THEME -
SUSTAINABLE MARKETS
A banking issue
Emission trading
Kyoto compliance
What is Rabobank doing to promote sustainability?
often involved in discussions from start to finish, with
sponsors inviting us to negotiate the EPC itself, not simply
finance it. This integrated approach means that we actively
work with sponsors to niake a project a bankable pro-
posal.' While the move to set up the Sustainability and
Social Innovation team in India was prompted by demand
from the cliënt side, the team owes a great deal to the ex
pertise available from the Sustainability and Social Innovation
Directorate in Utrecht from which it is migrating best prac-
tices in many areas.
Daan Dijk, Manager Sustainable Energy and Environmental
Markets, believes passionately that environmental markets
are a commercial proposition. 'Why? Because real problems
need real solutions and these require real money and new
financial products and services. We are seeing an increasing
monetarization of the environment, with environmental
management becoming a political issue. If we look at emis-
sion reduction regulation, the plant-based "polluter pays"
system failed to produce the required results. Continuing
climate ehange brings rising costs to society and a need for
a more global, market-based approach. The emergence of
emission trading is a response to this and a major opportu-
nitv for KI.'
Under the Kyoto Protocol, governments are subject to binding
limits 011 greenhouse gas (GHGs) emissions. The aim is to
reduce overall emissions of six GHGs by 5.2% below their
I 990 levels between 2008 and 2012. One mechanism that
has been eagerly taken up is emissions trading. The costs of
compliance with the Kyoto Protocol have been estimated at
around 2% of global Gross Domestic Product (GDP). The
use of emission trading mechanisms can reduce these com
pliance costs to 1 of GDP. The future importance of emis
sions trading is best illustrated by the US. Despite the Bush
Administration's failure to ratify the Kyoto Protocol, lors of
US companies are already trading emissions. Concludes
Dijk: 'Both business and government in the US know that
this is the most efficiënt way to achieve environmental
change rather than the plant-based approach.
The Rabobank Group is negotiating an emission reductions
procurement contract with the Dutch government, whose
aim is to buy 50% of its total emissions reductions abroad.
Signatory to Carbon Disclosnre Project with otber financial
institutions including Allianz, Merrill Lynch and Swiss Re
Participant in Prototype Carbon Fund (World Bank project)
Finances Clean Development Mechanisms and joint imple-
mentation projects in developing countries and countries in
Central and Eastern Europe, in line with Kyoto Protocol
Procurement of project-based emission reductions - with
Dutch government bodies
Structured finance and risk management (Rabobank Environ
mental Financial Products/ RI-Global Financial Management)
activities
Weatber derivatives and structured reinsurance
R EFP/Interpolis)
Sustainable asset managementprivate banking (Robeco,
Schretlen)
NOx trading platform for Dutch industry - with ING Bank
Green certificate trading platform - with Dutch
national grid, TenneT
Climate neutral payment systems - with Shell and World
Wildlife Federation (WWF)
Climate Change Centre - with the Red Cross
Promotion and extension of market leadership in national and
international 'green finance' system
The Word I 9