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Financing the change for the future

Financing the change for the future. ZERO-konferansen Gardermoen , November 19, 2012 Idar Kreutzer, CEO, Finance Norway. Business as usual is not an option. Today and BAU: The world is on an unsustainable track. Source: World Business Council for Sustainable Development, Vision 2050.

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Financing the change for the future

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  1. Financingthechange for thefuture ZERO-konferansen Gardermoen, November 19, 2012 Idar Kreutzer, CEO, Finance Norway

  2. Business as usual is not an option Today and BAU: The world is on an unsustainable track Source: World Business Council for Sustainable Development, Vision 2050 Vision 2050: Around nine billion people live well, and within the limits of the planet

  3. The pathway to Vision 2050

  4. Significant needs for investments Expected investment needs for urban infrastructure up to 2030 (US$ billions) Many opportunities... Systems planning Water Technology Infrastruture Buildings Finance Source: Booz Allen Hamilton, 2007

  5. A good match Demand Supply Importanceofpension funds relative to thesizeoftheeconomy, 2010 (Assets under Management % GDP) Cumulative investment in green infrastructure: • $40 trillion between 2012 and 2030 • = approximately $2 trillion or 2% of global GDP per year • = a doubling from current levels Long term investments Sustainable investments Pension funds total: $ 28 trillion in assets Source: G20/OECD Policy Note on Pension Fund Financing for Green Infrastructure and Initiatives

  6. Barriers Source: G20/OECD Policy Note on Pension Fund Financing for Green Infrastructure and Initiatives

  7. Examples South Africa: • The Government Employees Pension Fund (GEPF) • Africa’s largest pension fund ($138 bn AUM) • Largest investor on JSE • 5 % invested in developmental projects, mostly infrastructure: • Economic infrastructure • Social infrastructure • Economic growth and transformation • Environmental sustainability • ESG framework to measure impact Peru: • In 2009, the Pension Fund Association created an Infrastructure Investment Trust, investing only in infrastructure project debt • Managed by a company authorized by the supervisory authority, with representatives of the 4 PFAs on the investment committee • Structure believed to overcome some of the difficulties pension funds encounter in investing in infrastructure projects Source: G20/OECD Policy Note on Pension Fund Financing for Green Infrastructure and Initiatives

  8. The financialhubofsociety The financialindustryplays a keyrole in our lives. It paves theway for thegrowth and developmentunderlyingourcommonwelfare. The industry’scontribution: • Financingthechange • Private Public Partnership – sustainableinfrastructure • Responsibleinvestments • Sharingofcorecompetence ( i.e. understandingof risk and losses caused by climatechange) • Cooperatingwithgovernments and localauthorities • Raisingtheawarenessofcustomers

  9. Stronggrowthin sustainableAuM UN PRI The 6 principles We will incorporate ESG issues into investment analysis and decision-making processes. We will be active owners and incorporate ESG issues into our ownership policies and We will seek appropriate disclosure on ESG issues by the entities in which we invest. We will promote acceptance and implementation of the Principles within the investment industry. We will work together to enhance our effectiveness in implementing the Principles. We will each report on our activities and progress towards implementing the Principles.

  10. CSR/ESG in general corporatelending Who’sresponsibility? • Roleofcreditor (credit) vsroleofowner (equity) Banks’ ”modus operandi” on CSR • Hot topics: • Human rights – because business is fundamentallyaboutpeople • Climatechange – becausefinancialinstitutions have an increasingneed to understand and manageclimatechange-related risks in theirportfolios • Building competence and increaseunderstanding

  11. The Fornebu metro – a Norwegian test case • «An environmental metro» to Fornebu • Plans to build a metro from Majorstuen via Skøyen to Fornebu • Private vendors want to build, finance and maintain the metro in a 30 year period • Private financial institutions can finance the metro • Today’ssituation • 14.000 employees at Fornebu • 50 busses per hour • 6.000 residencesaftercompletion • Large businesses: Aker Solutions, Telenor, Statoil, Kværner, OBOS, KLP Eiendom, Norwegian Property, IT-Fornebu, Aspelin-Ramm • Joint funding and publicinvolvement • 500 MNOK is missing • The largestbusinesseswillprofit from a metro to FoRnebu- aretheyable and do theywant to givesomething back? • The municipalityof Bærum mayallowincreaseddensity and theprofitcan form an instructurefund

  12. …it is about leadership and culture Active disengagement Culture eats strategy for breakfast!

  13. Leadership for sustainability Sustainability is the single biggest business opportunityofthe 21st century The most important thing I have learned since becoming CEO is context. It’s how your company fits with the world and how you respond to it. Harold Lee Scott, Jr, former CEO Wal-Mart Jeff Immelt, CEO The General Electric Company

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