South Pole Group Carbon Offsetting Scenario Simulation

Renat Heuberger, Chief Executive Officer

Chris Perceval, Director Transport and Technology South Pole Group Page 2 Agenda

About South Pole 03

Examples of offsetting in the Aviation Sector 12

Checklist of Recommended Best Practices 21

Introducing the Group Exercise 29 Presentation of the results South Pole Group Page 3 About us South Pole Group Page 4 Who we are

We offer comprehensive sustainability solutions and services.

We enable our customers to create value from sustainability-related activities.

Our staff of 150 employees worldwide are passionate about fighting . South Pole Group Page 5 Developing solutions worldwide South Pole Group Page 6 Our solutions

Carbon Credit Renewable Energy Green Finance Sustainability Solutions Solutions Advisory

• Carbon credits • GoldPower • Fund Advisory • Advisory on clean (offset credits) (renewable energies, supply chains, water • Guarantees of Origin clean technologies) risks, city-level • Eco-gas for public (GoO) climate programs utilities and energy • Due Diligence provider • I-REC - the Services • GHG Accounting international REC • Svante GHG • Carbon Project standard • Investment Climate Software tool Design Impact Assessment • Green e • Labels • Insetting • US RECS • Monitoring, reporting and verification South Pole Group Page 7 Track record: 10 years of creating global impact South Pole Group Page 8 Our global footprint (1)

Forest Restoration Solar Power Wind Power Growing effective carbon sinks Global energy transition Reducing fossil fuels South Pole Group Page 9 Our global footprint (2)

Waste Management Water Treatment Energy Efficiency Local job creation Improving lives Real impacts on livelihoods South Pole Group Page 10 Some examples of our clients and partners South Pole Group Page 11 Credentials

Winner Environmental Finance Best Project Developer award 2011-2016 Annual Market Rankings winner 2016

WEF Schwab Foundation Social Entrepreneur of the Year 2011

Zürcher Kantonalbank Sustainability Prize for SMEs 2013 Member WEF Global Agenda Council on Climate change

United Nations Global Compact South Pole Group Page 12 Some Aviation Sector Examples South Pole Group Page 13 Trends in Airlines Carbon Offsetting

Launch date of offsetting scheme Flights within EEA covered by ETS Malaysia, Air New Zealand, Atlas Blue, British Jet Blue, Copa Airlines, Kenya Airways, Mango, Sri Lankan Airways, NatureAir, Austrian South African Airlines LATAM SAS Airlines Airways (corporates)

2005-2006 2008 2012 2015

2007 2009 2013

Virgin Australlia Delta, Virgin America, United (corporate), Lufthansa-Swiss TAP Thai Delta (carbon AirPlus, TUI Travel, Airways United, neutral growth) Qantas, Jetstar, Easyjet, Japan Airlines Continental AirFrance-KLM Cathay Pacific Dragon Air

Source: South Pole Group, 2016 South Pole Group Page 14 A Leader, Aiming High

Qantas’ Fly Carbon Neutral programme

• Fuel efficient fleet, facilitated the Sustainable Aviation Fuel industry in Australia, and engaged in aircraft weight reduction initiatives. • In addition, 2.5 million tonnes of carbon emissions have been offset since 2007 • Fly Carbon Neutral programme focuses on climate change mitigation, protection of wildlife and nourishing communities. • Offer brazil nuts to enhance funding to the offset project and providing Qantas’ passengers with a sustainable snack South Pole Group Page 15 Align offsetting with strategic priorities

LATAM’s sustainability program • Stated goal to be “A leader and worldwide reference in climate change”

• A focus on environmental management system; risk management; eco-efficiency; sustainable alternative energy; internal capacity development; transparency; value chain; emission offsets; communications

• Offsets ground emissions in pursuit of carbon neutrality

Air New Zealand’s carbon offset programme • New Zealand Emissions Trading Scheme (ETS) offsetting domestic flights • Option for passengers to also offset as part of booking process • Projects protecting New Zealand’s native forestry projects South Pole Group Page 16 Align offsetting with strategic priorities Cathay Pacific’s FLY greener programme • FLY Greener Programme offsets staff business travel, carriage of passengers, and selected ground activities • Passengers can easily calculate emissions • The offset projects make a contribution in regions where Cathay Pacific has operations

KLM’s CO2ZERO Programme

• 20% reduction in its CO2 emissions per passenger by the year of 2020 • Strong focus on market for sustainable biofuels, and also involving passengers in offsetting emissions • Preference for Gold Standard Projects South Pole Group Page 17 Align offsetting with strategic priorities

Virgin America’s offsetting program • Option for passengers to offset the carbon footprint of their flights on the inflight entertainment system

• Offset HQ carbon footprint

Scandinavian Airlines’ Convention Program • Priority to target organizers of international conferences and events

• Give a range of options for the organizer to choose from South Pole Group Page 18 IATA Carbon Offset Program

• Some IATA’s members such as Thai Airways and South African Airways purchase via IATA • Includes a Carbon Calculator methodology • Offset supplier, Climate Care, provides high quality carbon credits • IATA assists airlines with the implementation • Offers a portfolio of offset projects with: – large geographical coverage – social and economic benefits for local communities. South Pole Group Page 19 Check List of Recommended Best Practices

. South Pole Group Page 20 Good practices checklist

1. Decide on focus and approach 2. Establish suitable criteria that reflect priorities and requirements 3. Plan to communicate externally and internally 4. Get ready to answer challenging questions 5. Select a reliable, valuable and reputable solutions provider / supplier South Pole Group Page 21 1. Decide on focus and approach • What is the purpose? (e.g. compliance vs. voluntary) • What is the objective? (e.g. offsetting own emissions, industry growth emissions, EU ETS compliance, as a client service offering, etc.)

• How to balance cost and impact? South Pole Group Page 22 2. Establish criteria that reflect your priorities

Make a decision on: • Standard • Type • Project location • Additional (social) benefits

Trends across all sectors: • Most used standard: 37% VCS, 12% VCS-CCB, 20% CAR, 19% Gold Standard, 12% other • Wind is most popular project type (25%) • Major project locations: US, India, Indonesia, Turkey, Kenya and Brazil Source: Ecosystem Marketplace 2016 South Pole Group Page 23 3. Plan to communicate externally and internally South Pole Group Page 24 4. Get ready to answer challenging questions

“Offsetting is green-washing by an industry that must stop growing” - Compensating unavoidable emissions makes a difference that would not otherwise occur. - Moreover, it is an addition to other activities in a basket of measures, e.g. technology, operational measures (e.g. route optimisation), and sustainable biofuels.

“Do the emission reduction projects really have a positive impact?” - Yes. Verification and certification procedures ensure additionality, sound practice and measure positive social impacts.

“Carbon projects can actually be bad for the environment” - Certain forestry and large hydro projects have been controversial because of harmful impact on local ecosystems. Supporting different project types with high quality standards is advisable. South Pole Group Page 25 5. Select a reliable partner and supplier

Check the reputation, service, track record and size of the supplier

Review other useful solutions and services that a partner can offer

Consider a long term supplier agreement, to reduce transaction costs

Run a tender process to engage in competitive bids South Pole Group Page 26 Benefits of early action

• Take action to reduce the amount of CO2 in the atmosphere and fight climate change

• Gain experience with carbon markets and providers

• Benefit from locking in better prices and managing risks

• Differentiation from competitors and demonstrating climate leadership South Pole Group Page 27 Introducing the Group Exercise South Pole Group Page 28 Presentation of the results