Corporate Sustainability
Jane Okun Bomba
Chief Sustainability, IR and Comms Officer
IHS Inc.
February 2014
IHS – Quick Facts
• Based in Denver, Colorado USA
• 8,000 employees in 31 countries
• 140 offices around the world
• In business since 1959; IPO in 2005 (NYSE: IHS)
• Half of annual revenue from North America; half of revenue from
rest of the world
• Customers in 4 major industries:
– Energy and Natural Resources
– Chemicals
– Technology / Electronics
– Transportation – Automotive, Maritime, Aerospace & Defense
2
IHS – the world’s leading information, insight
and analytics company
• Unique and leading position in attractive, high-growth markets
• “Must-have” offerings that support the core workflows of our
diversified and global customer base
• Primarily subscription-revenue model delivering recurring revenue
and high levels of cash flow
• Scalable business model with significant operating leverage
• Compelling strategies driving continued profitable growth
• Experienced management team
3
We’ve delivered sustained, double-digit, profitable
growth since our IPO over 8 years ago
Revenue1
Cumulative Post-IPO Shareholder Return1,2
$111
+ 26% CAGR
+ 18% CAGR
per share
$1,841
$476
$17
per share
2005
2/3/2014
2005
Free Cash Flow1,3
+ 33% CAGR
Adjusted EBITDA1,3
$405
+ 26% CAGR
$87
$43
2005
$562
+1,230 bps
of margin
expansion
30.5% since 2005!
18.2%
2005
2013
1$
2013
in millions except per-share amounts.
on 11/11/05 close price.
3”Free Cash Flow” and “Adjusted EBITDA” are non-GAAP measures as defined in our most recent earnings release (see www.ihs.com).
2Based
4
2013
© IHS 2014
We constantly measure against five benchmarks that
drive all aspects of our performance
Customer
Delight
Corporate
Sustainability
Colleague
Success
Shareholder
success relative
to peer group
5
Profitable topand bottom-line
growth
IHS
2014
©©
IHS
2014
Our target industry sectors are large, growing and
global in nature representing a significant opportunity
IHS Target Industry Sectors
Energy &
Natural
Resources
Large
$41T revenue
Growing
Above-market
long-term growth
Chemicals
(high single to double digit)
Interdependent
Technology
Transportation
Vertical depth
6
© IHS 2014
Embedded in each
other’s supply chains
Deep IHS industry
knowledge &
expertise
Corporate Sustainability:
A driver of long-term profitable growth
Strong Corporate Sustainability can make your
company a better company
• Decision-making through a Sustainability lens supports long-term
profitability
• A big goal of Corporate Sustainability is increased transparency.
• Sustainability is largely about managing risk and driving innovation,
both of which are top priorities for most corporations
• Attract and retain top talent
• Corporate Sustainability can drive
innovation and efficiency and…ultimately,
valuation
8
96
% of CEOs believe sustainability should be
integrated into company strategy and operations
49
% of CEOs cite complexity of implementation
across functions as the most significant barrier
to company-wide sustainability
Source: A New Era of Sustainability, UN Global Compact - Accenture CEO Study 2010
© IHS 2014
Corporate Sustainability: Measuring
performance
broad terms
Sustainabilityinisvery
measured
in broad terms
1
Governance
Corporate Governance,
Risk Management,
Codes of Conduct,
Customer Relationship
Mgmt, Lobbying,
Piracy
10
2
Environment
Environmental Reporting,
Environmental Policy/
Management,
Operational EcoEfficiency, Hazardous
Substances
3
Social
Social Reporting, Labor
Practices, Human Capital,
Talent Attraction &
Retention, Citizenship &
Philanthropy, Health &
Safety, Advertising ethics,
Editorial policy,
Stakeholder Engagement
Focus on Corporate Sustainability will drive
Shareholder Value
“Sustainability is a company’s capacity to prosper in a
competitive and changing global business environment by
anticipating and managing current and future economic,
environmental and social opportunities and risks.
Companies that address these factors through innovation,
quality and productivity enhance their ability to generate
long-term shareholder value.”
--Sustainable Asset Management
11
Growing trends in corporate sustainability
Ernst & Young 2013 survey looked at how companies are responding to
a wide range of internal and external forces related to environmental
sustainability risks and how well companies are prepared to address
them.
Several trends emerged:
1.
2.
3.
4.
5.
6.
© 2013 IHS
Inquiries from investors and shareholders are on the rise.
The “tone from the top” is key to heightened awareness and
preparedness for sustainability risks.
Governments and multilateral institutions aren’t playing a key role in
corporate sustainability agendas.
Sustainability concerns now include increased risk and proximity of
natural resource shortages.
Corporate risk response is not well paired to the scale of sustainability
challenges.
Integrated reporting is slow to take hold.
12
International Integrated Reporting Council (IIRC)
• The International Integrated Reporting Council (IIRC) - a global
coalition of regulators, investors, companies, standard setters, the
accounting profession and NGOs.
• This group shares the view that communication about value creation
should be the next step in the evolution of corporate reporting
• An integrated report is a concise communication about how an
organization’s strategy, governance, performance and prospects, in
the context of its external environment, lead to the creation of value
in the short, medium and long term.
© 2013 IHS
Investor Responsibility Research Center Institute
(IRRCI) Stats on S&P 500 (April 2013)
499 -- The number of companies making a sustainability disclosure in a
financial filing or linking financial performance to a sustainability initiative
• 74% of companies placing a dollar figure on a sustainability‐related topic
• 43% linking executive pay to sustainability criteria
• 65% with a sustainability‐related monetary estimate in a Form 10‐K
• 66% discussing climate change
• 76% with sustainability reporting
• 63% disclosing on hazardous waste
• 54% talking about product formulations
• 49% noting waste management initiatives
• 29% making the financial connection in a sustainability report
• 39% looking at water use
• 60% disclosing sustainability‐related contingencies or liabilities
7 -- Number of companies with an integrated financial & sustainability report
© 2013 IHS
14
Strong Sustainability practices drive operating and
financial performance
Governance
Environmental
Social
Good governance is
expected to produce longterm benefits to
shareholders and creditors,
principally from the
reduction of risk driven by
the formation of strong
internal controls and
effective board oversight.
Higher environmental
ratings suggest
operational efficiency,
reducing contingent liability
profile by actively
managing the firm footprint
(e.g., waste and
emissions) or positioning
to exploit low-resource
revenue opportunity.
High scores in the social
dimension suggest
effective management of
human capital, safety of
products and services, or
positioning to realize
opportunities from
increased social
inclusion.
© 2013 IHS
Corporate Sustainability
at IHS
Sustainability at IHS
• Corporate Sustainability is a core element of our
business model and key to our future performance; it is
not a special project
• We embed Sustainability into every aspect of our
culture and it is a core element of the solutions we
provide to our customers
• As we increasingly integrate Corporate Sustainability
into our operations it is becoming a key enabler of
operational efficiency and excellence; a discipline that
will help us to drive innovation and drive our long-term
success
© 2013 IHS
2011: Initiated a formal program/function
 Formally launched the IHS Corporate Sustainability function
and defined our vision
 Built a global team of Site Champions with every IHS site
represented
 Provided structure and support for those Champions around
the world to help them in leading local sustainability efforts
 Created a global framework for gathering data from all IHS
sites and implemented an IHS system for metrics management
 Participated in the Dow Jones Sustainability Index SAM*
Assessment
* SAM (Sustainable Asset Management) is a Zurich-based investment firm
2012: Established new Corporate Goal –
Corporate Sustainability
IHS has added a fifth corporate goal – Sustainability:
 Make operational improvements that bring efficiencies and foster
innovation, and reduce environmental impacts
 Positively affect our communities through global colleague
participation and philanthropy
 Be recognized as a leader in Corporate Sustainability based on
2015 performance
We will drive and measure our progress using the Dow
Jones Sustainability Index SAM Assessment:
– Target: Inclusion in DJSI World Index based on 2015 performance
2013: Established structured process for SAM
assessment; added VTO benefit
Implemented more structured process for assessment response:
• Robust tracking and response management process
• Responses will be linked to business strategies and company goals
– What is the Benefit?
– Does this policy, process, strategy:
• Improve Customer Delight?
• Strengthen Colleague Engagement?
• Help grow revenue?
• Reduce costs and bring efficiencies to IHS?
Volunteer Time Off (VTO) benefit:
 All Colleagues have a full day of paid time to volunteer
 We encourage IHS team events to bring offices together
 Supports Brand, Community, Colleague Engagement, Talent Attraction
and Retention
2013: IHS added to the Dow Jones
Sustainability Index – North America
IHS added to the DJSI North American Index:
• Key Results:
• 79th Percentile
• IHS Score: 63
• Industry Average: 45
Highlights:
• Customer Relationship Management: 100th Percentile – Score of 88
• Labor Practices and Human Rights: 95th Percentile – Score of 72
2014: Driving toward best-in-class performance
• Create corporate scorecards for each functional area
• Maintain our listing on the Dow Jones Sustainability North America
Index
• Support worldwide community involvement by ending the year with
100 percent of all IHS sites and offices participating in volunteer
activities in their geographic locations
• Contribute 16,000 IHS colleague volunteer hours globally
Corporate Sustainability: Top Takeaways for
Initiating a Program
• Think broadly when defining; this isn’t about recycling
• Successful CSR is different for every company – think about what fits
your company’s culture and long-term vision – it’s raison d’etre
• Develop a vision for how it connects with strategy and performance
• Learn how it can help to mitigate broad corporate risks
• Strong Sustainability efforts often lead to increased innovation
• Done right, it should make your company more efficient, a better
place to work, & help to drive long-term competitiveness & growth
A focus on CSR will make your company more profitable, a
better place to work, and a better investment!
23
Thank you!
Questions?
Contact:
jane.bomba@ihs.com