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Financial Impacts of Environmental Trends i S th d S th t A iin South and Southeast Asia

Shally Venugopal | [email protected]

• Non-profit, environmental research institute

• Based in Washington, DC, with international offices

• Works closely with public and private sectors• Works closely with public and private sectors

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• Forward looking, predictive

• Close collaboration with (institutional) investors and corporations

• Intelligence on environmental trends policies consumer• Intelligence on environmental trends, policies, consumer preferences and their financial impact

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Emerging Asia Equities Research Reports

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Ignoring the Elephant Riding the Elephant

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Key Trends in South and Southeast Asia: Water Scarcity, Climate Change, Energy Insecurity

Water Scarcity: Dire situation for most of India

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Climate Change Impacts

Flood Hazard Drought Hazard

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Energy: Growing supply-demand gap

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Risks by Major City in South and Southeast Asia

N ti lNational

SECTOR #1: Power GenerationOver Heating: Water Constraints on Power Generation in AsiaOver Heating: Water Constraints on Power Generation in Asia

Recent water impacts on power generation

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Current production capacity in water scarce areas

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79% of new Indian capacity in water stressed/scarce areas

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A recipe for water risk

1. Increasing water stress and scarcity

2. Fastest growing power demand in world

3. Dominance of water dependent power technologies

4. Investors taking on more riskg

5 Tradeoffs between environmental priorities

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5. Tradeoffs between environmental priorities

Financial Impacts could be significant

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Water risk varies by type, location, and business model

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Limited disclosure ask companies questions

• Is the plant in a water scarce region? Is the water source dependent on seasonal water flows?

• What is the plant’s water usage? What water reducing technologies are in place?

Can load losses and power outages from water shortages have a financial impact? For example, will such events violate the terms of power purchasing contracts?

• Are shareholder returns protected; will they be going forward?

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SECTOR #2: Food & Beverage ProcessingWeeding Risk: Financial Impacts of Climate Change and Water Scarcity

Trends on Asia’s Food and Beverage SectorTrends on Asia s Food and Beverage Sector

Business Risks by Value Driver

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Estimated Magnitude and Likelihood

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Potential Magnitude of Financial Impacts by Subsectorag

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Example: Sugar Crops

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SECTOR #3: Commercial Real Estate [DRAFT]“Surveying Risk, Building Opportunity”

Assessing Building Exposure Factors (Location)

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Water Scarcity Map

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Severity of Power Shortages in Indian Cities

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Assessing Building Vulnerability Factors (Design)

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Green building mitigation potential

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Positive returns on green investments

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Project and Company Risk Evaluation Process

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Discussion Questions

• Do you consider environmental issues when analyzing a company?

If h t t f i ?• If yes, what types of issues? • If no, why not?

• Are there situations where you suspected an impact but could not prove it?

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