United States v. Richard A. Nazzaro, 889 F.2d 1158, 1st Cir. (1990)
Telecom Italia, Paolo Nazzaro - Engagement Workshop. 3rd LundquiCSR Online Awards, Venice 27-28 Oct...
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Transcript of Telecom Italia, Paolo Nazzaro - Engagement Workshop. 3rd LundquiCSR Online Awards, Venice 27-28 Oct...
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Venice, October 28, 2011
Paolo NazzaroHead of Group Sustainability - Telecom Italia
Valuing non financial performanceIdentifying, measuring and managing material drivers of
value
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Reporting
Gap
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Non-financial performance is regarded as important by both senior executives and investors
►
Companies are slow to integrate non-financial performance measurements in the mainstream business strategy internally and to communicate these externally
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Investors are slow to incorporate non-financial indicators into valuation models
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ESG factors are a key driver of non-financial performance
Central
proposition
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Companies
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Perceived lack of expertise in NFP issues and reticence to discuss unless intrinsic to core business strategy
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Concern over the robustness of NFP management information and internal methodologies for delivering it
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Lack of confidence in ability to manage NFP to deliver forecast numbers
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Scepticism at investors’
interest in NFP
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Worries about impact on personal credibility of promoting non-core financial messages
What
causes
this
information asymmetry?
(1/2)
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Investors
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Inadequate evidence of causal link between NFP and financial performance
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Lack of robust inter-company or sectoral
frameworks for NFP comparison
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Interest often limited to assessment of NFP directly impacting on strategy or leadership competence
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Protection of proprietary analytical tools/approaches and market differentiation creating lack of transparency in NFP assessment
methodologies
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The relative importance of NFP issues differing between risk and regulatory environments
What
causes
this
information asymmetry?
(2/2)
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Business leadership from Lloyds Banking Group and Telecom Italia
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Parallel research programme: EABIS through its corporate founding partners, Doughty Centre for Corporate Responsibility at the Cranfield
School of Management (UK), Bocconi
(Italy), Vlerick
Leuven Gent (Belgium)
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Key partnership with EFFAS (ESG Commission) and DVFA
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Moderation
from
CSR Europe
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5 focus groups (Rome, Frankfurt, Paris, Stockholm, Utrecht) with
the participation of investors, businesses, consultants, representatives from institutions, academia and stakeholders
The LAB structure
and the focus groups
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A comprehensive review of the critical areas of non-financial performance and their contribution to financial performance
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A framework for proposed metrics and strategies for management and communication of key areas of non-financial performance highlighting the link with financial performance
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A declaration of principles and recommendations addressed to different stakeholders (companies, investors, EU institutions, business schools, trade bodies)
Outputs
phase
1 of
the LAB
GRUPPO TELECOM ITALIA
20 dicembre 2010
TELECOM ITALIA TELECOM ITALIA -- CONFIDENZIALECONFIDENZIALE
ER – Branding, Corporate Identity e RicercheUso Confidenziale
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Recommendations
– Investors
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The Collaborative Venture
ProjectDELPHI
CollaborativeVenture led by:
Telecom Italia, Solvay,Lloyds
Banking Group, KKR
Companies’Assessment
and bestpractice
sharing
Identificationof
superfactors
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Project Delphi
Work Stream
Initial
“Straw-Man”
hypothesis
of
superfactors
Validation
from
financial
analysts
(EFFAS)and asset
managers
Validation
from
large
asset
owners
Final
list
of
superfactors
Structure
SPONSOR
STEERING COMMITTEE
PROJECT MANAGER
WORKSTREAM LEADERS
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CSR Europe and EABIS have developed a framework as an instrument to explore member’s experiences while measuring their non-financial performance, with the objective to identify their progress and thus their maturity. This framework is based on the outputs from the first phase of the Laboratory on Market Valuation of Non-Financial Performance
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Learning
process
and best practices sharing
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Both primary (companies’
self assessment + direct conversation with CSR Europe and EABIS’
representatives) and secondary (desk research
completed throughout the enterprises disclosed attitudes) data examination.
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Measurement is based on a scoring system that is attributed to each aspect where the companies are being scanned
Companies’ assessment
and best practices
sharing
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Non-financial drivers and key metrics
Non-financial
drivers Key metrics
Human Capital Employee
engagement
Customer
Relations
Society
Environment
Customer
Satisfaction
Public perceptionSupply
chain
mgmt.
Carbon
emissions
Waste
mgmt.
Energy efficiency
Innovation
Corporate Governance
New product
& process
develop.
Ethical
integrity
Processes
& procedures
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A desired flightpath?