new value for customers. A key part of discovery-
-driven digital transformation is
driven digital transformation is
identifying organizational problems that can be addressed with digital technology, the desired
improvement for each, and a metric for assessing progress toward it.
The essential part of digital
The essential part of digital-
-transformation strategy is using data and digital capabilities to
transformation strategy is using data and digital capabilities to
create new value for customers. A key part of discovery
create new value for customers. A key part of discovery-
-driven digital transformation is
driven digital transformation is
Digital
Digital
transformative
transformative
b i d l
b i d l
Digital
Digital
transformative
transformative
b i d l
b i d l
Transformative business model
features: (1) personalization, (2)
l d
l d l (3) t
l (3) t
l d
l d l (3) t
l (3) t
Down to Talent in Four
Down to Talent in Four
Key Areas
Key Areas
Companies need to start thinking of their
p g
p g
decision rights. Leaders are
cross
cross-
-functionally collaborative
functionally collaborative
and deeply knowledgeable about
details.
details.
p g
p g
cross
cross-
-functionally collaborative
functionally collaborative
details.
details.
Technology is the engine of digital
transformation, data is the fuel, process is the
guidance system, and organizational change
capability is the landing gear.
2. The Transformative
2. The Transformative
Business Model
Business Model
1. Discovery
1. Discovery-
-Driven Digital
Driven Digital
Transformation
Transformation
10. Your Workforce Is
10. Your Workforce Is
More Adaptable Than You
More Adaptable Than You
Think
Think
Business model describes how a company creates
business model
business model
can link a new
can link a new
digital technology
digital technology
to an emerging
to an emerging
market need.
market need.
business model
business model
can link a new
can link a new
digital technology
digital technology
to an emerging
to an emerging
market need.
market need.
a closed
a closed-
-loop process, (3) asset
loop process, (3) asset
sharing, (4) usage
sharing, (4) usage-
-based pricing,
based pricing,
(5) a collaborative ecosystem,
and (6) an agile and adaptive
organization
organization
a closed
a closed-
-loop process, (3) asset
loop process, (3) asset
sharing, (4) usage
sharing, (4) usage-
-based pricing,
based pricing,
organization
organization
11. How Apple Is
11. How Apple Is
Organized for Innovation
Organized for Innovation
To build effective new business models that
take advantage of digital technology, older
companies need to agree on the way forward,
employees as a reserve of talent and energy
that can be tapped by providing smart on
that can be tapped by providing smart on-
-the
the-
-
job skills training and career development.
that can be tapped by providing smart on
that can be tapped by providing smart on-
-the
the-
-
3. Digital Doesn’t Have to
3. Digital Doesn’t Have to
Be Disruptive
Be Disruptive
4. What’s Your
4. What’s Your
Data Strategy?
Data Strategy? 7. How Smart, Connected Products Are
7. How Smart, Connected Products Are
Transforming Companies
8. The Age of Continuous
8. The Age of Continuous
Connection
Connection
9. The Problem with Legacy
9. The Problem with Legacy
Ecosystems
Ecosystems
and captures value. Business model defines the
customer value proposition and the pricing
mechanism, indicate how the company will organize
itself and whom it will partner with to produce value,
and specify how it will structure its supply chain.
Companies need to make continuous
connection a fundamental part of their
business models. They can do so with
four strategies: respond to desire,
adopt new performance metrics, and rebuild
their supplier, distributor, and partner
networks.
networks.
networks.
networks.
5. Competing in the Age of AI
5. Competing in the Age of AI 6. Building the AI
6. Building the AI-
-Powered
Powered
Organization
Organization
To scale up AI, companies must make three shifts:
(1) Develop cross
(1) Develop cross-
-functional teams with a mix of
functional teams with a mix of
(1) Develop cross
(1) Develop cross-
-functional teams with a mix of
functional teams with a mix of
Through what we call connected
strategies such that companies are
addressing customers’ needs the
moment they arise nd sometimes even
Digital transformation means using digital tools to
better serve the known customer.
Digital transformation often enables the elimination of
inefficient intermediaries and costly physical
infrastructure. But that doesn’t mean the physical
goes away entirely.
goes away entirely.
Digital transformation requires slow replacing of
goes away entirely.
goes away entirely.
Competing in the Age of AI
One Page Book Summary
curated offering, coach behavior, and
automatic execution.
Companies need a coherent strategy that strikes
the proper balance between two types of data
skills and perspectives for interdisciplinary
collaboration ; (2) Develop data
collaboration ; (2) Develop data-
-driven decision
driven decision
making procedure at the front line; (3) Develop
agile, experimental, and adaptable mindset
To launch successful AI, leaders should devote
early attention to several tasks:
(1) E l i i h AI i i t t t th b i
collaboration ; (2) Develop data
collaboration ; (2) Develop data-
-driven decision
driven decision
earlier, customers get a dramatically
improved experience, and companies
boost operational efficiencies and lower
costs.
costs.
costs.
costs.
Smart, connected products require (1)
companies to build and support an
ti l t h l i f t t
ti l t h l i f t t
ti l t h l i f t t
ti l t h l i f t t
legacy systems in a modular, agile fashion.
Balancing offense and defense requires
balancing data control and flexibility.
A company’s data architecture describes how
data is collected, stored, transformed,
distributed, and consumed.
A robust a single source of truth (SSOT) for
control and multiple versions of the truth
(MVOTs) data architecture for flexibility are
A company’s data architecture describes how
data is collected, stored, transformed,
distributed, and consumed.
A robust a single source of truth (SSOT) for
control and multiple versions of the truth
(MVOTs) data architecture for flexibility are
Coherent dynamic strategy for organizing, governing, analyzing,
and deploying an organization’s information assets is needed.
p p yp
p p yp
management: defensive, such as security and
governance, and offensive, such as increasing
revenue, profitability, and customer satisfaction.
p p yp
p p yp
(1) Explaining why AI is important to the business
and how they’ll fit into a new, AI
and how they’ll fit into a new, AI-
-oriented culture; (2)
oriented culture; (2)
Anticipating unique barriers to change; (3)
Budgeting as much for integration and adoption as
for technology ; 4) Balancing feasibility, time
investment, and value
and how they’ll fit into a new, AI
and how they’ll fit into a new, AI-
-oriented culture; (2)
oriented culture; (2)
entirely new technology infrastructure;
(2) a fundamental rethinking of product
development and manufacturing; (3) a
new organizational structure.
Smart, connected products create (1) new
production requirements and
opportunities; (2) new services.
( ) y
need.
The SSOT works at the data level; MVOTs
support the management of information.
( ) y
need.
The SSOT works at the data level; MVOTs
support the management of information.

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