New Commitments Yield New Markets

1. New Commitments Yield New Markets Sustainable Enterprise Summit March 17, 2004

2. In the past 20 years: Economic output up 75% Energy use up 40% Meat consumption up 70% Auto production up 45% Paper use up 90% Advertising up 100% World population up 35% Meanwhile: 75% of marine fisheries are fished to capacity or overfished; 5% in 1960 Water supplies per person dropped by a third between 1970 and 1990 A Nevada-sized area of forest is lost every year Roughly half of the people in the world live on less than $2 a day A sense of where we are

3. Premise of this Panel • Unprecedented growth of demand for natural resources • Rapidly accelerated pressure on natural systems • More people competing for their fair share • Something has to give • Somebody has to lead • There are real business opportunities and advantages for those who commit to lead the way

4. Panelists • Madeleine Jacobs, Head of Sustainable Development, ABN AMRO • Thomas Jorling, Vice President, Environmental Affairs, International Paper • Sofie Beckham, Forestry Manager, IKEA Trading Americas

5. Questions • What are the businessmotivations that persuaded your corporation to make these commitments? • What have been the most significant challenges, obstacles, or impediments to putting these commitments into practice? • What do you think the future of sustainability commitments will be in your industry?

6. Format • All three will address the first two questions • Discussion • All three will speak about the future • Discussion

7. New Commitments Yield New Markets Thomas Jorling Vice President Environmental Affairs

8. THREE DRIVERS OF COMMITMENTS • mandatory / regulatory • VOC, NOX, SO2 • voluntary / external • CCX, EPA-climate leaders • voluntary internal • endangered species banking, wetlands mitigation banking

9. WHY MOVE TO “CAP AND TRADE” AND OTHER MARKET MECHANISMS • To learn and gain experiences with the emerging techniques that offer the promise of cost-effective pollution control beyond current standards - these include VOC, NOX, SO2 and perhaps soon - CO2 • To participate at the earliest possible stages of the development of these mechanisms to help influence the shape and content to assure practicality and feasibility • To test the reality of ‘markets’ in natural resources (i.e. endangered species, conservation easements, wetlands mitigation) • As a natural resource/forest land based industry these ‘markets’ not only offer environmental achievement but also ways of unlocking value from assets

10. Exploring and testing the new while spending is still being driven by the old – i.e. capital spending is dominated by EPA rules, no discretion not to spend – compliance required – even though high cost – little benefit Maintaining existing environmental infrastructure both O&M and capital – sucks up resources – at a time when global competitiveness is keen Conflicting public policy and law – many EPA requirements result in more greenhouse gas emissions with no comparative assessment that such result is worth the environmental benefit from the requirement Rules that require incremental reductions across all systems at high cost – lock in old technology and discourage new technology CHALLENGES / OBSTACLES TO THESE EMERGING MECHANISMS

11. WRI Sustainable Enterprise SummitWashington, March 17, 2004 New Commitments Yield New Markets for Financial Institutions Madeleine Jacobs Head of Sustainable Development ABN AMRO

12. Our Sustainability Learning Curve SD business Strategy Value Creation Equator Principles O&G policy Mining policy Forestry dialog Loss Avoidance APP Dialog with FOE Freeport Value Destruction Proactive External Dialogue Wake-Up Call Developing Internal Standards Common Sector Baseline Case SpecificDefence Innocence Pursuing the Business Case

13. The Equator Principles • Voluntary declaration among leading group of Project Finance Banks • Establishes a common framework for commercial Banks • Will provide loans only to borrowers complying with Environmental & Social standards and processes • Based on IFC/World Bank guidelines/policies • With 20 Banks adopting, a de facto industry standard

14. The SD Business Rationale for Financial Institutions • Our LT success is linked to core competencies that underpin • our role as a Bank: • Trust • Client Satisfaction • Risk Management • Employee Satisfaction & Attraction

15. Challenges in the implementation of commitments • Building the Business Case • Translating SD into a focused business strategy • Making dilemmas tangible/enabling people at the front • Compliance • Dealing with emerging markets clients with standards still lagging

16. WRI Summit New Commitments Yield New Markets Social & Environmental Responsibility in a Competitive Marketplace

17. Question 1: IKEA Business Motivations • DRIVERS • The IKEA vision- “Create a better everyday life for the many people.” • Past challenges/milestones- IKEA must be proactive towards social and environmental issues to ensure our long-term future. • External groups- NGO’s and other external groups have increased our awareness of important issues.

18. Question 1: IKEA Business Motivations • ADVANTAGES • Raw material security- IKEA must be proactive to have supply! • Eco-efficiencies- Efficient raw material use has a positive effect on costs. • Marketplace differentiation- Consumer awareness of social and environmental issues is growing.

19. Question 2: Challenges, obstacles and impediments • Communication-Internal/external • Resources-New competencies and tools needed • Varying global conditions-Different countries, different conditions

20. Questions and Answers

21. Final Question What do you think the future of sustainability commitments will be in your industry?

22. Good Housekeeping Products & Materials Forestry Suppliers Stores Transport & Warehousing Question 3: Future of Sustainability Commitments • Deepening commitments • Partnerships will increase • Systems thinking/New tools

23. Question 3: Future of Sustainability Commitments • Product recovery • Product tracing • Consumption

24. We have only just begun, we still have a long way to go!!!

25. Likely to be an extended period of policy gridlock and impasse until inefficiencies build to an inescapable need to change That need will result from (or produce) a convergence between: Development of systems and processes (including those based on markets) that are coherent, cost-effective and efficient Examples of results from innovation pilot demonstrations involving governments and NGOs Rapid development of transforming technology, especially in climate / environment friendly energy production, water cleaning, etc. Growing spirit of partnership rather than adversarial relations among stakeholders THE FUTURE

26. Some of this will be driven by what appears to be a unifying concept – sustainability. Sustainability recognizes that environmental, economic and social welfare conditions all have to be addressed if 9 billion people can satisfy their basic aspirations for a decent quality of life without degrading the life supporting biosphere.

27. New Roles and Opportunities for the Financial Sector • We are entering an era where we rebalance priorities of the 90s- toward governance and people/planet • A more active role for Banks as part of society, working towards balanced solutions jointly with public sector and industry clients • SD will become a critical internal success factor for Banks • New markets and products: • SRI funds, sell and buy side research (focus on governance & people/planet) • Brownfield lending, Renewable Energy funding, Emissions trading • Corporate Finance and Project Finance Advisory

28. Questions and Answers

29. Thank You