How value creation (and destruction) from climate change ... · Georgia Louisiana Maine Maryland...
Transcript of How value creation (and destruction) from climate change ... · Georgia Louisiana Maine Maryland...
A
A 2001380520/487408_11/487408/487408
How value creation (and destruction) from climate change will shape the investment landscape
Wellington Management Company LLP
For institutional use only. Not intended for reproduction or use with the public. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold di�erent views and may make di�erent investment decisions for di�erent clients. The material and/or its contents are current as of the most recent quarter end, unless otherwise noted. Certain data provided is that of a third party. While data is believed to be reliable, no assurance is being provided as to its accuracy or completeness. Alan Hsu Global Industry Analyst and Portfolio Manager
Copyright © 2018 All Rights Reserved2001392649/487408_11/487408/487408A
A
About meTitle Line 2
Born and raised in Houston, Texas
Son of petroleum engineer
University of Texas
Information technology experience
Research coverage on energy, renewables, utilities, and sustainability
A
A13 September 2018 A1 2
Copyright © 2018 All Rights Reserved2001392651/487408_10/487408/487408A
A
Conventional investment wisdomTitle Line 2
The trend is your friend
Heads I win, tails I don’t lose
Think long term
Buy low, sell high
A
A13 September 2018 A1 3
Copyright © 2018 All Rights Reserved
Source: https://climate.nasa.gov/interactives/climate-time-machine
A
A13 September 2018
Temperature change is realTitle Line 2
1950 2017
2001380948/487408_3/487408/487408
A1 4
Copyright © 2018 All Rights Reserved
Source: NOAA, August 2018 | https://www.ncdc.noaa.gov/cag/global/time-series/globe/land_ocean/p12/12/1880-2018.csv
A
A13 September 2018
Weather adversity trendingTitle Line 2
Global land and ocean temperature anomalies (1880 – 2018) Degrees Celsius
2001381797/487408_3/487408/487408
1880 1892 1905 1917 1930 1942 1955 1968 1980 1993 2005 2018-1.0
-0.5
0.0
0.5
1.0
1.5
A1 5
Copyright © 2018 All Rights Reserved
Source: realclimate.org, January 2018
A
A13 September 2018
Predictable and more reliable than most forecastsTitle Line 2
2001389722/487408_11/487408/487408
1980 1985 1990 1995 2000 2005 2010 2015 2020-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Hindcast Forecast
Years
CMIP5 Ensemble mean (95% spread)Forcing-adjusted CMIP5 mean + spread
HadCRUT4Cowtan & WayNOAA NCEIGISTEMP
Global mean surface temperature anomaliesAnomaly (°C, w.f.t. 1980 – 1999)
A1 6
Copyright © 2018 All Rights Reserved
Source: Munich Re NatCatSERVICE, January 2018 | Losses from natural catastrophes 1980 – 2017: Volatility of loss volumes is increasing
A
A13 September 2018
Climate adversity is becoming increasingly costlyTitle Line 2
Insured versus uninsured natural catastrophe losses, 1980 – 2017US$ billion
2001381802/487408_4/487408/487408
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 20160
100
200
300
400Overall losses in 2016 values Insured losses
A1 7
Copyright © 2018 All Rights Reserved
Note: The term “country” refers to a country or statistically equivalent entity. | Source: US Census Bureau, 2007 – 2011, American Community Survey
Sources: Economist.com, CEIC; World Bank
A
A13 September 2018
Climate costs truly ‘human made’Title Line 2
2001381040/487408_4/487408/487408
2
U.S. C
ensu
s Bureau
Number of High-Income Households for Each County in the United States: 2007–2011Figure 1.
Source: U.S. Census Bureau, 2007–2011 American Community Survey.Note: The term "county" refers to a county or statistically equivalent entity.
0 100 Miles
0 100 Miles
0 500 Miles
Number of households by county
107–251
252–883
43–106
Less than 43
884 or more
Concentration of high-income households for each county in the United States: 2007 – 2011
Uncommon prosperityChina’s GDP per person (2015)
Over 14
$’000
12 – 1410 – 128 – 106 – 8Under 6
Hainan
Hong KongGuangdong
Fujian
Zhejiang
Shanghai
Jiangsu
Shandong
TianjinBeijing
Liaoning
JilinInner Mongolia
Heilongjiang
Xinjiang
Qinghai
Tibet
YunnanGuangxi
Guizhou
Sichuan
GansuShaanxi
Shanxi
Henan
Hunan
HubeiChongqing
Anhui
Jiangxi
NingxiaHebei
Macau
A1 8
Copyright © 2018 All Rights Reserved
As of 31 December 2016. | Sources: Climate Change Laws of the World database, Grantham Research Institute on Climate Change and the Environment, Sabin Center for Climate Change Law.
A
A13 September 2018
Climate risk is not JUST about weatherTitle Line 2Regulatory and litigation risk is also rising
2001389724/487408_4/487408/487408
1994and
before
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 20160
200
400
600
800
1,000
1,200
1,400
Total legislative
Total executive
Climate laws and regulations have been on the rise
Total legislative and executive acts or policies
A1 9
Copyright © 2018 All Rights Reserved
Source: http://www.air-worldwide.com/Publications/AIR-Currents/2015/The-Growing-Value-of-U-S--Coastal-Property-at-Risk/
A
A13 September 2018
No evidence that behavior is changingTitle Line 2
2001381134/487408_3/487408/487408
AlabamaConneticut
Deleware
FloridaGeorgia
Louisiana
MaineMaryland
Massachussetts
Mississippi
New Hampshire
New Jersey
New York
North Carolina
Rhode Island
South Carolina
TexasVirgina
0
25
50
75
100
2004 2012
2004 20120
3,000
6,000
9,000
12,000
% of insured value of coastal properties (east coast and Gulf Coast)
Insured $ (billions)
A1 10
Copyright © 2018 All Rights Reserved2001380547/487408_11/487408/487408A
A
Nature can’t keep upTitle Line 2
Source: World Wildlife Foundation, 2018
A
A13 September 2018
Deforestation impact from high levels of consumption is an area equivalent to 28 football (soccer) fields of forest per minute
A1 11
Copyright © 2018 All Rights Reserved2001391254/487408_10/487408/487408A
A
Nature can’t keep upTitle Line 2
Source: World Wildlife Foundation, 2018
A
A13 September 2018
Deforestation impact from high levels of consumption each year is an area equivalent to the size of Panama
A1 12
Copyright © 2018 All Rights Reserved2001380549/487408_11/487408/487408A
A
Risks beget more risksTitle Line 2
Permafrost
Hurricanes
Urban islands
Hotter temps
Regulation, policy, capital markets
A
A13 September 2018 A1 13
Copyright © 2018 All Rights Reserved
Source: MFS 2016
A
A13 September 2018
Investors should take a more holistic approach to integrating risksTitle Line 2
2001381290/487408_11/487408/487408
Hedge Funds
Mututal Funds
Private High Net Worth
PensionsInsurance
Sovereign Wealth Funds
Endowments
0
10
20
30
40
50
60Asset owners have long liabilities (years)
A1 14
Copyright © 2018 All Rights Reserved2001381291/487408_11/487408/487408
¼ 1 3 5 6 – 1011 – 20
21 – 5051
0
5
10
15
20
25
30
20062007
20082009
20102011
20122013
20142015
0.6
0.9
1.2
1.5
1.8
Assets under management % of total (RHS)
Earning momentum model
Stock price and volume patterns
Dividend discount model
Multiples – Price to earning
Expected value analysis
Discounted cash ow model
Economic value added model
Residual income model
-5-4-3-2-1012345
10.005.00
3.332.50
2.001.67
1.431.25
1.111.00
0.910.83
0.770.71
0.670.53
0.590.56
0.530.50
0
100
200
300
0
10
20
30
40
Turnover (# of funds, LHS)
¼ 1 3 5 6 – 1011 – 20
21 – 5051
0
5
10
15
20
25
30
20062007
20082009
20102011
20122013
20142015
0.6
0.9
1.2
1.5
1.8
Assets under management % of total (RHS)
Earning momentum model
Stock price and volume patterns
Dividend discount model
Multiples – Price to earning
Expected value analysis
Discounted cash ow model
Economic value added model
Residual income model
-5-4-3-2-1012345
10.005.00
3.332.50
2.001.67
1.431.25
1.111.00
0.910.83
0.770.71
0.670.53
0.590.56
0.530.50
0
100
200
300
0
10
20
30
40
Turnover (# of funds, LHS)
1Source: 2˚ii Equity Research Analyst Survey 2016, n=6 | 2Source: BlackRock 2016 | 3Sources: 2˚ii, Mercer & The Generation Foundation 2007 | 4Sources: Authors 2017, from 2˚ii Equity Research Analyst Survey 2016, Damodaran 2010 and CFA Institute, 2016
A
A13 September 2018
... but they don’tTitle Line 2
Equity processes explicitly short-term4Equity holders invest for 2 years3
Bond holders invest for 2 years2Analyst focus on five years or less1
A1 15
Copyright © 2018 All Rights Reserved
Source: Federal Reserve Bank of St. Louis, 2008
Source: Chuanshu Ji, 2008
A
A13 September 2018
“Mr. Market” often misses big mispricingsTitle Line 2
Monthly supply of unsold homesRating agencies did not downgrade securities until it was too late
2001381314/487408_11/487408/487408
1/055/05
9/051/06
5/069/06
1/075/07
9/071/07
5/079/07
1/085/08
9/08
0
3
6
9
12
Monthly ratio of unsold homes to sold homes
3Q064Q06
1Q072Q07
3Q074Q07
1Q082Q08
0
200
400
600
800
1,000
10
14
18
22
26
Ratin
gs d
owng
rade
s
Percent
Mortgage-backed securities downgrade (LHS)
Late payment rate (RHS)
A1 16
Copyright © 2018 All Rights Reserved2001392656/487408_10/487408/487408A
A
Climate change is a trend with no obvious endTitle Line 2
We know the trend is• Morepredictablethanmostotherforecasts• Indicatingmateriallyworserisk(andbetteropportunities)everyday• Likelytomateriallyimpactglobalassetvalues• Beingignoredinmanywaysbycapitalmarkets
A
A13 September 2018 A1 17
Copyright © 2018 All Rights Reserved2001381321/487408_11/487408/487408
A
A13 September 2018
Capital market opportunitiesTitle Line 2
Some things are timeless...
A1 18
Copyright © 2018 All Rights Reserved
Source: Stratfor
A
A13 September 2018
Refrigerator sales, AC salesTitle Line 2
World heating and air conditioning energy demandCooling is on track to overtake heating as the larger consumer of residential energy. Cooling is predominantly powered by electricity.
50 thousand petajoules
2001381322/487408_2/487408/487408
1971 1991 2011 2031Projected
2051Projected
2071Projected
2091Projected
0
5
10
15
20
25
30
35
40
45
Air conditioning Heat
A1 19
Copyright © 2018 All Rights Reserved
Source: US Energy Information Administration, Annual Energy outlook (for years 2010 – 2017), https://www.eia.gov/outlooks/aeo/, accessed 17 May 2017
A
A13 September 2018
Renewables are cost competitive todayTitle Line 2
2001389729/487408_8/487408/487408
2011 2012 2013 2014 2015 2016 2017 20180
100
200
300
400
Coal – carbon capture
Solar PV
Coal – convention
Wind (onshore)
Gas – conventional combined cycle
$/MWh
A1 20
Copyright © 2018 All Rights Reserved2001380785/487408_8/487408/487408A
A
Solar value proposition depends on locationTitle Line 2
A
A13 September 2018
MA
A1 21
Copyright © 2018 All Rights Reserved2001380788/487408_10/487408/487408
A
A13 September 2018
Agriculture risks: arable land and waterTitle Line 2“Small and shrinking fraction of total global land mass”
37 billion acres of land on earth
A1 22
Copyright © 2018 All Rights Reserved2001394586/487408_9/487408/487408
A
A13 September 2018
Agriculture risks: arable land and waterTitle Line 2“Small and shrinking fraction of total global land mass”
37 billion acres of land on earth
11 billion acres of arable land
A1 23
Copyright © 2018 All Rights Reserved2001394587/487408_10/487408/487408
A
A13 September 2018
Agriculture risks: arable land and waterTitle Line 2“Small and shrinking fraction of total global land mass”
37 billion acres of land on earth
11 billion acres of arable land
7 billion acres of land free of weeds & pests
A1 24
Copyright © 2018 All Rights Reserved2001380790/487408_11/487408/487408
A
A13 September 2018
Dirt matters, and we are losing soil rapidlyTitle Line 2
Each year lose 0.66% of cropland due to soil erosion
Global soil
Global soil after 30 years
Global soil after 50 years
15 million hectare of cropland lost due to soil erosion each year
1.5 billion hectare of cropland under cultivation for crop production
A1 25
Copyright © 2018 All Rights Reserved2001389488/487408_11/487408/487408
A
A13 September 2018
Agriculture risks: arable land and waterTitle Line 2
And much of the planet’s arable land is located in high-climate-risk geographies• Brazilishometo30%ofsoybeanproduction,etc.• Californiaprovides~50%ofUSfruits,nuts,andvegetables
A1 26
Copyright © 2018 All Rights Reserved2001380792/487408_11/487408/487408A
A
Fashion pollution and waste likely underappreciatedTitle Line 2
Fashion industry is 2nd most polluting on the planet
Production of 1 t-shirt produces same amount of CO2 as driving a car 10 miles
Americans will on average discard 80 pounds of clothing (equivalent of ~28 t-shirts)
A
A13 September 2018
Sources: 13-D, August 2018; World Economic Forum, 2018; Savers, State of Reuse Report, 2018
CO2 from driving One t-shirt
A1 27
Copyright © 2018 All Rights Reserved
Sources: Cires, NOAA, April 2018
A
A13 September 2018
If looks could killTitle Line 2
2001389733/487408_11/487408/487408
Emission from personal care products tracked benzene (transport) emissions
People use 15x the fuel in non-petroleum products as they do petroleum
0:00 5:00 10:00 15:00 20:00 25:000:00 5:00 10:00 15:00 20:00 25:006
8
10
12
14
16
18
100
150
200
250
300
350
400
6
8
10
12
14
16
18
100
150
200
250
300
350
400
D5 siloxane emissions (LHS)
Benzene emissions (RHS)
vs
Personal Transport
A1 28
Copyright © 2018 All Rights Reserved2001380793/487408_10/487408/487408
A
A13 September 2018
Copper needed in higher volumes for mitigation and adaptationTitle Line 2
Copper demand today is ~43 billion pound
43 billion pounds
A1 29
Copyright © 2018 All Rights Reserved2001392777/487408_9/487408/487408
A
A13 September 2018
Copper needed in higher volumes for mitigation and adaptationTitle Line 2
If annual car demand were all electric vehicles, would need another ~28% more copper annually
43 billion pounds
+28%
A1 30
Copyright © 2018 All Rights Reserved2001392780/487408_11/487408/487408
A
A13 September 2018
Copper needed in higher volumes for mitigation and adaptationTitle Line 2
New air conditioning units add another 74% copper to satisfy demand needed through 2050
43 billion pounds
+28%
+74%
A1 31
Copyright © 2018 All Rights Reserved2001380794/487408_9/487408/487408A
A
Utilities are leading providers of alternative energyTitle Line 2
#1 owner of solar in N America
#1 owner of wind in N America
#1 owner of electric charging infrastructure
A
A13 September 2018 A1 32
Copyright © 2018 All Rights Reserved2001389567/487408_11/487408/487408A
A
Internet infrastructure concentrated on coastsTitle Line 2
Why this matters: Impacts to be felt next 15 years
Impacted assets: 4,000 miles of fiber conduit and 1,000 connection nodes
Impacted cities: New York, Miami, and Seattle
Impacted companies: CenturyTel, AT&T, and InteliquentSource: University of Oregon and Axios, 2018 | Sea Level Rise Costing Billions in Home Prices
A
A13 September 2018 A1 33
Copyright © 2018 All Rights Reserved2001380795/487408_3/487408/487408A
A
Catalysts to climate re-ratingTitle Line 2
Carbon tax
Climate legislation
Natural disasters
A
A13 September 2018 A1 34
Copyright © 2018 All Rights Reserved
Base: Americans 18+ who are registered to vote. | Data collected from size tracking studies con-ducted from March 2012 to October 2014 | Source: Forbes, January 2015
A
A13 September 2018
Carbon regulation politically acceptableTitle Line 2
Majority of republicans support regulation of carbon dioxide as a pollutant
% strongly/somewhat support the policy
Question: How much do you support or oppose the following policies – regulate carbon dioxide (the primary greenhouse gas) as a pollutant?
2001381323/487408_4/487408/487408
Totalregistered
voters(n=5,513)
TotalRepublicans(n=2,330)
LiberalRepublicans
(n=105)
ModerateRepublicans
(n=540)
ConservativeRepublicans
(n=1,271)
Tea PartyRepublicans
(n=412)
0
50
100
70
56
7174
54
36
A1 35
Copyright © 2018 All Rights Reserved
Source: World Bank Group
A
A13 September 2018
Carbon taxes for the massesTitle Line 2
2001389715/487408_10/487408/487408
Northwest territories
Alberta
Canada
British Columbia
WashingtonOregon
California
Saskatchewan
Manitoba
Québec
Japan
Republic of korea
VietnamThailand
New ZealandAustraliaSouth Africa
TurkeyChina
KaakhstanUkraineEU
Iceland
Mexico
Colombia
Chile Argentina
São Paulo
Rio Dejaneiro
Brazil
Côte d’Ivoire
Ontario
Newfoundland and labrador
Prince Edward Island
New BrunswickNova Scotia
MassachusettsRggi
ETS implemented or scheduled for implementation ETS and carbon tax implemented or scheduledCarbon tax implemented or scheduled for implementation Carbon tax implemented or scheduled, ETS under considerationETS or carbon tax under consideration ETS implemented or scheduled, carbon tax under consideration
A1 36
Copyright © 2018 All Rights Reserved
Source: World Bank Group
A
A13 September 2018
Carbon pricing intitiatives climbing steadilyTitle Line 2
2001389716/487408_7/487408/487408
Figure 5 / Regional, national and subnational carbon pricing in itiatives: share of global emissions covered
Shar
e of
glo
bal a
nnua
l GH
G e
miss
ions
25%
20%
15%
10%
5%
0%
1990
1992
1995
2000
1998
2003
2004
2005
1991
1994
1997
2002
1993
1996
2001
1999
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2018
2019
2020
2017
4 5 6 7 8
9 10 15 16 1921
24
32
3738
41
2
Number of implemented initiatives
46 47
50
51
Finland carbon tax (1990 Ò)
Poland carbon tax (1990 Ò)
Norway carbon tax (1991 Ò)
Sweden carbon tax (1991 Ò)
Denmark carbon tax (1992 Ò)
Slovenia carbon tax (1996 Ò)
Estonia carbon tax (2000 Ò)
Latvia carbon tax (2004 Ò)
EU ETS (2005 Ò)
Alberta SGER (2007 Ò)
Switzerland ETS (2008 Ò)
New Zealand ETS (2008 Ò)
Switzerland carbon tax (2008 Ò)
Liechtenstein carbon tax (2008 Ò)
BC carbon tax (2008 Ò)
RGGI (2009 Ò)
Iceland carbon tax (2010 Ò)
Tokyo CaT (2010 Ò)
Ireland carbon tax (2010 Ò)
Ukraine carbon tax (2011 Ò)
Saitama ETS (2011 Ò)
California CaT (2012 Ò)
Japan carbon tax (2012 Ò)
Australia CPM (2012 - 2014)
Québec CaT (2013 Ò)
Kazakhstan ETS (2013 Ò)
Ò)
Shenzhen pilot ETS (2013 Ò)
Shanghai pilot ETS (2013 Ò)
Beijing pilot ETS (2013 Ò)
Guangdong pilot ETS (2013 Ò)
Tianjin pilot ETS (2013 Ò)
France carbon tax (2014 Ò)
Mexico carbon tax (2014 Ò)
Spain carbon tax (2014 Ò)
Hubei pilot ETS (2014 Ò)
Chongqing pilot ETS (2014 Ò)
Korea ETS (2015 Ò)
Portugal carbon tax (2015 Ò)
BC GGIRCA (2016 Ò)
Australia ERF Safeguard Mechanism (2016 Ò)
Fujian pilot ETS (2016 Ò)
Washington CAR (2017 Ò)
Ontario CaT (2017 Ò)
Alberta carbon tax (2017 Ò)
Chile carbon tax (2017 Ò)
Colombia carbon tax (2017 Ò)
Massachusetts ETS (2018 Ò)
Argentina carbon tax (2019 Ò)
South Africa carbon tax (2019 Ò)
Singapore carbon tax (2019 Ò)
China national ETS (2020 Ò)
A1 37
Copyright © 2018 All Rights Reserved
Source: Climate Change Litigation of the World
A
A13 September 2018
Climate lawsuits on the riseTitle Line 2
Number of litigation cases in 25 jurisdictions, 1994 – 2016
2001389717/487408_6/487408/487408
1994 1995 1996 1997 1998 1999 20002001 200220032004200520062007200820092010 2011 2012 2013 2014 2015 2016
0
15
30
45
A1 38
Copyright © 2018 All Rights Reserved
A
A13 September 2018
California climate risks evident in recent eventsTitle Line 2
2001392782/487408_11/487408/487408
Wildfires Droughts
A1 39
Copyright © 2018 All Rights Reserved2001392660/487408_11/487408/487408A
A
In Summary...Title Line 2
The trend is NOT your friend
Climate investing = Heads I win, tails I lose
Think long term – climate risks grow by the day
Buy low, sell high – climate risk is a significant mispriced bet
A
A13 September 2018 A1 40
Copyright © 2018 All Rights Reserved2001380597/487408_11/487408/487408A
A
Rating agencies aren’t looking far enoughTitle Line 2
How Does S&P Global Ratings Incorporate Environmental, Social and Governance Risk Into its Rating AnalysisOur ratings are forward-looking and they incorporate our financial forecasts. These forecasts reflect the period over which we consider we have a clearer view of an entity’s potential financial performance, taking into account capital structure, and the potential impact of relevant factors (including ESG risks and opportunities). Generally, our forecasts cover a time horizon of up to two years for speculative-grade corporate entities (that is, those rated ‘BB+’ and below) and no more than five years for investment-grade entities (rated ‘BBB-’ and above).
A
A13 September 2018
Source: https://www.spglobal.com/our-insights/How-Does-SP-Global-Ratings-Incorporate-Environmental-Social-and-Governance-Risks-Into-its-Ratings-Analysis-.html
A1 A1
Copyright © 2018 All Rights Reserved2000000298/487408_11/G1422/G1422
A
A13 September 2018
Important noticeTitle Line 2
©2018 Wellington Management. All rights reserved. | As of April 2018
Wellington Management Company llp (WMC) is an independently owned investment adviser registered with the US Securities and Exchange Commission (SEC). WMC is also a commodity trading advisor (CTA) registered with the US Commodity Futures Trading Commission. In certain circumstances, WMC provides commodity trading advice to clients in reliance on exemptions from CTA registration. In the US for ERISA clients, WMC is providing this material solely for sales and marketing purposes and not as an investment advice fiduciary under ERISA or the Internal Revenue Code. WMC has a financial interest in offering its products and services and is not committing to provide impartial investment advice or give advice in a fiduciary capacity in connection with those sales and marketing activities. WMC, along with its affiliates (collectively, Wellington Management), provides investment management and investment advisory services to institutions around the world. Located in Boston, Massachusetts, Wellington Management also has offices in Chicago, Illinois; Radnor, Pennsylvania; San Francisco, California; Beijing; Frankfurt; Hong Kong; London; Luxembourg; Singapore; Sydney; Tokyo; Toronto; and Zurich. This material is prepared for, and authorized for internal use by, designated institutional and professional investors and their consultants or for such other use as may be authorized by Wellington Management. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. This material is not intended to constitute investment advice or an offer to sell, or the solicitation of an offer to purchase shares or other securities. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients.
In Canada, this material is provided by Wellington Management Canada ulc, a British Columbia unlimited liability company registered in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan in the categories of Portfolio Manager and Exempt Market Dealer. In the UK, this material is provided by Wellington Management International Limited (WMIL), a firm authorized and regulated by the Financial Conduct Authority (FCA). This material is directed only at persons (Relevant Persons) who are classified as eligible counterparties or professional clients under the rules of the FCA. This material must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment service to which this material relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. In Germany, this material is provided by Wellington Management International Limited, Niederlassung Deutschland, the German branch of WMIL, which is authorized and regulated by the FCA and in respect of certain aspects of its activities by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This material is directed only at persons (Relevant Persons) who are classified as eligible counterparties or professional clients under the German Securities Trading Act. This material does not constitute investment advice, a solicitation to invest in financial instruments or financial analysis within the meaning of Section 34b of the German Securities Trading Act. It does not meet all legal requirements designed to guarantee the independence of financial analyses and is not subject to any prohibition on dealing ahead of the publication of financial analyses. This material does not constitute a prospectus for the purposes of the German Capital Investment Code, the German Securities Sales Prospectus Act or the German Securities Prospectus Act. In Hong Kong, this material is provided to you by Wellington Management Hong Kong Limited (WM Hong Kong), a corporation licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) regulated activities, on the basis that you are a Professional Investor as defined in the Securities and Futures Ordinance. By accepting this material you acknowledge and agree that this material is provided for your use only and that you will not distribute or otherwise make this material available to any person. In Singapore, this material is provided for your use only by Wellington Management Singapore Pte Ltd (WM Singapore) (Registration Number 201415544E). WM Singapore is regulated by the Monetary Authority of Singapore under a Capital Markets Services Licence to conduct fund management activities and is an exempt financial adviser. By accepting this material you represent that you are a non-retail investor and that you will not copy, distribute or otherwise make this material available to any person. In Australia, Wellington Management Australia Pty Ltd (WM Australia) (ABN19 167 091 090) has authorized the issue of this material for use solely by wholesale clients (as defined in the Corporations Act 2001). By accepting this material, you acknowledge and agree that this material is provided for your use only and that you will not distribute or otherwise make this material available to any person. Wellington Management Company llp is exempt from the requirement to hold an Australian financial services licence (AFSL) under the Corporations Act 2001 in respect of financial services. A registered investment adviser regulated by the SEC, among others, is exempt from the need to hold an AFSL for financial services provided to Australian wholesale clients on certain conditions. Financial services provided by Wellington Management Company llp are regulated by the SEC under the laws and regulatory requirements of the United States, which are different from the laws applying in Australia. In Japan, Wellington Management Japan Pte Ltd (WM Japan) (Registration Number 199504987R) has been registered as a Financial Instruments Firm with registered number: Director General of Kanto Local Finance Bureau (Kin-Sho) Number 428. WM Japan is a member of the Japan Investment Advisers Association (JIAA) and the Investment Trusts Association, Japan (ITA). WMIL, WM Hong Kong, WM Japan, and WM Singapore are also registered as investment advisers with the SEC; however, they will comply with the substantive provisions of the US Investment Advisers Act only with respect to their US clients.
A1 A2