Pitchbook US template

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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
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The world is not getting any bigger
Source WWF, 2008
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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

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

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Global Trends

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

Source SERI Global Material Flow Database
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Innovation in design needed?
Source Umicore 2008
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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
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What do we assess at J.P. Morgan?

• Financial activities
• Equity and debt underwriting many IPOs, many
  bonds
• Loans
• Certain trading activities, including commodities
• MA, including many advisories
• Principal investment
• Any transaction where high reputation risk
  perceived
• Industrial sectors

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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

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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

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Conclusions

• Governments, regulators, the media, NGOs,
  lenders, investors and societyhave increasing
  expectations about how corporations manage
  environmental, health, safety and social
  issuesGlobalisation of societys expectations
• Environmentally and socially responsible
  behaviour is not a nice to have it reduces
  costs and helps companies to stay in
  businessIts about the money, not hugging
  trees
• Work for a better tomorrow if we get hung up on
  yesterdays performance or behaviour we will get
  nowhereDont let the perfect become the enemy
  of the good