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Minister for the Environment and Heritage
Dr David Kemp
20 September 2003
Federal Minister for the Environment and Heritage, Dr David Kemp, today unveiled a new report that shows a company's approach to sustainability can provide investors with an important indicator of long-term corporate performance and risk.
"The Mays Report is a key contribution from leaders in the financial sector into the advantages of factoring corporate sustainability into investment and management decisions. In addition to saving costs and increasing revenues, corporate sustainability improves a company's intangible assets such as brand image, supplier relations, and appeal to customers and employees," Dr Kemp said.
The report - Corporate Sustainability: An Investor Perspective - also shows Australia's investment community is not taking full advantage of the benefits from leveraging information from the sustainability performance of businesses relative to their British and European counterparts.
Written by Mr Shaun Mays - with assistance from representatives of ABN AMRO Morgans, AMP Henderson Global Investors, BT Financial Group, Insurance Australia Group and Sustainable Asset Management - the report features a range of case studies involving some of Australia's leading companies.
It found investor interest in sustainability is still in its formative stages in Australia and that companies need to more clearly demonstrate how they approach sustainability principles in their business.
"Sustainability is closely linked to resource efficiency, cost management and management performance indicators. It can provide a particularly useful window into management efficiency and competency for analysts who need a deeper view into a company's performance," Dr Kemp said.
"Through assessing sustainability indicators found in triple bottom line reports for example, investors can get a valuable insight into management's ability to understand, manage and anticipate the dynamics of the external business environment and identify specific risks and opportunities."
Case studies in the report show companies which have created new business opportunities from sustainability have either enhanced established businesses or lowered their overall risk profile. For example, the Investa Property Group saved $185,000 or over 16% of its total energy costs at one property by reducing air conditioning operating hours, installing controls that more efficiently manage after-hours lighting and refitting office space lights with energy efficient bulbs.
Another company, Global Renewables, has won approval to build a new waste treatment plant in Sydney to 'mine the waste stream' to produce energy and fertiliser. The facility will recover 17,000 tonnes of plastic, glass, paper and metals each year, then will separate and clean the organic waste to produce renewable energy and return the carbon to the soil as organic fertiliser.
Mr Mays said Australian investors tend to focus on financial outcomes when assessing financial performance primarily as a result of investment analysts' "one-dimensional approach" to company performance.
"We believe a more rounded approach to investment and risk management is a necessity - if only as to pre-empt problems within companies before they become apparent, both in fact and in share valuations."
Mr Mays was a former investment analyst at the helm of some of Australia's largest investment managers, including Potter Warburg and Commonwealth and Westpac Investment Management.
The report is available on the Department of the Environment and Heritage website at: www.deh.gov.au/industry/finance/publications/index.html