Anfield Redevelopment and Stakeholder Engagement

I have read with interest the Anfield regeneration news which has taken decades to settle, which originated from even the Moores era. The club has been slowly buying properties surrounding the stadium with an intention to expand the stadium and redevelop the location. This has led to years of 'confict' with the local communities, where there has been many unhappy property owners who have refused to sell their properties at the proposed prices. It has also been claimed that the club have deliberately kept the purchased houses empty and derilict to ensure prices remain low in the surrounding area.

This brings us to one important facet that a company would definitely need to take into consideration, which is stakeholder engagement. It is important for a company to identify and prioritise who their key stakeholders are, and depending on the different stakeholder segments, they would then need to develop customised engagement methods and strategies, to ensure that they constantly engaged, and understand what the intended outcome is needed. This would also allow the organisation to get feedback from these important stakeholders to know whether what they are doing is correct or not. They would also understand better the issues, which will be raised by the stakeholders, as your point of view of an issue may differ to what they may be thinking. This is also important as key stakeholders who have a large influence on what you set out to do, can may times make or break initiatives which an organisation set out to do.

So in this case, did the Anfield club engage their stakeholders well? So who are the key stakeholders in this situation and what would be their interests?

The owners of the properties surrounding the stadium were unwilling to sell their properties, as they may be waiting for an even higher price. They invested in these properties with a set return on there investment in mind. So they will be pushing to get the best deal out of the club. They could be Everton fans who are holding the club at ransom?

The local council is another important party. Their interest is to resolve this issue as soon as possible, so that the city as a whole would benefit from the eventual investment and development in the area. The club management got the local council onside, and to such an extent, the local council is looking to issue compulsory purchase orders to forcefully purchase these properties from them.

FSG are another key stakeholder. They own the club, and it is in their best interest to start the redevelopment as soon as possible. The club is lagging behind in matchday revenue, the see that. And the longer this drags on, the longer they have to wait until they get the "spade in the ground". Whether supporters like it or not, they are in it for the return in their investment. It's all about what would bring the biggest return, the biggest "bang for buck". And I would guess that's why they went for the Anfield redevelopment approach rather than the Stanley Park approach.

At the end of the day, I hope they are able to reach an amicable solution. FSG has decided to redevelop Anfield, and without these properties being purchased, this will drag on much further, and the club will be stuck again. The locals have waited long enough for this redevelopment, and if you look at the issue from a macro level, the net benefit of the redevelopment of the surrounding area will always be net positive. Sometimes tough decisions need to be made.   You'll Never Walk Alone...

Investor Pressure on Companies being Sustainable

One of the key drivers of companies being operated in a more sustainable manner is pressures from investors. There is a growing trend that more and more investors are putting in ESG (Environmental, Social & Governance) factors into their investment risk assessments, factored into their investment decisions. Investors globally are getting more and more interested in getting companies to disclose more of their sustainable practices and performance, as some schools of thought would use sustainable practices as a proxy to good management and operational practices within their organisation.

There is an increased interest in global sustainable reporting programs such as the Carbon Disclosure Project (CDP) and the  Dow Jones Sustainable Index (DJSI). The CDP itself, has signatories of 700 investors managing funds in excess of USD 80 trillion (source: CDP Website), and the numbers of companies responding to it has increased significantly over the years. Bloomberg terminals themselves have CDP data available for analysts to look at ESG data, which also shows the increase in demand for these sort of ESG info from analysts to make investment assessments.

The case study below, which I read in interest from the Star website serves to highlight the increasing trend of "Responsible Investors" globally. Would a publicly listed company take the risk of being divested by large investors globally if they are not operating in a sustainable manner? My question is, how did thei pension fund make their decision, and on what basis was it made?

Norwegian Govt Pension Fund Global divests out of 23 palm oil firms (source: The Star website)
http://biz.thestar.com.my/news/story.asp?file=/2013/3/11/business/20130311163536&sec=business


KUALA LUMPUR: The Norwegian Government Pension Fund Global (GPFG) disposed of its stakes in 23 Asian palm oil companies in 2012, including Kuala Lumpur Kepong and Genting Plantations.

The GPFG, which is the world's largest sovereign wealth fund, was reportedly to have also divested its stake in Astra International, First Resources, Golden Agri, Indofood Agri and Wilmar, according to JP Morgan Asia Pacific Equity Research.

In its research note on Monday, it said the GPFG had divested out of these companies, citing concerns about unsustainable palm oil production.

JP Morgan Research said the divestment was also played up by EU environmentalist groups, describing it as a victory against destructive practices on rainforests.

"GPFG sales appear to be a blanket sell-down of the sector without company specific consideration -- take the opportunity to accumulate good quality names," it said. JP Morgan said however, the environmental groups' accusations were not new for the palm oil sector and the stake sales by GPFG appear to be a blanket divestment across the sector without due consideration to company-specific plantation management practices.

“Notably, many companies in the sector have during the course of the past 2 years been increasing their proportion of RSPO certified plantations.

"Furthermore, it was reported that stakes in the companies mentioned have been divested completely in 2012, indicating that they would be no further overhang on stock prices from stake sale by GPFG from hereon," pointed out JP Morgan Research.

A news report by DPA said rising global share prices helped the Norwegian government's pension fund obtain its second-highest full-year result in 2012. The fund's return was 13.4%, equivalent to a rise of 447bil kroner (US$78.8bil). In 2009, the return was a record 26%.

The GPFG's market value rose 504bil kroner to 3.8 trillion kroner at the end of the year, although a stronger Norwegian krone weighed on the result.

The return on its equity investments was 18.1%, and gained in the second half of the year on moves by the European Central Bank calming concerns for the euro.

Europe accounted for 49% of the fund's equity investments at the year-end. North America's share was 31% and Asia 15%. It also invested in Oceania, Latin America, Africa and the Middle East.

Sustainability?

So as part of my "reboot" of my blog here, I would like to talk about some of the new concepts that I have learnt throughout the journey of my career so far. Today, I would like to talk about this concept of "sustainability" that has been getting more and more attention globally. I have been gradually been exposed to this concept for the past 5 years now and I have seen more and more organisations starting to look at it with a more serious tone.So what is this concept called sustainability? And how does it impact organisations?

Out of all the many definitions that you get all over, the definition I like to use is the definition from the Bruntland Report in 1987, which defines Sustainable Development as development that meets the "needs of the present, without compromising the needs of the future". Think of it as taking a long term, holistic view. There are finite resources in our planet today, energy, fuel, food, forest and all. So if we were to use it all up today, how can people in the future survive.

And this is relevant to corporates as well. If they are taking a long term view of their businesses, they would need to start looking at these sort of issues in a more serious manner. For example, energy and resource scarcity. How resilient if your business when it comes to the increasing prices of energy. The only way for energy prices is up, and if you don't take actions to buffer yourselves from the increasing energy prices, there will come a point in time where energy prices will reach levels which make it... unsustainable. And energy is only one of the key issues under this whole umbrella called sustainability.

Some people are calling it consultant spiel, which air brushes older concepts to make it look more sexy. Companies are saying that they have been looking at it anyway, even though it is not called "sustainability". Well enough, but whatever you call it, you would still need to start thinking of these sort of issues, so that you are well prepared to meeet the ever changing scenario in the future.

On a personal level, awareness of these issues have also made me think about the type of lifestyle choices I make. With oil prices on the rise, and government subsidies I was worried whether I would be able to afford paying for fuel prices in the future. With all the new energy efficient engines, and hybrid engines, I decided to downsize my car from a thirsty fuel guzzling 3 liter car to a smaller, fuel sipping 1.5 liter car. And my fuel expenses have gone drastically down, which leaves me with more spare cash to spend save. So it does make sense then, financially. But there's less excitement though! :)