Social Profit Measurement Alternatives for Company Performance

PROJECT SCOPE Hitachi has a strong focus on Social Innovation, but while multi millions of dollars are being put into social beneficial initiatives, there are not quantifiable and repeatable measurements for success that can rival the ubiquity of common financial measurements like P&L, EBITDA etc. Startups and Fortune 500 companies may all aspire to do social good, or support sustainability, but the ultimate measurements of the success of a company that board members and investors use are the capital market accepted measurements of revenue growth, profitability and share price, which is driven by long term projections on those financial metrics. Good businesses can create social harm (e.g. the opioid crisis driven in part by profits for pharmaceuticals, social media creating obsession and distraction in an effort to monetize its user base to appease financial investors, food industries putting profit and "share of stomach" over health, etc). Investors are looking for ways to invest in socially responsible companies but ultimately the only repeatedly quantifiable measurement of success are financial in nature. Therefore, more and more institutions and consulting companies appeal for approaches such as “triple bottom lines” to emphasize the value of environmental and social good. In this context, all most all commercial companies are issuing sustainability report annually. However, lack of timeliness and lack of substantial, information are fatal disadvantages of those reports, making them more like a propaganda rather than a reflective introspection or an informative communication with investors. Even though Wenco currently can provide very comprehensive solutions to measure and improve productivity, asset health and safety via its Digital Platform, ESG is the missing piece of the puzzle. Therefore, this project is designed to encourage students to study existing guidelines and edge-cutting research of quantifying and reporting social good, sustainability, quality of life improvement, and other metrics that can be used across industries as a balance to purely financial measurements. These "Social Profit" measurements could be used to score candidate startups for investors and investment funds (particularly for employee pension funds or other limited partners that may desire socially responsible investment), or for shareholders and boards to evaluate corporate success beyond general "goodwill" or avoidance of bad brand image. These measurements should be numerical in nature and serve as a weighted combination with traditional financial measurements to create a truly balanced Balance Sheet of financial profitability AND social profitability. The data collecting and reporting shall be more frequent than currently common annual report. It could be quarterly, monthly, weekly, even daily, if not hourly, to maximize the efficacy of the report, and could eventually evolve to a real-time dashboard. Students are highly encouraged to start with mining industry and /or adjacent industries such as quarrying and construction, if they have appropriate knowledge, experience, resources, and connections. Students should be prepared to: To Be Found in Attachment

Strategic Market & Sales Channel Research: ESG Appraisal Products

Defined Tasks: Wenco has been undergoing research into ESG and the potential impact on its product line and customers. Initial Phase 1research focused on the overall ESG landscape, influencers and started to examine likely future standards. Phase 2 focused on defining an ESG dashboard that could be delivered by Wenco’s digital platform, focusing on three levels: enterprise, site, and equipment. The majority of the effort focused on equipment dashboards and integration with Wenco technologies (e.g. FMS). Phase 3 will look at the larger picture that will influence mining companies and the supply chain this industry belongs to. It will divide the research into two areas 1. Industry-leading influencers from the customer-demand side and other organizational influencers. For mining, these would include leading buyers such as Tesla, BMW, Tiffany and others (details listed below) as well as United Nations and other bodies. The research will examine what metrics they use to evaluate and influence suppliers along their supply chain in order to determine what operational reporting mining companies should offer in monthly/quarterly and annual reporting related to ESG. 2. The Financial market approach that includes banks, investors, auditors and standards bodies that will create the new “sustainability and social responsibility bottom line” mirrors the approach for financial profit reporting, as well as the technologies (e.g. blockchain) that may be used in such reporting. Expected outcomes: We break the task down into two areas, each area will be assigned to a student/team, respectively. Area 1: ESG management across supply chains. Student(s) assigned to this section are expected to choose six leading companies (three per 80-hour report duration) to carry out research across the supply chain, to figure out: 1. What are the ESG requirements/matrices those companies exert on their suppliers, including mining suppliers? 2. What monthly reports can be created by an ESG management system to help those companies? (Wenco will then determine if any of this data can be captured in near-real-time or by shifts to flow up to aggregated dashboards and reports) Potential supply chains to look at (minimum three per 80-hour session): a. Jewelry: Jewelers (Tiffany, Pandora, Chow Tai Fook, Cartier, etc.) --->Refineries (Johnson Matthey, HNH, etc.)-àmining companies (Barrick, Kinross, Newmont, etc.) b. Electronics: Consumer electronics (Apple, Sony, Nintendo, etc.) ---->Microelectronics (TSMC, NVIDIA, Samsung, Intel, STMicroelectronics, etc.) -àelectronic materials (Tanaka, Heraeus, etc.) àRefineriesàMining companies c. Electric vehicles: Carmakers (Tesla, BMW, etc.)àBattery makers (Panasonic, AESC, PEVE LG, CATL, etc.)àRefineriesàMining Companies d. Other TBD by students, including organizations such as United Nations, other leading industries. Student(s) are also highly encouraged to look at other relevant supply chains/leading companies. Area 2: ESG management through financial instruments. 1. What roles financial institutions are playing in ESG? Which will be the most influential in setting ESG standards and compelling mining and other suppliers to report/comply? 2. What kind of instruments are they using to regulate operating companies? - For example, “Green Loans” are quite popular recently. 3. Are they developing in-house solutions to appraise the ESG performance, or cooperating with 3rd parties? Which of those 3rd parties can be our potential M&A target/partners? Potential 3rd parties: a. Sustainalytics b. Refinitiv c. Envirosuite d. K2Fly e. Minetell Student(s) are also highly encouraged to find and research other targets. 4. How can the data they collect be validated? (e.g., using blockchain? A company called Minespider claimed they have blockchain technology for "green certification")

Market Selection: Safety Suite

Purpose: · Market research conducted to understand how safety solutions built for mining could be adjusted to gain a profitable foothold in adjacent markets. · Identify which adjacent market is most attractive for the Wenco safety suite considering our present offerings (Fatigue Management, Collision Avoidance). Overview: Wenco has recently acquired a fatigue management company that measures brain activity and empowers operators with the information they need to act and avert personal harm and damage to onsite assets. In addition to fatigue management, the Wenco Safety suite also provides solutions for collision awareness, speed monitoring and shift management. As we seek to increase our market share in Safety for mining, we are also hoping to expand into adjacent markets that can also benefit from our Safety solutions. In this project we want students to analyze the safety market, highlighting the segments with the highest degree of similarity to mining. Assessing competitors in segments like underground mining, construction and transportation will provide the Wenco team with an understanding of market attractiveness and our relative competitive strength. Number of Individual Students Required: 2 Defined Tasks: Market Attractiveness Analysis a. Research markets that are most like mining using developed benchmarks (processes, use cases etc). b. Based on the Wenco Safety suites existing capabilities and jobs done for customers, identify where we will have the best chance of gaining market share in an adjacent market i. (Trucking, Underground Mining and Industrial Construction are all example markets). c. Identify and analyze the competitor offerings in these markets. Highlight the advantage in feature offerings that competitors may have relative to Wenco solutions. Final Report a. Based on the findings of your analysis, develop a final deliverable that identifies the best adjacent market for entry by Wenco’s safety portfolio. b. Provide strong reasoning based on indicators of market attractiveness to show which market is the most rationale for Wenco to engage.

Real-time Emission Monitoring Technology

Purpose of Research: Emission reduction is an inevitable trend and is putting unprecedented pressure on the mining industry and adjacent industries such as quarrying and construction. In order to monitor the emission in a real-time manner, a research in existing technologies is imperative. Number of individual students required: 1 Defined Tasks: Our previous research shows that there is no significant causal link between RMI (Responsible Mining Index) ESG performance and long-term stock prices. Nonetheless, some remarkable drops in stock prices can still be seen after major environmental scandals have been reported even though those changes still cannot be predicted quantitatively and will be compensated quickly because of strong financial performance. We believe the reason investors are not able to react to ESG failures rationally and continuously is because there is a lack of tools to do so. Currently, there are a few organizations, for-profit or non-profit, that are providing ESG scoring metrics for institutional investors to make their own decision, but none of them can provide “near real time score”, which we believe is the prerequisite of connecting scores directly to the prediction of stock prices and/or profit. Currently, almost all ESG reports are updated annually or bi-yearly. This is not helpful either to investors or to companies because they must make decisions accurately and quickly to make things right. If they do not obtain information in a precise and timely manner, the only thing they can do is exclude this information from their valuation model or their daily operational management considerations. Therefore, a more “real-time” updated ESG dashboard is imperative to achieve the ambition of “triple bottom line”, and sub-dashboard of environmental factors, especially “real-time emission” dashboard, is the priority considering the inevitable trend of emission reduction. Expected outcome: 1.. Define a new reporting/data renewing interval: what frequency of updating is helpful to investors and mining companies themselves, while it is still feasible. 2. A deep dive into real-time emission monitoring (because it is the most straight forward factor, the most imperative trend, and the most feasible action with available technologies): a. Indispensable technologies (including sensors, telemetry, communication, etc.) b. Existing solutions and their pros and cons c. Potential partners (including acquisition target etc.) Remarks: Students in Richmond, BC will be considered first