Slide1: The Carbon Disclosure Project In South Africa Tsvetana Mateva National Business Initiative


The Carbon Disclosure Project : The Carbon Disclosure Project What is the CDP? The CDP represents an efficiency process whereby many institutional investors collectively sign a single global request for disclosure of information on climate risks relevant to shareholder value. The CDP’s aim is twofold: to inform investors of the significant risks and opportunities presented by climate change to inform company management of the serious concerns of their shareholders regarding the impact of climate change on company value.


CDP - Background : Four previous requests institutional investment capital of $4.5, $10, $21, $31.5 and now $41 trillion The CDP’s 225 signatories include: Half of the world’s largest 20 fund managers, i.e. UBS, Allianz, State Street, AXA, Credit Suisse, Deutsche, ING, AIG, HSBC and Morley Over 40 Asian, Canadian and Australian institutions 15 Brazilian institutions and 3 South African ones: Fraters Asset Management, Nedbank and Sanlam Investment Management CDP - Background


CDP - Background : The information requests have historically been sent to the 500 largest global companies (FT500), but in 2006 CDP expanded to cover more than 2,100 companies globally Separate CDP reports are now available for the largest companies listed in the following countries and regions: US and Canada UK, France and Germany, Japan and Asia (ex Japan), Australia / New Zealand Brazil The responses from CDP4 and previous years can be downloaded from www.cdproject.net CDP - Background


CDP5 SA: CDP5 SA JSE Top 40 is one of smallest sample sizes Non-response further reduces this Low awareness generally But high risk (resources) Eskom not included Analysis will be undertaken at three levels: Total data set Sector level analysis (high risk / low risk) 3) Company level analysis


CDP5 SA - sponsors : The project is managed jointly by the National Business Initiative and Incite Sustainability It is sponsored equally by ABN Amro, Frater Asset Management and Macquarie First South Securities The data analysis is sponsored by Genesis Analytics The first ever SA CDP report will be launched early in September CDP5 SA - sponsors


SA companies approached in CDP4: SA companies approached in CDP4 Anglo American, BHP Billiton and SABMiller - answered and information available Liberty International, Lonmin, Old Mutual - answered the questionnaire but declined permission to make the information available Aquarious Platinum and Sasol - supplied information Dimension Data, Investec and Sappi– did not respond Standard Bank - declined to participate


CDP5 - Questionnaire: CDP5 - Questionnaire


CDP5 - Questionnaire: General company climate change position 2. Regulation’s effect on the company 3. Physical risks of climate change 4. Innovation in response to climate change 5. Responsibility of the board in managing and disclosing climate change policies 6. Emissions of greenhouse gases (GHGs) 7. Products and services that emit GHGs 8. Emissions reduction strategies, costs, and implications 9. Emissions trading plans for existing and future carbon markets 10. Energy costs for consumption of power and impact of rising energy costs due to climate change. CDP5 - Questionnaire


CDP5 - Questionnaire: CDP5 - Questionnaire All Companies Risks, opportunities and Strategy Identify commercial risks - physical / regulatory / other Identify commercial opportunities Detail objectives and strategy to manage these risks List emissions reduction targets GHG accounting GHG methodology Direct & indirect emissions


CDP5 - Questionnaire: Defined high impact companies Additional GHG accounting issues - EU ETS GHG emissions management Reduction programme Trading initiatives Intensity Energy costs Planning Climate change governance Responsibility Individual performance CDP5 - Questionnaire


Mining Industry CDP Signatories- how they see the climate risks:: Mining Industry CDP Signatories - how they see the climate risks:


Physical risks:: Physical risks: “… Rising temperatures could affect our operations in arctic climates, some of which rely on travel over ice …” “… Temperature changes could improve operations in extremely cold climates …” “… business continuity, facility design, production interruption, loss of facility, impact on personnel as well as reputation impacts…” “…prolonged increases or decreases in precipitation patterns could result in changes to tailings impoundment operations, could impact water supply for operations, or possibly result in water license restrictions due to shrinking aquifers…” “…particularly concerned about the increased frequency and severity of storm activity and tropical cyclones…”


Commercial risks and/or opportunities:: Commercial risks and/or opportunities: “…Climate change risks include (1) increased fuel and electricity costs and (2) GHG emission restrictions with associated compliance costs…” “…potential changes in weather patterns including the intensity and frequency of storm activity and rainfall patterns will impact some sites directly…” “…we may see increased demand for lower emission fuel sources such as gas and uranium in coming years…” “…the further we look forward in time, the more uncertain the regulatory environment becomes for both our assets and our customers and the more uncertain the physical impacts are on our assets “…clean coal technologies and carbon sequestration…”


Financial and strategic impacts of GHG regulations:: Financial and strategic impacts of GHG regulations: “…regulations require significant expenditures and increase mine development and operating costs…” “…more stringent implementation of existing laws and regulations could have a material adverse impact through increased costs, reduction in levels of production and/or a delay or prevention of the development of new mining properties…” “…we are likely to see changes in the margins of our businesses from our greenhouse gas intensive assets…” “…inconsistency of regulation will also likely impact the location of competitors and change the attractiveness of location of some of our assets for the better or worse…”


Financial and strategic impacts of GHG regulations:: Financial and strategic impacts of GHG regulations: “… existing regulations have impacted our operations so far principally through the increase in power prices…” “…some regulation, such as the mandatory renewable energy target will be very difficult to achieve…” “…the cost of resources to collect and report our GHG emissions data to governments…” “…the cost of resources to track GHG emissions at all operations for public disclosure in our Responsibility Report and on our website…” “…These might include increased financial and management burden as a result of carbon taxes or market-based mechanisms such as cap and trade trading systems…”


Slide17: If sea levels rise by a few meters as predicted, the geography as we know it will not exist by the time a child of 10 today dies of old age.


Slide18: For any questions related to the CDP5 in SA contact: Tsvetana Mateva – NBI – mateva.tsvetana@nbi.org.za Jon Hanks – Incite Sustainability – jon@incite.co.za