Greenhouse Gas Management Challenges The View from Sustainable Investment Julie Fox Gorte Senior Vice President for Sustainable Investment Pax World Management Corporation www.paxworld.com

Emissions Management at Pax World Issues typical for: Small firm Tenant Management of satellite offices Service provider Sector-specific issues Sector/industry standards for all firms’ management of GHG emissions Can we eat our own cooking? Actions Carbon neutral (including travel emissions) Offsets with Native Energy Member of Investor Network on Climate Risk SEC petition

Issues typical for:

Small firm

Tenant

Management of satellite offices

Service provider

Sector-specific issues

Sector/industry standards for all firms’ management of GHG emissions

Can we eat our own cooking?

Actions

Carbon neutral (including travel emissions)

Offsets with Native Energy

Member of Investor Network on Climate Risk

SEC petition

Greenhouse Gas Management Challenges: Sources of Risk Regulatory risk Litigation risk Reputational risk Supply chain risk Competitiveness Physical risk

Regulatory risk

Litigation risk

Reputational risk

Supply chain risk

Competitiveness

Physical risk

Greenhouse Gas Management Challenges: Emissions Management Flexibility: how dependent are emissions on long-lived assets? Dell & AEP examples Technology: can GHGs be replaced? Nike example Control: how much of the emissions imprint does the company control? Ford example

Flexibility: how dependent are emissions on long-lived assets? Dell & AEP examples

Technology: can GHGs be replaced? Nike example

Control: how much of the emissions imprint does the company control? Ford example

Corporate Management of Climate Risk: Sectoral Differences Source: Societe Generale

Investment View of Climate Risk Modeling Source: Societe Generale Assumptions Use imputed figures for emissions unless better information is available Auction raises the net cost Assume ability to pass upstream/downstream is typical of sector

Assumptions

Use imputed figures for emissions unless better information is available

Auction raises the net cost

Assume ability to pass upstream/downstream is typical of sector

Physical Risk

Investor Actions to Understand and Manage Climate Risk Investor Network on Climate Risk action plan Require asset managers, consultants, and financial advisors to consider climate risks Invest in clean tech Improve energy performance of real estate portfolios Urge comprehensive corporate responses to climate risk Help investors evaluate and address climate risks Expand climate risk scrutiny and collaboration by investors and analysts Push for guidance from the SEC (petition filed in 2007) Encourage companies and investors to support government action on climate policy Support policies to maximize energy efficiency Global Warming Shareholder Campaign: 68 resolutions in 2007/8

Investor Network on Climate Risk action plan

Require asset managers, consultants, and financial advisors to consider climate risks

Invest in clean tech

Improve energy performance of real estate portfolios

Urge comprehensive corporate responses to climate risk

Help investors evaluate and address climate risks

Expand climate risk scrutiny and collaboration by investors and analysts

Push for guidance from the SEC (petition filed in 2007)

Encourage companies and investors to support government action on climate policy

Support policies to maximize energy efficiency

Global Warming Shareholder Campaign: 68 resolutions in 2007/8

Investor Actions, continued UNEP FI: Asset Management Working Group and Climate Change Working Group Carbon Disclosure Project USCAP IIGCC Ceres

UNEP FI: Asset Management Working Group and Climate Change Working Group

Carbon Disclosure Project

USCAP

IIGCC

Ceres

Summary Climate change creates many sources of risk, to companies and to investors Need to evaluate each source thoroughly and carefully, and be transparent about climate risk and opportunity management Every risk is someone’s opportunity

Climate change creates many sources of risk, to companies and to investors

Need to evaluate each source thoroughly and carefully, and be transparent about climate risk and opportunity management

Every risk is someone’s opportunity