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Creating Connections Held in partnership with Creating Connections This document has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this document, and, to the extent permitted by law, PwC, IIRC or their licensors do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this document or for any decision based on it. Copyright 2014. All rights reserved. Permission is granted to make copies of these slides, provided that all logos, disclaimers, copyright notices and acknowledgements on the slides are retained, and each copy bears the following credit line: "Copyright 2014. All rights reserved. Used with permission of the IIRC and PwC.“ In this document, PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. IIRC refers to the International Integrated Reporting Council. Acknowledgements of third party source materials are contained on the relevant slides. Held in partnership with Creating Connections Creating Connections <IR> as a response to megatrends Andrew Jurczynski Global Leader - Megatrends, PwC Held in partnership with Creating Connections Overview What are megatrends? Integrating megatrends into business decisions Why investors want your views on megatrends? Panel and Q&A – send your questions using the activity feed in the app Starting your roadmap to <IR> Held in partnership with Creating Connections Megatrends – 5 global trends which: • • • have a major influence on economic and commercial landscape over next decade permeate across all sectors of economy and society fundamentally disrupt industries and way we all do business Held in partnership with Creating Connections Shift in global economic power Megatrends poll Currently, four of the world's 12 biggest economies are in emerging markets. In 2030, we think this figure will be how many? Vote in the app now! Held in partnership with Creating Connections Shift in global economic power Held in partnership with Creating Connections Held in partnership with Creating Connections Rapid urbanisation Megatrends poll How many people are added to the global urban population every week? Vote in the app now! Held in partnership with Creating Connections Rapid urbanisation Held in partnership with Creating Connections Held in partnership with Creating Connections Climate change and resource scarcity Megatrends poll Global food demand is expected to increase by how much by 2030? Vote in the app now! Held in partnership with Creating Connections Climate change and resource scarcity Held in partnership with Creating Connections The impact of megatrends – 9 strategic issues Megatrends 2. Future of virtual currencies 1. Regulation • Scope • Enforcement • Compliance 8. Risk • Analytic tools • Cyber-security 3. Customer expectations and the power to punish 4. Digital competitors and the age of innovation 9. Impact on value creation and capital stocks 7. The organization of the future 5. New definitions of service and metrics 6. The revolution in distribution Held in partnership with Creating Connections Integrating megatrends into business decisions Juan Gonzalez Strategic Development Director, Indra Held in partnership with Creating Connections Strategic response to megatrends Source: Legal & General investor presentation March 2014 Held in partnership with Creating Connections Strategic response to megatrends Source: Aegon 2013 Integrated Review Held in partnership with Creating Connections Why investors want your views on megatrends Rui Mota-Guedes Head of European Equity Strategy, MainFirst Bank AG Held in partnership with Creating Connections Why investors want your views on megatrends Superior returns Successful strategy EFFECTIVE IMPLEMENTATION Simple, consistent, longterm goals Understanding of the competitive environment Objective appraisal of resources Held in partnership with Creating Connections Why investors want your views on megatrends World Consumption ($ trillion) World Population (billion people) Source: McKinsey Global Institute Held in partnership with Creating Connections Why investors want your views on megatrends Percentage employers having difficulty filing jobs Source: ManpowerGroup Held in partnership with Creating Connections Panel discussion and Q&A Held in partnership with Creating Connections Megatrends - threat or opportunity? CEOs recognise there are megatrends with the ability to transform their business in the future… 81% 60% 59% 46% 40% …opening up opportunities along the way Business model change Technological advances Demographic shifts Shift in global economic power Resource scarcity and climate change Urbanisation 22% Changes to consumer demand New market opportunities 15% 13% 13% 11% New product/service 11% 10% Changes to costs/pricing offering 10% Held in partnership with Creating Connections Your roadmap to <IR> Ian Ball Chairman, Chartered Institute of Public Finance and Accountancy, Chair of IIRC Working Group Held in partnership with Creating Connections Your roadmap to <IR> Self-assessment of your organization’s <IR> status Reflect Record learning points Plan actions Take back to drive momentum with your colleagues All materials are in your workbook: guidance, worksheets, space for notes Judgement – not an exact science! Snapshot of complex businesses! Not a test! Held in partnership with Creating Connections What will your roadmap to <IR> cover? Step 1: identify relevant inputs, outputs, outcomes Day 1: as part of “<IR> as a response to megatrends” Material capitals to value creation and focus areas for each material capital for roadmap exercise Step 2: assess your integrated thinking Day 1: as part of “The integrated business” Day 2: at start and end of day Red, orange, green rating for each focus area Step 3: assess your external communications Day 3: after “Emerging Trends” Red, orange, green rating for each focus area Held in partnership with Creating Connections Getting started 10 minutes to: Write down a snapshot of inputs, outputs, outcomes relevant to your organization’s value creation Decide which capitals are material Choose an area to focus on for each material capital 5 minutes to discuss on your table Workbook includes tips to help you Look for this icon for ideas for bringing in learning from conference sessions Held in partnership with Creating Connections Held in partnership with