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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

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

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  1. 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

  2. The world is not getting any bigger… Source: WWF, 2008

  3. 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

  4. Growth in Consumerism From 1.3 to 4 Billion Middle Class in 30 Yrs Source: Goldman Sachs, 2008

  5. 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

  6. Global Trends • Trends in world wide extraction of selected materials, 1980 - 2005 Source: SERI Global Material Flow Database

  7. Innovation in design needed? Source: Umicore 2008

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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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