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