Jupiter supports the Copenhagen Communiqué on Climate Change

At the end of September, the Copenhagen Communiqué on Climate Change was launched with over 650 global business leaders signed up from over 50 countries. The Copenhagen Communiqué calls on world leaders to agree "an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency of the crisis facing the world today". They also warn that business will suffer if a credible deal is not reached at the United Nations Climate Change Conference in Copenhagen this December.

This follows on from the Bali Communiqué in November 2007 and the Poznan Communiqué in December 2008, both with just over 150 global businesses signed up.  Jupiter was also signatories to both of these initiatives.

For further information and to read the full Copenhagen Communiqué, please go to www.copenhagencommunique.com

Jupiter signs the Investor Statement on a Global Agreement on Climate Change 2009
Jupiter has signed the 2009 Investor Statement on a Global Agreement on Climate Change. The statement is supported by 186 global investment institutions with assets of US$13trillion. In order to integrate climate change considerations into the decision-making process and re-allocate capital towards a low-carbon economy, clear and appropriate long-term policy agreements are essential. An international framework for reducing carbon emissions is likely to play a central role in managing the transition to a low-carbon society and supports the need for global action. Therefore, the statement, calls on world leaders to reach a strong post-2012 climate change agreement in Copenhagen in December.

For further information go to www.iigcc.org

Jupiter achieves gold
On 9th September, the Ethical Investment Association announced, at their Autumn Conference, the winners of the Transparency Awards. These awards identify funds that best adhere to a set of socially responsible investment (SRI) reporting guidelines. The guidelines were developed by the European Social Investment Forum and its national counterparts, including UKSIF, the sustainable investment and finance association. They are designed to help investors make informed choices around SRI funds and offer guidance to asset managers on areas, such as investment criteria and engagement approach.

Jupiter achieved the gold standard for the openness and clarity of its approach towards green and ethical funds' policies and practices. Only three other fund managers achieved gold: Henderson Global Investors, Insight Investments and Axa Investment Managers.

For further information go to http://www.eurosif.org/publications/european_sri_transparency_guidelines

Jupiter attends CDP Project Launch
In early October we attended the results event of the 2009 Carbon Disclosure Project (CDP) survey, which charts how the world's largest companies are addressing the challenges of climate change. The survey rates companies on the depth and scope of their disclosures and the quality of their reporting. This year for the first time, firms were also rated on their performance in responding to climate change and reducing their contributions to the problem.

Following the results of the 2008 survey Jupiter decided to engage with those companies in the FTSE 350 in which it invests, but do not disclose information to CDP. We wrote to encourage these companies to participate in the 2009 survey. We were therefore pleased to see that number of companies responding to the survey in 2009 has increased, although there is still further to go as 45% of companies in the FTSE 350 continue not to disclose.

This year Jupiter is focusing on engagement with companies in the Global 500 that have either not responded to the CDP or do not have a carbon reduction plan. We will be working with other investors through the United Nation's Principal for Responsible Investment clearing house.

Climate change and aviation - Jupiter tours Rolls Royce HQ
This month representatives from our SRI and fund management teams were invited to spend the day at Rolls Royce HQ in Derby. We were keen to understand how well the company is positioned to help its customers in the aviation industry make the transition to a lower carbon economy. Our visit was timely, following a recent announcement by the International Air Transport Association (IATA) at the UN Secretary General's Summit on Climate Change. The IATA pledged to work to reduce the global aviation industry's carbon emissions by 50% by 2050, in relation to the sector's 2005 emissions level and to stabilise emissions from aviation by 2020. This would be supported by a 1.5% average annual improvement in fuel efficiency*.

As with most debates around climate change the challenges that the aviation industry faces are complex. The long-lead times and high development costs make a step-change in the technology unlikely in the short-term, so the immediate focus must be on replacing old aircraft with newer more efficient models. Rolls Royce is investing in research and development to ensure it continues to deliver incremental improvements in fuel-efficiency. The company follows developments in the environmental debate around air travel closely and is feeding its expertise into policy debate through consultation with the UK's Climate Change Committee and work with the Environmental Technology Institute.

*www.iata.org

Chinese companies in the spotlight
China is beginning to make progress with some of the environmental challenges it faces as a consequence of its rapid economic growth and at Jupiter we are seeking to understand how Chinese companies are addressing their own environmental and sustainability risks, particularly as the regulatory environment in China becomes more stringent.

Our recent engagement with Chinese companies suggests a heightened awareness of environmental issues, with many companies investing in energy efficient technologies, environmental management systems and product quality certifications.

In September we met Midas Holdings, a leading manufacturer of aluminium alloy extrusion products that are used in the rail transportation industry.  Midas is an international player, so its excellent approach to quality standards and product certification has been essential in winning new contracts both internationally and closer to home.  The Chinese stimulus package prioritized investment in railways and Midas highlighted the importance of its quality standards and certifications in being awarded 100 percent of the first round of government contracts for investment in new railcars.

As an industrial player we also took this opportunity to discuss how Midas manages its energy and water footprint. It is important to recognise that the company procures aluminium and is not involved in smelting so its environmental impact is relatively more limited, with energy accounting for less than 3% of its total costs.  These types of issues are important to understand as they have the potential to impact on the competitiveness of the business and therefore its desirability as a potential investment in our portfolios.

In the same month we had a discussion with China Water Affairs regarding water quality. The company invests in and turns around distressed state-owned water utilities in second tier cities in China. Pollution and contamination issues could present a serious risk to its business but the company assured us they have experienced no quality issues to date and that they have an internal auditing team which carries out regular testing on water quality.

Discussions such as these highlight the link between sustainable business practices and potential investment performance.

Jupiter attends LSE conference debate on climate change policies in India
Chaired by Nicholas Stern with a keynote speech by RK Pachauri, the chair of the Intergovernmental Panel on Climate Change (IPCC)

India is the world's fifth largest emitter of carbon on an absolute basis and has been criticised for refusing to bind to targets for curbing its greenhouse emissions, although its carbon emissions on a per capita basis remain amongst the lowest in the world. The government has been proactive in policy changes to encourage lower emissions. In September, it announced plans to introduce domestic legislations in areas such as energy intensity, fuel efficiency, building standards and renewable energy use. This legislation will represent implicit targets to contain carbon emission growth. This is a powerful signal that it is willing to contribute to the global challenge of climate change.

The LSE debate was an opportunity to hear India specialists discuss the country's need for an efficient and coordinated energy policy. There was general optimism over the government's plans to introduce energy efficiency measures, targets for the most energy-intensive industrial units and an ambitious programme to source 20GW of electricity from solar by 2020. However, climate change policy remains a challenge in a country where 400 million people do not have access to electricity and where the power sector needs not only capital investment but also profound modernization and regulatory evolution. The discussions gave an overview of some of the existing corporate initiatives to develop renewable energy projects and grid-independent powering solutions. Micro-finance models were highlighted for the economic and social benefits they offer, notably in rural areas, while enabling the expansion of non-capital intensive renewable energy projects*.

*FT article, India signals flexibility on climate targets, September 22 2009

Jupiter visits the building site of the Riverside Resource Recovery Facility in Belvedere, which will be the biggest energy from waste (EfW) plant in the UK
The tour was organized by Costain, the company carrying out the engineering works of the Riverside Energy from Waste facility at Belvedere. The plant is Cory Environmental's most significant project development and when complete will produce 62MW of electricity; enough to supply some 66,000 homes. The project will also lead to important fuel savings. Every year an estimated 585,000 tonnes of household and industrial waste from central London boroughs will be transported by barges on the Thames rather than by road. This will divert more than 100,000 heavy goods vehicles from London's congested roads, allowing significant fuel savings.

From a technical point of view, the Riverside facility will be at the forefront of EfW technology. The moving grate combustion plant will have one of the highest efficiency rates in Europe and complies with the emission limits for incinerators set by the European Union.

The project helps satisfy two main issues that the UK needs to address: energy security and waste diversion from landfill. In the context of a continued decline of domestic gas production from the North Sea, and low gas storage capacity, the UK needs to develop new sources of energy. It also needs to build new waste treatment capacity to comply with European Union waste directives.