Capital 7

Question 1

What are the three dependent dimensions of ESG reporting?

Answer 1

1.Standards: Reporting on key metrics/standards of economic, environmental and social impact

2.Certification: Mandated certification of ESG components by external service providers

3.Rating: not mandated rating of overall sustainability performance by external service provider

Question 2

What motivates investoprs ti use ESG information?

Answer 2

• Financial materiality (to investment performance
• Client demand
• Bringing about change in firms
• Ethical responsibility

Question 3

What are the most common uses of ESG information by investors?

Answer 3

• Engagement with companies (37%)
• Stock valuation for investment decisions (34%)
• Negative screening: Avoiding investments based on ESG criteria (30%).
• Thematic investments: Focusing on ESG-related themes (21%).

Question 4

What trends are expected for how Investors use ESG information in the future?

Answer 4

Increased use of engagement and screening methods as ESG integration grows

Question 5

What are the key statekholders for ESG reporting and management?

Answer 5

1.Media and journalists

2.NGO & civil society

3.Regulators & policitcs

4.Employees

5.Stock exchanges & funds

6.ESG rating agencies

7.Investors

8.Shareholders

9.Business partners

Question 6

Key stakeholders

What do Media & journalists; NGO and Regulators want?

Answer 6

Media:

• Demand high ESG transparency and reveal/penalize non ESG conform behavior (e.g., klimareporter, ECOreporter)

NGOs & society:
- Scrutinize ESG performance and demand a socially fair & environmentally friendly energy transition (e.g., Greenpeace, Klima-Allianz Deutschland)

Regulators & politics:
- Set ESG regulations and targets as well as transparency and reporting requirements (e.g., EU, local government)

Question 7

Key stakeholders

What do employees; Investoprs and shareholders want?

Answer 7

Employees:
- Demand strong ESG performance and a socially-fair energy transition

Investors:
- Demand ESG performance according to Paris Agreement (e.g., Deutsche Bank AG)

Shareholders:
- Demand integration of ESG criteria into long-term business decisions (e.g., Blackrock)

Question 8

What is the required set—up to execute?

Answer 8

1.Organization: define hybrid organization

2.KPIs: introduce relevant overarching and business specific KPIs

3.Incentive Scheme and Motivation: Ned to cover material part

4.Skills, Resources, and Systems: specific resources needed centrally and for each BU/OpCo

Question 9

What hypotheses help to address the key question about the organization?

Answer 9

Define hybrid sustainability organization with an effective balance between

• central and decentral structure while guaranteeing BU/OpCo ownership.
• Strong link to strategy key to enable value creation from ESG

Question 10

What hypotheses help to address the key question about the KPIs?

Answer 10

Introduce relevant overarching and business-specific KPIs (for both overall
Group and each OpCo) that are

• aligned with material topics, ambition levels (Comply, Compete, Lead) and defined ESG initiatives

Question 11

What hypotheses help to address the key question about the Incentive scheme and motivation?

Answer 11

Requires further assessment in project

• Key incentive aspects need to be linked to material topics and ambitions derived in the project

Question 12

What hypotheses help to address the key question about the Skills, resources, and systems?

Answer 12

Specific resources will be needed for ESG management centrally and for each
BU/OpCo;

• however, experience suggests that this will not lead to additional manpower, but rather reskilling/reallocation of existing resources