Etika - Alfi

1. Etika - Alfi SRI - An opportunity for Luxembourg Dirk AJ Coeckelbergh Lundi 5 novembre 2007

2. SRI - An opportunity for Luxembourg? The Belgian SRI experience Intro Why SRI? The SRI market The SRI yield The SRI ways The SRI don’t's The SRI do's The SRI in the future

3. The Belgian SRI-experience Intro The Belgian experience - from inside (but discrete) - from an objective (fact and figures) viewpoint - from a personal point of view - from a believer (but this is not necessary to act) - from someone with respect for everybody involved, but also - from a critical spectator (truth has its place) - from an actor (BACOB - DInsurance - DVV - Crédit Agricole) - active in different fields of society (bank, social economy, non-profit, insurance, public investment actors, advisory functions, univ.)

4. The Belgian SRI-experience - Why?- demand from clients / investors- pressure from alternative banks (Triodos)- pressure of NGO's (Netwerk Vlaanderen, RFA, trade unions, ..)- sympathy of public entities- legislative framework pressures to (more) ethics- responsibility of financial sector augments with its perceived capability to develop power, influence, wealth, effects- "ethical" inspired bankers inside banks- conviction that power can be used to influence positively the world- conviction that money and ethics are not necessarily enemies- pressure of other institutions (me too if he…)- prestige, PR, money, pressure of Board Members of banks- privileged investor relationships possible (public entities, pension funds….)

5. The Belgian SRI-experience - The SRI market?VOLUME IN BELGIUM (official publications)- volume most broad definition: more than 149 billion € end 2005- volume in strict definition: 9,5 billion € end 2005LEADING PRACTICES- major part (broad) : exclusion of certain companies/sectors/practices- major part (strict) : best in class screening & engagement&| thematic funds- less used: solidarityLEADING BANKGROUPS IN BELGIUM (main practice)- KBC (best in class inhouse & thematic funds & solidarity)- DEXIA (best in class inhouse & thematic)- Fortis (best in class inhouse "plus" & thematic)- Triodos (thematic)- CAB (best in class external label)

6. The Belgian SRI-experience - The SRI market?LEADING PRODUCTS- isolated (1 or 2) funds (a lot of players)- broad spectrum of funds for various risk appetites (KBC, Fortis, Dexia, CAB)- structured products (KBC, CAB, ...)- insurance products (pension products, T 21/23) - savings bonds (Triodos)- savings account (Triodos, Fortis)- ethical seed capital (governmental institutions, private investment companies in the social economy)LEADING reinvestment type of asset- (funds) stocks quoted or listed on a stock exchange- (other products) : credits or capital into social economy, social profit

7. The Belgian SRI-experience - The SRI market? LEADING Screening practices- outhouse-inhouse: own methodology on mainly externally bought information: Fortis, KBC, Dexia- inhouse-inhouse: own methodology on partially or totally own research and information: Triodos - outhouse: external methodology and external informationMARKETING DRIVER TOWARDS PROFESSIONAL INVESTORS- always the asset manager of the groupMARKETING DRIVER TOWARDS PRIVATE INVESTORS- ING, Dexia, KBC, Fortis: Bank-marketing and asset-managerand both on local and European level;- CAB, Rabobank, : Bank-marketing at Belgian level- Ethias and KBC: traditional retailmarketingteam

8. The Belgian SRI-experience - The SRI market?LEADING POSITION OF LEADING FUNDMANAGERS in Belgium- Eurosif report 2006)"More and more asset managers are convinced that non-financial analysis is important to assess long-term financial return. They claim it is important to build up an SRI identity and reputation in order to have a credible position on the institutional SRI market".ATTITUDE TOWARDS LABELLING by independent external specialistic providers in SRI labels and SRI certificationNone: KBCMixed: Dexia: no label for funds, but "group investors label" (portfolio 21) for insurance products // Fortis: limited use in funds Only external labels or certifications:CAB, PAM, Ethias, RabobankOwn label: Triodos

9. The Belgian SRI-experience - The SRI market?TRANSPARENCY SRI-methodology and researchof KBC/DEXIA/CAB/FORTIS/TRIODOS/INGAbsolute musts for us:- publication of criteria: all- publication of methodology: all but ING- publication of universum in all applications: only KBC, CAB, Triodos TRANSPARENCY SRI-methodology and research of the labels Ethibel, Portfolio 21 (Eurofinansol: premature)Absolute musts for us:- publication of criteria: all - publication of methodology: all - publication of universum in all applications: only Ethibel

10. The Belgian SRI-experience - The SRI market?GROWTH- 2 to 10 times faster than general markets in comparable classical products structured products (KBC, CAB, ...)

11. The Belgian SRI-experience - The SRI Yield?1.Ethical savings and investments stay "savings and investments"2.Theoretical framework- theory of profit-maximisation: rather inverse effect- theory of stakeholders: rather positive effect- theory of good management: good for image, influence, stability, innovation, client perception3. Financial yield for who: for investor or for public (or those who finance the externalisation effects of industries and commerces)4. Financial yield may not be mixed with the discussion of solidarity - solidarity, unless it comes from the profit of the financial services provider itself, is not easing the sales, on the contrary5. Some ethical investments are just simply not done for the financial yield, but for other reasons6. Ethical versions of alternatives are possible in all investment classesand must be compared with similar risk opportunities and investments.

12. The Belgian SRI-experience - The SRI Yield?7. Ethical products must thus be compared- for clients which are seeking yield- for comparable investment risks8. Published research from the Belgian players (BACOB, KBC, Dexia, Fortis, ING, Delen Bank, ) shows that ethical investments are similar in yield compared to risk comparable classical investments.Ethibel studies do show the same results.9. Ethical investments thus give a higher all in yield for- public investors (no externalisation)- sensible investors for ethics (no absence of ethics)- sensible investors to harm (no harm)

13. The Belgian SRI-experience - The SRI ways?The drive from scratch: possible for banks with "enough" clear view and retail responsible that do believe in market controlf.e. BACOB 1996-2002 : fundsf.e. CAB, KBC up till now: EMTN's or structured productsThe duo drive: double brandingf.e. Fortis and Red Crossf.e. Fortis and Krekelsparen/Epargne CigaleThe easy drive: changing the investment criteriaf.e. Dexia funds partially, KBC funds partially, Fortis partially The prudent drive: changing a % of outstanding money or just the new money into ethical criteriaf.e. LIS mainly

14. The Belgian SRI-experience - The SRI don’t's ?The stop and go f.e. starting, closing funds, starting later againThe classical product with an ethical prima facie outlookfe. funds with no transparency at all on ethical items claimedThe never ending downwards way?f.e. a banking group decides to- stop solidarity- to make less "high" its ethical standards or criteria (market capitalisation, n of negative names in certain industries)- to stop external co-branding- to stop external labelling

15. The Belgian SRI-experience - The SRI do's ?The go-go-go for it f.e. BACOB (actually Dexia branding uninterrupted (?) market leadership since 1996) f.e. DVV-DI: largest single investment portfolio in insurance world in Belgium (9 months of work….) f.e. Triodos: ethical products in an ethical bankThe credible way of transparency on products, dialogue with relevant stakeholders (authorities and NGO's) f.e. KBC : highest banking standards on SRI in BelgiumUninterrupted processes in the same directionf.e. systemic or regular solidarity schemes of KBC and TriodosMarket leadership practice and maintenancefe. Biggest Ethibel certified fund : LIS / Biggest savings scheme: Fortis

16. The Belgian SRI-experience - The SRI do's ?The unconditional conditions for success:- focus your concept and steps- go for it as if it is business as usual - make sure distribution and marketing is really aware of the importance of the project and really supports it (otherwise you will fail) - make sure your formal or informal leader is behind it - transparency, dialogue and seriousness are in ethics up to 10 times more important than in classical banking - make products with at least the same commissions, fees, compensation schemes effects as usual

17. The Belgian SRI-experience - The future ?Government intervention on specific and general items, especially in the - retail market- funds market- pension schemes market Institutional investors appetite is growing fast but wants experienced asset managers (use retail experience to break in to institutional asset management clients)Private banking breakthroughAssessment stress up till survival stress for 'non truly ethical or half ethical products

18. The Belgian SRI-experience - The future ?All Luxembourg related banks to boost in ethical fund activity since November 5 2007?Q & A?