------------------------------------------------------------------------ Issue 32 September 2004 http://www.unepfi.net/ebulletin (PDF Version) "With globalisation, we have seen a shift in rights. Today, economic power lies very much with the private sector rather than the public sector. And with those rights, there are certain responsibilities we must take on," - Martin Hancock, Chief Operating Officer for Westpac in London - EVENT OUTCOMES 1. RISKS OF WATER: A BUSINESS CASE FOR FINANCIAL INSTITUTIONS ACTIVITIES 2. LAUNCH OF THE SUSTAINABILITY BANKING IN AFRICA REPORT MEMBER SHOWCASE 3. WESTPAC ARE SUSTAINABILITY LEADERS FOR THE 3rd YEAR RUNNING 4. NEDCOR’S INCLUSION IN THE DOW JONES SUSTAINABILITY INDEX FOR 2004/2005 EVENT WIRE 5. EU EMISSIONS TRADING 2004 6. 6th ANNIVERSARY TBLI CONFERENCE 7. DISCOUNT FOR UNEP FI SIGNATORIES FOR BUDAPEST CONFERENCE 8. HONOURING AFRICAN INVESTMENT NEWS 9. INSURANCE COMPANIES ESCAPE HURRICANE CHARLEY RELATIVELY UNSCATHED EVENT OUTCOMES 1. Risks of Water Scarcity: A Business Case for Financial Institutions On Tuesday August 17th, during the World Water Week in Stockholm, financial institutions, development agencies and stakeholders met to discuss the preliminary findings of the study, Risks of Water Scarcity: a Business Case for Financial Institutions which was carried out in a collaboration between the Stockholm International Water Institute (SIWI) and UNEP Finance Initiative. The project was supported was supported by the Swedish International Development Agency (SIDA). Among the key findings of the report were: - Water scarcity can become, if not already, a considerable source of risks to projects and investments. The corporate sector needs to assess this fact and work together with society to make progress. - Assessment of water scarcity risk must be included in project planning, business projections and business opportunities due diligence. - A collaborative approach with relevant stakeholders can build credibility, trust and much needed partnerships to anticipate and mitigate risks. - Financial institutions need to understand how water scarcity will affect their core businesses and that of its business partners. - Water supply problems can open a window to improve operational performance and efficiency. This can give a company a competitive advantage on its peers and this is an investment opportunity for financial institutions to propose sustainable improvements which can benefit business and water sustainability. After the presentation of the project, the meeting continued with an open dialogue with the different participants, which covered key issues such as: - Are water issues an issue for financial institutions? - How to deal with these risks. How can the financial sector get involved? - How can financial institutions become more active in financing infrastructure? - Are Environmental Impact Assessments sufficient to mitigate water related risks? The insightful inputs from the different participants is greatly appreciated and will be included in the full UNEP FI - SIWI report of the study, expected to come out at the beginning of Q4. A key message for financial institutions is that they need to become actively engaged at different levels to reduce water related risks, engaging with relevant stakeholders can be an empowering tool. Interested financial institutions and other stakeholders can still contribute to this project by sharing their experiences on how water related risks in their regions has affected their financial exposure. For more information, please contact: Johan Kuylenstierna: johan.kuylenstierna@siwi.org or Alberto Pacheco Capella: alberto.pacheco@unep.ch ACTIVITIES 2. Launch of the Sustainability Banking in Africa Report A Sustainability Banking in Africa Report, covering five countries, will be launched on September 21st. A special reception has been organised at Nedcor Offices, Johannesburg, South Africa to launch this benchmark report at the end of the first day of the African Institute of Corporate Citizenship (AICC) Convention (September 21-22nd). The report, produced by AICC Centre for Sustainability Investing, in association with UNEP FI African Task Force and supported by IFC, Finmark Trust, Nedbank and Deutsche Bank, outlines the challenges and opportunities for developing more sustainable banking practices in Africa. Through the support of case studies from South Africa, Botswana, Kenya, Nigeria, Senegal and Malawi, it is hoped that this report will encourage active debate around the principles and practices of sustainability banking in Africa, and will pave the way to uncovering strategies and opportunities unique to the continent. For more information on the launch of the Report please contact: Christina Wood, AICC: c-wood@mweb.co.za MEMBER SHOWCASE 3. Westpac are Sustainability Leaders for the 3rd Year Running A recent report by SAM identified UNEP FI member Westpac as a global sustainability leader. The report stated - "Westpac continues to be the sustainability leader on a global scale and improved its performance compared to last year. The company has underpinned its strong commitment towards sustainability by formulating responsible business practices driven by the Social Responsibility Committee at board level and integrating those values into its Code of Conduct as well as its Risk Management at the very core of its business processes. As a result, Westpac benefits from an excellent corporate culture aimed at avoiding conflict situations with customers or other interest groups. The company's reputation management allows that potential crisis situations are identified at an early stage while seeking pro-active solutions. This is clearly benefiting Westpac's shareholder value." To view the report: http://www.sustainability-indexes.com/djsi_pdf/djsi_world/CompanyBiographies/Bios05/CBR_Westpac_Banking_05.pdf Following on from the announcement of Westpac’s first place, UNEP FI Steering committee member, Martin Hancock, COO Westpac London, gave an interview to Ethical Corporation Magazine in which he said "Everybody likes bank-bashing. It’s an international pastime everywhere," says Hancock, who knows better than most, having spent 25 years working in one bank or other. "Some of it is legitimate, some of it not. The difference with us is that we chose to listen." Ask why and Hancock will tell you the expected line from a chief operating officer: it was all to do with business basics. Westpac’s senior management recognised that sustainability wasn’t going to go away. Business logic demanded they do everything possible to keep customers, regulators and other stakeholders on side. Put the two together and you have the reason for a wholesale re-orientation of the bank’s governance and management around sustainability principles. To read the full interview: http://unepfi.net/ebulletin/interview.pdf This interview is from Ethical Corporation Magazine 4. Nedcor’s Inclusion in the Dow Jones World Sustainability Index for 2004/5 Nedcor has become UNEP FI’s first African signatory to be included in the Dow Jones Sustainability Indexes (DJSI). Launched in 1999, the DJSI are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide. Based on the cooperation of Dow Jones Indexes, STOXX Limited and SAM they provide asset managers with reliable and objective benchmarks to manage sustainability portfolios. Currently 52 DJSI licenses are held by asset managers in 14 countries to manage a variety of financial products including active and passive funds, certificates and segregated accounts. In total, these licensees presently manage 2.8 billion EUR based on the DJSI. Dow Jones was one of the predecessors for the JSE Socially Responsible Investment Index launched in South Africa earlier this year. This is the first time that Nedcor has been included in this Dow Jones Index, and it is one of only 4 South African companies included, together with Barloworld, Bidvest Group and Standard Bank. Nedcor are also one of only 28 banks worldwide to make the index. For further information contact: Justin Smith: JustinS@nedcor.com EVENT WIRE 5. EU Emissions Trading 2004 Brussels, 20 & 21 October 2004 This conference, from Environmental Finance Publications, will provide an in-depth examination of the EU Emissions Trading Scheme - the implications for industry and the environment, outstanding problems/concerns, prospects for trading activity and carbon prices. PLUS case studies from major affected companies. For Further Information visit: http://www.environmental-finance.com 6. 6th ANNIVERSARY TBLI CONFERENCE Amsterdam, 11 & 12 November 2004 Brooklyn Bridge is celebrating its 6th anniversary of the TBLI Conference! The event will take place in Amsterdam, at the Beurs van Berlage, on the 11th and 12th of November 2004. The focus of the 2004 Triple Bottom Line Investing Conference is TBLI and Growth. How is TBLI growing and what are the drivers? What are the risks and opportunities? This year, we are giving special attention in the program to the daily SRI-issues for asset management, banking, and insurance industries covering topics such as: the Equator Principals and environmental risk assessment; financial sector initiatives dealing with climate change, and a round-table discussion panel involving the top pension fund leaders in Europe that are opening up their large funds to SRI. There will be more cutting-edge research on Socially Responsible Investment (SRI) and Fund Performance, measurements on the social and environmental Return on Investment (ROI) for financial capital and the outcomes of foundations and NGO's, Managers from world's leading sustainable private equity funds discussing their experiences and all current developments on Carbon Finance, Corporate Governance, FDI, Microfinance, Public Policy and SRI. We will have Open Thematic Salons to allow attendees to further explore topics, network, and stimulate discussion about TBLI. For more information visit: https://www.tbli.org/index.php?referer_code=unep 7. Discount for UNEP FI Signatories for Budapest Conference Budapest, 27 September 2004 UNEP FI and SEFI are hosting the Renewable Energy Finance Workshop on September 27, 2004 in Budapest. The workshop will bring together banks, venture capitalists and project developers to discuss financial aspects of renewable energy projects. During the conference the newly formed Central and Eastern European Task Force will be launched and a new UNEP FI signatory, OTP Fund Management will sign the UNEP FI statement. 8. Honouring African Investment The Ai Investment Awards will honour the achievements of the private sector, governments and multilateral agencies working to improve Africa’s investment environment. The awards, to be announced at the African Business Congress on 19th November in Dakar, Senegal, will cover categories such as International Business Leader, African Business Leader and Business Woman of the Year. An important focus of the awards is the commitment to sustainable development with the Best Initiative in Support of the Millennium Development Goals and the Sustainability Investing in Africa Awards. Other categories include Privatisation Programme of the Year, Infrastructure Deal of the Year and Venture Capital Deal of the Year. For a full list of categories and information on the nomination procedure please visit the Africa investor website http://magazine.africa-investor.com/awards.php or www.africa-investor.com. Alternatively you can e-mail awards@africa-investor.com to request a nomination form. The closing date for nominations is 30th September 2004. NEWS 9. Insurance Companies Escape Hurricane Charley Relatively Unscathed Hurricane Charley was the worst storm to hit the US in over a decade, but the cost for insurers will be around $7.4bn, less than the initial estimation of $10-14bn for total damage. It is still America's second most expensive hurricane ever after Hurricane Andrew, which devastated the US 12 years ago and left a bill of about $22bn. The experience of hurricane Andrew in 1992 taught the insurance companies a lesson, leading them to change their practices to ease the financial damage. Admittedly, some of the companies left after that disaster, but the bigger ones stayed, and changed the way they insured people and property. In addition, they off-loaded much more of the remaining risk to re-insurers, and, as a result, the industry as a whole spread the risk far more widely. Government has also intervened with the state of Florida setting up the Hurricane Catastrophe Fund to help pay for repairs. Finally, the hurricane was not as bad as expected, and certainly not as damaging as Hurricane Andrew. Swiss Re, the second-largest reinsurer in the world, expects its claims related to Hurricane Charley to be below USD 200 million before tax, a manageable sum. While some insurers and reinsurers are likely to suffer losses in the short-term, the long-term outlook is much more positive as the impact can be absorbed, and the impact on large insurers is manageable. 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