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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

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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

u s resource consumption
U.S. Resource Consumption
  • 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

From 1.3 to 4 Billion Middle Class in 30 Yrs

Source: Goldman Sachs, 2008

global consumption
Global Consumption
  • 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
  • Trends in world wide extraction of selected materials, 1980 - 2005

Source: SERI Global Material Flow Database

innovation in design needed
Innovation in design needed?

Source: Umicore 2008

slide8

The Transformational Challenge

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?

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?
  • 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

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

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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