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 Vision 2050: Around nine billion people live well, and within the limits of the planet Source: World Business Council for Sustainable Development, Vision 2050

The pathway to Vision 2050

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

A good match Demand 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 Supply Importance of pension funds relative to the size of the economy, 2010 (Assets under Management % GDP) Pension funds total: $ 28 trillion in assets Long term investments Sustainable investments Source: G20/OECD Policy Note on Pension Fund Financing for Green Infrastructure and Initiatives

Barriers Lack of political commitment over the long term Lack of infrastructure project pipeline Fragmentation of the market among different levels of government Regulatory instability High bidding costs Problems with government support for infrastructure projects Lack of expertise in the infrastructure sector Problem of scale of pension funds Regulatory barriers Short-termism of investors Lack of investor capability Negative perception of the value of infrastructure investments Lack of transparency in the infrastructure sector Misalignment of interests between infrastructure funds and pension funds Shortage of data on infrastructure projects Problems with investment conditions Source: G20/OECD Policy Note on Pension Fund Financing for Green Infrastructure and Initiatives

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

The financial hub of society The financial industry plays a key role in our lives. It paves the way for the growth and development underlying our common welfare. The industry’s contribution:  Financing the change  Private Public Partnership – sustainable infrastructure  Responsible investments  Sharing of core competence ( i.e. understanding of risk and losses caused by climate change)  Cooperating with governments and local authorities  Raising the awareness of customers 8

Strong growth in sustainable AuM 1.We will incorporate ESG issues into investment analysis and decision-making processes. 2.We will be active owners and incorporate ESG issues into our ownership policies and 3.We will seek appropriate disclosure on ESG issues by the entities in which we invest. 4.We will promote acceptance and implementation of the Principles within the investment industry. 5.We will work together to enhance our effectiveness in implementing the Principles. 6.We will each report on our activities and progress towards implementing the Principles. UN PRIThe 6 principles

CSR/ESG in general corporate lending Who’s responsibility?  Role of creditor (credit) vs role of owner (equity) Banks’ ”modus operandi” on CSR  Hot topics:  Human rights – because business is fundamentally about people  Climate change – because financial institutions have an increasing need to understand and manage climate change- related risks in their portfolios  Building competence and increase understanding

«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’s situation employees at Fornebu 50 busses per hour residences after completion Large businesses: Aker Solutions, Telenor, Statoil, Kværner, OBOS, KLP Eiendom, Norwegian Property, IT- Fornebu, Aspelin-Ramm Joint funding and public involvement 500 MNOK is missing The largest businesses will profit from a metro to FoRnebu - are they able and do they want to give something back? The municipality of Bærum may allow increased density and the profit can form an instructure fund The Fornebu metro – a Norwegian test case

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

Leadership for sustainability Sustainability is the single biggest business opportunity of the 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. Jeff Immelt, CEO The General Electric Company Harold Lee Scott, Jr, former CEO Wal-Mart