A Green New Deal?

22 May 2009 Designator | author 1

For Professional Investors

Fortis Investments

“Green New Deal”A new era for sustainable development?

Stewart Armer, Head of SRI

| 22 May 2009 | 2

Fortis Investments

Agenda

Source: Fortis Investments

Introduction

“Green New Deal” tool

“Green New Deal” analysis

- Macro analysis of the G-20 stimulus packages

- A new era for sustainability?

Opportunities for sustainable and responsible investors

- Key sector beneficiaries of the economic stimulus

- Well positioned companies

Conclusions



Fortis Investments

Introduction

| 22 May 2009 | 4

Fortis Investments


12 sustainable investment experts, from 9 different countries, with 117 years professional experience and fluent in 10 languages

Truly integrated team combining both sustainability and investment expertise

Autonomous investment centre based in Frankfurt

12 sustainable investment experts, from 9 different countries, with 117 years professional experience and fluent in 10 languages

Truly integrated team combining both sustainability and investment expertise

Autonomous investment centre based in Frankfurt

Where does our analysis come from?SRI at Fortis Investments



Fortis Investments

“Green New Deal” online tool

| 22 May 2009 | 6

Fortis Investments

| 22 May 2009 | 7

Fortis Investments



Fortis Investments

“Green New Deal” analysis

| 22 May 2009 | 9

Fortis Investments

Analysing sustainable fiscal stimulusIntegrating environmental and social themes

Healthcare

Knowledge and education

Social housing and communities

Access to IT

Sustainable food supply

Clean and efficient energy

Clean water and air

Resource and waste management

Sustainable transport

Sustainable buildings and infrastructure

| 22 May 2009 | 10

Fortis Investments

First, consensus has developed…Sustainability has become an overarching policy goal

Since mid-2006 climate change has been pursued by policy makers morethan by NGOs

Sustainability is increasingly seen as an essential precondition of development

‘The choice we face is not between saving our environment and saving our economy. The choice we face is between prosperity and decline’

– Barack Obama 0

100

200

300

400

500

600

700

800

900

1000

Jan-0

5Apr-

05Ju

l-05

Oct-05

Jan-0

6Apr-

06Ju

l-06

Oct-06

Jan-0

7Apr-

07Ju

l-07

Oct-07

Jan-0

8Apr-

08Ju

l-08

Oct-08

Jan-0

9

Clim

ate

chan

ge re

fere

nces

; Jan

200

5 =

100

NGOs Policy makers

New demand

Source: Fortis Investments, Reuters

NGO and policy maker references to climate change

| 22 May 2009 | 11

Fortis Investments

… Now for a USD 1 trillion stimulus!Stimulus funding is a watershed for sustainability

USD 2.1 trillion G-20 fiscal stimulus (excluding Saudi Arabia and South Africa)

More than USD 430 billion environmental investments; more than USD 600 billion societal investments

Includes integrated solutions to integrated challenges: climate change, food scarcity, oil and financial crises


US: USD 787bn

UK: USD28bn

S. Korea: USD 35bn

Japan: USD 278bn

China: USD 585bn

Indonesia: USD 6bn

Canada: USD 32bn

Australia: USD 32bn

Germany: USD 108bn

France: USD 34bn

Brazil: USD63bn

EU: USD 45bnItaly: USD16bn

Mexico: USD 4bn India: USD 8bn

Environmental stimulus Social stimulus Other stimulus

| 22 May 2009 | 12

Fortis Investments

G-20 sustainable investments Breakdown of sustainable spending

Significant spending across the board on a role out of developed technological platforms – an immediate beneficial impact!

But, several aspects require careful monitoring:

- Timing - most funding will be released 2009-2010, but when will it actually be spent?

- Funding mechanisms - grants, loans or tax breaks? And how appropriate are these methods?

- Political consensus and dispute – can we be sure support for sustainable sectors won’t be withdrawn?

G-20 sustainable fiscal stimulus spending

Environmental stimulus Social stimulus


84.266.7

39.9 38.6

208.7

333.4

151.4

12.5

95.0

13.50

50

100

150

200

250

300

350

400

Clean a

nd Effic

ient E

nergy

Clean W

ater a

nd Air

Resou

rce an

d Was

te Man

agem

ent

Green B

uildin

gs an

d Con

struc

tion

Sustai

nable

Transp

ortHea

lthca

re

Knowled

ge & Edu

catio

nAcc

ess t

o IT

Social

Hou

sing &

Com

munitie

s

Sustai

nable

Food S

upply

US

D b

illio

ns

| 22 May 2009 | 13

Fortis Investments

Obama’s New DealLeading the US in a new direction?

USD 787billion ‘American Recovery and Reinvestment Act’ – USD 375mn to environmental and social sectors

A new commitment to reform distinguishes this from previous palliative stimulus

- Healthcare IT

- Renewable energy

-Smart grid

Caution a lack of complete political consensus

- Compromises in the bill

- Federal-State conflicts

American Recovery and Reinvestment Act



19.714.57.529.0 10.5

0.013.37.2787.0

168.5

105.3

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

900.00

Total S

timulu

s

Clean a

nd Effic

ient E

nergy

Clean W

ater a

nd Air

Resou

rce an

d Was

te Man

agem

ent

Green B

uildin

gs an

d Con

struc

tion

Sustai

nable

Transp

ortHea

lthca

re

Knowled

ge &

Educa

tion

Acces

s to I

T

Social

Hou

sing &

Com

munitie

s

Sustai

nable

Food S

upply

US

D B

illio

ns

| 22 May 2009 | 14

Fortis Investments

Chinese StimulusFoundations for sustainable growth?

USD 585 billion stimulus package announced mid-November – USD 450 billion to environmental and social sectors

Shovel ready projects being accelerated –sustainability has become a matter of political expediency

Central government to fund less than 1/3 of investments; other key sources include local governments, state owned enterprises and state banks

Disclosure is limited, and sources can be contradictory; local news analysis offers the best insight

Chinese fiscal stimulus



25.631.5

46.4

146.3

58.522.0

124.4

585.4

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

Total S

timulu

s

Clean a

nd Effic

ient E

nergy

Clean W

ater a

nd Air

Resou

rce an

d Was

te Man

agem

ent

Sustai

nable

Transp

ortHea

lthca

re

Knowled

ge & Edu

catio

n

Social

Hou

sing &

Com

munitie

s

US

D B

illio

ns

| 22 May 2009 | 15

Fortis Investments

Japanese Stimulus‘Leading the low carbon revolution’?

USD 278 billion announced in 4 fiscal stimulus packages; only USD 64 billion for sustainable sectors

But NOT a “bridge to nowhere”:

- Targeted spending, light on infrastructure

- R&D investment provides basis for future growth

- Aimed at promoting structural change in key areas including health and the auto industry

Large stimulus for renewable energy (particularly solar), but not enough to tackle air and water pollution

Japanese fiscal stimulus



6.06.60.310.5 0.8

12.00.1278.327.7 0.7

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Total S

timulu

s

Clean a

nd Effic

ient E

nergy

Clean W

ater a

nd Air

Resou

rce an

d Was

te Man

agem

ent

Green B

uildin

gs an

d Con

struc

tion

Sustai

nable

Transp

ortHea

lthca

re

Knowled

ge & E

duca

tion

Social

Hou

sing &

Com

munitie

s

Sustai

nable

Food S

upply

US

D B

illion

s

| 22 May 2009 | 16

Fortis Investments

South Korean StimulusA model for green infrastructure

USD 37 billion ‘Green New Deal’ – USD 28 billion in sustainable investments - identified by the UNEP as a model for global sustainable growth

9 major green infrastructure projects to create 960,000 jobs 2008-2012 – 4% of the labour force

Too much focus on infrastructure?

- River ‘restoration’ projects threaten biodiversity

- Lack of funding for R&D and clean technologies

‘We know that the old strategy of semiconductors, mobile phones, cars and ship-building cannot continue’

- Kwon Tae-shin, Minister of the PM’s Office Environmental stimulus Other stimulus

South Korea’s ‘Green New Deal’

Source: Fortis Investments, Financial Times

7.7

0.42.411.2

6.9

37.3

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Total S

timulu

s

Clean a

nd Effic

ient E

nergy

Clean W

ater a

nd Air

Resou

rce an

d Was

te Man

agem

ent

Green B

uildin

gs an

d Con

struc

tion

Sustai

nable

Transp

ort

US

D B

illio

ns



Fortis Investments

Opportunities for sustainable and responsible investors

| 22 May 2009 | 18

Fortis Investments

A new age of rail transportSmart technology is transforming rail

USD 167 billion G-20 stimulus - largest ever public investment in railways

USD 9.3 billion rail package in the US is focussed on high speed, smart rail – leveraging IT systems to improve efficiency, safety and customer service

Tried and tested technologies developed on Taiwan’s High Speed Rail Corporation and France’s TGV network will change the face of rail travel

Chinese USD 146 billion rail stimulus is focussed on non-coastal networks – laying 35,000 km of new track as a foundation for consumer-led growth

Source: climateprogress.org

| 22 May 2009 | 19

Fortis Investments

VOSSLOH (VOS GR)Railway technology made in Germany

Vossloh is a German domiciled company specializing in public transport technology.

The company operates through two divisions. Rail Infrastructure includes the manufacture of rail fasteners and track switches, and construction and maintenance of railway tracks. Motive Power and Components offers diesel locomotives, and a range of products for for trams and trolleybuses, control and safety systems for railway lines, and passenger information systems.

By supporting the public transport infrastructure, Vosslohhelps to provide an alternative to the environmentally damaging use of private vehicles.

Sources: Vossloh, Fortis Investments

ATTRACTIVE VALUATION

STRONG BUSINESS MODEL

MANAGEMENT TRACK RECORD

ENVIRONMENTAL BENEFIT

| 22 May 2009 | 20

Fortis Investments

Water water everywhere?The water crisis is recognised but not dealt with

G-20 Water stimulus (bubble size = % GDP)More than USD 50 billion for water – a major element of Chinese and South Korean stimulus packages

Decisive for Australian stimulus – Green MPs demanded inclusion of water clauses before casting deciding vote

Overall investment disappointing in GDP terms, especially in the US and Australia given recent severe droughts

‘Water is an essential component of growth, social and economic development, poverty reduction and equity’

- UNESCO

A

ustra

lia

Can

ada

Chi

na

EU

Indo

nesi

a Ja

pan

Sou

th K

orea

U

K U

S


0.09% 0.01%

0.64%

0.00% 0.05% 0.01%

1.54%

0.00%

0.05%

USD 0

USD 5

USD 10

USD 15

USD 20

USD 25

USD 30

USD 35

USD 40

US

D b

illio

ns

| 22 May 2009 | 21

Fortis Investments

CHINA EVERBRIGHT INTERNATIONAL (257 HK)Investing in environmental infrastructure

China Everbright International focuses on environmental protection infrastructure investments, including the construction and operation of solid waste treatment projects and waste water treatment projects, as well as toll bridge operation.

The Company’s environmental protection business is divided into four major sectors: waste-to-energy in Jiangsu Province, waste water treatment in Shandong Province, Suzhou Everbright National Demonstrative Veinous Industrial Park and restoration of water quality for Taihu Lake

Sources: China Everbright International, Fortis Investments





| 22 May 2009 | 22

Fortis Investments

Potential for green transportHow sustainable are ‘green car’ stimulus measures?

G-20 Green auto stimulus (bubble size = % GDP)Almost USD 40 billion in stimulus funding for green automobiles, of which USD 8 billion for car scrap credits in Germany, Italy and France

We question the sustainability of scrap credits - encourages waste, negative societal implications, inherently short term

More convincing measures:

- Hybrids receiving major boost in Japan –subsidies and 0% acquisition tax break

- Advanced battery R&D funding in the US and the EU could speed up the shift to green cars


0.04%

0.09%

0.24%

0.09%

0.12%

0.10%0.07% 0.01%

USD 0

USD 1

USD 2

USD 3

USD 4

USD 5

USD 6

USD 7

USD 8

USD 9

US

D b

illio

ns

EU

Fran

ce

Ger

man

y

Italy

Japa

n

Sou

th K

orea

UK

US

| 22 May 2009 | 23

Fortis Investments

TOYOTA (7203 JP)World leader in hybrid technology

Toyota has established a clear leadership position in the clean automobile / hybrid market. Toyota developed its first Hybrid system in 1995. Today has Toyota sold over 1,000,000 Hybrid cars worldwide (about 500,000 in the US).

Toyota has effectively integrated Environmental credentials in its brand underpinned by a strong environmental vision & principles (e.g. Toyota’s Guiding Principles, Toyota’s Earth Charter).

Toyota's own estimates indicate that Prius hybrids havecontributed to a reduction in greenhouse gas emissionsof approximately 4.5 million tons of CO2 compared to non-hybrid gasoline-powered vehicles in the same classand of similar size and driving performance.

SUSTAINABLE PRODUCT OPPORTUNITIES

SUSTAINABLE PRODUCT FOCUS: CLEAN AUTOMOBILES / HYBRID TECHNOLOGY

ESG MANAGEMENT QUALITY

Sources: Toyota, Fortis Investments. Trademark, copyright, and other intellectual property rights are and remain the property of their respective owners

| 22 May 2009 | 24

Fortis Investments

Green buildingsPicking the low hanging fruit!

G-20 green construction stimulus (bubble size = % GDP)USD41 billion for the green construction

sector across almost half of the G-20

Low cost energy saving with a large immediate benefit

- High cost-benefit ratios

- Scalable – minimal sunk costs offers great potential in terms of scope

Integrated with social initiatives –insulation for low cost housing, benefitting the consumer

Source: Fortis Investments SRI Research, May 2009

0.37%0.22%

0.01%

0.01%

0.13%

0.13%

0.05%

0.26%

0.10%

USD 0

USD 2

USD 4

USD 6

USD 8

USD 10

USD 12

USD 14

USD 16

USD 18

US

D b

illio

ns

A

ustra

lia

Can

ada

EU

Fran

ce

Ger

man

y

Japa

n

Sou

th K

orea

U

K

US

| 22 May 2009 | 25

Fortis Investments

SAINT-GOBAIN (SGO FP)Insulation products to meet new standards

Low-emission double-glazing is three times as efficient as traditional double-glazing in terms of thermal insulation. Potential to save up to 140 million tonnes of CO2 per year out of a total of 765 million tonnes emitted by the EU construction sector. Extra costs offset after two years (standard use is 30 years).

Glass wool insulation: energy saved through using glass wool products is equivalent to 1000 times the energy consumed during production of glass wool.

Strong market position: one in three houses in Europe and one in five houses in the US are insulated with the Division’s products.

Generates 10% of sales from products directly aimed at Energy Efficiency – primarily building insulation products (e.g. glass wool, stone wool, low emission glazing).

Sources: Isover, Fortis Investments





| 22 May 2009 | 26

Fortis Investments

Investment in energy reformPotential to rebalance supply and demand?

G-20 clean and efficient energy stimulus, USD billionsOver USD85bn for clean and efficient

energy

Take-up of renewable agenda in unexpected areas:

- Indonesia funding biofuels, geothermal energy and energy self-sufficient villages

- China making possibly the largest smart grid stimulus, also promoting energy saving in industry

- Mexico assisting households to purchase energy-saving appliances

A new opportunity to integrate advances in low carbon energy in a smart grid…


Other, 0.3

Energy Efficiency, 23.8

Smart Grid , 23.9

Renewable Energy, 31.5

Carbon Capture, 3.8

Biofuels, 0.9

| 22 May 2009 | 27

Fortis Investments

HANSEN TRANSMISSIONS (HSN LN)Supplying gearboxes for wind turbines

Hansen is an established global gearbox designer, manufacturer and supplier with a leading position in the wind turbine gearbox market

Hansen also delivers gear units for water treatment systems like aerator drives, screw pump drives and brush aerator drives for waste water treatment plants.

Hansen’s principal manufacturing facilities are located in Belgium and include a wind turbine and industrial gearbox plant at Edegem, and a fully integrated dedicated wind turbine gearbox manufacturing facility at Lommel.

Sources: Hansen Transmissions, Fortis Investments





| 22 May 2009 | 28

Fortis Investments

Smart Grid Changing the dynamic of consumer and resource

US and EU funding USD11.1bn smart grid programmes; China has announced smart grid investments within USD160bn conventional grid programme

Move away from a radial system towards a ‘living’network; incorporating all forms of generation and storage; creating a new energy market for consumers!

Sources: Fortis Investments SRI Research, www.urbanecoist.com, May 2009

| 22 May 2009 | 29

Fortis Investments

ITRON INC (ITRI US)Optimising the delivery and use of energy and water

Itron provides a portfolio of products and services to utilities for the energy and water markets throughout the world. The company is a provider of metering, data collection and software in the US, Canada, Europe, South America and Asia.

Itron's main contribution to sustainability is its extensive product and service offering, all of which contribute to the smart grid concept of our energy future.

The smart grid incorporates energy efficiency, easy integration of renewables into the energy mix, peak load management, and a variety of additional concepts that together represent an elegant solution to our serious problems related to growing energy demand in a carbon constrained world.

Sources: Itron Inc, Fortis Investments





| 22 May 2009 | 30

Fortis Investments

Investment in social wellbeingHealthcare integrated within the sustainable agenda

G-20 healthcare and education stimulus, USD billions

Over USD330 billion in stimulus funding for healthcare!

BUT, healthcare is a conventional target for fiscal support – what has changed?

Hospitals are being refitted with green facilities – practical implementation of the link between the environment and social wellbeing

Healthcare IT (HIT) places new emphasis on self regulation, active consumer involvement, sustainability….


Healthcare Facilities, 153.9

Access to Healthcare, 146.6

Healthcare Services, 7.6

Healthcare R&D, 25.3

| 22 May 2009 | 31

Fortis Investments

Integrated healthcareGroundbreaking investments in Healthcare IT

23.4 billion of healthcare IT stimulus in China, Japan and the US

Supports integrated and bespoke healthcare provision, based on a holistic view of individual needs

Interoperable electronic health records (EHRs); online appointment setting and billing; new generation of healthcare applications

New dimension of opportunity and risk for medical device manufacturers

- Competition from Google, Intel, GE

Sources: Fortis Investments SRI Research, US Department of Health and Human Services

| 22 May 2009 | 32

Fortis Investments

ECLIPSYS CORP (ECLP US)Innovative healthcare IT solutions

Eclipsys provides healthcare IT products and services that improve patient outcomes and help hospitals save money, primarily in the US

Eclipsys markets its software to healthcare providers of many different sizes and specialties, including community hospitals, large multi-entity healthcare systems, academic medical centres, outpatient clinics and physician practices.

After incorporating Eclipsys systems, the DeKalb Medical Center in Georgia achieved a 66% reduction in medication administration errors, and the Springhill Medical Center in Alabama realized a 43% reduction in patients with ventilator-associated pneumonia.

Sources: Eclipsys Corp, Fortis Investments




SOCIAL BENEFIT



Fortis Investments

Conclusions

| 22 May 2009 | 34

Fortis Investments

ConclusionsA new era for sustainable development

Combination of unprecedented public funding, demand for change, technological and institutional capacity - a new era for sustainable development

Significant opportunities and risks for sustainable investors

Need to look beyond headline announcements at mechanisms, timing and political developments

Get the latest analysis, and join the debate: www.sriblog.fortisinvestments.com

| 22 May 2009 | 35

Fortis Investments

www.sri.fortis.com

This document has been prepared solely for informational purposes and does not constitute 1) an offer to buy or sell or a solicitation of an offer to buy or sell any security or financial instrument mentioned in this document or 2) any investment advice. Any decision to invest in the securities described herein should be made after reviewing the most recent version of the prospectus, which can be obtained free of charge from Fortis Investments*. Moreover, prospective investors should conduct such investigations as the investor deems necessary and should seek their own legal, accounting and tax advice in order to make an independent determination of the suitability and consequences of an investment in the securities. The opinions contained herein are subject to change without notice.

Investors should ensure themselves that they read the last available version of this document.

Past performance or achievements are not indicative of current or future performance. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units.

For more information, please contact [email protected]

Fortis Investments is the trade name for all entities within the group of Fortis Investment Management. This document has been issued by Fortis Investment Management Belgium N.V./S.A. (address : Avenue de l’Astronomie 14, 1210 Brussels, Belgium, RPM/RPR 0882 221 433).

A Green New Deal?

Economy & Finance

Transcript of A Green New Deal?