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

Investing in the Future London, December 2005 Climate Change & the Financial Sector: An Agenda for Action Andrew Torrance, CEO Allianz Cornhill London, December 2, 2005

Investing in the Future London, December Agenda 1 Facts on Climate Change 2 Climate Change & the Financial Sector 3 Agenda for Allianz Action

Investing in the Future London, December Agenda 1 Facts on Climate Change 2 Climate Change & the Financial Sector 3 Agenda for Allianz Action

Investing in the Future London, December Facts on Climate Change The Facts  Hurricane activity increased - Katrina costs: $60bn for insurance industry and $470m for Allianz Group  Weather disasters are hitting Europe hard storms, 2002 floods, 2003 heat wave  Governments react by curbing CO 2 emissions

Investing in the Future London, December Facts on Climate Change The Facts Global Warming Temperature Rise over Past 100 years Source: IPCC

Investing in the Future London, December Agenda 1 Facts on Climate Change 2Climate Change & the Financial Sector 3 Agenda for Allianz Action

Investing in the Future London, December Facts on Climate Change The 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 ò Climate related risks can have an impact on all financial services

Investing in the Future London, December Climate Change and the Financial Sector New 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, re- newables, 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

Investing in the Future London, December Agenda 1 Facts on Climate Change 2Climate Change & the Financial Sector 3 Agenda for Allianz Action

Investing in the Future London, December Risk Mitigation and Investment Opportunity The 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.

Investing in the Future London, December Climate Change and the Financial Sector New 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?

Investing in the Future London, December Tackling Climate Change: A View from the Finance Sector Karina Litvack F&C Asset Management plc

Investing in the Future London, December 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?

Investing in the Future London, December 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

Investing in the Future London, December 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 ) 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

Investing in the Future London, December 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

Investing in the Future London, December 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

Investing in the Future London, December 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

Investing in the Future London, December Climate Change Risks and Opportunities Questions?