The election of President Barack Obama has marked a sea-change in attitudes towards climate change in the US. His first few months in office have seen the implementation of a raft of measures that highlight his understanding of the environmental and economic importance of climate change, both in terms of its threats as well as its long-term opportunities.

The US$787bn American Recovery and Reinvestment Act, which was passed in February, included several initiatives designed to cut US dependence on oil and to create up to half a million green collar jobs.

The passage of the American Clean Energy and Security Act through the House of Representatives, earlier this month, was also a landmark for US climate policy.

While the vote was narrow, the potential for 'green jobs' rather than climate change, per se is now underpinning the legislative drive.

President Obama's willingness to lend his considerable political will to the cause is particularly encouraging. The importance of this shift in stance cannot be underestimated as we approach the UN Climate Change Conference in Copenhagen.

The US is not alone in recognising that green investment now can create jobs for the future and revive ailing economies. We have seen some US$470bn1 pledged for environmental solutions projects by G20 nations in recent months.

China in particular stands out in its commitment to green projects. It plans to invest around US$200bn of its US$586bn economic stimulus package on improving its transport system, updating its electricity grid and boosting water and waste services2. This investment reflects an emerging sustainability ethos in China.

Closer to home, we have seen a number of measures introduced by the UK government to help it meet its objective of reducing carbon emissions by 80% by 2050. Most recently, Ed Milliband, the Energy and Climate Change Minister, has launched the Renewable Energy Strategy, which shows how the UK will meet its legally binding commitment to cut UK emissions by a third by 2020. Lord Mandelson has also unveiled the UK's Low Carbon Industrial Strategy. The two White Papers outline innovative schemes, such as loans to families to make energy efficiency improvements that are repaid through savings on fuel bills, and cashback schemes for households and communities that generate their own clean energy.

Amid the most severe economic downturn in decades, it has been encouraging to see that initiatives to tackle climate change and decarbonise our economies have become part of the solution to global economic troubles. The transition to a low carbon economy is not something to be delayed because of the global recession - instead it has become the driver of recovery.

1. HSBC estimates
2. Towards a Global Green Recovery, p.21 (www.pik-potsdam.de/globalgreenrecovery)

Our engagement
We believe that engagement with companies we invest in is an important part of our fiduciary duties and responsible ownership, and climate change remains a key focus of our discussions. Not only is it good for the planet, but is good for the long-term sustainability of investment performance. The following demonstrates some of the ways companies in which we invest are addressing this issue.

In the six month period; 1 January to 30 June 2009, we held 61 meetings with companies from a range of sectors. One of the core themes in our discussions has been how companies are progressing with green initiatives in a challenging economic environment.

Included in these numbers are a series of meetings held with the Chairmen of Jupiter's core UK holdings. These fund manager led meetings were set up to discuss a range of corporate governance issues, such as composition, evaluation and effectiveness of the Board, executive remuneration and capital raisings. We also discussed how sustainability issues are addressed at Board level.

Sustainability in the Banking Sector
In April Jupiter attended the Barclays' 2008 Sustainability Report launch.  The presentation by the CEO and Chairman focused on how Barclays' sustainability programme will support its efforts to rebuild customer trust in the industry following the financial turmoil of previous months. It also aims to ensure robust governance systems are in place to mitigate reputational issues and future regulatory risk.

On the environmental side, the session focused on carbon accounting and climate change risk. Understanding how to model carbon risks into long-term financing and investment scenarios continues to represent a challenge for the industry. John Varley, Barclays' CEO suggested that the skills and expertise of banking and finance professionals should be more extensively used to develop better carbon accounting practices.

You can view the report here.

We have also met with representatives of HSBC and Standard Chartered during the last six months to discuss sustainability issues and have an ongoing programme of meetings with others operating in this sector.

Insurance industry to disclose information on Climate Change Risks
In March the National Association of Insurance Commissioners (NAIC)1 in the US announced that large insurance companies will have to disclose to regulators the financial risks they face from climate change, as well as actions they are taking to respond to those risks.

In order to understand the challenges that such reporting might present for UK companies, Jupiter met with RSA's UK CEO to discuss how climate change mitigation is integrated into its risk management processes. In particular we focused on how the company is managing its exposure to flood risk in the UK market. RSA believes it has some of the best flood mapping technology in the sector and is relatively less exposed to properties at risk from flooding than many of its peers.

Although the incidence of flooding and extreme weather events is increasing, the meteorological data now available enables underwriters to account for these risks more accurately through pricing. RSA also pointed to the fact that customers typically renew insurance policies on an annual basis so premiums can be adjusted to reflect changes to the risk profile.

RSA's UK CEO also highlighted the importance of recognising and understanding the longer-term costs and opportunities that climate change presents. He emphasized the need for industry initiatives to be supported by strong government leadership on this issue.

Global Scenarios on the Future of Mining & Metals
In April Jupiter was invited to attend a workshop in London for the World Economic Forum's Mining & Metals global scenarios project on the future of the global mining & metals sector. This workshop was one of a series held around the globe, which have been organised to address the following question:

"What will the environment for the global mining & metals sector look like in terms of sustainable development in 2030?"

The London workshop included representatives of the mining industry from companies, such as Anglo American, BHP Billiton, Rio Tinto, Vale and Xstrata, as well as a range of other stakeholders.

The workshop aimed to identify the most relevant and challenging critical uncertainties, which will influence the global mining & metals sector over the next 20 years.

The following issues were highlighted during the discussions:

• Climate change - impacts, policies, carbon economy, water availability
• Global values and governance - global governance, values in society, new global deal
• Social expectations - social sustainability, poverty, legacies, benefit sharing, voluntary versus mandatory
• Economic outlook - economic growth, access to capital
• Availability of resources - scarcity, access
• Power shifts - demise of the West, rise in importance of China
• Social and political stability - social unrest and conflict, war, fragile states, organized crime
• Public resource management - Resource nationalism, protectionism, extent of state involvement

The project will continue to develop the scenarios with the aim of launching its findings at the next World Economic Forum Annual General Meeting in Davos in 2010.

Driving Change - a focus on Electric Vehicles
With emissions from cars and vans accounting for nearly half of all transport emissions2 governments are increasingly focused on reducing the environmental footprint of road transport. In April the UK government announced it would offer consumers incentives of up to £5,000 to purchase electric cars as part of its plans to see the creation of electric car cities across the UK and the launch of large-scale experiments with ultra-green vehicles3.

Jupiter's SRI team has been involved in a number of focused meetings to explore the barriers to wider penetration of electric vehicle. A presentation by Ricardo, a specialist automobile and engineering consultant, suggested that the key constraint to wider deployment of electric vehicles continues to be the cost of the battery pack. For a C class vehicle (equivalent to VW Golf) the costs of the battery are in the region of £8,000 to £10,000.

While governments have set targets to reduce battery costs, there is no clear engineering route to significantly take out the additional costs, which will enable electric vehicles to be commercially viable on a significant scale.

Former Government advisors make recommendations for Low Carbon Industrial Strategy
A panel of specialists, including Jupiter's Emma Howard Boyd, who advised the Government on how to reap the biggest possible market share of the lucrative environmental sector have warned that a more urgent, joined-up and systematic approach is required to ensure that the UK does not get left behind in the race to dominate international green markets, particularly in light of a resurgent US.

This is the main finding from a study entitled Commission Statement - Driving Investment and Enterprise in Green Markets, which was launched at the House of Commons in June 2009. Published by the Aldersgate Group, the authors of the report interviewed all the former members of the Commission on Environmental Markets and Economic Performance (CEMEP). Drawn from business, trade unions, universities and NGOs, CEMEP was established by Gordon Brown in light of the Stern Review to make detailed proposals to ensure the UK is in the best possible position to seize the new opportunities of the low carbon economy.

The Commission published its findings in November 2007 and the Government officially responded to the twenty four detailed recommendations the following May. A year on, this new report reviews performance to date and makes recommendations for achieving a credible and ambitious low carbon industrial strategy and economy.  www.aldersgategroup.org.uk

1. www.naic.org
2. Stern Review 2006 Transport Annex
3. www.dft.gov.uk/pgr/scienceresearch/technology/lowcarbonelecvehicles