Slide 1: Investor Client Council H2 2024
AERP Global Sustainable 1 Investor Client Council H2 2024 From ESG to (Valuation) Impact: A phe Ne Material Lens on Custaila itty as Oe ae
Slide 2: From ESG to (Valuation) Impact: Agenda
From ESG to (Valuation Impact): Qe Funtainahle' A Financially Material Lens on Sustainability AGENDA 2:00 — 2:10: Welcoming Remarks Chris Heusler, President of S&P Global Sustainable1 2:10 — 2:15: Purpose & Objectives Mona Naqvi, Chair of the Investor Client Council 2:15 — 2:30: New Member Introduct
Slide 3: Keynote Presentation
date 2 SS Sustainable1 Investor. Council H22024 2:30 — 2:45: Keynote Presentation Dr Paul Gruenwald Global Chief Economist Ratings S&P Global Inc. ©2024. Private & Confidential: This document and the information shared within cannot be shared further without written permission from S&P Global. 3 eat
Slide 4: Sustainability Pathways to Credit Materiality
date i SS Sustainable1 Investor. Council H2 2024 2:45 — 3:45: Sustainability Pathways to Credit Materiality Alexandra Dimitrijevic, Head of Ratings Research & Development Christa Clapp, Global Head of Sustainable Finance Market Analytics Ratings 7 4 S&P Global Inc. ©2024. Private & Confidential: Thi
Slide 5: Tipping Points and Sustainable Growth | Introduction and Takeaways
Tipping Points and Sustainable Growth | Introduction and Takeaways The search term ‘climate tipping point is trending higher on Googld Worldwide, three-month moving average, as ranked by Google Trends (maximum popularity = 100) 60 0 May 2014 May 2016 May 2018 May 2020 Google Trends is a ranking by G
Slide 6: Global Stock Of Natural Capital Is In Decline
Global Stock Of Natural Capital Is In Decline 4 2 0 -2 1995 2000 2005 2010 2014 C Natural capital CAGR Produced capital CAGR Source: https://sustainabledevelopment.un.org/content/documents/6569122- Based on 2005 constant U.S.-dollar series. CAGR--Compound annual growth rate. Pelenc-Weak%20Sustainabi
Slide 7: Traditional framework for economic growth
Traditional framework for economic growth (top panel) • Capital is accumulated through investment (financed by saving) • Output – and consumption possibilities – continuously grow • Productivity gains can lift output: higher α. • No explicit consideration of nature or “natural capital” Incorporating
Slide 8: Regeneration is key to our framework
Regeneration is key to our framework (inspired by the UK Government’s Dasgupta Review S&P Global Ratings Economics 8
Slide 9: This is the key innovation of our framework
This is the key innovation of our framework
Slide 10: β) continuously falls. • Empirically, this positive outcome has been occuring in the US,
• • • • β) continuously falls. • Empirically, this positive outcome has been occuring in the US, Europe and Japan in recent decades as emissions have delinked from output. • To reach global sustainable growth, these technology gains need to be extending the EMs and the Global South.
Slide 11: Conclusions and Future Work | Still Much To Do
Conclusions and Future Work | Still Much To Do The “holy grail” of two capital models is bi-directional interaction between the economy and the environment. This model makes progress toward that goal but does not fully achieve it. This action above goes from the economy to the environment, with stro
Slide 12: Assessing How Climate Change May Influence Credit Ratings
Assessing How Climate Change May Influence Credit Ratings Estimate the magnitude of a megatrend's potential ( impacts on creditworthiness ~ eocttte va yy on Magnitude Source: White Paper: Assessing How Megatrends May Influen Assess the credit impact transmission channels i _- Define plausible scenar
Slide 13: How Climate-related Credit Risk Drivers Can Transmit To Potential Credit Impacts
How Climate-related Credit Risk Drivers Can Transmit To Potential Credit Impacts Credit risk drivers Physical climate risk Climate transition risk Public policies such Investment, Chronic climate Acute climate as emissions markets, and Technology and requirements, change hazards a consumer energy mi
Slide 14: All three green shades signify important steps
All three green shades signify important steps along the transition pathway toward the Paris Agreement's goals
Slide 15: Climate Transition Assessment Analytical Approach
We use our Climate Transition Assessment (CTA) Analytical Approach to assess the robustness of a company’s transition plan Current activity —= We apply Shades of Green to the current mix of economic activities. = 0% 100% Source: S&P Global Ratings. S&P Global Ratings Climate transition plan Metrics
Slide 16: Break
Investor.Council™ H2 2024 From ESG to (Valuation Impact): De Pustainahie' A Financially Material Lens on Sustainability 3:45- 4:00: Break S&P Global Inc. ©2024. Private & Confidential: This document and the information shared within cannot be shared further without written permission from S&P Global
Slide 17: Are Investors Doubling Down on Double Materiality?
date Investor. Council H2:2026 4:00 — 5:00: Are Investors Doubling Down on Double Materiality? | Steve Bullock Global Head of Research & Methodology S&P Global Sustainable1 Q3 Sustainable 1 7 S&P Global Inc. ©2024. Private & Confidential: This document and the information shared within cannot be sha
Slide 18: eS Sustainable1
S&P Global Inc. ©2024. Private & Confidential: This document and the information shared within cannot be shared further without written permission from S&P Global. eS Sustainable1 18
Slide 19: Double materiality: outside-in and inside-out impacts
The impact of the The impact of the environment and society company’s operations on on the company the environment and (‘Outside-In’) society (‘Inside-Out’) Physical Risk Scores Paris Alignment Environmental and Financial Impact Net Zero CVAR Nature and Commitments ESG Scores and Data Biodiversity R
Slide 20: Double Materiality in S&P Global ESG Scores
Double Materiality in S&P Global ESG Scores Qy Sustainable 23 Materiality Core Subjects mapped to CSA criteria topics both cross-sectoral & industry specific and linked with key opportunity & risk factors and impact areas. E Enironmemst © S Soci . Ot « a ! e fey eh a é sere c .° @¢ ° a e r - e wen |
Slide 21: Double Materiality in S&P Global ESG Scores
Qg Sustainable1 Double Materiality in S&P Global ESG Scores Every core material subject, for every industry, is reviewed by S1 industry experts, to determine how these concepts affect a company’s business. Below is a mental map exercise of how this analysis is conducted. Human Capital & Talent Incre
Slide 22: SDG Methodology at a Glance
SDG Methodology at a Glance Qy Sustainablet Presenting a methodology that offers users a deep diver into corporate contributions to or detraction from achieving the SDG’s including data level granularity and broader insights into impacts os Objectivity + Contributions bifurcated based on revenue seg
Slide 23: Methodology at a Glance
Methodology at a Glance Qg Sustainable1 Robust analysis with granular analysis and comprehensive evaluation of company’s impacts “ Alignment Assessment SDG alignment assessment per individual SDG Holistic overview of a company’s positive contributions and detractions from achieving the SDGs Integrat
Slide 24: Component Scores
• • • • • • • • • • • • 0-100 0-100 Component Scores 0-100 0-1 30% 30% 40% 0-100
Slide 25: Mining Industry: Distribution of SDG Goal Assessments
Mining Industry: Distribution of SDG Goal Assessments Qy Sustainable Companies in this industry generally detract from the achievement of environmental SDGs (e.g., 6, 13 and 14) Some companies positively contribute to social SDG’s through reducing inequalities (e.g., 10) and good governance practice
Slide 26: No case No case
• • 100 100 50 50 0 0 45 91 58 1 64 25 0 1 1 8 (30%) (30%) (40%) (30%) (30%) (40%) No case No case 26
Slide 27: Climate Value at Risk (CVAR)
Climate Value at Risk (CVAR) 27
Slide 28: Climate Value at Risk (CVAR)
Climate Value at Risk (CVAR) 28
Slide 29: The Ecolab Smart Water Navigator
The Ecolab Smart Water Navigator Fig. 1: Linking water risk metrics to business decision making The Smart Water Navigator provides a comprehensive series of risk metrics to help businesses understand incoming (quantity and quality) risks and outgoing (quality) risks by using economic techniques to q
Slide 30: The Ecolab Smart Water Navigator
The Ecolab Smart Water Navigator Fig. 2: Total Economic Value Framework for Incoming Water Risk Fig. 3: An example of using water risk metrics to guide the business (Deep Dive) decision-making process Source: Smart Water Navigator (2024) Source: Smart Water Navigator (2024) 30
Slide 31: Use Case Persona Methodology
Use Case Persona Methodology Inputs Valuation Impact 31
Slide 32: Use Case Persona Methodology
Use Case Persona Methodology Inputs Valuation Impact Paris 32
Slide 33: Use Case Persona Methodology
Use Case Persona Methodology Inputs Valuation Impact Nature & Biodiversity Risk Dataset 33
Slide 34: Use Case Persona Methodology
Use Case Persona Methodology Inputs Valuation Impact 34
Slide 35: Access limited to Investor Client Council Members
NOTE: Access is strictly limited to Investor Client Council Members. Please treat these credentials as private & confidential. 16
Slide 36: Thank you for your participation!
Investor.Council™ H2 2024 From ESG to (Valuation Impact): De Pustainahie' A Financially Material Lens on Sustainability Thank you for your participation! S&P Global Inc. ©2024. Private & Confidential: This document and the information shared within cannot be shared further without written permission
Slide 37: Copyright and disclaimer
Qg Sustainable1 Copyright © 2023 by S&P Global Inc. All rights reserved. These materials have been prepared solely for information purposes based upon information generally available to the public and from sources believed to be reliable. No content (including index data, ratings, credit-related ana