Sustainable strategy as an asset

Consumers and investors are nowadays looking at more information about the sustainable footprint of a company/product. When the Council of the European Union adopted the new Directive regarding non-financial information and reporting in late September this year, it was clear, that this was the start of new information flow.

According to this Directive large public and listed companies are required to report on environmental and social issues in their reporting period 2017-2018.

Why this is important also to your company?
Corporate Responsibility is about your future business and new growth opportunities. It is also risk management and reducing costs. But it is also brand management and employer branding. It is a question of your company´s competitive advantage and new business opportunities.For listed companies this means also that ESG-investors target your company better.

Altough the EU Directive is about company reporting, corporate responsibility is not. It is about changing your business strategy towards integrated business strategy. This is the only way to find the business opportunites what for example the climate change, urbanization and natural resources mean to your business.

ESG-investors interested of your strategy
Environmental, social and governance related investors are interested of your sustainable integrated business strategy. In the world they represent 45 trillion US dollars assets under management. And the trend is growing.

Investors are interested of different kind of sustainable themes; for example from climate change, energy efficiency, forest to water. So it makes sense to start rebuilding your business strategy, implement it, share & communicate it and finally report it. Sustainable business strategy is an asset for your company!

Päivi Härkönen

Business

London properties in focus

When I visited London a couple of weeks ago, I was surprised by the buzzing feeling and action there were. People were busy and the atmosphere was positive. Greetings also to the start-up and growth companies I met there!

This city is now a place where big real estate companies are heading. For example the India´s biggest real estate developer has announced that they are developing new buildings in London. And the real estate prices are showing upward trend. For example Financial Times reported that in Mayfair several luxury flats have been sold with new record prices. And new flats and blocks are on their way.

The reason why this is happening is partly because the pension funds are rising their asset allocation in real estates. Pension funds are seeking long-term investments and London properties are one of the metropolis in the world that are looking attractive for many investors. Also the oversees funds like Canadian pension fund Ontario Fund have landed to the European real estate market and they are expecting to invest several billion euros in the properties.

Investors are looking for good returns with third-party rating systems like LEED, which is widely used in office buildings globally. But there are also other systems and some banks have developed their own property rating methods. These systems analyse for example the technology level of the building, energy efficiency and environment issues as for example health and wellness issues.

The tightening energy efficiency legislation drives also investors to focus more on ESG issues. Green Buildings offer good rental yields, cost savings and higher premiums in sale. ESG-factors also help investors to mitigate regulatory, market and physical risks related to properties.

So, it is not surprise that investors also want to learn more about BIM (Building Information Modelling) in order to make better real estate investment decisions. This system helps all building stakeholders like architects, designers and project managers to work together. The costs savings in time and resources are remarkable.

And maybe we also see more modern wood houses and flats in the future. This is absolutely the trendiest thing at the moment.

Päivi Härkönen

Business Design

How to get started with corporate responsibility?

During the last month I have been following different kind of concepts and reports that take corporate responsibility into account. Some are parts of formal annual reporting, or CSR reports and some are marketing concepts talking about sustainability or corporate responsibility. And then there is the ESG world with financial institutions and their own reporting models as part of the UNPRI organization. So there are different kind of angles, reports and communication to this topic.

But what is the common thing for each of them? It is about the competitivness of the company. The channels, the target audience and the tools may be different, but the outcome should be the same. Corporate responsibility is the future key for business success, as Mr. Bruce Oreck, the US Ambassador in Finland, said a couple of years ago in Helsinki. And yes, corporate responsibility is one of the most important elements in corporate strategy framework.

And this integrated thinking is becoming more common, partly due to the legislation of corporate reporting of non-financial information but also due to the fact that investors and consumers are interested of these issues. And if you think about listed companies, the fact that ESG-investors are growing douple-digit in Europe, make the new investor target group interesting for many listed companies.

For coprorate management the big question is to make innovative corporate responsibility strategy which helps to determine the relevant business opportunities, targets, KPIs, risks but also for to create shared value in the long term. But it is also about gathering the data, collaborate with the value chain, manage the change and communicate it with different stakeholders. Much of the work is also analysing the outcomes and making needed adjustments.

There is no one size fits for all type thinking in this strategy work. But companies starting to make the big change, environmental issues are in the front line and carbon footprint might be the first question the investors are asking. And what is your impact in your value chain?

Päivi Härkönen

Business

What about M2M and LEED?

Have you ever thought how much technology you have in your house? Well, you have heating and cooling, lightning and security and then you have all the devices connected to internet. These devices can be laptops, TVs, smartphones or tablets etc. So much energy and so much technology.

This machine to machine world is getting closer to us in our facilities. The smart energy savings sensors will monitor, control and optimize our living and take into account for example the outside weather conditions. And of course, they will help our lives to become more sustainable and also enhance our well-being.

This kind of green living is getting more and more  attention from investors as well. The LEED and BREEAM certifications include energy performance, smarter use of water, sustainable materials, better indoor air quality and for example location/public transport. But they do not include what kind of smart technology systems the buildings have or if the systems are so smart that they can optimize the energy consumption 24 hours a day by themselves.

LEED certifications are one the of the leading rating methods for buildings in the world. The aim of the rating is to lower operating costs and increase asset value for owners and investors. Energy efficiency is one of the main drivers. Here are some LEED elements:

  • Lower operating costs and increase asset value
  • Reduce waste sent to landfills
  • Conserve energy and water
  • Be healthier and safer for occupants
  • Reduce harmful greenhouse gas emissions

Different kind of rating methods are being developed all around the world at the moment. I wonder, when we see this kind of high-tech embedded certifications for buildings?

Päivi Härkönen

Business Tech

What kind of IR story you have?

It is this time of the year. IR professionals are working with their Annual Reports and sifting from analyst infos to conference calls and getting back to the hard work, annual report. And each time you face the same situation. Which would be the headlines and how to get stakeholders interested of the output? What to tell about strategy or the crisis we had?

IR communications is the hardest communications form. There are plenty of legislations from government side and different kind of rules from stock exchanges. And not to forget the good corporate governance. There are last minute updates from auditors and it requires 24/7 surveillance between legal, finance and IR communications officers.

Company´s IR story is targeted to different kind of professional stakeholders like analysts, investors and financial journalists.  And more often companies are using social media channels to deliver the message to a broader audience.  In that jungle how to get your message heard, how to establish credibility and how to accelerate your relationships?

Company´s IR story should focus on your key messages related to your strategy, vision and relevant key metrics. Financial communications in not only numbers, it is more often about the strategy and the communications itself: how do you deliver your message? How reliable, sound and transparent company´s C-suite is? What is the first impression of a CEO or a CFO?

Investors and portfolio managers are listening several stories per day. What makes your IR story different? Is it the way how the company is telling about the strategy and updated situation, or is it the market potential with relevant KPIs or is it the way the C-suite is presenting the story? All these matter.

Nowadays CEOs and CFOs have to be more entrepreneurs than officials. If you are passionate about your story you get more confidence and trust than otherwise. And yes, we know: you have to repeat your story so many times that you are bored to death. But this is the way how portfolio managers can make their handpicked investments, not for this quarter but for a longer term profitable and sustainable investment.

Business