Fortis Investments 19 February 2008 | 1
Sustainable Performance Strategies:
Asian Environmental Solutions Strategy
Stewart Armer, Head of SRI, Fortis Investments
TBLI Asia
Bangkok
30 May 2008 Designator | author
May 20081

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Why Asia Environmental Focus Now?

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Asia Environmental C ontext
ENVIRONMENTAL ENVIRONMENTAL ENVIRONMENTAL ENVIRONMENTAL
PRESSURES INFRASTRUCTURE STRESS POLICY
CHINA VERY HIGH VERY POOR EXTREME EMERGING
INDIA VERY HIGH POOR VERY HIGH DEVELOPING
VERY
JAPAN HIGH EXCELLENT MODERATE
DEVELOPED
AUSTRALIA HIGH GOOD MODERATE DEVELOPED
WIDER ASIA HIGH POOR GROWING EMERGING

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What are the key Sustainability issues in Asia?
Environment Social Governance
! Water Scarcity ! Rising Food Prices ! Transparency &
Disclosure
! Air Pollution ! Social Access & Poverty
! Shareholder protection
! G H G Emissions ! Human / Labour Rights
! Non compliance with
! Natural Resource ! Product Safety environmental and
Depletion social regulation
! Urbanisation
! Waste Problem ! Bribery & C orruption
! Demographic Change
! Eco-Toxicity
Sources: Fortis Investments

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Fortis Sustainability Radar
How do sustainability issues develop?
Fortis Sustainability Radar™
Growing
Political/ Voluntary
Media Codes
Attention
Strong
Scientific
Some Evidence
Scientific
Evidence Legislation
Calls for in place
tighter
legislation
Sustainability
EMERGING MOMENTUM ESTABLISHED
Issues
Sources: Fortis Investments

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Fortis Sustainability Radar
Sustainability dynamics: Developed Asia
Greenhouse Gases (E)
Nanotechnology (E)
Water Scarcity (E)
Air Pollution (E)
Biodiversity (E)
Food Crisis (S)
Asbestos (S)
Waste (E)
Sustainability
Issues
EMERGING MOMENTUM ESTABLISHED
Sources: Fortis Investments

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Fortis Sustainability Radar
Sustainability dynamics: Emerging Asia
Greenhouse Gases (E)
Nanotechnology (E)
Water Scarcity (E)
Air Pollution (E)
Biodiversity (E)
Food Crisis (S)
Asbestos (S)
Waste (E)
Sustainability
Issues
EMERGING MOMENTUM ESTABLISHED
Sources: Fortis Investments

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Transition to Sustainability
Application of different policy instruments
INCENTIVES
Subsidies Japan
Grants, Feed-in-tariff, etc
China
Fiscal Incentives
Tax credit, sales tax, etc
Procurement
Public investment, loans, etc
Consumer Choice
Labels, product info.
Mandatory targets
Targets, tradable certificates
Mandatory Standards
Specifications, bans, etc
Effective Enforcement
Effective penalty regimes
PENALTIES
EMERGING ESTABLISHED
Sources: Fortis Investments

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Fortis Sustainability Radar
C ompany response
Fortis Sustainability Radar™
PRODUCT Companies with products or
STRATEGIC services that solve the
problem
INcluded
BEST
Companies who achieve
PRACTICES competitive advantage through
better practices
WORST
PRACTICES
Companies with a defensive EXcluded
or minimalist approach
Sources: Fortis Investments

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Fortis Sustainability Radar
The Investment O pportunity Zone
Fortis Sustainability Radar™
Business INVESTMENT
Response O PP ORTUNITY Z O NE
PRODUCT
STRATEGIC Sustainable
Winners
PARAMETERS ARE PARAMETERS ARE
BEST
NOT CLEAR – VERY CLEAR –
PRACTICES
TOO EARLY TOO LATE
WORST
PRACTICES
Unsustainable
Losers
Sustainability
EMERGING MOMENTUM ESTABLISHED
Issues
Sources: Fortis Investments

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Asian Environmental Strategy
Business Fortis Sustainability Radar™
Response
Asian
PRODUCT
STRATEGIC
Environmental
Strategy
BEST
PRACTIC ES
WORST
PRACTIC ES
Sustainability
EMERGING MOMENTUM ESTABLISHED
Issues
Sources: Fortis Investments

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SRI Investment C entre

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SRI Investment C enter
Leverages on Fortis Investments´ global platform
International SRI
Committee
40 dedicated
Investment Centres:
Japan
China,
Indonesia,
Emerging Equities, etc.,

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Asian Environmental Strategy

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Water Focus: China
Severe water crisis
! China is facing a water crisis of daunting scale as a result of
water scarcity, pollution linked to rapid industrialisation,
urbanisation, and a poor record in enforcing local
environmental regulations.
! Although China ranks sixth in the world in terms of water
resources, its per-capita water resources are only 28% of the
world’s average ranking it among the 13 lowest countries in the
world.
! More than 70% of the water in five of China’s seven major river
systems is unsuitable for human contact, according China’s
State Environmental Protection Agency (SEPA). Less than
50% of the Chinese population is connected to sewerage
systems.
Sources: Fortis Investments, www.china.org.cn, Citi Group, Credit Suisse

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Water Focus: China
Radical policy shift to ensure clean water
! The government has made the securing of drinking water Drinking water quality survey of 118 cities in China
resources a top priority and plans to significantly raise fines for
water polluters. The security of drinking water and purification
of key rivers and lakes, were highlighted in the country's 11th
Five-Year Plan (2006-10) of Environmental Protection. Key
highlights include:
– The Chinese government has pledged to make safe
drinking water available to 160 mn rural residents by
2010 and clean drinking water to all of China’s rural
residents by 2015.
– A total investment of Rmb1 trn (EUR 92 billion) has been
set aside to address the water issues including water
Source: Ministry of Water Resources Chine
supply, waste water treatment, water reusage, sewage,
and water environment protection over 2006-10 (see
graph). Investment by Chinese Government Rmb 1tn between 2006-10
– A steady increase in tariff rates to promote awareness of
conservation and efficiency of water and wastewater
treatment fees.
! Another draft regulation released in November 2007 saw the
maximum fines for individuals or companies that discharge
highly toxic pollutants into drinking water resources raised by
five times to Rmb 500,000 (source: Xinhua News Agency).
Sources: Fortis Investments, www.china.org.cn, Credit Suisse

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Water Focus: India
Increased demand for water technology
! India has 16 percent of the world's population, 2.5 percent of
the land mass and 4 percent of the world's water resources.
These limited water resources are depleting rapidly while the
demands on them are increasing.
! Drinking water supplies in many parts of India are intermittent.
Transmission and distribution networks for water are generally
old and badly maintained, and as a result, are deteriorating.
Estimates reveal that by 2020, India's demand for water will
exceed all sources of supply.
! India is heavily dependent on ground water resources, which
has led to extraction levels creating water shortages. These
resources have also reached unhealthy contamination levels as
a result of the pollution associated with the region’s economic
development and dependence on fossil fuels. As result, there is
an increasing demand for water technology that can help
improve the supply, distribution and quality of India’s water.
Source: Fortis Investments

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Water Focus: Australia
C oping with increased water scarcity
! Australia is vulnerable to climate change because of its natural
water scarcity. Following a number of years of well below
average rainfall, much of Australia is officially classed as
“drought”. This can be seen in the graph which highlights water
levels in the Murray-Darling Basin C atchment, which accounts for
about 40% of Australia’s agricultural production.
! Agriculture and food & beverage industries are negatively
impacted by increased water scarcity. Water infrastructure and
technology (e.g. desalination) companies benefit from increased
government action to tackle the water problem.
! Beginning 2007, the Australian government launched a ten year
plan to ensure water security totalling A$ 10 billion (see graph).
Recently, the new elected government in Australia has
committed a further A$ 1bn for investment in desalination
projects, stormwater harvesting, and increased wastewater
recycling and this will be linked to a series of tax credits, rebates
and loans.
Sources: Fortis Investments, JP Morgan, Australian Federal Government

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Air Pollution Focus: China
Deadly air pollution in urban centres
! World Bank research has found that 16 of the world’s 20
most polluted cities are in China and about 750,000 people
die prematurely in China each year as a result of air
pollution in large cities.
! The Chinese government is concerned that the
environmental crisis will lead to social unrest. The 2008
Olympics in Beijing is adding international pressure to the
situation.
! The Government’s five years environmental protection plan
targets that by 2010 75 percent of China's large cities will
enjoy more than 292 days of good air quality (air quality
level II or better) every year. In 2005, the percentage was
69.4. Measures include stricter emission standards for
industry and cars.
! Beijing is leading the way amongst Chinese cities. By
2006, Beijing had spent Rmb 9.7 billion, 3 percent of its
G DP, on environmental protection since it won the bid to
host the G ames in 2001. According to the monitoring
results on air pollutants, the density of nitrogen oxides,
carbon monoxide and dust particles in 2006 had dropped
by 23 percent, 8 percent and 19 percent compared with
that of five years ago.
Sources: Fortis Investments

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Clean Energy Focus: Japan
Global leader in solar technology
! Japan has established iteself as world leader in
environmental technology including clean air /
water technology, eco-efficient materials, and
renewable energy.
! Japan has become the world leading exporter of
solar technology. With Sharp as the global leader
Kyocera, Sanyo, and Mitsubishi are all
positioned amongst the top ten cell
manufactures (see graph)
! The photovoltaic industry has been growing by
more than 40% p.a. over the last five years
driven legislation to promote renewable energy
as response to climate change and energy
security concerns.
Sources: Fortis Investments, Deutsche Bank estimates 2007 ( Graph) , Cheuvreux

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Clean Energy Focus: China
Rapid growth in renewable energy
! China’s energy consumption has risen by 11.2% C A GR
during the past five years, making China the second-
largest energy consumer after the US. China is set to China’s development plan for renewable energy
overtake the US to become the world’s largest energy
consumer soon after 2010, and even earlier is set to
become the world’s largest carbon emitter.
! China’s renewable energy expansion is driven by energy
security concerns, the climate change challenge, and
providing access to energy in remote areas.
! On 4 September 2007, the Chinese government
published its guideline for Renewable Energy expansion.
It aims to increase the use of renewable energy sources
(including hydropower) to account for 10% of total
energy consumption by 2010F (from about 7.5% at
present) and further to 15% by 2020F.
Sources: Fortis Investments, DB Research

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Clean Energy Focus: China
Main beneficiary from growing C ER market
! China is the main producer and beneficiary of C ertified
Emission Reductions (C ER) trade. Verified emission
reduction projects undertaken within developing
countries that have ratified the Kyoto Protocol are able to
claim C ERs for sale into various emissions trading
schemes.
! While the cost of producing a C ER can be as low as a
couple of euros, the sale prices achieved within the
global Kyoto or regional European trading schemes have
reached more than €20. This creates a significant margin
opportunity for many operators of G H G-emitting plants
within China to participate in emissions abatement,
despite the lack of local incentives to take part in efforts
to tackle climate change.
! In May, the World Bank and IETA estimated an overall
carbon market size of $30 billion 2006. More recently
IETA has commented that carbon emissions trading will
probably double to at least $60 billion this year.
Sources: Fortis Investments, Citi Group

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Clean Energy Focus: India
Growing global player wind energy
! India has a goal of installing 10% of all added electric power from
renewable energy sources, or at least achieving an installed
capacity of around 10 G W by 2012.
! India is already one of the top global players in terms of installed
wind capacity, with around 4,200 MW in 2005. Further capacity
of 2200 MW are planned until 2010. India has also become one
of the leading manufacturers of wind turbines.
! India plans 5000 MW capacity addition through “non-
conventional” energy sources under the XI plan (2007-2012). As
part of this India is focussing on deployment of its hydro energy
potential through both large and small scale schemes. Providing
access to energy in rural areas is a key priority in terms of
reaching India’s development goals. The government is
focussing on both solar and biomass energy generation.
! India is also behind China the second largest beneficiary of C ERs
(C ertificate of Emission Reduction).
Sources: Fortis Investments, Goldman Sachs, SustainAsia

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Clean Energy Focus: Australia
New political momentum
! Prime Minister Rudd’s first act as new leader was to
announce immediate ratification of the Kyoto Protocol which
followed at the UN Climate Change conference in Bali
(December 2007).
! Australia has the highest per-capita C O2 emissions in the
world and expanding the cost effectiveness of clean energy
will be critical to meet targets to cut greenhouse gas
emissions by 60% by 2050. Specific election pledges were:
A$500 million Renewable Energy Fund - to develop,
commercialise and deploy renewable energy in Australia.
A$240 million Clean Business Fund – to help business and
industry deliver energy and water efficiency projects, with a
focus on productivity and innovation.
! This change of the political landscape will benefit Australia’s
emerging biofuels industry and innovative green product
solutions such as bioplastics (see pictures).
Sources: Fortis Investments

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Clean Energy Focus: Wider Asia
Policy Infrastructure for Renewable Energy
Feed-in-tariff Tax reductions or Public loans / Renewable Energy Target
credits financing
Indonesia seeks to generate 5% of its energy from
Indonesia \" \" renewable sources by 2020.
Korea has a renewable target for electricity generation
Korea \" \" \" of 5% by 2010.
Malaysia seeks to generate 350 MW renewable energy
Malaysia \" \" by 2010. Main potential is biomass based on palm oil.
Main goal is to increase self-sufficiency to 60% and to
Philippines \" \" double renewable energy capacity to around 5G W by
2013.
Government focuses on waste to energy, biomass
Singapore \" \" cogeneration, and solar power offering up to 50%
public financing for innovative projects.
Taiwan has a target of achieving 10% from renewable
Taiwan \" \" \" energy by 2010.
5% of all new capacity must come from renewable
Thailand \" sources. Main projects are using biomass, such as
sugar cane and rice husks.
Sources: Goldman Sachs Research, Fortis Investments

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Clean Energy Focus: Wider Asia
Forecasted solar and wind capacity additions
Solar Energy - Wind Energy -
Forecasted capacity additions until 2010 Forecasted capacity additions until 2010
Rooftop solar has potential as the island’s geography means Total wind potential estimated at just 448 MW. No clear
Indonesia
that grid connection is difficult. government guidance or targets available.
628 MW 2250 MW ( by 2012)
Korea Government has budgeted W1.9tn for R&D, subsidies, and Government has budgeted W1.6tn for R&D, subsidies, and
feed-in tariffs until 2012. feed-in tariffs until 2012.
Energy C ommission state limited grid connection for solar, Energy C ommission state that wind potential is not high due
Malaysia
but rooftop programs could be important. to low average wind speed.
392 MW
But plans to become key manufacturer. Cypress Sunpower
Philippines Department of Energy estimates a total 76,000 MW of
opened a US$ 300 mn plant in 2004.
potential wind energy.
Has plans to install 50,000 m2 of solar thermal capacity by
Singapore Wind is not considered a viable source of energy.
2012. Seeks to become a solar manufacturing hub.
2,049 MW
20 MW
Taiwan Strong potential in Taiwan Strait: Taipower plans a further
Actively promoting innovate solar PV systems.
546 offshore turbines between 2010 and 2020.
142 MW 52 MW
Thailand Environmental groups believe Thailand has potential to Government does not consider wind as priority due to low
provide 30% of energy needs from solar by 2020. wind speeds.
Sources: Goldman Sachs Research, Fortis Investments

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Clean Energy Focus: Wider Asia
G eothermal potential in Indonesia and Philippines
! G eothermal resources range in temperature and depth Installed and expected geothermal capacity
and are used mostly for direct heating and electricity
generation.
! The Philippines and Indonesia have great geothermal
potential due to their geological context. The Philippines
already has a lot of geothermal capacity, so most of the
growth is planned in Indonesia. Taiwan also plans to
develop additional geothermal capacity, but this is very
small in comparison.
! Asia’s major suppliers of geothermal generating
equipment are based in Japan (Fuji, Sumitomo).
Sources: Goldman Sachs Research, Fortis Investments

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Energy Efficiency Focus: Australia
Rich in coal seam gas (methane)
! Australia has one of the largest supplies of coal seam
gas. C oal seam gas (predominately methane) is a
natural gas found in coal deposits and is one of the
cleanest burning fuels. In Australia, coal seam gas is
predominantly used by gas-fired power stations to
generate electricity and it creates less than half of
greenhouse gas emissions of equivalent coal fired
power stations.
! The Australian government is increasingly supporting
clean coal solutions. The new government announced it
will commit A$50 million from the existing Clean C oal
Fund towards the establishment of a pilot gasification
plant in Queensland, supporting the development of
integrated coal gasification and combined cycle power
generators
! China and India are the world’s second and fifth biggest
energy consumers, and both see coal seam gas as key
to long-term energy needs.
Sources: Fortis Investments

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Energy Efficiency Focus: Taiwan
Growing Demand for LED Technology
! Global energy consumption is forecasted to grow White LEDs: Expected market development by application
by 53% until 2030. Rising energy prices and tighter
regulation on greenhouse gas emissions will key
drivers for energy efficient technologies in different
industry sectors.
! White LEDs make the production of lighter and
leaner electronic equipment possible, and can be
used to illuminate larger surface areas for longer
periods. LEDs have lower power consumption,
longer lifespans, and a lower environmental impact
than conventional lighting.
! Many of the leading players in the LED value
change are based in Japan and Taiwan.
Sources: Nikko Citigroup Limited, Fortis Investments

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Eco-Efficient Materials Focus: Japan
Leaner, Lighter, Stronger …
! There is an increased demand for eco-efficient materials
triggered by the search of industry to reduce their
environmental impact – e.g. insulation and lightweight
materials.
! Japanese companies are well positioned in this growing
market. For example, Japan is the world leader in the
carbon fibre market which provides ultra strong and
lightweight solutions to the airline, automotive, and wind
blade industry.
! Toray Industries and Mitsubishi Rayon are global
leaders in the carbon fibre market, which is forecasted
to grow by 20% p.a. to 2010 for the automotive and
airline industry.
Sources: Fortis Investments, C ontrium C onsulting, Freedonia Group

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Waste & Recycling Focus: Japan
Recycling high on the domestic agenda
Japan’s legal framework aimed a forming a recycling-friendly society
! Measures taken by the Japanese government have set
the stage for a move away from a society built around
high-volume production, consumption and waste to a
more recycling-friendly society.
! This has been a positive driver for recycling companies,
which are not only benefiting from the enhanced policy
framework, but also from rising oil prices (e.g. industrial
waste oil recycling, plastic recycling) and high metal
prices (e.g. precious metal recycling).
! Another positive driver is the high awareness of
environmental issues in Japan’s private sector.
Japanese companies have one of the highest uptakes
of IS O14001 (certified environmental management
standard) and this has led to increased recycling
volumes for a range of different materials.
Sources: Fortis Investments, Goldman Sachs

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Waste & Recycling Focus: China
Growing demand for waste management solutions
! China has surpassed the US as the world’s largest waste
generator driven by rapid urbanisation and rising G DP
per capita. Annual Municipal Waste G eneration has
grown 8% pa per capita between 1980-2000 compared
to 1% in the US. In 2004, 190 million tonnes were
generated, and the World Bank predicts 484 million
tonnes by 2030.
! Over 90% of waste is still dumped or land filled. In its 11 th
five year plan the Chinese government states that it plans
to invest Rmb 51.6 billion in sold waste treatment pants
between 2006-2010. Incineration will play a key role in
Chinese waste management strategy.
! The SARS incident in 2003 triggered the first national
regulation for medical waste resulting in setting up 300
medical waste disposal centers (EUR 700 million budget)
and 31 hazardous provincial waste centers.
Sources: Fortis Investments

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Asia Environmental Investment O pportunities
ENVIRONMENTAL ENVIRONMENTAL INVESTMENT
STRESS POLICY OPPORTUNITIES
CHINA EXTREME EMERGING \"\"\"\"\"
INDIA VERY HIGH DEVELOPING \"\"\"\"
VERY
JAPAN MODERATE \"\"\"
DEVELOPED
AUSTRALIA MODERATE DEVELOPED \"\"\"
WIDER ASIA GROWING EMERGING \"\"\"

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Why Asia Environmental Focus Now
! The Asian region is facing growing environmental challenges as a result of population growth,
rapid industrialisation, and natural environmental constraints.
! Governments across Asia have started to act realising that the growing environmental problem is
beginning to undermine economic growth and social stability.
! The global climate change debate is adding additional international political pressure. These
developments create a whole range of environmental investment opportunities.
! The Asian environmental investment opportunity is already sizeable and is growing fast

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