S O C I A L   &   E N V I R O N M E N T A L   I S S U E S
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S O C I A L   &   E N V I R O N M E N T A L   I S S U E S. THE NEW S T R A T E G I C   B U S I N E S S R I S K. Mark Eadie Executive Director, Environmental Management. The world is not getting any bigger…. Source: WWF, 2008. U.S. Resource Consumption.

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S O C I A L   &   E N V I R O N M E N T A L   I S S U E S

THE NEW S T R A T E G I C   BU S I N E S SR I S K

Mark Eadie

Executive Director, Environmental Management


The world is not getting any bigger
The world is not getting any bigger…  E N V I R O N M E N T A L   I S S U E S

Source: WWF, 2008


U s resource consumption
U.S. Resource Consumption  E N V I R O N M E N T A L   I S S U E S

  • In their lifetime, each American consumes

    • 535 kg of copper

    • 7.2 tonnes of clays

    • 14.1 tonnes of salt

    • 569 kg of zinc

    • 621 tonnes of stone, gravel and sand (= half a train-load)

    • 346,000 litres of oil (= 18 petrol tankers)

    • 6,100,000 cubic feet of gas

    • 13.3 tonnes of iron ore

    • 2,964 kg of bauxite

    • 8.7 tonnes of phosphate

    • 260 tonnes of coal

    • 26.8 tonnes of other minerals and metals

      Source: Mineral Information Institute, 2010


Growth in consumerism
Growth in Consumerism  E N V I R O N M E N T A L   I S S U E S

From 1.3 to 4 Billion Middle Class in 30 Yrs

Source: Goldman Sachs, 2008


Global consumption
Global Consumption  E N V I R O N M E N T A L   I S S U E S

  • If the whole world were to reach the level of consumption of the USA/Europe….

  • …we would need:

    • 3 X current world copper production

    • 2 X current zinc production

    • 6 X current oil production

    • 26% more than current bauxite production

    • 5 X current phosphate production

    • 3 X current coal production

    • 56% more than current gold production


Global trends
Global Trends  E N V I R O N M E N T A L   I S S U E S

  • Trends in world wide extraction of selected materials, 1980 - 2005

Source: SERI Global Material Flow Database


Innovation in design needed
Innovation in design needed?  E N V I R O N M E N T A L   I S S U E S

Source: Umicore 2008


The Transformational Challenge  E N V I R O N M E N T A L   I S S U E S

Resource efficiency to improve by over 80%

Life Expectancy 80yrs

Life Satisfaction 8/10

2050

80% reduction in CO2 emissions

Source: NEF


What do we assess at j p morgan
What do we assess at J.P. Morgan?  E N V I R O N M E N T A L   I S S U E S

Financial activities

Equity and debt underwriting – many IPOs, many bonds

Loans

Certain trading activities, including commodities

M&A, including many advisories

Principal investment

Any transaction where high reputation risk perceived

Industrial sectors


What are the risks
What are the risks?  E N V I R O N M E N T A L   I S S U E S

  • The obvious business risks are the direct and indirect negative impacts, and these are assessed through a variety of environmental and social assessment methods

  • However, there are more and wider strategic business risks including:

    • Lower resource availability

    • Significantly growing social expectations of behaviour of companies

    • Changing legislation

    • Changing technical standards

  • But there are also positives

    • Growing social understanding of different agendas

    • Huge potential alternative revenue flows for resource reuse, recycling

    • Advancing technical solutions lower costs


  • No single standard but a rich reserve of guidance
    No single standard, but a rich reserve of guidance  E N V I R O N M E N T A L   I S S U E S

    Legislation and regulations

    IFC Performance Standards (the main specific reference in the Equator Principles)

    OECD Guidelines

    IAIA Good Practices for EIAs

    IFC/World Bank EHS Guidelines and Sectoral Guidance

    Sector Standards, Guidance and Input: ICMM, IPIECA, IHA, RSPO, BCI

    Academic, NGO, commissioned studies and references

    Geographical

    sectoral (e.g. mining, oil and gas, forestry…)

    functional (e.g. water, biodiversity, poverty…)

    ISO14000, OHSAS18000, SA8000, proprietary protocols (e.g. Anglo American Socio-Economic Assessment Toolkit, Shell SPMU guides)

    ILO, UN, EU conventions and guidance


    Conclusions
    Conclusions  E N V I R O N M E N T A L   I S S U E S

    Governments, regulators, the media, NGOs, lenders, investors and societyhave increasing expectations about how corporations manage environmental, health, safety and social issuesGlobalisation of society’s expectations

    Environmentally and socially responsible behaviour is not a “nice to have”: it reduces costs and helps companies to stay in businessIt’s about the money, not hugging trees

    Work for a better tomorrow: if we get hung up on yesterday’s performance or behaviour we will get nowhereDon’t let the perfect become the enemy of the good


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