Resolutions help investors to draw a line in the sand
 Understanding technological frontiers
 Mastering sustainability analytics
 Jupiter attends the Sustainable Banking Conference
 Discussions with food producers and retailers focus on food security in a changing climate
 Will blue and yellow make green?
 Racing towards a low carbon economy - Jupiter participates in World Forum on Enterprise and the 
Environment

Resolutions help investors to draw a line in the sand

As a result of these resolutions, both oil giants provided investors with more information about the environmental impact of their businesses. Shell in particular impressed us with its stakeholder engagement as regards oil sands and its commitment to carbon capture trials. The company provided information on its assumptions around carbon regulation and environmental risks and also highlighted a wide range of measures it had introduced to improve sustainability performance, ranging from improved energy efficiency to employee safety.

At Shell's AGM in May, we voted against the resolution in view of the improvements in relevant disclosure mentioned above. However, we voted in favour of the resolution at BP's AGM in April. While the resolution received 6.21% and 5.74% of shareholder support at the BP and Shell AGMs respectively, the preceding months leading up to the ballots further highlighted the achievements of active investors such as ourselves in seeking information that adds value to investment decision-making processes.

Understanding technological frontiers
We see the unfolding of events at BP's Deepwater Horizon platform in the Gulf of Mexico as a stark reminder of the importance of understanding fully the risks associated with operating at the edge of technological frontiers - not least for investors. Jupiter has actively engaged with BP and its peers extensively on this front, and will continue to build upon these ongoing dialogues to better understand and support best-practice standards of management, particularly with regards to low-probability catastrophic events.

The wider extractive sectors are naturally a particular focus group in this respect. Recent examples of this can be seen in our discussions with mining companies Anglo-American, Rio Tinto and Xstrata. In separate meetings, we explored the worst-case scenario catastrophes in the mining sector, and established the extent to which these risks are anticipated and monitored internally. The companies explained that catastrophic events and risk management frameworks in other sectors inform their operational approaches considerably.

Of course the risks associated with leading-edge technologies are far from limited to the extractive sectors. The strength of investment opportunities in clean energy was perhaps reiterated with the rhetoric of President Obama in stating his conviction that "now is the time for us to start making that transition and investing in a new way of doing business when it comes to energy." However future energy pathways remain no less subject to investment risks. The unintended consequences associated with the proliferation of first generation biofuels, for example, again underlines our rationale for developing a clear picture of systemic, sectoral, and company-specific sustainability risk and opportunity profiles as a means of generating investment value.

Mastering sustainability analytics
Jupiter recently collaborated with Imperial College on a project to develop an analytical framework for assessing environmental, social and governance risks within the oil & gas and banking sectors. Six students of Imperial's Masters in Environmental Technology spent three months compiling the framework as part of a learning exercise designed to assess the practicalities of formally combining quantitative impact and risk metrics with our qualitative and engagement-based assessments of management competency and strategic direction - all with a view to enhancing investment analytics.

The study provided support for our long-held assertion that shareholder engagement provides an essential layer of analysis in order to identify long-term value opportunities, not least in emerging market companies where standards of corporate disclosure typically fall short of those now commonly expected of European and North American counterparts. This theme is currently being explored further by one of the project team during a three-month internship in connection with Jupiter's China Sustainable Growth fund, demonstrating the ongoing contribution made by academic institutions to the sustainable investment community as proponents of best-practice approaches.

Jupiter attends the Sustainable Banking Conference
With the financial crisis having posed questions about the role of the banking sector within society, the FT Sustainable Banking Conference reminded attendees of the capacity for the sector to facilitate economic and social development. Discussions focused on how banks are capable of addressing the related challenges of climate change and global poverty with measures such as financing low-carbon growth in emerging markets and funding mechanisms that support global food security.

With regards to the latter challenge, food producers and agriculture specialists highlighted the need for farmers to access capital in order to invest into crop science, machinery, weather-related insurance and training. Additional investment in physical infrastructure, such as transportation and refrigeration, was also said to be a critical requirement. This relates to an ongoing theme of Jupiter's engagement with the banking sector organisations so as to aim to identify those companies seeking to build long-term investor value in meeting social and environmental challenges on a financially sustainable footing.

Discussions with food producers and retailers focus on food security in a changing climate
Population and consumer growth is placing increasing pressure on global food supply chains, exacerbated by the spread of energy- and water-intensive Western diets. In China for example, meat consumption has risen from an average of 20kg per capita in 1985 to more than 50kg in 2008 - a 150% increase over 15 years (according to CLSA's 'Growing in China' report, May 2010). The challenges posed to global food security are further extended by climate change related issues, such as biodiversity loss and extreme weather conditions.

Engaging with food producers and retailers on food security and the sustainable management of their supply chains remains a key area of focus at Jupiter. For example, a trading update with Unilever provided an opportunity to discuss the company's management of its agriculture supply chain and the importance of innovation in developing sustainable consumer products. A further meeting with Booker Group also provided an update around its strategy for expansion into India, where food shortages are a politically sensitive issue, but where studies demonstrate 56% of food is wasted.

Will blue and yellow make green?
While it remains to be seen whether David Cameron will make good his intention for the new administration to be "the greenest government ever", the recent general election demonstrated that environmental politics has nonetheless turned a corner. Unlike previous general elections, this one saw all parties adopt "green" policies to a greater or lesser extent. In the last 10 years, development of renewable energies in the UK has often fallen short of that in other European countries. However, this election saw not only the arrival of the UK's first Green Party MP, but greater emphasis from all sides on the importance of a low-carbon economy and creating 'green' jobs in order to grow the UK out of its indebtedness.

With June's budget announcements expectedly focusing on immediate austerity measures, we anticipate the government will publish detailed proposals on the creation of a Green Investment Bank following the spending review in autumn this year, helping to facilitate a transition to a low-carbon economy. In addition, the government reaffirmed its intentions to tighten the UK Climate Change Levy so as to support a consistent carbon price, and to offer households incentives to reduce carbon emissions and energy bills under the Energy Security and Green Economy Bill.

Such policy developments reflect the sorts of measures being discussed and introduced across the world. So despite no over-arching deal being achieved at the Climate Change Summit in Copenhagen, we are seeing grounds for continued opportunity among companies offering environmental solutions.

Racing towards a low carbon economy - Jupiter participates in World Forum on Enterprise and the Environment
With transport being the second largest global greenhouse gas emitting sector, this year's World Forum focused on 'Low Carbon Mobility: Land, Sea and Air'. The forum brought together 150 experts, including the US Energy Secretary, Dr Steven Chu, and the former Russian President, Mikhail Gorbachev, to consider what transportation will be like in 2050, and what action is needed to reach that point. The environmental footprint of the sector is shaped by the technologies available for travel, and by the structure of the built environment and related infrastructure. Discussions covered many subjects, such as depleting conventional oil reserves, increasing demand for transport within emerging economies, and the increasing impact on the environment.

During the opening session President Gorbachev highlighted the need for action in moving towards a de-fossilised economy and how it was now vital for politicians to work more closely together to make a low carbon economy a reality. Dr Chu told the delegates that it was inevitable oil prices would rise as demand for oil increased and that it was a key priority for the US Administration to de-carbonise its economy.

Over the two day conference we heard from a wide range of companies from the transport sector, including Rolls Royce, BAA and Go-Ahead Group, as well as companies in closely related sectors, such as Shell and BP. Conference themes included: the comparative scope for either changing existing vehicle technologies (e.g. reducing the weight of the cars and improving their engine), or developing new technologies (e.g. hybrid or electric vehicles, advancing battery technology, alternative fuels), de-carbonising the energy system, and redesigning the built environment.