Investing in the Future London, December 20051 Climate Change Risks and Opportunities Oliver Dudok van Heel

Investing in the Future London, December 2005

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Climate Change Risks and Opportunities

Oliver Dudok van Heel


Climate Change & the Financial Sector:An Agenda for Action

Andrew Torrance, CEO Allianz Cornhill

London, December 2, 2005


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Agenda

1 Facts on Climate Change

2 Climate Change & the Financial Sector

3 Agenda for Allianz Action


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Agenda





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Facts on Climate ChangeThe Facts

Hurricane activity increased

- Katrina costs: $60bn for insurance industry and $470m for Allianz Group

Weather disasters are hitting Europe hard

- 1999 storms, 2002 floods, 2003 heat wave

Governments react by curbing CO2 emissions


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Facts on Climate ChangeThe Facts

Global Warming

Temperature Rise overPast 100 years

Source: IPCC


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Agenda





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Facts on Climate ChangeThe Impact

Climate change increases claims for insurers

Climate change could have an impact on mortality and diseases

Climate policy can change investment portfolio and share price

Climate related risks can have an impact on all financial services


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Climate Change and the Financial SectorNew Risks, New Demands

Insurance

- climate change related losses are rising at 2- 4% per year

- larger, more frequent natural catastrophes

Banking

- credit risk is increasing due to uncertainty

- potentially large new “climate change markets” in emissions trading, renewables, weather derivatives

Asset Management

- climate change is a mainstream risk and not a socially responsible investment (SRI) issue

- climate policy can alter the risk profile of companies


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Agenda





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Risk Mitigation and Investment OpportunityThe Agenda for Allianz Action

Address climate change at board level and put it on a par with other business risks when taking decisions

Screen climate change risks in our business through an internal task force

Increase investment in renewable energy sector by 500 million euros over the next years.


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Climate Change andthe Financial SectorNew Solutions

Awareness raising through risk consultancy: Consulting with clients and governments

Product Development: Upgrading to environmentally friendly technology

Climate Change and Poverty: Can micro-insurance provide a safety net against natural catastrophes?


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Tackling Climate Change: A View from the Finance Sector

Karina LitvackF&C Asset Management plc


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Debate

Why don’t companies invest more in clean technologies?

Why don’t investors channel more capital to clean technologies?

What does business want to do about Climate Change

What does business want from government?

How can the market be used to crack this problem?

What has worked before?


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Agenda

Introduction: Who is F&C Investors and Climate Change

Where we were and where we are What next?

Market failure The Business of Politics Mobilising the markets

Debate


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Who is F&C Asset Management

No. 4 UK asset manager – Top 15 in Europe: €190 billion Assets Under Management (£129.9 billion as at

30.09.05)

Global investor Long-term holdings: Pensions & Life Assurance Specialist in Governance & Sustainability

Growing activism of investment community Governance scandals Client and regulatory pressure to ‘mind the store’

Engaged shareowners: Dialogue and Advocacy


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Investors and Climate Change

Where we were Governance Risk Assessment Policies Strategy Targets Disclosure Energy efficiency Products Public Relations

Where we are An impasse Risk/Reward ratio Investment Horizon Lack of policy

clarity Market failure Political paralysis

EU ETS


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What next?

Market failure The Business of Politics What has worked

Health & Safety regulation: non-tradeable SOx and Acid Rain: tradeable

Mobilising the market Success of ETS in changing Utility Sector

valuations Impact of oil prices on Renewables IPOs


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What next?

The Business of Politics Has Governance implications …for Business …for Government

The Politics of Litigation When rules and markets fail Costly & disruptive

Global trading markets Corruption


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Climate Change Risks and Opportunities

Questions?

Documents

Investing in the Future London, December 20051 Climate Change Risks and Opportunities Oliver Dudok van Heel