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Www.innovestgroup.com

Agenda. Innovest Why Should We Care? Emerging Indicators of Competitive Advantage - Key DriversImplications for InvestorsInnovest Rating Model-Findings

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Www.innovestgroup.com

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    2. Agenda Innovest Why Should We Care? Emerging Indicators of Competitive Advantage - Key Drivers Implications for Investors Innovest Rating Model- Findings – The Electric Power Sector Climate Change – A Key Emerging and Financially-Relevant Value Driver Conclusion- Q&A

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    4. What We Do Research coverage: reports on 2200 companies globally, 60+ sectors: North America, Europe, Asia-Pacific, global emerging markets Best-in-class rating: from AAA (top) to CCC (Bottom) within each industry sector Innovest’s perspective: AAA companies are those which supply the goods and services which we demand, with the lowest environmental impact relative to their peers and in a socially equitable manner Over $1 billion currently invested based on Innovest’s research platform (e.g. State Street Global Advisors, T.Rowe Price, Crédit Agricole AM (IDeAM) and ABP)

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    7. What We Do

    8. Four Key Intangible Value Drivers The “Iceberg” balance sheet

    9. The Findings–Analysis of Stock Performance Based on Environmental Ratings (May 1997 – Nov. 2005)

    10. Superior Environmental Management – Benefits

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    14. Innovest Rating Model

    17. Across a Number of Investment Styles. . .

    18. The Green Planet Fund (IDEAM)

    20. Key Drivers

    21. Electricity Industry - Key Drivers

    22. Downside Issues – Risk Metrics Air Emissions Regulations: SO2, NOX, Hg and increasingly CO2 Other Operating Risks associated with coal mining, water and waste management Resource Usage & Efficiency Site Remediation Liabilities Nuclear Management (long-term waste disposal, pot. radiation releases, decommissioning, public acceptance and security concerns) Other Sustainability Risk/Climate Change

    25. Legislation to cap CO2 emissions is inevitable Question of “when and what form”, rather than “if”? What will be the impact on the Utility sector? Debate has moved from policy to technology - Global focus is on technology solutions

    27. Electric power plants account for 40 percent of U.S. CO2 emissions Downside Issues – Potential Carbon Caps

    28. Major C02 emitters may face higher debt charges from air quality conscious lenders

    29. Financial impacts are highly differentiated across companies, creating potential winners and losers: Prevailing power market dynamics and competitive environment in operating states Pace of carbon regulations in operating states Ownership of generating assets and geographic diversification Fuel mix of generating assets Carbon Caps- Innovest Analytical Approach

    30. Financial impacts are highly differentiated across companies, creating potential winners and losers: Flexibility to diversify the existing generation portfolio away from carbon- intense fuels Ability of passing on costs to consumers, and access to less-carbon-intensive technologies Strength of the corporate carbon governance, management systems and mitigation strategies Positioning to pursue and profit from emerging business opportunities in new less carbon-intense technologies Carbon Caps- Innovest Analytical Approach

    33. Benefits of Investments in Green Power and Distributed Power Generation

    36. For Further information

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