From challenge to opportunity

Part I

Why Sustainability?

Key Drivers

Source: CLIMATE RISKLTD

A story of uncertainty, complexity, scale and opportunity

1.  Global population growth 2.  Rising living standards 3.  Resource efficiency 4.  Natural capital 5.  Adaptation

What it Looks Like Risk and reward is peaking

Source: www.igbp.net

Part II

Primer on Complexity

Circular v Industrial Economy

Source: CLIMATE RISKLTD

Super size and connected pushes boundaries

“Circular Design” “Industrial Logic”

•  Output becomes input •  Competitive advantage •  Free market •  Adaptive

•  Output becomes waste •  Regulatory arbitrage •  Oligopolistic •  Protective

Uncertainty

Planetary Risks & Rewards

Source: Stockholm Resilience Centre

Opportunity

Climate Story so far Fuzzy science or example of complexity

Source: IPCC/Wikimedia

Part III

Market Positioning

Emerging Market Structure

Unilever

Triodos

IPCC

Exxon

UN PRI

Kering GIM

CSR & ESG

SAM

Chinese Strategic Plan

AXA

E P&L CDP Trucost/PWC

National Grid B-Team

Ecosystems services

Tesla

GIRS Rathbones

Google Apple

Abundance

Jeremy Grantham MSCI ESG

Rockefeller NSWF

Koch Brothers

Inclusive Capitalism Australia

Sweden Paris 2015

BoE Financial Stability

Papal Encyclical

GDP Russia

Republicans

IEA

Source: CLIMATE RISKLTD

Aviva

Big Picture Scenarios What happens to portfolios and business risk?

Source: CLIMATE RISKLTD

Sustainability as Mindset

1.  Sector Valuation

•  Discount rate and Net present value

2.  Company specific risks •  Dirtiest producers •  Cleanest producers

3.  Second order effects •  Debt looks like equity •  Insurance market risks

Simple “Climate Accord” Analysis

Part IV

Sustainability Proposition

Defining your Sustainability Journey Creating a process to deliver on KPI

Source: Dan Gray / CLIMATE RISKLTD

1.  Awareness: assess understanding of risks and rewards

2.  Responsiveness: set intentions for future-state 3.  Materiality: define business priorities and create roadmap

4.  Sales: deliver frameworks, knowledge leadership and products

5.  Outcome: leadership for market, employees and stakeholders

Position on the Innovation Curve Identify key client markets across the curve

Source: Everett Rogers / Wikipedia

Manage the Innovation Curve New stories and views create dynamism

Source: Mindtools.com

Part VI

Return on Sustainability

Climate Risk Value Add

CEO Competition

CIO Risk & Reward

COO Compliance

New Markets

Quality of Earnings

Governance

New Clients Product Diversity Regulation

Adaptability Optionality Reputation

Source: CLIMATE RISKLTD

Manage and Join KPIs across C-Suite

Initial Conversation

1.  Business, Portfolio and Marketing ‘Audit’

2.  Strategic and Tactical Report

3.  Outcomes from Board

4.  Engage with Sustainability Journey

Source: CLIMATE RISKLTD

Assess challenge and opportunity

From challenge to opportunity Climate Risk's mission is to enable new services based on understanding the

principles that are driving globalisation and the challenges this creates. Our service is for family offices, wealth and asset management companies and asset owners

who have a growing sense that sustainability is a strategic and global issue differentiating companies, sectors and markets. Our business is to clearly demonstrate how this new complex affects investment decisions, portfolio

management and client service as a source of value.

www.climateriskltd.com

Climate Risk Ltd

Copyright © 2015 Paul Pizzala