Promoting Sustainable Development in the Arctic Guggenheim Partners Promoting Sustainable Development in the Arctic A Private Sector Proposal for Partnership September 2015 For Internal Use Only

The Arctic: Limitless Opportunity; Significant Responsibility Shipping Energy Ocean Resources Environmental Protection By 2030, over 5% of total world trade could be routed along the Northern Sea Route. While Arctic oil production could double by 2050 under some projections, the Arctic holds vast renewable potential: wind, hydro, tidal, geothermal, solar, and biomass are all promising areas Fishery catches in the region could increase by up to 70% over the next 40 years, with even greater potential in aquaculture and the “blue economy”. The Arctic is warming twice as fast the rest of the world, a warning for the rest of the world but an opportunity for climate science and other research. Icebreakers are one of the key pieces of infrastructure in future development of the Arctic A lack of public funds is holding back the pressing need for more icebreakers, and infrastructure needs more broadly With such large infrastructure needs all across the Arctic, how are we going to do this? Sources: Netherlands Bureau for Economic Policy Analysis, Statistics Norway, Reuters, NOAA Guggenheim Partners

A Private Sector Initiative…An Unusual Partnership A large, diverse group of people and organizations are working together on a solution to Arctic development needs Norwegian Labour Party UCLA Trade and Development Canada University of Oxford Sapinda Tschudi Shipping Norwegian Polar Institute Pt Capital Guggenheim Partners University of Alaska Fairbanks The Polar Journal COSCO Statoil Ministry of Foreign Affairs, Republic of Korea Ministry of Justice, Japan Barclays Royal Dutch Shell CSIS Norwegian Shipowners’ Association New Eurasia Foundation Greenpeace Protect Sápmi Guggenheim Partners

Promoting Sustainable Development in the Arctic Step 1: The Arctic Investment Protocol Guggenheim Partners

Step 1:The Arctic Investment Protocol A Code-of-Conduct for responsible economic development in the Arctic Helps ensure private sector organizations do the right things for the right reasons Intended to be measurable as a series of goals against which we should be evaluated Intended to hold us accountable to a pragmatic set of goals Responsible Arctic development should adhere to six main objectives Guggenheim Partners

Objective 1: Build Resilient Societies through Economic Development Create jobs, promote capacity building and encourage local ownership Promote the United Nations’ Sustainable Development Goals through infrastructure investment Infrastructure Quality and GDP per Capita by Country Source: WEF, IMF Guggenheim Partners

Objective 2: Respect and Include Indigenous and Local Communities Arctic people should be engaged in an inclusive dialogue on the practical benefits from economic growth; development should not be imposed from afar Unemployment Rate in Arctic Regions Arctic Region National Unemployment and living standards are worse in many Arctic regions than in the rest of the country Source: Patchwork Barents, Knoema, BLS, Statistics Canada, Statistics Greenland, Bloomberg. Guggenheim Partners

Objective 3: Protect and Preserve the Complex, Diverse Environment of the Arctic The Arctic environment is changing rapidly. As such, investment without environmental concern will not succeed. March 2015 Surface Temperature Anomaly vs. 1951-1980 Average Source: NASA Guggenheim Partners

Objective 4: Practice Responsible and Transparent Business Practices Report and address impacts and implement an agreed grievance policy Responsible development is an obligation. The Arctic Investment Protocol is built upon the following principles: International Finance Corporation Performance Standards on Environmental and Social Sustainability – guidance on how to identify risks and impacts, designed to help avoid, mitigate, and manage risks and impacts as a way of doing business in a sustainable way. UN Principles for Responsible Investment – international network of investors committing to incorporate environmental, social, and corporate governance issues into investment analysis, decision making, and ownership. World Bank Group Environmental, Health, and Safety Guidelines – technical reference documents with general and industry-specific examples of Good International Industry Practice. Contain the performance levels and measures normally acceptable to IFC that are generally considered to be achievable at reasonable costs by existing technology. Guggenheim Partners

Objective 5: Consult and Integrate Science and Traditional Ecological Knowledge Modern science can help us understand the future of the Arctic region, while traditional knowledge provides us an understanding of the past and of man’s interaction with the Arctic environment September Average Sea Ice Extent With rapidly changing ice conditions, science and traditional knowledge must be relied upon to understand this new environment. Source: National Snow and Ice Data Center. Guggenheim Partners

Objective 6: Global Cooperation and Best Practices Only with a diverse group of stakeholders can we strengthen global cooperation and collaboration and obtain a commitment to best practices in the Arctic region Governments Universities and Research Organizations Indigenous Groups Private Industry International Organizations NGOs This does not imply endorsement of the work of the Global Agenda Council. Instead, this represents those organizations who have been consulted in it’s development. Guggenheim Partners

Promoting Sustainable Development in the Arctic Step 2: The Arctic Infrastructure Inventory Guggenheim Partners

Step 2: The Arctic Infrastructure Inventory An authoritative and exhaustive database of infrastructure needs in the Arctic Highlighting the most pressing needs for the Arctic region, as well as gaps and overlaps in infrastructure plans Identifying investment opportunities Value of Potential Arctic Infrastructure Projects by Country Total Arctic Infrastructure Needs Approach $1 Trillion Source: Guggenheim Partners. Guggenheim Partners

Promoting Sustainable Development in the Arctic Step 3: The Arctic Permanent Investment Vehicle Guggenheim Partners

Step 3: The Arctic Permanent Investment Vehicle Matching the demand from long term, patient capital with the urgent need for investment in the Arctic, particularly in infrastructure. Investments by this new institution will be guided by the Arctic Investment Protocol Potential models include regional development banks, infrastructure finance companies, and development funds High degree of interest from pension funds, sovereign wealth funds and insurance companies with long term investment horizons and need for stable returns Regional Development Bank Model Source: IFC. Guggenheim Partners