Havard Business Manager Live 2019
GemeinwohlAtlas 2019
Jan-Menko Grummer
27. Mai 2019
EPIC: Why now? The burning platform - companies have lost control of their equity story
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The changing shape of value …
… further compounded by significant current market volatility and uncertainty
Intangible assets represented 17% market value in 1975, having risen
(in some sectors) to 87% by 2015
2017 ICAEW
Blackrock requested “that you publicly articulate your company’s strategic framework for long-term value creation and explicitly affirm that it has been reviewed by your board of directors” – Larry Fink, BlackRock CEO in the 2018 Annual Letter to CEOs
“Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financialreturns for the shareholders of your company.” – Larry Fink, in the 2019 Annual Letter to CEOs
Martin Lipton, Novartis – extended reporting on contribution to innovation and social impact
FRC Lab examining long term value KPIS
Exxon Mobil Announcement that it will report on its impact on global warming ‘bowing to investor pressure’
Said Business school and Deloitte study
… and an increase in market focus …
… and major disruptive market drivers.
MarketValue
Intangible value –not measured or communicated
Tangible book value
Intangible book value
Intangible value –not measured or communicated
Value created for material
stakeholders
Economic, Social and
Environmental externalities
Tangible book value
Intangible book value – with
improved classification and
accounting methods
Development of accounting standards for intangibles
Curr
ent f
ocus
of a
ccou
ntin
g pr
ofes
sion
Inve
stor
focu
s
Long TermMarket Value
Value
Measurement of material components that impact
LTV
Relia
bly
com
mun
icate
d
Premium arises
through clear
communication of long term value
factors
Time
Unco
mm
unica
ted
Valu
e
Trust in business has fallen
to 56%. “My employer” has emerged as the most trusted institution, more than NGOs and business.
2019 Edelman Trust Barometer
IP traffic will grow at a CAGR
of 24% from 2016 to 2021
2017 CISCO
Big data as both a disrupter and chief enabler
Pressure to demonstrate strong financial performance within two years rose from 79% to
87%
2016 FCLT Global
Investment chain tends to focus on the
short-term
Trust in the establishment
at an all-time low
State Street letter on Human Capital and Culture January 2019
EPIC is building trust with key stakeholdersEY has proactively held over 30 discussions with the following:
► SEC► UK FRC ► EFRAG► European Comission► European Central Bank► IIRC► CEOs/Chairs► Pension Funds/Investors► Public Officials► Chair of IASB► OECD
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The Embankment Project publication (www.epic-value.com)
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The Embankment Project
The project set out to find a measurable, comparable and meaningful way for companies to better articulate to the financialmarkets how value is created for stakeholders and for investors to better differentiate the ability of companies to protect or growfuture cash flows.
9 Companies
11 Asset owners
EY
11 Asset managers
Coalition for Inclusive Capitalism
The Embankment Project for Inclusive Capitalism
• Collaboration with The Coalition for Inclusive Capitalism
• Market led initiative with >30 organisations
• Open source methodology
• Metrics from 7 working groups
• Results published on 16 November 2018
CompaniesAetna BASF DowDuPont Ecolab Johnson & Johnson Nestlé Novartis PepsiCo Unilever
Asset managersAmundi Barings BlackRock Fidelity Investments Investec Asset Management J.P. Morgan Asset & Wealth Management Neuberger Berman Nuveen Schroders State Street Global Advisors Vanguard
Asset ownersAllianz Allstate ATP CalPERS CalSTRSCanada Pension Plan Investment Board Government Pension Investment Fund Guardian Life MetLife New Zealand Super Fund Washington State Investment Board
Participants
In total:USD30tn AUM
USD1.5tnMarket Cap