Corporate Sustainability IMPLEMENTING DOW JONES SUSTAINABILITY INDEX FOR EMERGING MARKETS GROUP7:...

Corporate Sustainability

IMPLEMENTING DOW JONES SUSTAINABILITY INDEX

FOR EMERGING MARKETS

GROUP7: BARADA PS, JASBIR L, MARK E, PANKAJ J, RAVI M, SHOVIT H, 8303 SUSTAINABLE BUSINESS & DEVELOPMENT

FMS EMBA SEMESTER-3

Corporate SustainabilityBusiness approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from ECONOMIC, ENVIRONMENTAL and SOCIAL DEVELOPMENTS.

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 MARK

How?

• Gearing strategies & management

Why?

• To harness the Market’s potential

For Whom?

• Sustainable Products & Services

What for?

• Successfully reducing and avoiding sustainability costs and risks

Corporate SustainabilityAddressing GLOBAL and INDUSTRY challenges in a variety of AREAS:

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 MARK

•Strategy: Integrating long-term economic, environmental and social aspects in their business strategies while maintaining global competitiveness and brand reputation.

•Financial: Meeting shareholders' demands for sound financial returns, long-term economic growth, open communication and transparent financial accounting.

•Customer & Product: Fostering loyalty by investing in customer relationship management and product and service innovation that focuses on technologies and systems, which use financial, natural and social resources in an efficient, effective and economic manner over the long-term.

•Governance and Stakeholder: Setting the highest standards of corporate governance and stakeholder engagement, including corporate codes of conduct and public reporting.

•Human: Managing human resources to maintain workforce capabilities and employee satisfaction through best-in-class organizational learning and knowledge management practices and remuneration and benefit programs.

Sustainability InvestingIncreasingly, diversifying portfolios by investing in companies that set industry-wide best practices with regard to sustainability.

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 SHOVIT

Two factors drive this development:• First, the concept of corporate sustainability is attractive to investors because it aims to

increase long-term shareholder value. • Second, sustainability leaders are increasingly expected to show superior performance and

favourable risk/return profiles.

To benchmark the performance of their sustainability investments, private and institutional investors need global, rational, consistent, flexible and, most importantly, investable indices.

In response, S&P Dow Jones Indices and RobecoSAM offer the Dow Jones Sustainability Index (DJSI) family.

For investors, the integrity of the Corporate Sustainability Assessment and the index calculation results in independent, reliable and investable sustainability indices.

For companies, the DJSI provides a financial quantification of their sustainability strategy and their management of sustainability opportunities, risks and costs. "What gets measured, gets done“.The DJSI will provide investors and companies with insight into the trends and events driving global supply and demand of sustainable products and services.

Sustainability Megatrends

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 SHOVIT

Corporate Sustainability Assessment

Based on RobecoSAM’s internationally recognized leading Corporate Sustainability Assessment (CSA) methodology

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 SABUT

CSA – Universe Composition

• Derived from

• Assessment of the 2500 largest listed companies in terms of float adjusted capitalization in the S&P Global Broad Market IndexSM.

• Current DJSI World components with a float adjusted market capitalization above USD 500 million.

• Classified to one of the 59 industries as defined by RobecoSAM.

• Ethical Exclusion Classification.

• Adult Entertainment, Alcohol, Armament, Nuclear, Gambling.


CSA: Indian Scenario

Company Name Country RobecoSAM GICS IndustryDJSI World Universe

DJSI World Enlarged Universe

DJSI Emerging Markets Universe

Bajaj Auto Ltd India AUT Automobiles TRUE TRUE TRUEHero Motocorp Ltd India AUT Automobiles TRUE TRUE TRUEMahindra & Mahindra Ltd India AUT Automobiles TRUE TRUE TRUETata Motors Ltd India AUT Automobiles TRUE TRUE TRUEAxis Bank Ltd India BNK Banks TRUE TRUE TRUEHDFC Bank Ltd India BNK Banks TRUE TRUE TRUE

Housing Development Finance Corp India BNK Banks TRUE TRUE TRUEICICI Bank Ltd India BNK Banks TRUE TRUE TRUEIndusind Bank Ltd India BNK Banks TRUE TRUE TRUEState Bank of India India BNK Banks TRUE TRUE TRUEUnited Spirits Ltd India BVG Beverages TRUE TRUE TRUEAsian Paints Ltd India CHM Chemicals TRUE TRUE TRUECoal India Ltd India COL Coal & Consumable Fuels TRUE TRUE TRUEAmbuja Cements Ltd India COM Construction Materials TRUE TRUE TRUEUltratech Cement Ltd India COM Construction Materials TRUE TRUE TRUELarsen & Toubro Ltd India CON Construction & Engineering TRUE TRUE TRUECipla Ltd/India India DRG Pharmaceuticals TRUE TRUE TRUEDr Reddy's Laboratories Ltd India DRG Pharmaceuticals TRUE TRUE TRUE

Sun Pharmaceutical Industries Ltd India DRG Pharmaceuticals TRUE TRUE TRUENTPC Ltd India ELC Electric Utilities TRUE TRUE TRUEPower Grid Corp of India Ltd India ELC Electric Utilities TRUE TRUE TRUE

Infrastructure Development Finance Co Ltd IndiaFBN Diversified Financial Services and Capital Markets TRUE TRUE TRUE

Kotak Mahindra Bank Ltd IndiaFBN Diversified Financial Services and Capital Markets TRUE TRUE TRUE

Nestle India Ltd India FOA Food Products TRUE TRUE TRUEHindustan Unilever Ltd India HOU Household Products TRUE TRUE TRUEBharat Heavy Electricals Ltd India IEQ Machinery and Electrical Equipment TRUE TRUE TRUECairn India Ltd India OIX Oil & Gas TRUE TRUE TRUEIndian Oil Corp Ltd India OIX Oil & Gas TRUE TRUE TRUEOil & Natural Gas Corp Ltd India OIX Oil & Gas TRUE TRUE TRUEReliance Industries Ltd India OIX Oil & Gas TRUE TRUE TRUEJindal Steel & Power Ltd India STL Steel TRUE TRUE TRUEBharti Airtel Ltd India TLS Telecommunication Services TRUE TRUE TRUEITC Ltd India TOB Tobacco TRUE TRUE TRUE

Infosys Ltd India TSV IT services & Internet Software and Services TRUE TRUE TRUETata Consultancy Services Ltd India TSV IT services & Internet Software and Services TRUE TRUE TRUEWipro Ltd India TSV IT services & Internet Software and Services TRUE TRUE TRUE

36 Indian Companies Across 17 Industry Sectors




Assessment Framework

CSA: levels & scores


CSA: questionnaire sample


Identification of MSA

CaseImpact

Identification of

Criteria Affected

Evaluation of

Company

Response

MSA Scor

e

MSA Process


MSA Process



8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 JASBIR

Design CommitteeThe DJSI Design Committee consists of two RobecoSAM representatives and two S&P Dow Jones Indices representatives and meets on a monthly basis.

The responsibilities of the DJSI Design Committee include the following:

• Auditing the index composition at the annual and quarterly reviews

• Deciding on the composition and accuracy of the Dow Jones Sustainability Indices

• Approving all changes to the index methodology

• Ongoing review of all extraordinary corporate actions for possible changes to the index composition

• Verifying the integrity of input price, currency rate and other related market data

Assessment Procedure

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 JASBIR

Systematic and Consistent measurement of corporate sustainability performance

Access to corporate information via web-based questionnaire, management meetings and public information

Integrated assessment of economic, environmental and social criteria with focus on long term value creation

Assessment of more than 2000 companies yearly based on broad range of general and industry specific criteria

Assessment complemented by Media and Stakeholder Analysis

Process audited by an independent third party firm

Index Overview: World

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 RAVI

• The Dow Jones Sustainability World Index was launched in 1999 as the first global sustainability benchmark.

• DJSI tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria.

• The indices serve as benchmarks for investors who integrate sustainability considerations into their portfolios, and provide an effective engagement platform for companies who want to adopt sustainable best practices.

Index Overview: Emerging Market


*Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey

Diversified Overview: World & Emerging Markets


• The DJSI Diversified family was launched in May 2013.• DJSI offers investors a similar risk profile and comparable financial performance, yet

with a significantly higher exposure to sustainability. • The companies’ sustainability profiles are analysed using RobecoSAM’s Corporate

Sustainability Assessment (CSA) methodology.

The Diversified Approach

• Selects the most sustainable companies from the global or regional S&P BMI universe.

• The DJSI Diversified is an investment solution for investors who measure performance against a standard benchmark but wish to tilt their portfolios towards sustainable companies without taking on additional active country, company size or sector risks relative to the benchmark.

• The DJSI Diversified addresses the challenges faced by investors interested in sustainability investing who often discover that implementing a sustainability investing solution may require a substantial shift in their strategic asset allocation.

Industry Group Leaders: 2013

8303 SUSTAINABLE BUSINESS & DEVELOPMENTFMS EMBA SEMESTER-3 PANKAJ

• For 24 Industry groups represented in DJSI

Industry Example: Emerging Markets


Sustainability Performance:• Member of DJSI World, DJSI Emerging Markets.• TSMC has been a member of the DJSI World for 13

consecutive years. • Over the last 10 years, the company has reduced its

electricity consumption per wafer unit by 47% and water consumption by 56%.

• Since 2012, corporate social responsibility has been a topic on its Board meeting agenda and is regularly factored into the Board’s decision-making process.

• The company dedicates 8% of its revenue to R&D and employs 27.5% of its workforce in the R&D department.

INDUSTRY GROUP LEADER REPORT | 2013

Taiwan Semiconductor Manufacturing Co LtdSEM Semiconductors & Semiconductor Equipment

Com pany

Share

Key data

2 012

2013E

C ountry T a iw an M arket cap (m illion) 2,6 05,788 S a les (m illio n) 4 99 ,872 -

N o o f E m p lo yees 33,341 C urren cy T W D E P S 6.4 2 7.1 4

W eb w w w .tsm c.com .tw H igh 52 week 1 16 .50 P /E R a tio 1 5.65 1 4.07

L ow 52 week 8 1.00

COMPANY INFORMATION Source: Bloomberg / September 04, 2013


















EndNotes

GROUP7: BARADA S-16, MARK S-22, JASBIR S-28, PANKAJ S-42, SHOVIT S-64, RAVI S-80 8303 SUSTAINABLE BUSINESS & DEVELOPMENT

FMS EMBA SEMESTER-3

1. Business Strategy for Sustainable Development: Leadership and Accountability for the 90s, published in 1992 by the International Institute for Sustainable Development.

2. Corporate Responsibility & Sustainable Economic Development in China: Implications for Business, study conducted by National Chambers Foundation & Asia-Us Chamber of Commerce.

3. Informational data from Dow Jones Sustainability Indices, www.sustainability-indices.com/about-us/dow-jones-sustainability-indexes.jsp

4. Informational data from S&P Dow Jones Indices, www.sustainability-indices.com/about-us/sp-dow-jones.jsp

5. Informational data from RobecoSAM Indices, www.sustainability-indices.com/about-us/sam-indexes.jsp

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