Johnson Team Captures Gold in International Case Competition by Harnessing a Passion for Sustainability
by Brennan Duty, MBA ‘15 (1/8/14)
Brennan Duty (MBA ’15) together with fellow first-year Johnson students Harun Olcay, Anne Keyes and Bryan Hill took gold in the third annual International Schulich Sustainable Case Competition, hosted by the Schulich School of Business at York University in Toronto, Canada.
The Johnson team captured first place in the 2013 Schulich International Case Competition at York University in Toronto, beating out teams from schools in India, Australia, Canada and the US. The case explored how financial stakeholders should take into consideration a mining company’s corporate responsibility activities when making investment decisions.
Hosted by Schulich’s Case Analysis Club, Natural Resources Opportunities Club and Net Impact Club, as well as the faculty of Schulich’s Global Mining Management specialization and the Graduate Business Council, this year’s Competition challenged competitors to quantify the sustainability and corporate social responsibility efforts made by mining industry organizations so that they could be factored into their share price by institutional investors.
The case prompt presented two Canadian mining companies, Cliffs Natural Resources and New Gold. We were asked to calculate how the robustness of their corporate responsibility (CR) programs affects their financial performance. We also examined how the lack of CR might lead to the revocation of a mine’s permit, or “privilege,” to operate. A mine could lose its permit for a number of reasons, but it normally occurs when a mining company fails to properly consult local stakeholders about the impact of a particular aspect of the mining operation, whether it is road building over religious land or the improper disposition of toxic mining byproducts.
The case focused specifically on how the withdrawal of a mine’s permit can affect the company’s cash flows and how CR management, if properly quantified, might change financial analysts’ valuation of a company. The case further considered the necessary requirements from a human resource or organizational management perspective to ensure good CR.
My team, comprised of first-year Johnson students Harun Olcay, Anne Keyes and Bryan Hill, created an approach based on the Sustainable Livelihood Approach (SLA), championed by Ian Scoones. The SLA approach is hugely beneficial, because it quantifies what is otherwise qualitative CR data so that it can be used in Key Performance Indices or, in our case, financial valuation. This is done by the output of a global performance score on a scale of 1-6 (where 1 is the poorest performance and 6 the best). Depending on that score, a mine’s cash flows can be more or less discounted – or increase cash flows, in the case of outstanding CR performance.
Our proposed approach would also incorporate the data collected through CR reporting, eliminating the “reporting burden” that affects mining companies that must report CR performance in several formats to satisfy various types of stakeholders.
The competition was judged by a number of sustainability executives. When the results were tallied, our team walked home with gold! The two teams from the Schulich School of Business finished in second and third places.
I believe that my team’s success at the competition illustrates to how well our varied backgrounds complemented each other. It also demonstrates how well we were able to incorporate our core business skills into recommending solutions to real-world problems. A special note of recognition goes out to our core Finance professor, Roni Michaely, for teaching us so effectively the underpinnings of discounted cash flows.
SICC 2013 champions, from left to right: Brennan W. Duty, Anne Keyes and Bryan C. Hill; Not pictured: Harun Olcay