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EU Policies as Value Drivers in Environmental Technology
Silvio Mattanza - Zegora Investment Management
TBLI Conference - Paris - 16.11.2007
© Zegora Investment Management Ltd - 2007 - All rights reserved
© Zegora Investment Management Ltd. - 2007 - All rights reserved 2
Agenda
• Introduction• The 6th Environmental Action Programme (EAP)• The EAP Today• Opportunities• Conclusions
© Zegora Investment Management Ltd. - 2007 - All rights reserved 3
Zegora Investment Management
• Based in Zurich and founded in 2005• Specialized in environmental technology• Managing the Zegora Environmental Fund, a broad
environmental technology fund• The Fund’s goal is the identification of sector leaders• Focus is put on the actual environmental impact of
companies, less on formal criteria
© Zegora Investment Management Ltd. - 2007 - All rights reserved 4
Public Policy as a Value Driver
TechnologyAvailability
EnvironmentalPressure
Social Pressure
Policy-Making and Implementation
Value Creation
© Zegora Investment Management Ltd. - 2007 - All rights reserved 5
Agenda
• Introduction• The 6th Environmental Action Programme• The EAP Today• Opportunities• Conclusions
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The 6th Environment Action Programme
• Framework for the EU’s policy-making 2002-2012• Sets the priorities and guidelines for implementation
of environmental policy• The central concern is to improve the environmental
profile while maintaining the competitive position
«The 6th EAP promotes full integration of environmental protection requirements into all Community policies and actions»
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Priorities and Strategies
• The Environment Action Programme is split into four Priority Areas and seven Thematic Strategies
Climate Change
Nature & Biodiversity
Environment & Health
Natural Resources & Waste
SoilMarine En-vironment
Air PesticidesUrban En-vironment
Waste & Recyling
Natural Resources
Priority Areas Thematic Strategies
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From Research to Implementation
• Implementation of environmental policy requires completion of lengthy legislative processes
EU Law
Non-Legal Measures
Thematic
Strategy
Implemen-tation
NationalLaw
ResearchEAP
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Agenda
• Introduction• The 6th Environmental Action Programme (EAP)• The EAP Today• Opportunities• Conclusions
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Mixed Results of the Mid-Term Review
«Despite the progress made, the magnitude of many environmental challenges is also increa-sing and Europe is not yet on the path towards a genuinely sustainable development.»
• Mid-term review of the EAP concluded in Q2 2007• The EAP is still the right framework to drive progress• The implementation is broadly on track and a
significant number of actions have been taken• However, many environmental pressures are
increasing and the ecological footprint is growing
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Status and Outlook
Status Outlook
Nature & Biodiversity
Environment & Health
Natural Resources & Waste
Climate Change
CO2 and GHG reduced but 2010 Kyoto targets not met
Proposals on ETS beyond 2013 and Carbon Capture
Policies largely in place but biodiversity loss not halted
Finalize marine guidelines and combat illegal logging
Air and water policy in place but lack of implementation
Implement REACH and revise Emission Ceilings Directive
Production and consumption patterns still unsustainable
Propose procurement targets and report on ETAP progress
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Agenda
• Introduction• The 6th Environmental Action Programme (EAP)• The EAP Today• Opportunities• Conclusions
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Variety of Available Policy Instruments
Regulatory Market-Based Voluntary
Policy
• Input restrictions• Technology
controls• Output quotas• Emission licenses
• Taxes & Fees• Tradable permits• Deposit-refund
systems• Performance
bonds• Eco Liability• Subsidies
• Eco-design • Eco-labels• Eco Management
and Audit Schemes
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Sources of Opportunity
• Concrete business opportunities are mostly created at the national level based on the EU framework
EU Law
Non-Legal Measures
Thematic
Strategy
Implemen-tation
NationalLaw
ResearchEAP
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Climate Change
Nature & Biodiversity
Environment & Health
Natural Resources & Waste
Priority Areas
Opportunities at EU Level
• The Environmental Technologies Action Plan provides concrete technology driven measures across the EAP
Environmental TechnologiesAction Plan and its Instruments
• Performance Targets• Green Procurement • Market Instruments • Mobilization of Financing • Eco-technologies in Developing
Countries
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Instruments and Industries (1/3)
Performance Targets
Improve environmental performance through standards
Type Regulatory Market Voluntary
Instruments Caps & Limits
Eco-design
EMAS
Integrated Product Policy
Integrated Pollution Prevention Control
Affected Sectors
Waste, Water, Appliances, Chemicals, Food, Packaging, Industrial Plants, Utilities
Company Examples
Electrolux, BWT, Nokia, Toyota
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Instruments and Industries (2/3)
Green Public Procurement
Leading by example
Type Regulatory
Market Voluntary
Instruments Green purchasing
Life-cycle costing
BAT
EMAS
Affected Sectors
Energy, Infrastructure Services, Construction, Transport, IT Devices, Waste
Company Examples
ABB, Biffa, Veolia, Techem
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Instruments and Industries (3/3)
Market Instruments
Promote the take-up of environmental technologies and allocate cost correctly
Type Regulatory
Market Voluntary
Instruments Tradable permits
Tax incentives
Subsidies
Loans & Bonds
Affected Sectors
Renewables, Energy Efficiency, Transport, Construction, Housing
Company Examples
Vestas, Q-Cells, Rockwool, St. Gobain
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Agenda
• Introduction• The 6th Environmental Action Programme (EAP)• The EAP Today• Opportunities• Conclusions
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Conclusions
• The EAP is an EU-wide framework for environmental policy integration
• The EAP is the right thing to do but requires more focus on implementation
• Well implemented policies are able to generate significant value across many industries
• Actual opportunities are mostly created at the national level
• The EU framework serves as an ideal guide to identify trends and areas of competitive advantage
Environmental performance equals competitive advantage
© Zegora Investment Management Ltd. - 2007 - All rights reserved 21
Appendix
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Selected Links
EU Environment Homepage http://ec.europa.eu/environment/index_en.htm
EAP Homepage http://ec.europa.eu/environment/newprg/index.htm
EU Implementation Network http://ec.europa.eu/environment/impel/index.htm
Environmental Technologies Action Plan
http://ec.europa.eu/environment/etap/policy_en.htm
Ecologic - Institute for International and European Environmental Policy
http://www.ecologic.de/
European Environmental Law Website by the T.M.C. Asser
Instituut
http://www.eel.nl
© Zegora Investment Management Ltd. - 2007 - All rights reserved 23
Zegora Contacts
Company Address
Zegora Investment Management AGWunderlistrasse 478037 ZurichSwitzerland
Phone +41 44 800 80 80
Fax +41 44 800 80 83
Website www.zegora.com
Email [email protected]
Contact Person
Silvio MattanzaEmail: [email protected]
© Zegora Investment Management Ltd. - 2007 - All rights reserved 24
Zegora‘s Management Team
Dr. Kurt A. Lambert, President of the Board of DirectorsFounder of Harcourt Investment Consulting, member of the Advisory Board of the FTSE Hedge Fund Index. Doctor in Economics University of Lausanne, studies at Hofstra and University of Texas.
Benoît Bitschnau, Member of the Board of DirectorsFormer financial consultant with CSAM and corporate auditor with a multinational company. Degree in Economics from University of Lausanne, masters program in finance at the University of Lausanne.
Silvio Mattanza, Managing DirectorFormer technology consultant and contract manager with Accenture specializing in outsourcing of finance and administration processes, law degree from Universities of Zurich and Westminster.
© Zegora Investment Management Ltd. - 2007 - All rights reserved 25
Zegora Environmental Fund - Key Features
• A unique fund focused on companies offering technologies and services that benefit the environment
• Excellent investment case based on increasing importance and awareness of environmental matters
• The performance goal is to deliver superior long-term performance relative to a global equity portfolio
• Global portfolio which is broadly diversified across companies, sectors and industries
• Domiciled in Switzerland and regulated by the Swiss Federal Banking Commission
• Launched in 2006
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Why an Environmental Fund?
• High awareness of the importance of the environment
• Trend towards a greater awareness of the supply constraints of our natural resources
• Trend strengthened by increasing global wealth and education levels
• Pressure from governments, authorities and NGOs
• Companies forced to be innovative and adhere to increa-singly tough environmental standards
• Increased requirements to invest in environmental performance
Increasing demand and tremendous opportunitiesFor companies thinking ahead and focused on reducingecological footprints
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Balanced Allocation across Industries (1/2)
Primary Categories (total 70%, 5 x 4 companies, 3.50% per company) Environmental benefits are inherent in the normal course of business
Energy Alternative
Secondary Categories (total 20%, 10 companies, 2.0% per company)Realization of benefits requires outstanding environmental performance
WaterWaste & Recycling
Transport Rail
Energy Classic
Environmental
IndustrialFacilityAgriculture & Forestry
Transport Vehicles
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Balanced Allocation across Industries (2/2)
Growth CategoriesBoth significant growth potential and substantial environmental benefits
Energy Conservation
Fuel Cells & Hydrogen
Future Energy Pollution Control
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Current Fund Performance
Fund MSCI World (EUR) FTSE4Good (EUR)
Inception 14.73% 12.93% 11.94%1 Month -0.43% 0.15% 0.14%YTD 4.06% 1.81% 0.34%
Zegora Environmental FundMSCI WorldFTSE4Good
Total Return in % (EUR as of 31.08.2007)
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Risk Measures since Inception
Fund MSCI World (EUR) FTSE4Good (EUR)
Volatility 2.11 1.19 1.04Share Ratio 4.81% 7.47% 7.86%
© Zegora Investment Management Ltd. - 2007 - All rights reserved 31
Why Invest with Zegora?
Our Focus
Zegora Investment Management Ltd. is an independent boutique investment advisor focused solely on environmental, social and economic sustainability. This is our core and only business
Our PeopleThe firm has a committed, experienced and proven team in the asset management space
Our ApproachA truly unique and structured approach allows us to invest in both today‘s and tomorrow‘s environmental leaders
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Disclaimer
No Offer or AdviceThe information in this document is not intended to and shall not in any way constitute an invitation to invest in any of the investment products that appear or are mentioned, nor should the information provided be construed as advice of any other type, for example of a financial, fiscal or legal nature. Investments in any products and other transactions referred to in this document must only be made on the basis of the offering document relating to the specific investment (e.g. Prospectus, Key Features or other applicable terms and conditions).
Sales RestrictionsThe products and other transactions described in this document are destined for persons and companies with residence in Switzerland only and may not be available to residents of other countries, in particular to residents of the United States and the United Kingdom.
RiskInvestments can involve significant risks and the value of an investment may go down as well as up. It may not be possible to liquidate the positions in the relevant markets before a loss is sustained. Past performance is not indicative for future results. No assurance can be given that the investment objective of any product will be achieved or that substantial losses will not be suffered.