Rosemary Bissett (Head of Sustainability, Governance & Risk, Enterprise Risk, National Australia Bank) - Presentation at the United Nations Association of Australia (Victorian Division) Corporate Sustainability Leadership Seminar ‘Corporate Water Valuation: Accounting for Risks and Impacts, Valuing Ecosystem Services’ held on Monday 29 April 2013, in partnership with National Australia Bank. Held in support of the International Year of Water Cooperation, seminar addressed some of the challenges and opportunities associated with corporate water valuation, as well as local actions and global tools and initiatives in this area. It highlighted some examples of what Australian businesses are doing, alongside government and NGOs, to measure and manage their risks, impacts and dependencies on water. Guest Speakers & Panelists included: • Matt Kendall, General Manager, Planning and Evaluation Group, National Water Commission • Rosemary Bissett, Head of Sustainability, Governance & Risk, Enterprise Risk, National Australia Bank • Carl Obst, Editor, UN System of Environmental-Economic Accounting (SEEA) • Jean-Michel Seillier, Regional Manager Victoria, Veolia Water • Gioia Small, Regional Manager Sustainability and Vintrepreneur, Treasury Wine Estates • Michael Spencer, Secretary, Water Stewardship Australia and Fellow, Department of Business, Law and Taxation, Monash University Facilitator: • Rob Gell, Environmental Entrepreneur, Chairman of UNESCO Western Port Biosphere, and Chair of Wildlife Victoria More information available at: http://www.unaavictoria.org.au/education-advocacy/masterclasses/corporate-water-valuation-seminar/

1. Corporate Water Valuation:
Accounting for Risks &
Impacts, Valuing Ecosystem
Services
A finance sector perspective
Rosemary Bissett
Head of Sustainability Governance & Risk
29 April 2013

2. Natural Capital Declaration
An Update

3. The Natural Capital Declaration
Centres on four key commitments:
1) understanding the impacts and dependencies of
natural capital, directly and through customers, by
financial institutions that can translate into material
risks or opportunities;
2) embed/integrate natural capital considerations in
financial products and services;
3) report/disclose on natural capital; and
4) work towards a global consensus for the
integration of natural capital in private sector
accounting and decision making.

4. The NCD partners
Now signed by 41 Financial Institutions
Supported by 23 organisations
Convened by

5. WORKING
GROUPS
2012/2013
OUTPUTS
2015
OUTPUTS
2018
OUTPUTS
2020
OUTPUTS
1. UNDERSTANDING
NC DEPENDENCY
2. EMBEDDING NC
IN FINANCIAL
PRODUCTS
&SERVICES
3. REPORTING &
DISCLOSURE
Agreement on road
map with NCD
signatories
Assessment framework
on risks and
opportunities related to
finance and NC
Best practice case
studies
4. FINANCIAL
ACCOUNTING
Set up governance
structure and
secretariat
NCD road map
work plan,
schedule and
budget
NCD Roadmap
Decision criteria for
embedding NC into FI’s
products and services
NC friendly products and
services
Templates for NC
reporting and disclosure
recommendations
Shadow price
accounting
Environment P&L’s
for FI’s
4 pilots in FIs
(1 per step)
Mid term review on
4 steps output
Comparable global
standard for NC accounting
for FI industry
Regulatory framework
mandating NC accounting
Comparable global
standard for NC
accounting for FI
industry drafted
8 pilots in FI’s
(2 per step)
30 FI pilots 130 FI pilots

6. Finance sector perspective on
managing water related risks
and opportunities
Water has moved from a marginal input towards a central enabler of
food, energy and climate security – and a vital prerequisite for growth

7. • Water is a basic necessity for sustaining life (it remains undelivered to many
of the world’s poor)
• Availability of adequate quantity and quality of water is a service provided
by ecosystems
• Macro-conditions are impacting water availability and quality – increasing
demand (population), degradation of watersheds, deforestation and extreme
weather patterns
• BAU activity translates to a unsustainable 40% gap between global supply
and water withdrawals by 2030 – leading to growing water security risk
(varies by geography and locality)
• Water makes a crucial contribution to agriculture, fisheries, forestry, energy,
industrial production and to quality of life
• Use of tools such as a marginal abatement cost curve for water investment
will help to identify the most efficient and effective investment opportunities.
7
WaterWaterWaterWater –––– a natural value issuea natural value issuea natural value issuea natural value issue

8. Water risk – what are we talking about?
Drought declared in south-east England
The Guardian, Monday 20 February 2012 14.55 GMT
Wellington has ’20 days of water left’ in
drought
Published: 8:27AM Wednesday March 13, 2013 Source: Fairfax
Queensland floods: the effects could go global
BY Jonathan Harwood LAST UPDATED AT 13:00 ON Thu 13 Jan 2011

9. Categories of water risks
• Strategic – relevance to future products and supply chain
• Financial – costs for compliance with regulatory
requirements, management of water entitlements, costs
for supply, storage, purification and transport of water
• Regulatory – changes to the policy environment, access
rights etc
• Compliance – permits for extraction, licences for
discharge to sewer or environment
• Operational – availability/quality/impact on operations
and production
• Reputational – impacts on social licence to operate

10. Activity exposure to water-related risk –
some examples
Sector Activity Water exposure
Agriculture Horticulture, Arable farming,
livestock, dairy farms
Availability & quality of water;
feedstock, irrigation
Mining & metals Mining, manufacture, recovery &
recycling
Availability & quality of water;
feedstock; environmental control
Power, oil & gas Power plants Availability & quality of water;
cooling; effluent carrier
Manufacturing Varied e.g. Pulp/Paper
Manufacture; Chemicals; food &
beverages
Varied e.g. Availability & quality
of water; feedstock; cooling;
effluent carrier; safety agent;
cleaning; process solvent;
Construction Land development Flooding risk; availability &
quality of resource
Tourism & leisure Wetlands & water courses;
recreational; hospitality, leisure
Availability for plant & animal life;
Availability & quality of water for
human activities; changes to
waterborne disease; irrigation
10

11. Drivers of water related risks and
opportunities
11
Regulatory &Regulatory &Regulatory &Regulatory &
legislativelegislativelegislativelegislative
requirementsrequirementsrequirementsrequirements
ResourceResourceResourceResource
aaaavailability &vailability &vailability &vailability &
qualityqualityqualityquality
SocialSocialSocialSocial
accountabilityaccountabilityaccountabilityaccountability
Products andProducts andProducts andProducts and
servicesservicesservicesservices
WaterWaterWaterWater----relatedrelatedrelatedrelated
infrastructureinfrastructureinfrastructureinfrastructure
Water technology/Water technology/Water technology/Water technology/
efficiencyefficiencyefficiencyefficiency
Water servicesWater servicesWater servicesWater services
Project financeProject financeProject financeProject finance AssetAssetAssetAsset
managementmanagementmanagementmanagement
Corporate financeCorporate financeCorporate financeCorporate finance
Water fundsWater fundsWater fundsWater funds

12. A FI risk management approach
12
Risk Identification
Country level
(Political, sovereign, exchange
rate, regulatory, social, legal &
compliance risk)
Project level
(Construction, marketing,
operational, counter-party and
reputation risk)
Terminate
investment
consideration
Mitigation measures
Monitoring of risk
• Changes in compliance
requirements & regulatory
change
• Reputational risk
• Climate change
• Loan documentation
• Stakeholder consultation
• Insurance cover
• Hedging instruments
Tracking changes in risk
profile
• Feasibility studies
• EIAs (new)
• Due diligence (existing)
• Financial due diligence
Screening
(Assessing significance
of risk)
Risk control measures
by client
(legal, technical and business
measures)
Measures

13. The CDP Water Disclosure RequestThe CDP Water Disclosure RequestThe CDP Water Disclosure RequestThe CDP Water Disclosure Request
“We have learned from our
comprehensive measurement and
reporting capabilities for GHG
emissions that transparency is a
powerful tool for motivating people
and organisations to change
behaviour. We are applying the
same principle to our near term and
long-term water risk.”
UPS
13

14. Thank you