Vivendi

Marc Fox, Global Investment Research, Goldman Sachs International
(SDR 2007-2008)

« We launched the GS SUSTAIN Focus List to identify long-term investment opportunities presented by company response to a rapidly changing, globalizing world. Our framework for identifying sustained competitive advantage in mature industries combines analysis of cash returns, structural change in industries and environmental, social and governance (ESG) performance.
The GS SUSTAIN framework identifies mature industry leaders best positioned to deliver sector-leading returns over an extended time horizon (3-5 years). Fundamentally, media companies invest in people and ideas. Firms rely on their workforce to tackle the challenges of an ever-changing business environment through innovation, or opting to purchase the creative output of others, as evidenced by the fact that two-thirds of industry assets are made up of intangibles, and almost half of the cost structure relates to expenditure on human and intellectual capital. Superior human capital management is needed to meet the increasingly complex needs of employees who desire to align their personal values with their careers and have high expectations regarding compensation, career development, labour standards, and health and safety. We observe that the more spent to attract and retain the most talented employees, the greater the cash flow companies are able to generate. This reinforces our view that management quality, human capital management, and leadership on social issues are vital to maximizing value out of the workforce.
Vivendi demonstrates clear leadership on ESG performance, ranking in the first quartile versus European media companies (as published February 20, 2006) with a demonstrated commitment to managing its intellectual footprint through the creation and distribution of content by promoting awareness of environmental, human rights and public health issues and reductions in its environmental footprint through with energy consumption and greenhouse gas emissions intensity below sector peers. »