Presented at the 4th Global Infrastructure Basel Summit 21 & 22 May 2014. Read more at www.gib-foundation.org. Next Summit: 27 & 28 May 2015 in Switzerland

1. Click !
Investing in Sustainable Infrastructure
- Moving from Billions to Trillions
Yuki Yasui, Deputy Head, UNEP Finance Initiative
4th Global Infrastructure Basel Summit
21 May 2014 Basel

2. UNEP’s'Partnership'with'the'Finance'Sector'
UNEP'Finance'Ini6a6ve'
Since'1992:'Pla=orm'associa6ng'the'United'Na6ons'and'the'
financial'sector'globally'to'encourage'financial'ins6tu6ons'to'
fulfill'its'role'towards'a'sustainable'world'
2014:'Over'230'members'globally'from'banking,'investment'
and'insurance'sectors'
Mission:'To'be'a'catalyst'for'systemic'change'in'the'financial'
sector'to'ensure'its'ac6ve'par6cipa6on'in'sustainable'
development'

3. • Mobilizing*new*green*finance/
investments*
• Reducing*flows*to*brown*&*greening*
the*brown*
Inves=ng*in*
sustainable*
infrastructure*
Baseline!
• Meeting the energy/transport/communication needs!
Addition!
• More costly green technologies (eg. Coal fired power
plants vs offshore wind farms)!
Addition!
• Greening existing infrastructure (eg. Modal shift from
road to rail) !

4. Barriers to private sustainable
infrastructure financing
1)*New*Kids*on*the*Block:**
Tradi=onally*financed*by*the*public*sector,**
especially*in*developing*countries*
Public
finance!
(European)
banks!
Long Term
investors!

5. Barriers (continued)
2)*Financial*Stability*
M*Basel*III*Capital*
Requirements*for*Lenders*
M*Solvency*II*for*Insurers*
(EU)*
Increase*capital*charges*
against*LMT*infrastructure*
loans*
Motivated by one-sided
negative effect of unstable
financial system to the
economy!
What happens to the
finance sector under an
unsustainable economy? !
Stress test banks on the
extreme effects of climate
change?!

6. Barriers (continued)
3)*Brownfield*over*Greenfield*Projects*
M*World’s*largest*offshore*wind*project*finance*
deal*agreed*in*Holland*($3.8bln,*15*May*2014)*
M*Largest*funding*gaps*in***

7. Energy intensity
gains in
2000-2010: !
Only 0.5% per
year!
Commercial
bank lending to
coal industry
up by 400%
from 2005.!
90% of future
funding
expected from
private sector !
$1.4 trillion
new
investments in
renewable
energy
2005-2013.!
$244 billion in
2012"
Competition for infrastructure investments

8. Financiers'&'
Investors'
Strengthen**direct*
business*interests*
to*a*vibrant*
sustainable*
economy*
Insurers''
Business*
interest*to*
reduce*
impact*of*
climate*risks*
Institutional
Investors!
Long-term
investment
horizon!
Need*to*Strengthen**
Mo=va=ons*of*Financiers/Investors*
Moving'from''
millions'to'trillions'

9. Solution 1: Green Infrastructure Bonds
Short'term:'Public'Green'Infrastructure'Bonds'
→*Build*exper=se*&*investor*confidence*in*LMT*
investments*
MediumQterm:'Expand'Green'Corporate'Bonds*
→*Develop*standards'&'tools'on*innova=ve*financing*
structures*for*the*private*sector*
→*Develop*capacity'&'training'
→*Develop*enabling*policy/regulator*environment**

10. BUILDING TOOLS FOR INVESTORS
Link to download the publications
www.unepfi.org/publications/property

11. UNLOCKING ENERGY EFFICIENCY INVESTMENT
OPPORTUNITIES
A seven-step approach can effectively increase the the supply
of financeable energy retrofit projects.
Ensure executive awareness of the business case
Measure and benchmark building energy performance
Set portfolio energy efficiency targets
Link asset manager compensation to energy performance
Align lease clauses to enable retrofits (green leases)
Include impact on asset value in investment analysis
Take a portfolio approach to determine next steps

12. THE BUSINESS CASE
Significant long-term results: Energy efficiency
measures can pay back quickly, depreciate slowly and
deliver returns for decades:
30%
improvement in
building
efficiency has
28.6% 10-year
IRR - US
30%
energy savings
opportunity from
buildings
1930s-1990s -
France 1
17%
energy savings from a
sample of post-retrofit
buildings – Singapore 2
1.*Kamelgarn,*Y.*&*
Hovorka*F.*(2013)*
2.*World*Green*
Building*Council*

13. Solution 2: Align'financial'regulatory'
framework'with'SD'goals
SD ackowledged as
an interest to
financial regulators
- SD as additional
regulatory goal
- review impact of
existing regulations
Only%when%the%last%tree%has%
died%%
And%the%last%river%poisoned%%
And%the%last%fish%caught%%
Will%we%realise%%
We%cannot%eat%money%
19th*Century*Cree*Indian*

14. Solution 2: Align'financial'regulatory'
framework'with'SD'goals
→*Stakeholder*Dialogue*
Policy*makerand/or*financial*regulator*dialogue*
with*financiers/*investors*
Examples*of*UNEP*FI*ac=vi=es:*
M*Research*paper:*Basel*III’s*effect*on*sustainable*
finance*
M*EC*DG*Energy*coMconvened*WG*on*energy*
efficiency*financing*in*buildings**