presentation by kyoko sakuma
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Kyoko Sakuma, Stock at Stake Senior Analyst - Sustainable Analysis & Consulting (SA&C) - Belgium.TRANSCRIPT
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The challenge for rating innovative and sustainable companies
Kyoko SakumaAsia-Pacific Team Leader, Vigeo Group
Presented at TBLI Asia 2006
26 May 2006
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Based in Paris, Brussels and Casablanca, the VIGEO Group is a corporate social responsibility rating agency.
Created in 2005 from the merger of two companies, • Stock at Stake /ETHIBEL (1992)
• VIGEO ( ARESE, 1997)
• The VIGEO Group is the leading provider of information on corporate social responsibility in Europe
INTRODUCTION TO THE VIGEO GROUP
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Companies30,2%
NGOs and Unions 23,6%
Financial institutions
46,2%
Capital : 16 Millions €
Ethibel Register Committee
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Scientific Committee
VIGEO GROUP GOVERNANCE STRUCTURE
N. NotatCEO
Chairman
M. BontempsDirector
SRI ResearchDepartment
An international team composed of 60 professionals: 14 Nationalities
2 Business Activities
Investors Solicited Ratings: 50+ asset managers and institutional investors, and in-depth coverage of 850 companies (Europe 550, Asia Pac 130, USA 170)
Corporate Solicited Ratings: 35+ large European Corporations
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VIGEO Group Solutions
ETHIBEL services
Mainstream services
Equi-Plus
Equi-Perso
Equi-Compact
Thematic services
Ethibel label
Ethibel indexes
Equi-Carbon
Equi-Rights
Equi-Standards
SOLUTIONS
PIONEER
• A list of +/- 260 companies in 24 sectors and 3 regions, Europe (57%), Asia Pacific (20%) and Americas (23%), selected from MSCI World 1500
EXCELLENCE
• A list of +/- 350 companies in 24 sectors and 3 regions, Europe (57%), Asia Pacific (20%) and Americas (23%), selected from MSCI World 1500
INDEXES Pioneer and Excellence
A list of +/- 200 companies in 24 sectors and 3 regions, in the Pioneer Register or +/- 280 companies in the Excellence register
Two index families: Global and Europe
Equi Standards © Best in Class CSR Research & Identification risk/opportunities850 companies (550 Europe, 130 Asia Pac, 170 USA)
Equi Plus © Equi Standards +Detailed Scores
Tailor-made services
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VIGEO Group Asia Pacific Research
1. Index-based selection combined with Bottom-up approach Ethibel Best-in-class & exclusionary criteria
Equi-Standards Best-in-class & risk/opportunity identification
2. Bottom-up approach
Asunohane (“Feather for Tomorrow”) SRI fund, Asahi Life Asset Management (ALAMCO) Best-in-peers & risk/opportunity
identification
Common criteria:
Stakeholder Expectation
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VIGEO Group tailored-made solution
Asahi Life Asset Management’s SRI fund “Feather for Tomorrow”(AUM 5.1 Billion JPY as of 7 April 2006)
Vigeo Group response• What are the essential conditions for Japan’s and world’s sustainable growth in 20-30 years? And what will be more expected by the society then?-Need for better care and nursing to meet the aging population-energy and material-saving (zero emission) in business model Etc.
“Feather for Tomorrow” SRI fund manager’s view
• Companies with sustainable management in 20-30 year
• Companies with uniqueness compared to its peers
• Companies providing an innovative solution to societal challenges
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VIGEO Group tailored-made solution
Expansion of Stakeholder
research into Group-wide
activities
Stock at Stake became a research partner in 2002
Evolution of partnership with ALAMCO
in “Feather for Tomorrow “SRI fund
Inception in 2000
Identification of sector
risks/opportunity issues
Identification of risks/opportunity
issuesamong peers
Identification of uniqueness
of the company, cf. peers
• Joint selection of research universe
• Shared views on materiality
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Identification of risks and opportunities
SRI analyst challenge 1: What are the conditions on which possible risks/opportunities become
probable risks/opportunities ?
Inventories of “possible” risks/opportunities
Identifying “probable” risks/opportunities
SRI analyst challenge 2:
How probable /material are the identified risks and opportunities for the company in question compared to its peers ?
Probable risks/ opportunities
Company A
Company B
Company C
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Recommended companies
Company Mission:Contributing to improvement in medical quality and to reduction in medical costs
simultaneously
Company strategy: Help improve knowledge management and efficiency of in-house testing laboratory
Company Solutions:• Providing state-of-art IT-based analysers and labo systems, as an integral part of management solutions for better use of labo’s physical/human resources as part of medical team
• Introducing an “open platform” labo-system (small size) with its competitors
Company A is a producer of analysers, laboratory systems.
Issues at stake
• As population grows older, rationalisation of medical costs becomes imminent.
• 10% of public hospitals, and more plan to outsource the management/process of clinical testing to a testing centre to cut costs.
• A short-term cost cut is achieved, but “quality of medical care” and a clinical path suffer.
• Recent accidents at hospitals heighten public awareness about care elements of hospital management: a hospital rating and a second opinion system.
• Advantage of in-house labo can be maintained, if a testing/analyser equipment is small and less costly, which consequently allows free time for clinical examination technicians to become a medical team member for the patients.
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Recommended companies
Company Mission:Providing reliable quality products at
low cost through steel recycling
Company strategy:
Make difficult “impurity” removal possible at lower cost, by selecting steel scraps with
optimal and safe elements
Solutions:• Commercialise diversified steel products applicable for high quality use (cf. automobiles)
(first company supplying steel plats to automobiles in 2005)
Issues at stake: • The iron & steel industry voluntarily commits to reduce by 10% CO2 (1990 level) by 2010: 6.4% reduction in 2003.
• But heat reuse and energy-saving technologies are insufficient to cut a link between production increase and CO2 emission.
• A larger role of environmentally more friendly electric furnace (cf. blast furnace) is expected, particularly when Japan’s electric furnace ratio is still lower (26%) than US (54%) and the world average (34%).
• Enough steel scraps for electric furnace is expected, as Japan’s 1.2 billion accumulated steel is set to grow (2-3% of accumulated steel estimation is steel scrap)
• But steel scrap contains impurity: limited use for construction materials and little access to automobile application.
Company B is an electric furnace steel producer.
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Two questions for discussion
The bottom-up company research is often understood as suitable for retail investment. But can long-term investment be realisable without the in-depth bottom up research ?
Can we say that Small and Medium-sized companies with little CSR information are less sustainable than the large companies with good CSR information ?
Can SRI analysts play a bridging role in filling the information /analysis gap for Small and Medium-sized company for the institutional investors?
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Thank You Very MuchContact:
Kyoko SakumaTel: +32 2 206 6797 directMobile: +32 495 501 004Fax:+32 2 206 [email protected]