1. CSR and Sustainabilitybusiness case and what investors request May 2011, Ukraine Name: Wei Pengwww.unepfi.org Title: UNEP FI Program Officer, Central and Eastern Europe

2. Agenda CSR and sustainability issues in a larger context Why investors and financiers should care What information investors are looking for Associated challenges and opportunities 3. 4. Environmental, social and governance issues And the list is still expanding 5. 6. >USD 432 billion or 15% of financial stimulus packages tagged Green/Low Carbon 7. Sustainability & Responsibility a new investment criteria> 800 institutionalinvestors > 25 trillion USD 8. Sustainability a new investment criteria Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.Chief Executive, CalPERS, the largest public pension fund of U.S. 9.

Dow Jones Sustainability Index - 1999

Istanbul Stock Exchange Sustainability Index

Singapore Stock Exchange - guidelines for sustainability reporting

Hang Seng corporate sustainability index

Johannesberg Stock Exchange sustainability index

Environmental Sustainability Index Seoul

Shanghai Stock Exchange Compulsory disclosure on corporate social responsibility

Equator Principles 85% of global project finance volume committed to sustainability-friendly financing

UNEP FI 200 financial institutions globally committed to incorporate sustainability in investment decision-making

The Global Campaign in the Capital Market and Financial Community 10. The Global Campaign in the Corporate World

Global Reporting Initiative(GRI) standardizing sustainability reporting

UN Global Compact : over 8000 corporate member from 130 countries (human rights, labour, environment, anti-corruption)

Carbon Disclosure Project(CDP) corporate disclosure on carbon emissions, water and climate change strategies

World Business Council for Sustainable Development(WBCSD) business network for sustainable development

11. How environmental issues transform intomaterial financial risk - The CSN Case 12. Biggest and oldest steel mill in Brazil Operating in city of Volta Redonda, near Rio, since 1946 between 1946 1999, CSN generated a few impacts: * Respiratory problems among local community * Employees contaminated by toxic gases * Polluted river * Waste dumped in inappropriate locations Then in 1999, US$100 million clean-up required by govt. How environmental issues transform into materialfinancial risk - The CSN Case 13. The Hidden Risks/Liabilities 14. The Hidden Risks/Liabilities 15. The Hidden Risks/Liabilities 16. Reputational risk corporate brand at stake Banktrack Network Private finance: a public interestHow Does This Affect Financial Institutions? 17. 18. New Regulators vs Old Regulators Government

New Regulators

Employees

Suppliers

Customers

Local Communities

Investors

NGOs

Media

19. Sustainability Beats Business As Usual 20.

Key Performance Indicators on sustainability performance for specific sectors, to be identified and agreed between investors and corporations across sector

Quantitative data on KPIs that allows comparison between corporations, throughout time, and in context of new market development

Where possible, standardised qualitative data on financially material ESG factors to allow track/evaluation of performance

Channel to communicate not only with investor relations, but also directly with sustainability functions

Disclosure not only on past performance, but also on forward-looking vision and strategy which will define future value

From UNEP FI Publication: translating ESG into sustainable business value keyinsights for companies and investors, download at: www.unepfi.org/fileadmin/documents/translatingESG.pdf

What Exact Info Are Investors Looking For? 21. Sample ESG considerations- by sustainability theme

Environmental

Energy use and efficiency; carbon emissions; water use; use of ecosystem services; innovation in environment-friendly products

Social

Employees; poverty and community impact; supply chainmanagement

Governance

Codes of conduct; accountability; transparency and disclosure;implementation quality and consistency

22. Sample ESG Considerations by Sector 23. UNEP FIis a unique public-private partnership betweenUNEP and over 200financial institutionsworldwide.UNEP Finance Initiative To realise best environmental and sustainability practice at all levels of financial institution operations. UNEP FI Mission 24. UNEP FI Membership Overview UNEP FI has over 200 members globally, from banking,insurance and investment industries Categorization by Region Categorization by Industry 25. 26. UNEP FI Scope of Work

THEMES

Climate Change

Biodiversity

Water Scarcity

Human rights

INDUSTRY FOCUS

Bank

Investment

Insurance

PRODUCTS AND SERVICES

Research

Policy Recommendation

Training

Tools

REGION FOCUS

Africa

Latin America

North America

Asia-Pacific

Europe

27.

Research reports and publications

On cutting-edge sustainability issues, helping FIs identify material risks & opportunities

Sustainable Finance Training

Online courses and in-person workshops on Environmental and Social Risk Analysis, Climate Change, Corporate Eco-efficiency, Energy Efficiency Financing

Tools

Environmental Risk Briefings, Human Rights Toolkit, Environmental and Social Responsibility Observatory

Webinars and Experience-Sharing

On hot topics such as carbon finance and energy efficiency; the Clean Development Mechanism and renewable energy financing.

Global and regional events

Biannual Global Roundtable, regional events, expert workshops and roadshows

UNEP FI Activities 28. Selection of UNEP FI Publications 29.

It's not a choice between our environment and our economy;

it's a choice between prosperity and decline.

Barack Obama

30.

THANK YOU.

UNEP FI Central and Eastern Europe Contact:

Wei Peng

[email_address]

+41 22 91 78469

www.unepfi.org