AIChE Sustainability Index Aug 29 08

8/2/2019 AIChE Sustainability Index Aug 29 08

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Benchmarking Sustainabilityfor the Chemical Industry:

The AIChE Sustainability Index

Calvin CobbFormer Chair, Institute for Sustainability

Beth BeloffPresident, BRIDGES to Sustainability InstituteSustainability Consultant, Golder Associates

SEF - August 29, 2008


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A community of sustainability practitioners

Companies

Professionalsindustry and academic Youth

Organized under the American Institute of ChemicalEngineers (AIChE)

Professional membership organization

Non-profit 501c(3)

The Institute for Sustainability


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Sustainability is a path of continuous

improvement, wherein the products

and services required by society aredelivered with progressively less

negative impact upon the Earth

Defined by AIChE Institute for SustainabilityNovember 04-July 05 Grassroots Project, Earl Beaver, Chair IFS


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Purpose of a Sustainability Index

Investment guides

Ethical investment/SRI

Long-term return (stock picks)

Stock market indices

Stakeholder ratings

Benchmarks for company management


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Examples of Financial SIs

InvestmentGuide?

MarketIndex?

Manage-ment

Benchmark?

Consult toCompanies?

DJSI FTSE-4Good

GS- Sustain

Innovest


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An Example

The Dow Jones Sustainability Index (DJSI)

Investment guide

Includes only companies that meet DJSI criteria governance,

transparency, accountability

Stock market index

Track market performance of DJSI components

Subset of corresponding broader indexes

DJSI World, subset of Dow Jones World Index

Benchmarking Inclusion, being sector leader

Consulting services through SAM analysis and recommendations for

companies who want to be included, improve ratings


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Used for Market Tracking

Source: SAM, Dec 2007


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Focus of Financial SIs Dow Jones Sustainability Indices

Governance, transparency, accountability

FTSE4Good

Management and reporting processes commensurate with ESG(environmental, social, governance) risk exposure

GS SUSTAIN

Stock picks based on ESG performance, industry positioning, and

financial returns

Innovest

ESG risk/opportunity assessment


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Reporting of Financial SIs Dow Jones Sustainability Indices

Inclusion (in or out), Supersector Leaders

Individual company scores & analysis to licensees only

FTSE4Good

Inclusion (in or out)

Individual company scores & analysis to licensees only

GS SUSTAIN

Ratings: leaders, average, and laggards

Analysis for sector leaders

energy, mining & steel, food & beverage, pharmaceutical, alternativeenergy, environmental technologies, biotechnology

Innovest

Top companies sector leaders & Global 100 list

Ratings (AAA to CCC) and analysis, for investor clients only


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What a Company Can Get from Financial SIs Dow Jones Sustainability Indexes

Benchmarking with peers, advisory

FTSE4Good

Guidance and support for companies to work towards inclusion inFTSE4Good through EIRIS

GS SUSTAIN

(none specific to sustainability and its ESG analysis)

Innovest

Confidential custom benchmarking studies for companies operational efficiency and business opportunities per peer analysis


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Based on the Wright Killen Refinery Survival Index (Oil and Gas Journal)

Meant to fill a gap:

Relies more heavily on quantitative performance indicators

Provides a heavier weightingapplied to various indicators of safety and

environmental performance and to technological innovation towards SD Available to range of sectors, company size

The scoring: robust methodology designed to account for subjectivity in a

transparent manner.

Designed to avoid the black box problem of other indices

Intended for executives and directors to manage company business lines

Global, initially focusing on major chemical companies

Publication remains silent on individual company ratings

Companies find it useful to benchmark themselves relative to a set ofcompanies

Research funded by United Engineering Foundation

Concept of the AIChE Sustainability IndexTM


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Advisory Panel Mission

to protect and promote the soundness, credibility and utility ofthe AICHE Sustainability Index

Advisors:

International financial community

Industrial sector experts

Media Non-governmental Organizations (NGOs)


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Strategic Commitment

Safety Performance

Environmental Performance

Resource Use

Waste & Emissions Environmental liabilities

Product Stewardship

Innovation

Product and service innovation meeting social needs

Process innovation

Value Chain Management

EHS Management

Supply Chain Management

Stakeholder Engagement

Elements of the Index


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Safety Performance


Resource Use

Waste & Emissions Environmental liabilities

Product Stewardship

Innovation

Product and service innovation meeting social needs

Process innovation

Value Chain Management

EHS Management

Supply Chain Management

Stakeholder Engagement

Unique Elements


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Calculations Use Existing Data Sources Company reports

Annual Corporate Reports

SEC 10-K Filings

Sustainability/EHS Reports

Government Agencies

EPA

CSB

U.S. Patent & Trademark Office Company websites

Media reports

Independent NGO reports


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AIChE Sustainability IndexTM for the Chemical IndustryNovember 2007

0

1

2

3

4

5

6

7


Safety Performance

Social Responsibility

Value Chain ManagementSustainability Innovation

Product Stewardship


Net Revenue > $10 Billion USDNet Revenue < $10 Billion USD


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0

1

2

3

4

5

6

7


Safety Performance


Value Chain ManagementSustainability Innovation

Product Stewardship


Net Revenue > $10 Billion USDNet Revenue < $10 Billion USD

Effects of Size


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0

1

2

3

4

5

6

7


Safety Performance


Value ChainManagement

SustainabilityInnovation

Product Stewardship

EnvironmentalPerformance

Major Diversified

Specialty Materials

Industrial GasesCommodity Chemicals

Comparing Sub-Sectors


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Drill Down View

Strategic Commitment to Sustainability

Stated Commitment

Commitment toVoluntary Codes

Sustainability Reporting

Sustainability Goals &Programs

3rd-Party Ratings

Strategic Commitment to Sustainability

Stated Commitment

Commitment toVoluntary Codes

Sustainability Reporting

Sustainability Goals &Programs

3rd-Party Ratings

0 1 2 3 4 5 6 7

Overall

0 1 2 3 4 5 6 7

Overall


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AIChE Sustainability Index

TM

Drills down, but remains broad enough

Based on public data

Targeted for managers and corporate executives, not investors

Focused on

Environmental performance metrics

Safety performance metrics (workplace, process)

Product stewardship mgmt system, history

Value chain management mgmt system

Sustainability innovation

initiatives, tools, results

Social performance and strategic management also covered

Less than other indexes

Benchmarked to peers and best practices


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Corporate Subscription Program Annual individual company benchmark reports

Benchmark sustainability performance to peers

Comparison of companys performance to industry best

practices Third-party feedback on public information on the company

Provide a reference for sustainability planning and reviewactivities

C S


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A Comparison of Scope

DJSI

FTSE

4Good

GSS

ustain

Innovest

PSI

AICh

E

SI

Governance Some Some

Reporting ? ? Some

Investment risk Some Some

Environmental performance Some Some ? ? Some

Social performance (incl. H&S)

Some Some

Product stewardship ? ?

Value chain management Some ? ?

Sustainability innovation ? ?


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How is your Companys Sustainability

Performance Viewed?

By the community?

By your shareholders? By your customers?

Versus your peers?

The AIChE Sustainability IndexTM


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ContactDarlene Schuster

[email protected]

410-458-5870

For subscription information email [email protected]
mailto:[email protected]:[email protected]

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AIChE Sustainability Index Aug 29 08

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