Domini social equity fund and MSCI KLD 400 Source: Bloomberg.
Investment funds incorporating ESG factors 1995 1997 1999 2001 2003 2005 2007 2010 2012 Number of Funds 55 144 168 181 200 201 260 493 720 Total Net Assets (US$ billions) 12 96 154 135 151 179 202 569 1,013 Source: US SIF Foundation. Note: ESG funds include mutual funds, annuity funds, closed-end funds, ETFs, alternative investment funds and other pooled products, but exclude separate account vehicles and community investing institutions.
Sustainable and responsible investing in the U.S. Today, more than one out of every nine dollars under professional management in the United States is invested according to strategies of sustainable and responsible investing (SRI). - $3.31 trillion in US-domiciled assets at year-end 2011 held by 443 institutional investors, 272 money managers and 1,043 community investment institutions that apply various environmental, social and governance (ESG) criteria in their investment analysis and portfolio selection. - After eliminating double-counting for assets involved in both strategies, the overall total of SRI assets is $3.74 trillion, a 22-percent increase since year-end 2009. Source: US SIF Foundation.
Sustainable and responsible investing in the U.S. 1995 1997 1999 2001 2003 2005 2007 2010 2012 ESG Incorporation $166 $533 $1,502 $2,018 $2,157 $1,704 $2,123 $2,554 $3,314 Shareholder Resolutions $473 $736 $922 $897 $448 $703 $739 $1,497 $1,536 Overlapping Strategies N/A ($84) ($265) ($592) ($441) ($117) ($151) ($981) ($1,106) Total $639 $1,185 $2,159 $2,323 $2,164 $2,290 $2,711 $3,069 $3,744 Source: US SIF Foundation.
Only 9 percent of investment strategies received a highly rated Ranking (ESG1 & ESG2) from Mercer Source: Mercer.
Mercer ESG ratings regional breakdown Source: Mercer.
There are a growing number of certified B Corporations B Corporation 2012 progress report Source: B Corporation.
B Corporation GIIRS impact rating GIIRS is an online self-assessment tool that measures companies' and funds' social and environmental performance. Comprehensive recognizing over 13 Social Enterprise models as well as over 100 multi-stakeholder practices and policies of a sustainable enterprise and fund manager; Easy to use designed for small and medium-sized enterprises and funds; Comparable allowing investors to compare and aggregate ratings of various companies and funds, regardless of geography, sector, and size, with specifically tailored questions and weightings applied in a consistent framework to ensure both relevancy and comparability; Adaptable offering industry addenda focused on products and services of companies within specific high-demand industries. Source: B Corporation.
MSCI ESG Impact Monitor The MSCI ESG Impact Monitor approach is stakeholder driven and covers 30 indicators Source: MSCI ESG Research.
Growth of media attention and shareholder proposals related to environmental CSR Newspaper articles Shareholder proposals Source: Caroline Flammer, MIT Sloan School of Management. Note: Newspaper articles include: articles mentioning both CSR and environment Shareholder proposals are proposals related to the environment as a percentage of the total number of shareholder proposals
The business case for CSR Improved relations with the investment community and better access to capital Enhanced employee relations that yield better results respecting recruitment, motivation, retention, learning and innovation, and productivity Stronger relationships with communities and enhanced license to operate Improved reputation and branding Source: Industry Canada.
Trends in CSR In 2011 57 percent of Fortune 500 companies issued corporate accountability reports Companies are becoming more aware and engaged with human rights issues across their value chains Some studies show up to 88 percent of millenials will choose a company with CSR values similar to their own Employee morale and engagement is higher in companies that pursue CSR Sources: Forbes, PricewaterhouseCoopers & Kellogg Insight.
Examples of CSR related indices and funds Dow Jones Group Sustainability Index FTSE4GOOD Index Series Socially Responsible Investment Fund Domini Social Equity Fund EcoValue 21 Sources: Industry Canada.
Deepwater Horizon oil spill Sources: Google Images.
2004 tsunami in Indonesia Sources: Google Images.
2009-2011 +20% cocoa yields Household incomes +200% Development projects +80% Investing $400 million 200,000 cocoa farmers 1 million people $100 million in Côte d Ivoire
FARMING COMMUNITY YOUTH ENVIRONMENT 35
Powerful Partnerships
Community Involvement We ve contributed more than $1 billion in cash and food over 25 years. The Mondelēz International Foundation is helping empower families around the world to achieve healthy lifestyles. Our community-based programs use proven three-pronged approach to healthy living active play nutrition education access to fresh foods Philippines Brazil China 5
Corporate Social Responsibility at Prudential Prudential s corporate social responsibility (CSR) work is led by the Community Resources Department. Community Resources manages a set of resources that the company utilizes to focus on key issues: Resources Impact Investments Corporate Engagement by Executives and employees Corporate Contributions Issue Areas Education Economic Development Civic Infrastructure Oversight is provided by: a board consisting of corporate directors and Prudential executives, and the Investment Committee on corporate impact investments Prudential s CSR work is local, national and international in scope with a special emphasis on its headquarters city of Newark, NJ 2
Impact Investing at Prudential has a long and deep history with the community Makes socially responsible investments earning a risk-adjusted return in projects that target the CSR focus areas (education, economic opportunity, civic infrastructure) and include both direct and indirect equity, debt, real estate and structured products. All investments are made with a dual mandate to drive social change and produce appropriate returns. Since its inception in 1976, the group has made over $1.5 Billion in investments with a strong track record of both social and investment performance. Prudential s dedicated impact investing unit manages a portfolio of $350 million in corporate assets and approximately $20 million of the Prudential Foundation Assets. Recent signature transactions include: Investing $7.5 million in UNICEF to launch the Bridge Fund which allows it to have a pool of liquid working capital to bridge funding delays and expedite the delivery of life saving commodities. In its most recent transaction, the Bridge Fund saved UNICEF $10 million and assisted it s purchase of 4 billion doses of Oral Polio Vaccine that is being used to eradicate polio in Nigeria. Leading supporter of B-Lab and a pioneer Investor in the Global Impact Investing Ratings (GIIRS) system. All funds in our portfolio are GIIRS rated and we serve on an advisory board to organization. 3
Corporate Engagement at Prudential strengthens community and builds employee skills This unit leads employee engagement and guides associates in using volunteerism to enhance their business skills. It also leverages corporate resources to advance social causes while helping meet business goals. Level of engagement by our employees In the last year, Prudential employees provided almost 120,000 hours of time to the community. Over 75 employees represent Prudential as board members for not-for-profit institutions Investing in Talent Building Diverse Leadership Initiative (A Board Placement Program) An employee and community engagement program for Prudential associates and nonprofit partners Combines Prudential s goals of developing leaders and strengthening communities Targets Prudential associates of different backgrounds (race, ethnicity, gender, age, sexual orientation and previous military service) Thirty high-potential diverse employees were identified for the inaugural class, 24 were placed. Corporate engagement is designed to provide development opportunities that tie into Prudential s leadership competencies such as: Establishes and Supports a Clear Vision and Strategy, Takes Intelligent Risks, Collaborates to Seize Opportunities, Transforms Strategy Into Action
Prudential s Corporate Contributions (Prudential Foundation) represents an established philanthropic tradition Established in 1977, the Prudential Foundation has invested several hundred million dollars in non profits that improve education, provide economic development opportunities, supports the arts, and builds civic infrastructure of underserved communities. Last year the Prudential Foundation made grants in the amount of $27 million. Signature support: $1M committed to the Alliance to Reform Education Leadership (AREL), a resultsoriented initiative focused on changing how school principals throughout the United States are recruited, prepared, supported and evaluated. National Fund for Workforce Solutions, a collaborative of national and local funders dedicated to testing new ways to train low income individuals to obtain and advance in careers paying family-sustaining wages and benefits, while at the same time ensuring that employers have the high quality human resources that will enable them to succeed in this dynamic and competitive economy. We have provided $1.75M since 2008. $2M committed to establish a one-stop business support center to help develop small and medium enterprises in the Tohoku area impacted by the tsunami. Our partner is Architecture for Humanity.
Millennials Must Be Engaged 89% said they are likely to switch brands if linked to cause 79% want to work for company that case about and contributes to society 78% believe that companies have responsibility for making a difference in the world 74% more likely to pay attention to a company s overall messaging when they see that company has deep commitment to cause they care about 69% consider companies CSR reputation when deciding where to shop 61% feel personally responsible for making a difference in the world 56% would refuse to work for an irresponsible corporation Source: 2006 Cone Millennial Cause Study
Stages of Employee Engagement
How Social Responsibility Inspires Employees and Serves Investors