Stranded Assets – Live Interactive Catalyst Event

J. Carl Ganter: Hello everyone and welcome to H2O Catalyst. I’m J. Carl Ganter, director of Circle of Blue and we’re coming to you live from Stockholm and World Water Week. And we’ll get started in just a moment. And before we get into the show let me add a quick technical note, we hope that you’ve connected via the web as well. The link is in your invitation confirmation email as a reminder visit social.maestroconference.com. That’s social.maestroconference.com. And if you’re dialed in by phone, participating by voice is fine too. This is another, in a series of urgent conversation about the world’s number one global risk. Risk to supplies of fresh water around the world. And like I said, we’re coming to you today with help from the Stockholm International Water Institute. As thousands gather here in Stockholm for world water week. We’re gonna hear a few technical notes from Charlie Rebich from Maestro Conference who will tell us some of the behind the scene workings of today’s events. Charlie: Welcome everyone. Thank you so much Carl. Really happy to host this event. For those just trying to get you all logged into social webinar. We’ve had a lot of people call in and you’re also invited to participate in our visual interface. And the instructions to do that are located in a reminder email that you received two hours and twenty four hours ago. In that reminder email was the phone number to call, your six digit pin, and then a link there to the visual interface. And if you click on that, it will open in a new browser tab. And you’re welcome to upload a photo and include your name and that way we’ll actually be able to see you when we’re in the break out discussion rooms. If you have any technical questions getting in, please go ahead and press five on your phone and one of our assistants will assist you. Thanks so much Carl and we’re excited to get going. J. Carl Ganter: Awesome. Thanks so much to Charlie. And again if anyone has any questions, as Charlie mentioned, press five on your phone and we’ll actually be right with you. We can help you fix your problems. And while we take just a few moments to allow others to join from around the world, we’ve got a great registration list here. And we have a live audience here in Stockholm filtering in. We want to learn a little bit more about you. So let’s do a quick poll. You can use your keypad on your phone or your caller dashboard in your browser to answer this question. If you work in government, press one. If you work in industry, press two. If you’re an NGO, press three, and academia press four. Remember the public or other, press five. And again the question is, if you’re in government press one. Industry, press two. If you’re an NGO, press three. Academia, press four. And the public, press five. We’ll take a look here at our social screen here. Charlie, do we have that number up? There we go. See if I can adjust it on our screen here in the big room. So it looks like we have about six percent number one. Still coming in. A really nice, almost evenly split here, it’s kind of fun to do a poll to get things going here. So again, let’s get started. If you’re just joining us, I’m J. Carl Ganter, director of Circle of Blue. We’re live in Stockholm at world water week with a special broadcast. How water scarcity can strand billions of investor dollars. And if you’re not yet on the social webinar, go to social.maestroconference, it’s all one word, social.maestroconference.com. If you’re joining us on the social webinar, you can let your networks know about today’s event by sending the tweet, which should be displayed on your screen. So you also have the chance to discuss these issues live during today’s event in a special breakout group. Breakout groups with our expert guests and top journalists. And also to share your questions and comments via twitter, use the hashtag knowwater. That’s k-n-o-w water, k-n-o-w water. If, again, if you have any problems or questions, press five on your phone and someone will be right with you. Well, it’s about four minutes after the hour. So, like I said, we’re letting folks come in and join us here. We’re live from world water week in Stockholm. At Circle of Blue we assign world leading journalists, assigned to state of researchers and other support teams to help report from the front lines of the world’s water challenges. Whether it’s water and energy in China or algae blooms in the the Great Lakes or solutions coming from the greatest innovation labs around the planet. Through this series of convenings, we’re also bringing together people from around the world to explore and reveal new facets of these complicated systemic issues. Here today to talk about water, economies and stranded assets and the impacts on financial markets even, we’ll have Cate Lamb, global head of Water at CDP. And Monika Freyman, director of the investor Water Hub at Ceres. And we’ll also be joined by Michael Minelli, in the economist and co-founder the Z/Yen group in London. And we’ll also hear from Torgyn Holmgren, executive director of the Stockholm International Water Institute here. But there is no doubt that we live in a time of serious disruptions on our water planet. Here is Stockholm there’s a sense that time is running out to make urgent decisions. There are sessions here in Stockholm that range from water security and conflict zones to sustainable agriculture and climate affected regions to new models for financing the restoration of watershed systems and the survival of entire water basins. It’s true in most cases, that we’re seeing that the world’s water accounts are being overdrawn. Water economists tell us that investor balance sheets maybe off by billions of dollars, as water hungry, twentieth century technology meets the realities of a water scarce twenty first century. So that’s the basis of our reporting on the fast emerging trend of stranded assets. And Circle of Blue senior editor, Keith Schneider has been leading our team on looking at stranded assets around the world. He’s been at the forefront of this global story. So Keith, I’d like you for our audience here, to set the stage for our discussion and the breakout groups coming up. I’d like you to give us an overview of what we’re finding. Keith.

Keith: Thank you Carl. Here at Circle of Blue we tell stories. During the past eight years we’ve traveled to the frontlines on six continents. Our story is how nations contend with the confrontation between rising demand for energy and food in an era of diminishing fresh water reserves. In the last year or so that narrative of global risk has evolved to a new stage. It’s entered the realm of finance and economic loss. We’ve witnessed how water-related stress is stranding valuable assets. Mines. Power plants. Hydro installations. Big farms. The idea that valuable resources could theoretically become stranded assets gained credibility over the last three or four years. The assets that attract the most attention are fossil fuels. Carbon Tracker Initiative, a London group, published a study last year. It said that preventing global temperatures from rising 2 degrees Celsius meant keeping $2 trillion in coal, oil, and gas in the ground. Our Circle of Blue reporting on stranded assets is not theory. We are now witnessing actual examples of stranded assets. All of them are getting stranded by water-related stress. Mines. Power plants. Hydropower dams. Closed or cancelled by drought, floods, and civic rebellions. Three years ago, for instance, we were in Cajamarca, Peru. We reported on the struggle over gold mining in the northern Andes. Water supply and pollution were the cause of the opposition. Water-related social conflicts in Peru have resulted in the indefinite suspension of $21.5 billion worth of mining projects since 2010, according to the Peruvian Institute of Economics. Earlier this year Newmont Mining cancelled the development of the $4.8 billion Conga copper and gold mine. The mine was opposed by Andes farmers because four natural lakes would have been drained and replaced by manmade reservoirs. Also in April, China announced it was cancelling or indefinitely delaying construction of 200 coal-fired power plants capable of generating 105,000 megawatts of electricity. That is a lot of power. It’s equivalent to a tenth of U.S. generating capacity. Constraints on the country’s freshwater supplies, particularly in the dry northern Yellow River Basin, are among the reasons for the move. China’s decision to use less coal and reduce imports, in turn, has been a big factor in the depression in the American coal industry. Almost every US coal company is bankrupt. Billions of dollars in fuel and power plant assets have been devalued. This winter we were in South Africa. Two of the largest coal-fired power plants in the world are under construction. Both are years overdue. Tens of billions of dollars over budget. And they may not have sufficient supplies of water to operate at full capacity if and when they are completed in the early 2020s. We were in northeast India to report on villagers worried about land, water, and fishing rights. Those concerns produced a powerful opposition movement in Assam over a big new dam. In 2011 the Indian government shut down construction of the 2,000 megawatt Lower Subansiri dam. It sits half built and moldering. The trend is new. The consequences to investor losses and global financial stability are just now coming to be understood. Last year, the Prudential Regulation Authority, a unit of the Bank of England, found that big losses worldwide caused by what the authors called “natural hazard events” nearly tripled between1985 and 2015 — from 350 to 950 annually 480 of those events were related to hydrological disturbances – droughts, floods, and civic campaigns that feared the loss of water supplies or pollution. The World Economic Forum now classifies water security at the top of the list of financial risks to business. The experts on this interactive broadcast will help us understand more about the extent of water-related stranded assets. Profound ecological change is translating into dark financial risks. Our expert panelists are at the forefront of this important new story. Thanks so much. Back to you Carl.

J. Carl Ganter: Keith, thank you so much. That’s Circle of Blue’s Keith Schneider. And now we’re joined by Torgny Holmgren here in Stockholm. Torgny is executive director of SIWI, the Stockholm International Water Institute, and has a special interest in helping the world better manage its water assets, both financial and water supplies. Thanks for joining us today Torgny. Torgny: Thanks a lot, Carl. I’m happy to be with you. Let me start with the World Water Week. This year the World Water Week we just made your [inaudible 00:12:27] on water annual event in the world is focusing on sustainable growth. And why have we chosen that topic? Yes, it’s because it’s a hot point. Of course we are looking into the outcome of decisions taken last year in New York and in Paris [inaudible 00:12:44]. The future development agenda. The energies, the climate change, the financial development and our aim is to make use of this week as one of stocktaking events annually on where we are on the implementation of the global usage and the climate change agenda. So now, Let’s say we are focusing more on the refugee number eight. There growth perspective and of course the groove in the future would like it to be sustainable and water will play a key role in that process. J. Carl Ganter: Thank you Torgny. Tell me a little bit more about the investment perspective. How is that world changing? How is Wall Street? How are businesses and investors starting to look at water? You must be getting calls everyday. Torgny: That’s true. Since I joined a few years ago, I get more and more calls, actually from businesses and private sector. I think that is also what we realize worldwide that water is not a given. We know that for sure. But also there is a risk moment in this. A financial risk in those areas running out of water physically and I think that has become very obvious for most businesses as of today. So what we are now looking into the ten, twenty years, I think a number of developments and processes that need to take place. To me, the starting point is what kind of incentives would be needed to be there to direct where we would like to be. Because we all know that there’s a huge demand, increase in demand for water and fresh water resources. At the same time, it’s a fine interest source. But we know that industry and production and still agriculture need a lot of water. So we need more smart incentives to distribute and allocate water in the future and admit this of course, the business sector is a very crucial part of that. Both for businesses operation wise, but also in the global scale, the global picture. That is I think one of the current trends that we’re looking into very much at this water week and also into the future events. J. Carl Ganter: Thank you Torgny Holmgren. We appreciate that. If you have anything you want to add her during the broadcast, I know you have a busy day at Stockholm water week. Torgny: We would like to focus on finance. You need lots of finance. I mean there are estimates by the world economic forum for instance that you need some five trillion dollars in infrastructure investment and the major part of that is water. And let me conclude where I started off with the SDG’s and the Paris agreement etcetera. I mean, these are global issues but what it boils down is what’s happening on the local scale, on a national scale. So it’s just shift accounts and the businesses of the local scale who come up with the solutions, the ultimate solutions to this. So that is to me, the most important part of it. We have the global, let’s go to local and there we need finance and that is what we are going to focus on in this week. J. Carl Ganter: Terrific. Thank you Torgny Holmgren from the Stockholm International Water Institute. Thanks for joining us and thanks for hosting. Really appreciate it. Thank you. Now, let me introduce our special guest we have as I mentioned, we have Monika Freyman of series and Cate Lamb of CDP and Michael Minelli of Y/Zen in London. And I wanted to start just briefly to set the scene and again we’ll be going into breakout groups here shortly. So our listeners will be able to join our special guests and it’ll be facilitated by our journalists from Circle of Blue and John Anderson another financial reporter in London. In these breakout groups, a really fun dynamic way of engaging a wider conversation, I wanted to start with Monika Freyman. You’re a director of the Investor Water Hub at Ceres. It’s a non-profit that brings together investors and businesses for sustainable economies. First I want to hear a little bit more about what series is doing, but five trillion dollars? That’s a lot of money at play globally. So set us up. I want all three of you to set the scene for our breakout groups because we’ll be going into these separate sessions. Give us a taste of what we’ll hear there and what’s on your minds today. Monika Freyman: Thank you, thank you for inviting me. Too often we forget that water really is the lifeblood of economies, communities, and cities. Not only do we need it for power generation, for keeping our populations healthy and resilient. It’s also fundamental for job growth, economic development. Many of the networks we really engage with, the business community, Wall street investors across the globe are beginning to recognize that water is also very much the lifeblood of business, business practices, but also investment flows and capital markets as well. So, be it, if it’s in a business supply chain, through the need for growth of food ingredients for food companies or for mineral extraction or if it’s in direct operations or to keep the workforce healthy and your customers and community vibrant and healthy as well. Water really flows through the entire business model. So the way that series is really seeing this as an incredibly urgent issue is that we are really working with communities and business in particular around making water, not an operating issue, but a strategic business issue. More and more very high water dependent sectors are starting to realize this. So we assist them in integrating water and better water stewardship practices into their practices and we also work with the investment community. Be it the different credit rating agencies or Wall Street investors that really do want to understand their risk exposure to water as well as opportunities. From the opportunity side, what is really interesting is also that need. So there’s incredible need for more financing to fill that five trillion dollar gap. One area where there’s a lot of excitement and interest is in the developing, for example, green bond markets. It’s funneling financial flows from the investment community towards green projects. We’ve recently developed along with CDP, WRI, climate bonds initiative and aqua a standard for water projects. That should really assist in mitigating against stranded assets so it insures that if the money that investors are putting into a large infrastructure or corporations into water projects. That standard insures their climate resilient and ready for adaptation to more variability in weather patterns as well. So that’s some of the work we’re doing but we’re also very excited by the work that we have going with the investor water hub. When you stand in the streets of London and look to the glass towers or the streets of Wall Street and look to the big buildings there are increasingly analysts sitting at desks studying water. They’re not only looking at dollar signs but want to become more water aware and they’re starting to integrate water into their investment decision makings. So all work that we are integral partners with them on. So thank you again and I’ll looking forward to after the discussion. J. Carl Ganter: Terrific. Terrific. Thank you so much Monika Freyman of the Investor Water Hub at Ceres. Michael Mainelli, you’re in London and as an economist you’ve been looking at stranded assets for a long time I presume. Can you give us a few moments? Give us a taste of what’s changed in regards to stranded assets from an investor perspective perhaps? And then really, what you’re seeing and it tees us up too for your discussion group. What’s on your mind? Michael: Super. Well it’s a real delight to be invited to be on this World Water Week. So thank you very much. From our perspective, we’ve been looking at stranded assets for about eleven, twelve years. In fact, as many people did, we began looking at it coming out of the CO2 space back in 2005. We were doing some research which we called Burn It All. What would happen if you burned all fossil fuels. And oddly at that time we had great support from BP. We handed those numbers over to Mark Campenalli who started carbon tractor and the unburnable carbon report. So, been in this biz for a while. Water is a little bit more problematic though. The first thing is that, interest in water is definitely intense. I agree with the previous speakers on that. We are seeing a regular sweet of reports on water. But it’s hard to grasp, you’ve got the company specific elements. You’ve got regional specific. You’ve got something like just under three hundred water basins globally with international borders. So everything oddly becomes local. I feel a bit like Tip O’neal when it comes to water. You know, all water is local. Second thing I noticed in this space is been that unlike a lot of the natural resources it’s actually kind of difficult to invest directly in water. If you cast your mind back to the eighties when we were looking at poorly served communities the mantra was to privatize them. We found privatization was tough in two ways. Transferring the capital to private sector didn’t really achieve much without competition and water is not inherently a good area to compete in, at least in the supply of water. Unlike things like coffee or carbon and coal, it’s not an asset class in it’s own. And while you can purchase it, of course given it’s weight, it’s not really a tradable commodity. In a funny sense a lot of the areas that people have been going into have been things more like desalination and all. Rather than addressing sort of the core prospects. Further, we’ve also found that in the financial sector there’s quite a bit of risk analysis of even western water companies, for example here in the U.K. have produced results showing something like forty or fifty percent of the so called fixed assets can’t be found. Management of water has been poor over decades and this has meant that a lot of the fixed assets don’t exist in the same way they would in the electricity utility. In electricity utility, I have to close the circuit. In theory, I can close the circuit in the water company but basically most people just pour stuff in at the reservoir head and don’t worry about it until it comes out. It’’s been a very, very problematic area for a while. I think turning to our session the one area I’d like to focus on is what can we do that’s positive? The analysis is here. The interest is there. It’s highly differential. I think in some ways it’s really about giving investors guarantees. And so in our session I’m hoping with John Anderson to be chatting about ideas like policy performance bonds for water. J. Carl Ganter: Terrific, thank you Michael Minelli teasing up his sessions breakout group coming up shortly. Cate Lamb, you’re at CDP and talking about ways to address the core prospects of water. Supply chains, disclosures, understanding risks. Tell us some of the trends you’re seeing. A bit about CDP’s inclusion of water and it’s work and also maybe tease our audience a bit with what you’ll be talking about in your breakout group. Cate: Thank you Carl and good afternoon everybody again and like everybody else thank you for having me along. CDP has been working on water now for the last six years. We are an international NGO that originally started with a whole mission of preventing dangerous climate change and leveraging the power of institutional investors strive corporate, a greater corporate transparency and action on carbon emissions on their own. In 2010 we expanded our work into water security recognizing that the private sector in particular, has an awful lot to lose but also an awful lot to gain from taking a much more comprehensive and strategic approach to the way in which engages in water. We want to be seeing companies all around the world in a range of different sectors engaging more proactively in the way in which water resources are managed. And as I said, there’s an awful lot to gain from doing that. I’ve recently been working on stranded assets in particular. I like what Keith mentioned earlier about the fact the theoretical carbon and climate landscape is very theoretical. It is based on a new, perhaps a global tax on carbon. Whereas water security really is stranding assets today. We have a whole range of examples within our data set itself. Just this year in fact, we had over two and half thousand companies disclose information to us. And in there roughly twenty-five to thirty percent of those companies report that water security will constrain their growth in the next three years. Very significant and it spreads across a whole range of sectors not just those of course with really large assets that are unfortunately unmovable. So the work that we are doing at CDP is to mobilize these companies to think differently about the way in which their plans are planning to grow. Many of the growth strategies of these companies are based on fundamental assumption that a stable supply of good quality fresh water will always be available to them. What’s new today is that assumption is no longer valid. And as Monica’s already alluded to, increasing numbers of institutional investors are becoming aware of that and are beginning to grapple with the implications of that for the success of their ability to generate strong stable returns. It’s not all bad news. There are solutions of course and stranded assets don’t have to be, sorry, assets don’t have to be stranded in all cases. The way in which you avoid that of course is by pursuing water stewardship strategy or adopting a water stewardship philosophy. Which means that you consider early on the implications of water security for the project and growth trustees that you’re planning. We want to help as many companies that we engage with to make a successful transition to a more water secure future. So what I’ll hope to be exploring with Keith today, will be the way in which investors themselves are responding. The development of water risk evaluation tools for example. Expectation documents that some of the world’s largest sovereign wealth [inaudible 00:27:55] publishing in response to these issues. But also how companies themselves are adapting and responding and the role of water security and water stewardship in enabling that continued stable successful growth. J.Carl Ganter: Great, thank you. That’s Cate Lamb at CDP. Cate, I did have a question for you though. Do you have an example of a company that maybe one of your early players that really wanted this to disclose? It’s been kind of dance I imagine. Do companies want to disclose their risk, number one? That’s kind of antithetical to a lot of internal ethos. Maybe you could give us a little story? Cate: I can appreciate that. It maybe counter productive to admit that you have a problem but it’s a bit like Alcoholics Anonymous right? Your best true cover is admitting you’ve got a problem. CDP’s water program was actually developed in response to corporate demand not necessarily investor demand. The likes of Pepsi Co for example who recognize that water poses a significant threat in their supply chains and wanted to engage more of their suppliers on this issue. They saw the power of transparency on carbon as a motive or a vehicle through which they were achieving better performance themselves and wanted to see this happen within their own supply chains and on water security. With some sectors it is a little bit of a balance of course, not everybody is ready to disclose. Some people, some organizations don’t necessarily have the resources to do so. But the demand for this information is growing on a daily basis. When is 2010 we had just about a hundred and fifteen institutional investors with around sixteen trillion dollars worth of assets asking for this data. Today we have over six hundred and seventy institutional investors with around seventy trillion dollars worth of assets that use CDP to gather this information and hold these companies accountable. The conversation is so much more than risk exposure however and what these investors are really looking for, you know they appreciate the risk. It is a risky world and this is just one of many risks that companies are facing. What they’re really looking for is an acknowledgment of that risk and a plan to mitigate that and ensure as I said earlier, strong, stable, successful growth and valued creation and avoiding value destruction. So the process of disclosure in itself gives those investors the confidence that the companies are actually taking meaningful and robust action. J. Carl Ganter: Great. Great. Thank you so much Cate Lamb at CDP. Monika I want to follow up on just a couple of things. You of course mentioned supply chains, a lot of the companies are consumers assume that their product is just gonna pop out of a bag or an Amazon.com box. Tell us a little bit about, what does supply chain mean? In the water world. I’d imagine most people listening have an idea. But just explain in a minute or so, water’s role in the supply chain and how in a sense of water footprint of a particular product. Monika Freeman: Thank Carl. Often water supply risks in the supply chain are actually the bottom of the iceberg. Whereas the water risks within the company walls is kind of just the tip. So often the large water risk for businesses and investors is actually lurking in supply chains and companies are beginning to realize that and map that and understand and work with their supply chains. So for example, we produced a report recently, “Feeding Ourselves Thirsty”, where we really looked at the agricultural supply chain of major food and beverage companies listed on the stock exchanges. And recognizing that water use in agriculture is about anywhere from seventy to ninety percent of water use in that particular region. You know, agriculture is a massive user of water and crops are increasingly at risk in different commodities due to, either being grown in arid regions or regions where there is not enough water supply. With many of the aquifers becoming more depleted and much of that groundwater really being used for agriculture. So companies who take in massive amounts of commodities and ingredients are starting to really try to understand those risks and work with farmers and critical basins to be seen as partners. But also to understand where they may have to really adjust. Either they’re ingredients or soon. I think too though, there’s interesting examples of supply chain risks in many other sectors. I think an interesting example was looking at apple and our iphones, which I’m very fond of mine of course, a lot of the components such as the chips really take an incredible amount of water as well. I think it’s around a thousand liters of super clean water per microchip that is required for cleaning and production. Taiwan last year, went through a water supply crisis where they were having to truck water to a lot of the manufactures in that supply chain and that island produces a good chunk of the supplies for the apple iphone. So there again there were investor and company risk related to water that normally wouldn’t be seen. J. Carl Ganter: Great. Great. Well, thanks so much. What we’re going to do, that was Monika Freyman of Ceres. And Michael you set us up really well I think, and so we’re going to jump into our breakout groups. But first I’ll tell you again this is and H2O catalyst event hosted by Circle of Blue and the Stockholm International water Institute and we’re live here from Stockholm. So now really comes the fun. You’ve heard from three experts and some enlightening comments from the executive director of the Stockholm International Water Institute and now it’s time for you to ask the questions for our group here in our audience. As well as those tuning in. So we’re going to move you into live breakout groups with each expert guest. The choices are on your screen if you’re in the social webinar and if you’re not here’s what you do. To join Monika Freyman of Ceres, facilitated by Circle of Blue reporter Brett Walton, press one on your phone or your dashboard. To join Michael Minelli, economist and co-founder of Z/Yen, he will be facilitated by finance journalist John Anderson, press two on your phone. And to join Cate Lamb, facilitated by Circle of Blue’s senior editor, Keith Schneider, who’s been covering the issue of stranded assets very closely, press three. Again, one more time Monika Freyman of Ceres, press one on your phone. Michael Minelli economist and co founder of Z/Yen, press two. Cate Lamb of CDP, press three and Charlie Rebich from Maestro Conference will tell us a bit more about how listeners can participate and pose questions in break out groups. Charlie. Charlie: Thanks Carl. Just for a technical note, how this works as Carl was mentioning, please use your phone keypad to select your breakout group or you can also use the little raised hands icon in the social webinar bar. If you’re logged into the visual interface, by clicking on that little raised hands icon, you can select one, two, or three. And for those of you who are at a computer, you’ll also be able to move yourself between breakout if you decide to move and want to browse between the different breakout rooms. And there’s a change breakout button as well there. You can click on the breakout button and actually move yourself between the rooms, once we go into the breakout rooms. For those of you on the phone, you’ll be able to stay in whichever breakout room you select by using your phone keypad. Then in a moment here we’re getting everyone moved over into their breakout’s now as you’re pressing your numbers, so thank you for that. I will change the view here in a moment and we will go out of this screen sharing view of seeing this slide and we will be a little text editor for each breakout room that has the name of the presenter and the moderator and there will be a line there that says type your questions here, below the line. So that’s where you’ll get to type your questions, to fill them out and the moderators will be asking those questions to our presenters. So I’m just checking on our end to see that we’re ready and it looks like from my team here that we are just about ready. You have one more opportunity here just to select one, two, or three for your breakout. And Carl, I think we’re ready to go. So I’m going to go ahead and change the views and go into the breakouts, if that sounds good to you. J. Carl Ganter: Excellent. Have fun everybody and we’ll look forward to hearing the results.

Brett: Hello, my name’s Brett Walton. I’m a reporter with Circle of Blue. Monika, are you in the room here? Monika: I am. Brett: We’ll give a second or two for everyone to get settled in. Let me remind everyone who’s listening in that you’re seeing a document on your screen. That’s where you can type in questions that you might want answered during the conversation that Monika and I will have. I will glance at those and select the ones that I think are most relevant or have the broadest interest for our audience. I’m speaking with Monika Freyman. She’s working with Ceres, that works with investors looking at water and climate risk. Before we get into some of the issues that we talked about at the top, I want to make sure we’re all on the same definitional page, that we have a common language to think about these issues. Water risk, Monika. How do you think about water risk and what defines that term for you? Monika: From an investor point of view, we really see water risk as being sector-specific. It can encompass risks far beyond just water supply and water sourcing. We really view it important for investors to be asking companies or municipalities or the investment set they’re looking at to really understand the nature of those water risks. Are they physical? Is it around wastewater management? Is it around poor water governance in that area? Really understanding that. From an investment point of view, as well, the information around what percentage or proportion of revenues or assets are exposed to those risks not only now but in the future. Brett: There’s a constellation of actors in this space. You have investors. You have shareholders. You have the companies themselves, the management within the companies. There’s regulators. Do you think that all of these parties, their interest around water risk are aligned, that they have the same ideas about what is a risk and what information should be out there? Is there still some disagreement or discontinuity between all these parties in this investment space? Monika: I’m happy to report that there’s all sorts of different views and different approaches and different desires and needs, but I think it’s actually extremely helpful. I think because these issues are complex, but also they do unify us all, that there is a recognition more and more that we all do face these challenges. We think it’s good to have these different voices. For example, the sustainable investing space and the evolution to really look at water as a business and finance risk has been very pioneering and evolving. There’s been incredible work around voluntary reporting and different tools that have… and many countless thousands of hours that NGOs have been putting together. I think it’s led to, now, regulators in the financial community finally paying attention. There’s different stock exchanges, and their listing requirements are now looking at requiring particular water disclosure. The Securities Exchange Commission is looking at climate and water exposure information. None of that would happen without this constellation of voices bringing together and rising and saying that this is very much a need and this is how potentially to do that kind of analysis. Brett: One of the questions that’s come in across the shared document is something that I think a lot of people are interested in. What types of information are investors looking for, and what types of information do companies have or need to produce? Monika: As I mentioned previously, I do think it varies by sector, but I think just having that conversation around a company recognizing that they aren’t perfect and that they do have challenges themselves around water issues. I think just having that frank conversation of, “These are the water issues we face,” and really get into the weeds on is it a product lifecycle issue around, let’s say, if they’re using plastics or pharmaceuticals and impacts to water resources, or is it around sourcing groundwater or the local communities and the social license to operate? Really understanding the nature of those risks and then tying the materiality of those risks to the business. “We have so much revenue at risk or assets, or stranded assets, potentially at risk from these issues. This is how we’re working to mitigate those risks.” Brett: With some of these indicators, like revenues at risk or assets at risk, do companies have the information they need to be able to make those assessments, or is that something that Ceres can provide, or other parties in this constellation? Is there symbiosis in providing information and searching for information? Monika: There’s not enough. Certainly CDP and Catelyn, my colleague here on the other line, has been working hard to really work on corporate disclosure of different risks and this kind of data, but more and more in the past, it has been reporting volumetric use of water. Let’s say a motor company saying, “We use so many billions of liters of water a year.” Really, that is pretty meaningless information to an outside investor, so moving that conversation to being, “What does that mean and what is the context? Where are you operating? Are you competing with local communities that are having challenges around water or not?” Really bringing some context to those metrics is important. I think with anything, metrics are just an indicator of doing more research work and can provide red flags to do more research. We really do encourage more scenario analysis stress testing, potentially, to really get to the fundamental business issues of the day. Brett: Your scenario now is in stress testing. Is it something that companies are comfortable doing? Is it something that investors have had to persuade them to do more of? Monika: Certainly it’s grown in the climate carbon debate. Companies are being asked to do a lot more climate and carbon modeling on behalf of investors, and I think many companies have been doing strategic analyses and scenario planning internally. Many have not also, to be frank. I think it is divided there. I think they’re not used to necessarily having to disclose those results, and really especially not just the upside or business as usual, but also those worst-case scenarios. The work we do at the hub, though, is to also encourage investors to do the work on their own. They don’t necessarily need the companies to do that for them. There’s a whole market ecosystem of analysts and banks and chartered financial analysts across the world that are able to do this modeling, as well. When there isn’t that information, they can certainly use that proxies and do that analysis, also independently. Brett: You mentioned that these risks are sector-specific. Are there sectors that have been more active or have done a better job in assessing what the risks are? Monika: I think what really speaks to volumes to what water risks are is the fact that brand companies, food and beverage, large household brands have been the most proactive in being transparent and in starting to put water risk mitigation strategies in place and better water stewardship in place. I think they are ahead of the game, and that really does speak to the fact that water is very much also a reputational risk for large businesses and companies. To preserve the brand, to preserve the ability to go and be with communities and in communities, sharing water resources, is absolutely a massive risk that can’t be taken lightly. I think those firms have to some degree led the way. There’s also certainly large infrastructure, power generation projects, and mining companies, for example, also very water-dependent, and may have good practices at the operating level but often we don’t hear enough from those industries on what they’re doing and telling their stories to third parties enough. That’s something that Ceres is also working on. Brett: You mentioned in the intro that you want to make water a strategic business issue. Can you talk a bit more about how water becomes a strategic business issue and what you mean by that phrase? Monika: It’s the recognition that, as we said, you really have to understand the potential loss of opportunity or the potential loss of revenue. To us, that is one of the bigger risks. It’s not how much water you use, 1000 gallons a day and how much you’re paying for that volume of water. To us, the real risk is, are you able to move into India? Are you able into South Africa or other regions? Are communities going to push you back? As Keith mentioned, are you able to develop that five billion dollar mine that put into place or not? It’s really around capturing the opportunity to deploy capital, to ensure that capital is utilized, to move into markets. That is a C-suite level leadership level. Too often in the past, business leaders saw water as an engineering problem, as an operations problem, but it really is much more of a CFO, CEO-type problem. We’re working especially with water utilities in the west through a campaign called CFO Connect. That is working with water utilities and water utility financial officers to really understand and ensure that their ability to raise that, go to the bond market, having a good credit rating from the rating agencies, is really contingent also on how well they manage the revenues from water. Are they also planning for conservation and promoting conservation planning through their revenue gathering structures? Are they also planning and mitigating for climate change and weather variability? There is a connection between water, climate, and their ability to service their debts, their financial obligations. It’s very tightly linked. More and more CFOs are coming together through this network to share the learning and to recognize that they need to expand their toolkit of skills and data gathering to really ensure that water is taken into account on their business planning, as well, for water utilities out in the western U.S. Brett: For the investors that you work with, is there a different type of analysis that goes into different asset types? For example, bond markets, that might be bonds that might be exposed to water risk versus equity stakes in a company or a particular factory or asset. Monika: Absolutely, and I think that’s what’s exciting. When we started the Investor Water Hub, we had a smattering of equity folks and fixed income folks, private equity. We asked, “Do you want to split apart and go into different asset class analysis?” Everyone was like, “No, we want to hear what everybody else is doing.” There’s been a lot of peer-to-peer learning. Charlie: This is Charlie with Maestro Conference. Sorry to interrupt. We just have 1 more minute. Please take this last minute just to wrap up your questions then we’ll come back to the main room. Monika: That was fast. Private equity, for example, has been … They do a lot of due diligence around water. We found that group to really be fascinating and interesting and feeding ideas to the other groups. Fixed income, really looking at a number of different asset classes other than just companies, but looking at sovereign performance on water, looking at state level, municipal level, and realizing that investors not only have to look at the buy-sell decisions, but they have to look at their water risk across asset classes. They may be investing in a company in a water-stressed region, but they may also be lending to the city or the water utility in that region, as well. Really, to understand the synergies they have to mitigate risk across asset classes is also critical. A lot of really creative, great learning coming from this group in terms of portfolio management, how to finesse different asset class type analysis for water. Brett: I guess before we get cut off, do you see change happening in this sector, the way people invest, and the things that are getting built? Monika: Yes, we do. I’m getting a five minute warning mark, so I’m hoping we have a little bit more time. Certainly, as I mentioned briefly in my opening, I think we are starting to evolve better risk management processes, but we also do see that there is investment opportunity. As we mentioned, the green bond market, which was a tiny $40 billion last year, and for the bond market that really is tiny, looking to double this year. Within that market, those flow of funds really can start to flow more to water projects, water infrastructure, and with certification, they really can help insure that those projects are far more resilient than projects in the past. We feel those are real opportunities. Different business models that maybe look at scaling infrastructure, so the use of natural ecosystems and incrementally scaling up, let’s say, water treatment capacity versus building multi-billion-dollar projects. If you can leverage the natural resources around you, what is good then is that you can scale up, but you can also scale down. When your population shrinks, like it had in Flint, Michigan, you’re not left with extremely expensive, hard-to-maintain infrastructure. You have a much more flexible and resilient system. There’s a lot more of this creative thinking that really is linking natural services and systems to finance. I think it’s exciting days, and there’s going to be so many more ideas in this field and in this area in the next few days. Brett: Did you say the green bond market worldwide was $40 billion last year? Monika: Yes. Brett: Have any bonds gone through this new certification process? Monika: The San Francisco Public Utility Commission was the pioneer in this certification and really showed the way in terms of certification really benefits. It brings new and broader investors to their portfolio of investors that potentially will be looking at their bonds in the future. Their projects around wastewater and stormwater management were very much under the criteria in the standards that were developed by many world experts. It was really a positive development, and we look forward to many more, hopefully, in the near term. Brett: Just so we’re clear, the bond standard certifies that this project does what related to climate or water? Monika: That it is following good climate mitigation standards. There is an assessment either around the climate mitigation components of the project or the climate adaptation of the projects. That thinking has taken place. That planning, that risk assessment, that vulnerability assessment. Investors, as they’re putting their money into those projects, have a much smaller likelihood of strandings in the future. Brett: These types of certification programs, do they make a bond more attractive to investors or a particular class of investors? Monika: In the past, it’s a nascent, early market. What the bond issuers have found, and the bond traders, is that there isn’t yet a price advantage. We’d certainly like to see that eventually, but there is an advantage in terms of it tends to bring more buyers to that bond than would traditionally be there. It’s a discovery of more clients to buy your bond process. It appeals to more investors, and there are a growing number of pension funds and other large institutional investors that have put aside big buckets of money exactly for these sustainable projects and sustainable-themed projects. It potentially could really come with more advantages as the market develops. As more people get interested in the market, hopefully there will be more financial flow from investors as well. Brett: I think we’re getting ready to wrap up here, but for people interested in these issues and investor … Charlie: Hi everyone, this is Charlie again. We extended the time a little bit, but now we have 1 more minute. Just 1 more minute just to wrap up. Thanks so much, everyone. Brett: For people that are interested in these issues, what should they be looking for as the next thing to come or the next development in this space? Monika: That’s a great question. I would say looking for … There’ll certainly be a lot more information through the Climate Bonds Initiative, Ceres’s CDP website on the water standard, as well as the AGWA website. There’s also going to be guidance for issuers that are interested. If cities or corporations are interested in having a green bond come out to the market around a water project, there’s actually going to be very good guidance that will be released in the next week or two about how to go about doing this. The San Francisco PUC bond is really used as a case study illustrating how to gather that information and make certification very smooth and painless.

Michael: Thank you very much. John you over there? John: I am here Michael. I’m a little bit disadvantaged, I’m not on the webcast, I’m just on the telephone. So I’ll do my best. Michael: I will as well. I’m pretty impressed with the technology so far and it seems like you’ve got quite a large group out there. John: Should we kick off or do you want to wait until everybody’s settled in? Michael: I think everybody is there, John. Probably best to get cracking I think. I’d encourage folks to type in some questions. John: All right. I can’t see them unfortunately. Michael: Yes, okay, I’ll try to handle this. We’ve got some questions here. First one is LCA and emergy, involved with energy metrics. What role do these have in raising awareness and improving decision processes of the finance industrial government in public sectors? That’s the first question. Maybe we should probably take these, as people are developing these questions, probably take them in order. We’ve got two more, John, so I’ll try and manage time and response. John: Michael, can I interrupt you though. I’m wondering if there wouldn’t be value in just explaining what the concept of a policy performance bond is, so the people can be familiar with that and then apply it into the water industry specific. Michael: Very good, policy performance bonds arose as a concept applied to environmental, social and governance issues back in the – about 2007, 2008, that really arose along the loan finance movement in specific frustration investments in alternative energy. So one of the difficulties we would have is we would have various government ministers coming and explaining that they were all very low carbon and yet really what people found was that they were probably better off betting against the government, possibly the best strategy was a contrarian one of any time the government reinforced its emphasis on some form of technology or commitment to alternative energy you should do the opposite. So we found ourselves as we do today with ratios of 8, 9, 10:1 in terms of investment in fossil fuels as opposed to alternative energies. So the loan finance movement in its frustration pointed out that the biggest risk here was the public sector and public sector policy changes. So the idea was that a government would issue a bond that would pay differentially based on how well it followed its own policy. So if it follows its policy very well, the bond would pay very little, if it failed to follow or implement its policy, then the bond would pay a much, much higher percentage rate. Simply example of this at the time went something along the lines of CO2, the government pick whatever its target was, 25% renewable into the grid or the price of fossil fuel at the pump was really up to them, and say this is what we’re going to meet. I think the paradigmacal one that we spoke about then because of the EU commission trading system was why not say if you claimed as a government in Europe in 2005 that they would keep the price above 26 Euros a ton. If you fall below 26 Euros you would pay a percentage point on the bond, 1% say, for every Euro you were below it. The idea was to really make governments put skin in the game. This wasn’t such a new concept in many ways. Inflation linked bonds date back to Massachusetts in the 1700s. But the most modern inflation linked bond I think from memory is about 1982 under Margaret Thatcher, and an inflation linked bond is a policy performance bond. It says basically, if I fail to keep inflation under control, I’ll pay more interest on this and so people use that to hedge. So, we’re taking that hedging concept and applying it into the SG area. It’s been a slow road, I’ll be frank. The proposal was made by the city of London at Copenhagen at the comp there. But last December it got taken up fairly seriously by the French government and, in fact, I’m working with [Angelil Bougidi 00:04:04] on a book on the application of policy performance bonds, slightly tuned towards climate change, but not wholly. We’re going through examples of how this could be applied in areas, particularly with the sustainable development goals, such as water forestry, but also wider into social areas like education or housing. So I might, for example, be putting together, let’s say, a furniture plant in a developing country, I want educated workers, I want them to be reasonably healthy, and I would like to have a timber supply and a decent water supply. The government would effectively issue bonds that would start to pay egregious interest rates if they fail to provide those fundamentals for me. This is something that we feel aid agencies could work with, etc. So the idea’s been gaining a lot of traction over the last two or three years, but we’re yet to really see somebody really bite the bullet and implement one. But it certainly applies to water. Does that help, John? John: It does and one follow-up question. You signaled in your introductory remarks though, water can be problematic from this perspective. Would you see then water becoming a component piece of an overall performance hooked into things like housing and education and so forth? Michael: Yes it would and, in fact, in some ways water exemplifies a benefit through this locality, as long as that locality coincides with some sort of governmental unit. I could see a municipality issuing a bond that says we intend to have reasonable good water quality and water supply over the next five years and so if you invest we promise it. I could look at a state or a province that controlled a reasonable chunk of the water basin that was, for example implementing a water program of making sure that the banks weren’t eroding. So I think there are a lot of activity areas there that would drag businesses in and make the private sector and the public sector work together quite well. So water in some ways has some benefits, as opposed to, say, a global target on CO2 wouldn’t be very meaningful because you really don’t control it, hence, why the examples on climate change and CO2 I was focusing there on things like alternative energy into the grid, something that’s locally controlled. I think we got some benefits in the space. John: Why don’t we go to those questions? Michael: Yeah, sure. I’ll just repeat the first one. LCA and emergy, the amount of energy metrics, what rules do these have in raising the awareness and improving decision processes of finance, industrial government and public sectors? I’m trying, John, I’m afraid I’m not an expert on this technology, I’m just one of the guests. I’m trying to figure out who’s asked that so if they want to pop up or say, that would be great. But on that, my initial reaction – oh, sorry, that was from John Capece. Thank you very much, John. I’m fairly familiar with emergy, matter of fact, we at law and finance have been running some sessions with Dennis White and the EPA team out of America. I think one of the difficulty with emergy has been that the analysis is so complicated that it’s very difficult for policy makes to treat it seriously and that that’s certainly been my experience. I know that there have been some excellent pieces and reports I’ve read on the Colorado water basins and things, but it just doesn’t seem to bite. John’s asking a supplementary, thank you, John. Are there other better metrics? That’s a really interesting one, John. I think personally some of these overall gross metrics, and we did a large study with NERC, the National Environmental Research Council, here in the United Kingdom on water data. A lot of the water data that would feed some of these models or metrics is sparse, patchy, incomplete. I’ll give you an interesting example of here in the United Kingdom, we would rely heavily on something coming out of the MET office. The Meteorological Office, the UK Meteorological Office is actually an agency of the Ministry of Defense. The problem with this agency is that until very, very recently it didn’t indicate when it had altered data. It’s moved quite a bit forward from where it was only five years ago but it means a lot of our historic data they claim has never been tampered with, whereas the U.S. National Weather Service claims that something like 8% or 9% synoptic stations are tampered with every year. So a lot of this data gets very, very iffy. At a gross scientific level, that probably doesn’t prevent doing analysis but at a financial level I want to make sure that my data sources are as tamper-free as possible. Why is that? Well, bluntly, it’s because people cheat in financial services. Once they have a prime metric of some form, they are prone to abuse it. I would encourage you to think about Libor, the London Interbank offered rate scandals, which range from 2005 to 2012 and the current ongoing Foreign Exchange data scandals. I’d like to keep data as local and as small as possible and not large aggregate data sets. We’ll turn to John’s second question, which was what are restoration projects are off on a 30 to 50 year timeline like in the south Florida Everglades context, roughly the same planning horizon as serious climate change impacts. How do we promote planning approaches that address both simultaneously to avoid climate change, negating shorter term oriented water planning investments? Well, I think one of the biggest difficulties here is who’s taking on which risk. Water restoration projects affect virtually all water projects are on very long time frames. In London we’re still dealing with Victorian delivery and Victorian sewage, taking it away. Investors, if they’re going to price these things keenly, need to take the long timeline into account. Then they have to take into account going back to policy performance bonds, the political risk, what is the regime going to be 50 years from now in London, let alone in some slightly less stable areas on the world. Am I actually going to get a return on my investment? Even within the 30 to 50 year time line that we’re talking about here looking forward, we can go backwards and see a nationalized water industry and a huge number of changes and ex-appropriation of assets. So I think this leads to the classic paradox here is how do we make long-term decisions that we stick with. Within those long-term decisions we want to have a low discount rate to encourage people to invest. But on the other hand, we the public electors have the right to change our mind at any time and this leads analysts into all sorts of problem areas. So what we’re trying to do in the policy performance bond area is to increase that policy certainty over the longer term. It does mean, on the other hand though, that you’ve got to find ways that, people would call it anti-Democratic at the extreme, I disagree. I think if society has made a decision today and they’re asking other people to come and invest in it and if society needs to change its mind, like I’ve put in a water project and it turns out that the standards that I set were too low and i need to up them, that needs to be shared out 40 years from now when we decide that we would like to have a system with less loss. I find this one of the problems in life. We’re very, very good democratically at making decisions, in fact, we get up and make a new one every morning. The problem is what ones are we going to stick with and do we compensate people if they go with one of our long-term decisions and we need to change our minds. John is coming back, as well. I’m not an economist but maybe I can cite what may be a policy performance bond type example in which the state contracted to buy land for water pollution treatment, the Everglades Agricultural Area, and paid for the purchase option. The company’s collected the option payment, then worked against the purchase politically, buying elections, etc., and have won. This is just one local example. It was seen as an example of an indirect bond. I think you’ve got a very, very good point there, John. I think you’ve got an excellent point. It’s definitely a type of example there, the buying of elections, but I think it’s an interesting one. Then he goes on, how can guarantees for water be achieved when uncertainty and mother nature’s delivery is not reasonably quantifiable? I think it goes back to the risk point. The idea here is that there are risks coming ahead to do with climate change, to do with the ultimate amount of precipitation that falls in particular areas, and it’s really about how we share them. So if we say that the private company is completely responsible for this, this delivery, regardless of what mother nature does, then they’re going to charge overly much for it. John, you still there? John: I’m still here, Michael Michael: I’ll just move slightly forward then on John’s point in 40 seconds. Corporations supported by government gaming or most environmental and water issues, how do you establish credibility? I agree that gaming and, in fact, I was pointing that out in my comments on libor and FX is absolutely crucial. But I think avoiding that, I think one of the problems, of course, is how do we bring out anything that’s new? If we don’t bring out new policy instruments the support things and change behaviors, we’re not going to get very far. So I think that’s just one of those paradoxes. I think the final point, John, you and I should chat sometimes, you’ve got great questions, would adaptive potential be a better metric than water availability to a company? I think that’s a very, very good idea of a metric, what is the company capable of delivering if things come in at the front end and things come out at the out and the government takes responsibility for the risk of variable precipitation and takes responsibility for setting the demand estimates going forward in the future? John, did you want to close for down to a minute? John: No, I just appreciate your remarks in explaining the whole concept of the performance bonds. I also think it’s interesting, the comparison of getting the appropriate metrics so that the system is not gamed. I also think it’s interesting that we’re looking at making decisions that have such long timelines that requires probably more sophisticated risk analytics than we have today. I thank you, Michael. I’ve found that interesting and I hope everyone else did as well. Michael: As John has kindly pointed out, that the questions are weaving a bit here and other people’s questions are there so my apologies. John, bask in the glow, and other folks. I’m sorry if I’ve been unable to give you due credit. Charlie: And gentleman, I think we’re going to have a bit more time actually to be here in breakout groups. So if you want to address more questions, maybe another four or five more minutes. John: Michael, let me ask you a question if I may, and that is what is going to have to happen ultimately for the acceptance of these policy performance bonds? Is it one sovereign undertaking them or what’s going to have to kick this whole bond market off? Michael: Yeah, in discussions, I think there are probably three avenues and it’ll be quite related I think to some of the remarks that were made I believe earlier by Monika or Cate with regards to “green investment”. The first thing is that there could be a government with its back to the wall. So, for instance, when Dominica had the hurricane come through and was looking quite poorly, one of the things that was being discussed was would they put forward a policy performance bond on their move towards sustainable energy, for example. When your back’s to the wall and historically that has been the only hard example we have, which is quite a large one, inflation linked bonds work. It was only when Britain couldn’t get loans because it had failed to tame inflation for nearly 20 years, that Margaret Thatcher was compelled to issue a bond with that sort of a rider on it. Same thing happen in Sweden, I think from memory, in the early 90s when the Swedish government had a financial crisis. People believed that inflation would go through the roof and they too issued inflation linked bonds. Panic and back to the wall is one. I think the second thing is the aid agencies. I believe a lot of aid could be tied to this. Let me give you an example of say an area that’s got severe water shortages, is actually putting forward a whole bunch of plans to trim water, some of which the outside can’t monitor, so reducing demand, increasing reservoirs, reversing loss. In some ways, you don’t care how they achieve it. Too much of our aid has historically been tied to how you do it, not to the target. So somebody could say, well, what we’re going to do it meet SDG6 on water supply, we guarantee X number of liters per family member, say 5 years from now you can judge us on how we’re doing over time. How they achieve that is kind of up to them. The third area, of course, is PR and marketing. One could see a fairly well off government issuing such a bond really to set an example. We have had a few discussions, not on water, but on things like alternative energy and transportation from leading centers. I won’t name them because it is somewhat sensitive. But these are typically kind of northern European centers who are looking at ways that they can help by leading by example and proving that such a bond is not technically a problem, it’s more a question of the usual things you do when you look at any financial asset, which is credit, operational risk, regulatory risk, reputation risk and will the thing actually generate a return. All those things can be tied to it. So just to wrap up, again, back to the wall, a government needs to do it to get the sort of moneys in that it requires to get a major project underway. Two, aid agencies. Three, effectively a helpful marketing pitch from some well off jurisdiction. John: Very good. Do you have any other questions on your plate at the moment? Michael: Well, there’s quite a few here. I think the biggest one that we’ve got here that we haven’t really addressed is how do you really monitor bond expenditures. I hope I sort of touched on that, that one of the things that I’m trying to push here is that you don’t want to be monitoring the expenditures. Too much has been done on the expenditures. I’ll give you a kind of forestry example. If we look at, Haiti … Charlie: Hi everyone, this is Charlie again. Just wanted to – we extended the time a little bit but we now have one more minute. Just one more minute to wrap up. Thanks so much everyone. Michael: I’ll finish that Haitian example. If we look on the other side of the island we see it heavily forested, on the other it’s not. Very easy bond to monitor. We can do this with basically via satellite on rough forestation levels. Imagine that the government of Haiti, in conjunction with some aid agencies, issues a bond on reforestation, which also would help water quality, and this was tied to, say, every percentage point of forestation is going to go up for 20 years. We can look at that and if they fail to improve from where they are, 20 years from now this bond is paying 20%. Well, I’d really like it. But actually, the ways that they might achieve that is through education, better policing and removal of illegal logging, so whole bunch of things that could be done that aren’t really financial investments. So where the government spends that, better roads and schools and houses and what have you, is really up to the government. Is it meeting its targets that matters. So I’m not as fussed about the bond expenditure as I am about … Charlie: Okay, everyone. This is Charlie. Sorry to interrupt everyone. We just want to bring everybody back here before the top of the hour. We call public mic now and we’ll do a little bit of a review form what was just talked about in the breakouts. After you, Carl.

Keith: That presentation that you made was awesome, really interesting. This whole call has been really awesome. I’ve learned so much. I was wondering if you could help us understand actual instances of stranded assets that you’re encountering through your work. I have a bunch of mines and power plants. This just came at me about a year ago when we were in India. These power plants aren’t being built or they’re being closed down. The Lower Subansiri Dam in Assam. Who’s losing money here? What’s happening financially in this realm? I was wondering if you could help us identify a few more examples of how stranded assets are affected here. Cate: Yeah, I’d be happy to, Keith. As you say, when you list the later assets, it’s quite amazing what you find. There’s a whole range of assets that you’ve already mentioned. Particularly the value in the mining and metals sector seems to be very materially affected at the moment. [By gold? 00:01:24] of course very famous example. It’s currently announced it’s suspending construction of its Pascua Lama mine in Chile over concerns about local groundwater pollution. It’s important to recognize in this project it’s not that there wasn’t enough water there. It wasn’t that the well ran dry and the company had to stop. The company couldn’t provide the regulators with the confidence that they would be able to manage and reduce the potential impact of the wastewater that was being produced. They would come out of this just fine. The mine was already under development when it happened to Shell. The company had already spent $5 billion just to begin excavating the mine. Now they had been Shell’s and there is $27 billion worth of gold and silver stuck in the ground that was on the balance sheet of course for gold. And so the valuation of that company has been affected. Investors are increasingly concerned about this and there are a number of lawsuits Barrick Gold are now facing. Related to a failure to disclose adequate information about this risk in this particular instance. The company has just settled. In fact I think it’s maybe in June this year, a $140 million worth of US lawsuits from US investors. But their legal woes aren’t over. There are a group of Canadian and European investors that are now pursuing legal action against the company. There are a range of these instances where Rio Tinto and Anglo American, PHP Bilton have walked away from their mines. And because of water leakage issues the costs in some cases definitely outweigh the benefits. It’s a similar story of course in other sectors. We have the power generation sector as you mentioned. There is also particular risks [inaudible 00:03:24] an example that those from the US will be familiar with power generation companies. Who report that increasing water regulation or tightening water regulations at the Creek plant in New Jersey. Led the company to consider one, the financial implications of meeting these new regulations. And the company established that it would cost them $800 million to install a new closed cycle cooling tower for the site. And so rather than making that investment they took the decision to close the plant down ten years early. That is not an easy decision to make of course. And the company reports that there are potentially her sites that other may be exposed to this new regulation. And they’re currently establishing what the implications of this new regulation could be. I have an example of a drowning asset. I’ve coined the phrase drying and drowning assets. And it’s not only – Keith: I like that, yeah. Cate: It’s not only the lack of water perhaps that is causing a challenge for some companies. It is actually an inundation of water that is causing some challenges here. Particularly the case I’ve got here from Anadarko Petroleum. Who disclosed that the floods that happened in Colorado one of their most productive and important fields of fracking that lead to a closure in the sense of over 75 vertical wells. Now the cost of that was not disclosed by the company at the time. But I did a little bit of digging around and they according to Nobel Energy industry estimates the average revenue loss per well [inaudible 00:05:16] just on a daily basis between $40,000 to $70,000 per day. So multiple that by 75 and over a period of perhaps a week. Well you can do the math. It’s a significant material loss. Keith: Is it Colorado flood or some sort of inundation? Cate: It was a flood. Keith: A flood in Colorado shut down a well field. Cate: Yes that’s right. Keith: When did that happen? Cate: This was in 2013. Cate: The company was prepared. They had anticipated that this was going to happen. So it was their choice to shut the wells down, of course. So they anticipated where this was going to happen and where. Pretty much prepared for it. But of course there was little they could do to control the floods. And the waters came and they took the hit, the closure of those wells at the time. I think the revenue loss equates to somewhere between $189 million to $331 million per week at those average industry revenues. Keith: Wow. We have an interesting question here. I’d love to ask you one more. But I’m going to go to some of the question I see on the screen here. I have a question here that says are investors holding countries and governments accountable for their water management plans the way they’re holding companies accountable. I live in the Colorado river basin and I’m concerned that laws and policies here aren’t taking into account 21st century holistic management principles. Cate: That’s a great question. One of the reasons why we’re in the state we’re in with regards to water management is because of course it has been poorly governed as a result of geography. The assumption I mentioned earlier that a stable supply of good quality water is always available. Is not just an assumption made with the corporate wells. Unfortunately it has been an assumption made across many governments, regional, national, and statewide of course as well. As a result there’s increasing pressure from governments to act. Now whether the ability for an investor on an individual basis to hold countries and individuals accountable for water management practice and plans is perhaps less clear. There are risks of course associated with that. But they do often invoice two calls for improved water regulations in key regions. And we’re seeing the private sector doing the same thing. So private sector water use is coming together to lend their voice. The best and more effective water governments because they recognize that a serious lack of water governance is ultimately one of the driving factors for their risk exposure. To give you an example in the US, the SEC, the security and exchange commission have a reporting standard for climate related risk in data. That will require companies to disclose relevant information in their annual reports about the risks and opportunities they’re facing. The idea being that this transparency, this demand for disclosure will increase corporate performance overall. Unfortunately the efficacy and implementation of that particular piece of legislation has proven less than ideal. And so investors are currently contributing to a consultation on that front to ensure the SEC plays its part and a much stronger part in enforcing legislation that often exists. Keith: Well in the United States oversight of water is really powerful in irrigation districts around the country. Irrigators really know what’s happening. In the Midwest we see them, and in the Great Plains we see that. On the state side not seeing as much governance and oversight with the exception of the Western states, California in particular. Next question here, any consideration of carbon as an asset or liability and a market to regulate it. We have huge problems and you mentioned some. There’s a liability in the market. Cate: Yeah I think we’ve alluded already to the previous work that is being led by carbon tracker. Understanding they’ve got available carbon. Where could they be doing and how we as a society cannot afford to bear carbon and other fossil fuel assets that remain in the ground. And the mechanisms for dealing with that. Of course posing questions, investors are posing questions to the companies that actually own those assets to understand what they’re doing to avoid the banning and consumption of those fossil fuels. Well it’s proving to be successful to a certain extent and of course it poses a challenge to companies in that sector, whose [inaudible 00:10:22] is essentially based on the banning of those fossil fuel assets. When it comes to water security however a key thing again alluding to the point you were making earlier. Is that water as it drys up try to make fossil fuel assets is something that is extremely interesting. They actually while it’s coming into force whether the companies like it or not it’s not a regulatory driven driver of course. Companies are failing to anticipate this change will unfortunately be the ones who will be lost, who will be the losers in this space. With regards to markets to regulate carbon as an asset I can’t necessarily talk to that extensively perhaps you can take that one yourself, Keith, I’m not really sure how [familiar 11:11] with that area. But we know that with the Paris agreement that was signed and ratified it had been ratified by a number of companies so far. Hopefully maybe the US at some point in the near future there are plans to encourage and look at new ways in which carbon can remain in the ground and we can avoid dangerous climate change. Through the reduction in carbon and other greenhouse gas emissions of course. Keith: My work on that is discouraging. There’s so much money still being poured into coal fired power plants [inaudible 00:11:49] which use tremendous amounts of water consuming drawing it down. Cate: They do but you know on that point a key thing WRI I think it was completed a scale analysis that indicates there’s about 1,200 coal fired power plants proposed for construction across a range like 59 countries. As you mentioned a huge capacity for power generation. But interestingly if you look the majority of that development is slated and more than three-quarters of the capacity slated for development in India and China. Both of those countries rank second and eight respectively on the WRI’s water stress index. So what was the question, the viability of that, right? Keith: The coal fired sector is there’s something like 1,200 proposed and then other studies say half of them have already been cancelled over 2010 to 2015. So a trillion dollars proposed to be spent, but it’s unclear how much will be spent. There’s so much transition in that sector. But the point is that, yes, India, China, Indonesia, Turkey, Philippines, there’s a lot of coal fired power plant proposals. Let’s get back to another thing, there are to [lay 13:14] questions here I think. What sort of innovations are happening in the water sector to resolve these issues? And then how how are you helping the people you’re dealing with to respond and resolve their issues? How are you helping them and change their management? So what’s happening that looks promising and how is CDP helping to change managing practices? Cate: Yeah, sure, thank you for that question. Charlie: Charlie with Maestro Conference. Sorry to interrupt we’ve got one more minute, just one more minute. So wrap up your questions and we’ll get back to the main room. Cate: Well I’ll talk very quickly. Innovation yes there are techniques in innovation of course. But I find them less exciting than the innovation of collaborative action. As I mentioned earlier in the past companies were very passively engaged in water management within the rim basins that they were engaging with and buying from and that has completely changed. The private sector is now being viewed as taking the initiative to collaborate more positively in the decisions around the way in which water is governed. We’re seeing a whole range of collaborations whether that’s business to business or maybe it’s cities and businesses. Which is really great. With regards to the actions or the way in which companies support moving from or at least being seen as one of the bad guys. The questionnaire itself provides a framework for positive improvement for those questions companies may not have not asked themselves before. That in and of itself sparks dialogue of course within those companies that will enable them to progress. In addition we score and rank benchmark every single company that responds to us. Each company when they do disclose they receive a score and a benchmarking report that will highlight the strengths and weaknesses overall. We have extensive guidance, webinars, workshops, events where we bring the companies together to share best practice. Just last year we launched a data portal. I should leave a link a little bit later on in this presentation where we share all of the best practices that existed in our data set. We do also however have extensive engagement with the investors themselves to ensure that they fully understand the risks you get playing a zero sum game. Companies are not, some companies are still not performing very well, but some of them are. They should be encouraged and motivated to continue on that path. Keith: Very quickly how concrete are water related standard assets? Cate: There are a range of tools out there including WRI’s aqueduct that will enable you to undertake scenario assessments of future water stress scenarios. The blue bag session yesterday they’ve created a water risk valuation tool which now sits on the 300,000 Bloomberg terminals. Which allows investors and anybody else, actually I’ve accessed a terminal. To establish whether an asset may be stranded and what the implications of that might be for a share price. I would recommend getting your hands on the WRI’s aqueduct. They’ve created a 2030 scenario based on IPCC projections. You can put in details of where certain assets may be and see the level of exposure that maybe a water asset may be facing. As I said earlier however that doesn’t necessarily mean that the asset will be stranded. It completely depends on whether the owner of the asset is aware of the situation that they find themselves in. And are taking a water stewardship proactive collaborative approach to engagement on water resource management. Keith: Awesome, thanks so much for participating today. And for downloading so much of your knowledge. I certainly hope we’ll meet sometime in London. Cate: Absolutely, yes, it’s a beautiful city. Keith: Yeah, and as you’re traveling the world think of Circle of Blue and [inaudible 17:18] can help also, the journalist’s viewpoint about what’s going on in the world of water resources. Cate: Absolutely. Cate: We really appreciate the efforts you’re taking to keep in and supplying the best guidance around this issue. We’ll be looking forward to working with you more on how we can focus on the solutions for this issue of course as well. Keith: One more thing. Other journalists and outfits that are following this closely water related standard act. Cate: There are yes. So we got Anthony [Correa? 17:50], Thomas Reuters, at breaking views. He’s been doing some work on this issue. And so to the Financial Times, [Pinella? 18:00] over there has done a huge piece actually on water and the ability for water to strand assets. I would recommend if you’re not already following those guys on Twitter to do so and to Google some of the work they’ve been doing on water, it’s really very interesting indeed. Keith: You said you’ve been in this for 6 years did you say? Cate: CDP has yes. Which is we’ve really seen the issue grow and raise in importance in the boardroom but also of course on Wall Street and the city of London of course as well. We are on the cusp I think of real transformation and transition. A piece of work that we’re doing at the moment for example is looking at the role of water security and it’s role in underpinning our industrial low carbon transition. The whole other area that we haven’t had an opportunity to talk about today but fundamentally water is climate right. Many of the low carbon transition plans that governments, countries, and companies are assessing the NDC’s that all of the countries submitted as part of the Paris climate talks depends on a stable supply of good quality fresh water in order for them to be successful. If you take for example the use of carbon capture storage is viewed as essential to ensuring that sector transitions to a low carbon business model. Carbon capture storage however is incredibly water intensive. We’ve done some research at CDP that indicates that in the future 34 percent of the assets of 12 of the largest [main? 19:40] companies are going to be located in extremely high water stress areas. Now this is coming at a time when we’re about to increase their dependence on this resource so they can become low carbon. I think it [crosstalk 00:20:04] Keith: One more minute. We have a question here. Are there any companies you would consider standouts in terms of ethical, sustainable use of water? Cate: Yeah another great question. There are a small but growing number of companies who are taking leadership in this space. As I mentioned earlier we score and rank companies on their water use, water stewardship and of course on their transparency efforts. We released for the first time in 2015 our global water reports and the results of their scoring. To have a water A-list in the sense that highlights who the companies are. You can download a copy of that report from the responsive CDP and from our website. But in that list there’s Colgate-Palmolive, there’s Ford Motor Company. It’s actually an interesting number of miners, Harmony Gold and [Combian? 21:12] Ore.

J. Carl Ganter: Thanks everybody. We still have a ways to go here. Just getting started. So I hope you’ve all had some dynamic conversations in your breakout groups. Lots of fun. I had a chance to surf them. Some really great ideas and provocative thinking. Really on the verge of global water challenges. So first what we’re going to do is, is we’re going to do, we’re gonna have our journalists facilitators in each breakout group give us a sense of what the topics were. What some of the highlights were give us a sense of report out. And then we’re going to come back to our three expert guests and have a conversation. You’ll have a chance to, in a larger group, ask questions, either on your screen. We may have the opportunity and time to take a few questions live as well. But we want to carry on this conversation, we have until the bottom of the hour. We have another thirty minutes to go. So if I can call on our journalists to give us an idea, a sense of the flow. What were some of the big ideas? So let’s start with Monika’s group and that was facilitated, Brett Walton, you were in Monika’s group. Correct? Brett Walton: I was there Carl. J. Carl Ganter: Excellent. Give us an idea. What happened? Brett Walton: Yeah, we started out by talking about this constellation of the actors that are in the financial world. We have shareholders and companies and managers within the companies and investors and regulators. And how it seems to be that there’s a recognition among all these actors that water risk is a growing and necessary challenge to address. There’s a lot more to be done with gathering information at the company level and then within the supply chain level looking at how much revenue does it risk. What types of assets are at risk. And a lot more can be done by companies and them being funded by investors to do that. One of the encouraging things Monika, she’s developing, is green bond standards. So this will be away to ensure that projects have smaller chance of being stranded. Showing that there’s some climate ready, climate smart investments out there. Those standards were developed this year and the first project to go under the certification of the San Francisco public utilities commission on some of their water investments. That’s an encouraging movement going forward is that there are investors that are doing things to ensure that there are projects that are ready for the twenty first century. J. Carl Ganter: Great thank you. That was Circle of Blue’s Brett Walton. Now in Michael Minelli’s group, that was facilitated by John Anderson. John, give us some of the top lines, some of the highlights, what you heard. John Anderson: Thank you Carl. I think we started out with just a description of the concept of a policy performance fund. Which allows the government pay a lower premium on its debt if it is in fact meeting specific targets and the whole idea of a policy performance bond goes back away to when both the U.K. and Sweden had to issue inflation link bonds, just given the runaway inflation in those countries at the time. Michael made the point though and it follows on from his introductory remarks, that given how crucial and essential water is in any kind of development, that you could have policy performance bonds that could address more than just water. But could address things like education and housing within a particular region or municipality. There was also an interesting discussion about how the metrics that would have to apply to things are a little bit iffy at the moment. Particularly in the U.K. where the met office statistics have in fact, have been altered despite the fact that office didn’t indicate that. It’s a sad commentary to note that given other irregularities in the market around things like libore and the effects scandal, the idea of getting decent fixed metrics is pretty essential. There was also a discussion about the fact that these water restoration projects often have very long time spans and that is going to be an issue that investors are going to have to get their head around, given the fact that there can be political change and different regimes and different philosophies at play over a project that might take forty to fifty years. I think that the idea of these performance bonds actually coming into their own, we ended it by discussing the three ways that that could happen, one would be if a government found itself with it’s back to the wall in a panic mode, desperate to get it’s hands on funding. Having to go the market with something like a performance bond. We also talked about how aid agencies could be beneficiaries of these things coming into places where there was severe water shortages and targets set that they would have to meet again for the bonds performance. And finally the third way is that governments could on the other end of the spectrum here, who are in good shape could be issuing these bonds for the PR and marketing effect as a way to show the world that they have their environmental concerns in check. So I think that’s the wrap up of the meeting. J. Carl Ganter: Great, thank you John. Again that was from Michael Minelli’s breakout group. And now Cate Lamb’s breakout group. Was facilitated by Circle of Blue senior editor Keith Schneider. Keith, tell us what happened. Keith: Thanks, Carl. It was really lively conversation because Cate knows a ton about what’s happening around the world with lots of specifics. And she began by talking about Barrick Gold which abandoned a very expensive project in Peru I think in 2013, but I’m not specific on that. Five billion dollar project abandoned over water and then she talked about Anadarko not stranded assets, but what she called ground assets. Anadarko an oil and gas developer in Colorado had a field that was inundated in a flood that took it out of production and costs several hundred million dollars, which are interesting interesting example of what we’re talking about. We also talked about accountability and how governments and accountability plays here. She noted that the security and exchange commission in the United States has recording requirements for climate related risks and disclosure of climate related risks. She noted that the implementation of the standard of that standard has not been aggressive as it should be. We talked a lot about how to identify stranded assets related to water. She noted that the world resources institute’s aqueduct which has been a very successful tool, global tool to understand water risks and Bloomberg now has a water risks climate tool attached to its terminals. We talked about who and what companies are sort of gold standards in caring for water conservation and avoiding water related risks and she noted that Ford Motor Company is a gold standard company in this work, in this effort. I think those were the big ones and she also noted that board rooms. You know, board rooms are becoming much more aware of the significance of water related risks in their operating portfolios. And how much it could cost or how much they could gain from caring for water and being aware of water related risks and stranded assets. Really good conversation I think. J. Carl Ganter: Great, thank you Keith. Really appreciate those report outs. Now I think we’re gonna bring, Charlie I think we’re gonna bring everybody back to group and would love to carry on this conversation. We’ll bring together Monika Freyman of Ceres and Michael Minelli talking about policy performance bonds and Cate Lamb of CDP. Would love to engage the three of you in conversation and also take more questions from our audience. Those questions I believe you can submit them on your screen and then we should have the capacity including a few of you perhaps by voice as well. Hearing the report outs, our special guests here, the experts. What did you hear from each other that you found particularly interesting? I know you run in the same packs, but we maybe come together a few times a year at conferences or the tops of mountains Cajamarca, Peru. Chime in. What did you hear? What would you like to ask each other? Cate Lamb: We were looking in our session as well but how we might predict more stranded assets in the future, you know, in this distribution of, or the vision of growth and then the distribution of natural resources and how that might play out in the future with listening more to security. And we tied that into how, ultimately a future, or the successful transition to a low carbon economy is independent by a stable supply of good quality fresh water. But that narrative isn’t necessarily very strong in the climate community at the moment. And Monika I wondered if you had any thoughts there about we might increase the work that we’re doing or the voice within the climatesphere. It’s very easy to talk with our water colleagues and our water friends, but how might we expand the knowledge of water security and the importance of water security within that climate space? And perhaps maybe Michael can answer that as well? And of course anybody on the line. Monika Freyman: I think what I find reassuring is that at more and more of these water events we are seeing climate at water events for example. So whereas before, at Water Week it was mostly a pure water crowd. One, we’re seeing a lot more finance at water events. But I also, series such as water quality and the links to climate change or really blinking cop and cop twenty two and having a water lens. Because as you mentioned Cate, climate risks are really water risks and visa versa. So, and the fact that water is a here and now, a very real and present risks that’s already being felt by climate is critical. So I think it is kind of more of an exchange of human beings at events is one element. But also, integrating in terms of planning and policy analysis, you know to make sure that the water analysis voice is in all that work as well. J. Carl Ganter: Great. I had a question. If you were on the main stage say in Davos, Switzerland, water is the number one global risk by the world economic forum’s global risk report. I think Keith brought that up earlier. How do you make the case, because this has been a very siloed approach and we’re still trying to get to this idea of a nexus of water, food and energy. And now we’re starting to talk more about sustainable development goals, SDG’s. How do we work this whole finance conversation? We still have, it’s still Wall Street. I mean just one block off of Wall Street, quite literally in Manhattan is Water street. I continually see that wall. It’s getting smaller and smaller but it seems like it’s not shrinking fast enough to keep up with the big challenges at hand. Give me some guidance here, how do we break the rest of that wall quickly in a systems context? Monika Freyman: I can just say two lines. One, you know, business doesn’t care if it’s a water risk or a climate risk or a food production risk. If it’s a financial risk it’s the all equalizer, so they’ll be very pragmatic about it and really try to work on those risks collectively. So I think a lot of those walls are instantly cleared the risk is really present and material. So that’s been of great benefit. And if I may jump in with a question of my own, I was very intrigued by the policy performance bonds and I feel like that is such a fascinating idea because in our own work with investors what surprised me most is how much out of the over three, four dozen investors that we’re speaking with regularly on water, how often regulatory risk comes up as a risk in terms of not just is regulation gonna change rapidly, but how much investors really fear poor water stewardship and governance in a region. And I think that’s really striking that there really seems to be a need from the investment community to have good water policies and stewardship. And that really is aligned with business versus what we’ve seen in the past is that you’d always have that assumption that business is against regulation and investors. But it’s so often, I’m seeing that that’s not the case at all which has been really fascinating. Michael: If I could echo on that [crosstalk 00:52:30] that to me is interesting. We did a study about 2005and we did another one in 2010 on the investment analyst approach to water. These are quite substantial studies here based out of London but kind of looking at the international investment and analytical community. This is also the time, some of you probably recall, we had the enhanced analytics initiative going. One of the things we found was that the analytical community has really got this in, I was touring for example, doing a bit of analysis on a large paint manufacturer globally and one of the intriguing things there is, is they’re very conscious of what their water footprint is. They’re taking gross measures, they’ve achieved a lot in the last decade, pretty much have their water intake, which is pretty impressive given that paint is something like thirty to forty percent water anyway. So that’s great. Their investors and their analysts are asking about it all the time and that’s great too. But your point there is it’s at that infrastructure level where I meet government regulation and policy and that’s where we’re falling apart. And that’s not just a water issue. One can look at, we mentioned in our session, discount rates. That people have been using crazy discount rates so we wind up with lots of infrastructure, whether it’s highways or airports or railways. As you look globally, most governments have been taking some pretty, pretty short term decisions and water is a big long term decision. And I think bridging that gap between investors and companies and where is appropriate to have public infrastructure providing it. They need to know that public infrastructure will be delivered or they’ll have to do their own thing, which may include relocating Cate Lame: If I may, I may pick you up on your point about how we break down the walls between Wall street and Water Street. There is quite an exciting movement at the moment going on across the range of different geographies around mandatory, non financial reporting. And that is being aimed at the companies themselves, but also financial institutions. It runs, for example, article one seven three is probably the most advanced piece of legislation out there at the moment. Which requires all french institutional investors to disclose how they are integrating climate related risk, including the depletion of natural resources into their investment practices. We see with the fast course of climate related financial disclosure, which is being led by Mark Carney the head of the Bank of England and Michael Bloomberg developing a methodology for again, voluntary, non financial reporting from the finance community as well as from many of the companies right across the G-20. And here closer to Stockholm the EU have implemented the non-financial reporting directive which will make it mandatory for companies of a set and size, I believe it’s over five hundred employees, again to include set in ESG metrics and factors into their annual reports. The role of reporting is something that of course excites us at CDP. It’s not necessarily everybody’s bag, but it’s a truly effective tool in driving systemic change. Because we can guarantee that once the institutional investors are requested to disclose this information, they will be holding the companies much more accountable for providing the information that they need to demonstrate better performance. It’s very exciting indeed and again and example of real systemic change that lies ahead. J. Carl Ganter: Wow that’s exciting shifts there. We are getting some questions in here too from the group and one is, you know we’re talking on a large, powerful scale, we’re talking corporate board rooms. We’re talking Davos. We’re talking Wall Street. Is there anything practical that consumers can do? Or that the consumers are doing? Maybe there’s some success stories right now we can share. Short of an intense grassroots movement, what can consumers do? How can they be part of this conversation? Cate Lame: They can change their diet, for one. Agriculture accounts for the greatest consumption of water on the planet. It also contributes the greatest GHG emissions for example, in the U.K., particularly a real move towards vegan diets. I know that’s not for everybody and it can be very challenging, I’ve tried myself. I’ve tried [inaudible 00:56:59] and it’s unfortunately not a suitable substitute for real cheese in my opinion. But reducing the amount of meat products that we can consume everyday is relatively simple, it saves you money, it’s better for your health and that could have a significant implication for water resources management globally. And particularly when you consider just how much water is used in the production of beef for example. Monika Freyman: I think another thing consumers can do as investors is when they look at their mutual fund statements or their little nest eggs, is to ask their financial advisor or the institution where they have their savings, if in that analysis of that mutual fund and the companies that are in your portfolio, is there water risk analysis taking place? I’m guessing somewhere in that institution they’re very well may be and it might be of interest. But I feel like every investor when you also are a consumer in terms of a financial product. So please do ask your investment advisors what kind of environmental and social and water risk that is taking place in those financial decisions when it comes to looking after your money. J. Carl Ganter: So take it right to the teller rather than Wall Street. (laughs)[crosstalk 00:58:31] Michael: I’m not going to disagree with these as very noble things that can be done and recognizing they’re the minority. Two things have always bothered me on the engage the consumer. If we the analytical community are still a bit in the dark here on some fundamentals. I’m always cautious, that doesn’t mean the idea of going vegan or something like that is insensible. I’d actually pull this back to two points. The first point is that if we really look at the cause of all of these things around this nexus of food, water, and energy, it’s actually population growth. I feel Joe Public would be better suited to be constantly thinking about what they’re doing to control population growth. That’s probably the biggest thing looking over a longer period. The second thing I always cautious of, particularly as we got into a lot of difficulty on this in the climate change debates of the early two thousands. When you start doing things, which came up in our group like life cycle analysis, you find that many of your suppositions are just wrong. So if you really really want to save the planet, use styrofoam cups and throw out your ceramic mugs. I know people don’t like to hear that, but that’s actually what the numbers say on life cycle analysis. Unless you believe you can use a mug, trying to remember the numbers, something like three thousand times before you throw it out. So drop one tray of mugs and that was several tens of thousands of styrofoam cups. Now, that’s not to be defeatist, but I do find for example that even in the water area a company that I know, I’m a big whiskey fan, they basically pull water out a foot from it dropping into the ocean anyway. But they have a terrible water footprint, yeah, well they do have a terrible water footprint but does it matter? The water was going to flow one foot farther into the salt anyway. I’m always a little careful about giving consumers overly simplistic do this, do that type things on this. We saw the same thing again in fisheries, when we setup the marine stewardship counsel nearly twenty years ago. We were giving out overly simplistic messages and people were running from fish to fish is sustainable, not sustainable and frankly getting themselves very confused. So, I’d like to get our houses in order analytically before we make too many recommendations to consumers. J. Carl Ganter: Right. But perhaps getting them involved so they’re aware of maybe putting pressure for the disclosures. Michael: Completely agree with that. Completely agree. J.Carl Ganter: Part of that conversation and realizing there’s a risk for not disclosing. We have a question here in the audience about risks in the icebergs if I’m reading this right. That are underestimated or not yet considering. Let me hand the microphone, tell us briefly who you are and a question for our group here. David Wilcox: Thanks Carl. David Wilcox, reach scale and we come from the social enterprise solving the world’s problems in view of the world but I think it’s really important to recognize that where we are today is dramatically different than where we were three years ago. And where we are going to be three years from now is going to be dramatically different than where we are today and I would say it’s nice to think about the risks being in an iceberg cause then the ones lower down don’t get seen or have to be dealt with. I’d say it’s more like a whack-a-mole and what’s happened in the world is we’ve given whack-a-mole hammers to a whole new group of people and they’re hammering. And so you can see that here at the conference, where you show up in sessions that are talking about the connection between water and nutrition and wash and you find people asking, well how can we be spending money on sugar water? If we really care about water and nutrition and wash. That’s not a question that would have happened three years ago and it’s not a questions that’s currently being dealt with. Second example would be the whole nature of the SDG’s is that it educates the consumer on the connections with all these different problems. And as the consumer becomes the aware of those connections, they’re actually globally becoming a list of five things that they care about. You can interview anywhere in the world. That’s going to significantly change the level of risk of companies that are causing problems with those five things. And that’s going to be dramatically more visible two, three years from now than it is today. And then finally as things get more problematic, there’s going to be a question of competition over resources to scale solutions. And companies who don’t start focusing on scaling solutions are going to be asked why they should be able to use that many resources. I believe we’re going to get to a point where that’s going to become an issue for companies. Their reputation will be dependent on their ability to scale actual solutions. So, I’d love to hear from the experts how they would see that developing in the context of financial reporting and the context of investor reporting and in the context of moving resources to actual solutions. Cate Lamb: Shall I take a stab at that? I’m sitting on the scaling. You’re absolutely right and that’s why CDP engages with the private sector as heavily as we do. They have that ability to scale solutions at a significant rate. Much more so than any government can. You mentioned the scale of Nestle and the workforce that they have. Importantly the number of suppliers that they buy from every year that’s an immense number of points that they have to change and motivate and prove performance and behavior, not to mention of course the consumers that they engage with. What we’re seeing at CDP is an increasing number of companies that are proactively engaging within their supply chains as Monika mentioned earlier. It’s not enough, we need to see more of them. But those that are leading the way are pushing the reporting requirements onto their suppliers and now holding them increasingly accountable through their procurement policies and procurement practices for delivering that change. So, Dell for example, now requires a selection of their suppliers to disclose water related data to them via CDP. And if they don’t, they are no longer a supplier to that company. We see increasing numbers of this activity happening in the carbon space and we imagine that the scalability will be achieved in the workspace as well. Monika Freyman: I was just going to echo thank you for mentioning scale, I think that it doesn’t come up often enough in these discussions and around how we are going to be solving problems in general either around sustainability or water issues and from the corporate and investor perspective, I hope scale becomes a bigger part of focus area where companies really move from talking more about project by project but more about how the work they’re doing scales across the organization and is really embedded into every decision they’re making. What is the impact, not just in their operations and the water ship but the entire region? And you’re starting to see that with some of the leading companies that haven’t started mocking about and really trying to scratch their heads about these issues. They are constantly changing the scale and scope of how they try to tackle the problem. And I think there needs to be a lot more analysis and discussion of making sure that the solutions fit the scale of the problem and the need for the solution itself. So… J. Carl Ganter: Michael did you want to add to that from your perspective? How do we really move the decimal point and accelerate the responses? Here at World Water Week we are, I’m sensing more of an urgency on the sanitation and on the water supply side. The fact that a billion people live in slums worldwide and that’s projected to be two billion coming up in the next few years. These are huge huge challenges. Where does scale come from in your perspective? You’ve lived this, you’ve seen this. Michael: I’d agree with many of the comments that were made earlier. It’s a question that’s not asked often enough as it’s for good. I think it’s a very good point that we have to figure out how to get there. That’s kind of why I think these policy performance bonds are being sought. Imagine the government of India committing to eighty-five percent sanitation of a particular scale. Huge amounts of other related investment would flow in based on that as well as giving any government the money to get the job done. That’s why I think we’re proposing this because the only way we’re going to see these kind of large elements to scale is large elements of credible commitment by governments which were lacking. Many of these very noble examples are ultimately, extremely local and I too am as frustrated as anybody else because the urgency is there. By the way, I don’t want to sound too good, I completely agree with the point that keeping the consumer aware of the urgency of the issue is important, maybe not going quite as far as just telling them too many specifics, but we are learning. J. Carl Ganter: Well, learning is what we’ve done here today and I hope we’re taking this more, we always say this, taking this to action, but that’s really part of our role in this space as journalists, as story tellers. It’s just the beginning of the story, we always say that the cub reporter gets the assignment. Go cover water! And they run out the door and say “where do I start?” Just start, that’s the whole point. This is just the beginning to the story and I think one of the biggest stories that we in the journalism profession and at Circle of Blue can be covering and that’s the whole story of stranded assets and the whole story of huge capital flows that are shifting and whether we characterize them as icebergs or little flags on top of icebergs. The bottom line is huge amounts of data, the ability to visualize and respond almost, not real time, but unprecedented amount of data and new tools coming forward. Again, that’s what we’re trying to do at Circle of Blue using world leading journalists and reporters. We have a very exciting data initiative that we’ll be talking a lot more about tapping into live data at scales never done before. Excited to be working with companies like click and Columbia University and Twitter and other pieces like that. Bringing in unusual suspects into the space and I think that’s what this whole conversation here, talking about stranded assets is doing under pressure so to speak. I really have to thank our guests for sharing their time and expertise and this H2O Catalyst event live from Stockholm World Water Week here in Stockholm. Monika Freyman and Michael Minelli and Cate Lamb, thank you so much. And our journalist facilitator Brett Walton and John Anderson and of course Keith Schneider who is on the front lines of this story for us and keep following that work. We’ve only just scratched the surface and we’ll be doing a lot more in the U.S. and globally on this story. Here in Stockholm we’ve had help from Circle of Blue’s Cody Pope and Jennifer Muller-Gallan, back in the back here and to SIWI our host and technical support here in Stockholm with wires running everywhere. And a huge thank you to the Circle of Blue team behind the scenes, sleepless in putting together these pieces as well as all the other fun work that we’re publishing on Circle of Blue.org and that’s Laura Herd. Of course, Matt Welch, Connor Bebb, Codi Kozacek, Brett Walton who you already heard on the call. And the rest of our team and crew of interns and everyone else that we applaud for supporting us in this endeavor and journey and adventure. Lastly to Maestro Conference Charlie and Josh and Adam and Aubrey and the whole team for the technology that makes this possible. It’s a very cool process. We hope you’ll follow the results of the Catalyst series online at Circle of Blue.org and we have our previous events looking at the U.S. national infrastructure challenges at H2O catalyst.org and so from all of us at Circle of Blue and here in Stockholm at World Water Week, thanks so much.