[Music]
[Applause]
[Music]
in recent years there has been a much
greater demand for businesses to behave
in a socially responsible manner a
concept of capitalism is shifting it had
seemed that businesses must decide
whether to prioritize on profits or
principles this does not have to be the
case socially responsible business
behavior can generate value not only for
the stakeholders of a business but also
for those primarily concerned with
financial gains the shareholders to
understand this it is important to
consider why shareholders invest in
firms and how this relates to
shareholder value there are two key
reasons why shareholders invest and
funds firstly to reap payments in the
form of dividends and secondly in the
hope of a capital increase that is an
increase in the price of the shares
meaning that when the shareholders sell
their shares a profit of margin will be
achieved as this price which they sold
it for is greater than that to which
they purchased it for so what is
shareholder value the simplest way to
answer this is to look at how
shareholder value is generated if a
company’s market value increases then
shareholder value is created even more
so if a long-term sustainable capital
increase is generated the key point here
is that this is that shareholder value
is predominantly dependent on a
company’s share price which in turn is
primarily a reflection of a company’s
future cash flows subsequently to create
shareholder value a company must ensure
that the investors perception of the
future cash flows is a positive one
requiring firms to adopt a long-term
focus for their companies it is here
where shareholder value can be generated
and social responsibility can play a
role there are various ways of
increasing shareholder value to satisfy
the financial demands of share
holder’s however the approach of
employing social responsibility as a
means of doing this is certainly
favorable not only does this produce
quantitative financial returns but such
an approach also complies with high
moral standards and responsible company
values to incorporate this approach
investors look to integrate
environmental social and governance
issues known as ESG measures this means
that companies involved in sustainable
stock indices practice corporate social
responsibility in one of these areas the
benefits invent in investing one of
these companies is quite clear a recent
study by Oxford University in
partnership with asset arabesque asset
management revealed that the shareholder
value of companies who integrate ESG
measures into their strategies is
greater than for those who do not these
positive results can be explored in even
greater depth with regard to the
environmental measures the research
revealed the companies associated with
positive environmental news seen
increase in stock prices by Northpoint
Apryl percent and the converse is also
true fair was behaving in
environmentally damaging ways see a
decrease in the value of the stock buy
nor point 65% likewise firms emitting
high levels of pollution or those that
violate environmental regulation also
see a decrease in market value on the
social side of things research has
revealed equally positive results a
review of the 100 best companies to work
for by London Business School revealed
that the share price of companies who
scored highest with regard to employee
well-being well exceeded that industry
average by two point one percent
positive results also emerge from the
governance aspect of social
responsibility Occident arabesques
research highlighted that superior
governance leads to better financial
performance and to quantify this a
portfolio dominated by well governed
firms and an alpha tender
fifteen percent above the industry
average the real world of corporate
business exemplifies these findings in
2010 the Mexican Gulf suffered a
horrific oil spill at the hands of BP as
well as costing the company ninety five
billion dollars the catastrophe severely
affected their share price and with this
the firm’s shareholder value on the 15th
of April 2010 four days before the
incident
BP share price stood at 653 P yet after
the disaster the share price tumbled by
over fifty percent to three hundred and
eight P and has continued to
underperform its peer group by thirty
seven percent what is really significant
about this is that the share price BP
reached as a result of this crisis was
lower than that I had experienced during
the financial crisis highlighting the
importance of social responsibility to a
firm share price and with this is
shareholder value although perhaps not
as drastic a similar incident occurred
more recently when the US environmental
agency announced in September 2015 the
Volkswagen had falsified admissions
tests the company’s share price
decreased by approximately 40 percent in
the space of a month volkswagen share
price in this situation also reached
lower levels than the company had
experienced during the financial crisis
whilst irresponsible social behavior
negatively affects company’s share price
a strong social responsibility policy
can generate an increase in share price
in turn creating shareholder value a
good example of this is the pond asus
endeavor fund the fund only invests in
companies which meet their stringent
criteria over offering an outstanding
workplace and must not be engaged in the
production of fossil fuels the criteria
produces spectacular results the fund
has consistent
outperformed the S&P 500 index over the
past ten years and since its founding in
2005 has earned a total return of twelve
point four percent almost five percent
greater than that of the S&P index
notably the fund was also not as badly
affected during the financial crisis as
the grouping with the understanding of
how social responsibility affects
shareholder value it is time to consider
why this is the predominant linkage
between shareholder value and social
responsibility is that of sustainability
eighty percent of the studies by Arabist
and oxford showed that stock price
performance of companies is positively
influenced by sustainability practices
the reason for this is that to act in a
sustainable manner companies must take
into account and plan for the future
meaning they must adopt long term
strategies which is a crucial aspect of
creating shareholder value when you
consider that it is future cash flows
that determine share price in line with
sustainability is that of a sustainable
brand image building a positive brand
image attracts investors to a company as
this is a means of fortifying future
cash flows
yet in order to develop a strong brand
image it is often essential that a
company behaves in a socially
responsible manner to act in a socially
responsible way firms must also consider
the interest of the stakeholders
primarily their employees and consumers
it is a respected view in the discipline
of management the satisfied customers
are the source of all profits and
shareholder value which is true since if
customers are satisfied with the company
they are likely to develop brand loyalty
a trait that enhances the future cash
flows of a firm and with this share
price and shareholder value in order to
achieve this first must respect and
school well in employee well-being
furthermore treating employees in a
socially responsible manner also ensures
companies retain the best talent
enabling them to maximize their
productivity and efficiency in turn
aiding cash
is social responsibility or a lack of it
also affects shareholder value through
its impact on a company’s finances in a
positive manner
the sustainable policies responsible
companies use and transparent governance
approaches practiced by these companies
is viewed by banks and lenders as a
method of risk mitigation subsequently
socially responsible companies can
benefit from reduced cost of capital in
turn positively impacting their future
cash flows and as such their share price
and shareholder value what Miami today
has been to bring to the forefront and
into alternative to the stereotypical
view of business behavior and capitalism
as an immoral socially destructive force
it is no longer a necessity for a
business to choose between honoring its
responsibilities to its stakeholders or
shareholders the social awakening of
shareholder value means both groups can
coexist in the 21st century companies
cannot differentiate between shareholder
value and social responsibility the
success of the former is dependent on
the adoption of the latter in today’s
world of corporate business generating
money depends on the practice of morals
and profits are driven by principles
thank you
you
[Applause]
[Music]
in recent years there has been a much
greater demand for businesses to behave
in a socially responsible manner a
concept of capitalism is shifting it had
seemed that businesses must decide
whether to prioritize on profits or
principles this does not have to be the
case socially responsible business
behavior can generate value not only for
the stakeholders of a business but also
for those primarily concerned with
financial gains the shareholders to
understand this it is important to
consider why shareholders invest in
firms and how this relates to
shareholder value there are two key
reasons why shareholders invest and
funds firstly to reap payments in the
form of dividends and secondly in the
hope of a capital increase that is an
increase in the price of the shares
meaning that when the shareholders sell
their shares a profit of margin will be
achieved as this price which they sold
it for is greater than that to which
they purchased it for so what is
shareholder value the simplest way to
answer this is to look at how
shareholder value is generated if a
company’s market value increases then
shareholder value is created even more
so if a long-term sustainable capital
increase is generated the key point here
is that this is that shareholder value
is predominantly dependent on a
company’s share price which in turn is
primarily a reflection of a company’s
future cash flows subsequently to create
shareholder value a company must ensure
that the investors perception of the
future cash flows is a positive one
requiring firms to adopt a long-term
focus for their companies it is here
where shareholder value can be generated
and social responsibility can play a
role there are various ways of
increasing shareholder value to satisfy
the financial demands of share
holder’s however the approach of
employing social responsibility as a
means of doing this is certainly
favorable not only does this produce
quantitative financial returns but such
an approach also complies with high
moral standards and responsible company
values to incorporate this approach
investors look to integrate
environmental social and governance
issues known as ESG measures this means
that companies involved in sustainable
stock indices practice corporate social
responsibility in one of these areas the
benefits invent in investing one of
these companies is quite clear a recent
study by Oxford University in
partnership with asset arabesque asset
management revealed that the shareholder
value of companies who integrate ESG
measures into their strategies is
greater than for those who do not these
positive results can be explored in even
greater depth with regard to the
environmental measures the research
revealed the companies associated with
positive environmental news seen
increase in stock prices by Northpoint
Apryl percent and the converse is also
true fair was behaving in
environmentally damaging ways see a
decrease in the value of the stock buy
nor point 65% likewise firms emitting
high levels of pollution or those that
violate environmental regulation also
see a decrease in market value on the
social side of things research has
revealed equally positive results a
review of the 100 best companies to work
for by London Business School revealed
that the share price of companies who
scored highest with regard to employee
well-being well exceeded that industry
average by two point one percent
positive results also emerge from the
governance aspect of social
responsibility Occident arabesques
research highlighted that superior
governance leads to better financial
performance and to quantify this a
portfolio dominated by well governed
firms and an alpha tender
fifteen percent above the industry
average the real world of corporate
business exemplifies these findings in
2010 the Mexican Gulf suffered a
horrific oil spill at the hands of BP as
well as costing the company ninety five
billion dollars the catastrophe severely
affected their share price and with this
the firm’s shareholder value on the 15th
of April 2010 four days before the
incident
BP share price stood at 653 P yet after
the disaster the share price tumbled by
over fifty percent to three hundred and
eight P and has continued to
underperform its peer group by thirty
seven percent what is really significant
about this is that the share price BP
reached as a result of this crisis was
lower than that I had experienced during
the financial crisis highlighting the
importance of social responsibility to a
firm share price and with this is
shareholder value although perhaps not
as drastic a similar incident occurred
more recently when the US environmental
agency announced in September 2015 the
Volkswagen had falsified admissions
tests the company’s share price
decreased by approximately 40 percent in
the space of a month volkswagen share
price in this situation also reached
lower levels than the company had
experienced during the financial crisis
whilst irresponsible social behavior
negatively affects company’s share price
a strong social responsibility policy
can generate an increase in share price
in turn creating shareholder value a
good example of this is the pond asus
endeavor fund the fund only invests in
companies which meet their stringent
criteria over offering an outstanding
workplace and must not be engaged in the
production of fossil fuels the criteria
produces spectacular results the fund
has consistent
outperformed the S&P 500 index over the
past ten years and since its founding in
2005 has earned a total return of twelve
point four percent almost five percent
greater than that of the S&P index
notably the fund was also not as badly
affected during the financial crisis as
the grouping with the understanding of
how social responsibility affects
shareholder value it is time to consider
why this is the predominant linkage
between shareholder value and social
responsibility is that of sustainability
eighty percent of the studies by Arabist
and oxford showed that stock price
performance of companies is positively
influenced by sustainability practices
the reason for this is that to act in a
sustainable manner companies must take
into account and plan for the future
meaning they must adopt long term
strategies which is a crucial aspect of
creating shareholder value when you
consider that it is future cash flows
that determine share price in line with
sustainability is that of a sustainable
brand image building a positive brand
image attracts investors to a company as
this is a means of fortifying future
cash flows
yet in order to develop a strong brand
image it is often essential that a
company behaves in a socially
responsible manner to act in a socially
responsible way firms must also consider
the interest of the stakeholders
primarily their employees and consumers
it is a respected view in the discipline
of management the satisfied customers
are the source of all profits and
shareholder value which is true since if
customers are satisfied with the company
they are likely to develop brand loyalty
a trait that enhances the future cash
flows of a firm and with this share
price and shareholder value in order to
achieve this first must respect and
school well in employee well-being
furthermore treating employees in a
socially responsible manner also ensures
companies retain the best talent
enabling them to maximize their
productivity and efficiency in turn
aiding cash
is social responsibility or a lack of it
also affects shareholder value through
its impact on a company’s finances in a
positive manner
the sustainable policies responsible
companies use and transparent governance
approaches practiced by these companies
is viewed by banks and lenders as a
method of risk mitigation subsequently
socially responsible companies can
benefit from reduced cost of capital in
turn positively impacting their future
cash flows and as such their share price
and shareholder value what Miami today
has been to bring to the forefront and
into alternative to the stereotypical
view of business behavior and capitalism
as an immoral socially destructive force
it is no longer a necessity for a
business to choose between honoring its
responsibilities to its stakeholders or
shareholders the social awakening of
shareholder value means both groups can
coexist in the 21st century companies
cannot differentiate between shareholder
value and social responsibility the
success of the former is dependent on
the adoption of the latter in today’s
world of corporate business generating
money depends on the practice of morals
and profits are driven by principles
thank you
you
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