[MUSIC] We know that our current behavior is not sustainable. In the past, we thought that future generations would have to pay the price but that's no longer the case. Current generations, especially the young ones, are beginning to feel the price in terms of droughts, floods, bad labor conditions and unsustainable debt levels. The good thing is is that current generations are also starting to express and value more sustainable behavior. On both the demand and supply side of capital markets like the one where we are here today. Let me tell you about how you can help capital markets to integrate externalities and the long-term future even better. Let's start with how investments are currently valued both demand and supply look at an investment. As the net present value of two forecasted cash flows, cash in and cash out using the discounted cash flow methodology. To make things simple ecological and societal externalities like CO2 emissions or poverty were left out of the equation. And that makes sense because of two reasons, one, the legal entity that was invested in. Being a company or a state, hardly ever needed to pay the price for that externalities, they didn't call it an externality for nothing. Since it was irrelevant for future cash flows, and too even if there would be a cost, or benefit for that matter. In the long term future, the discount rate would make it irrelevant in net present value terms. So it made sense to ignore externalities, especially if they're only impacted in decades rather than years or quarters, easy. As a result, long-term sustainability is currently misvalued in analyst reports for all asset classes, being equity, real estate or bond. The mainstream methodology for valuations are backward-looking and cannot deal with possible future ecological, political, societal and technological discontinuities. As a result, potential risks are not taken into account, and also additional value is not valued. But if you really value a well-functioning society and a livable planet and if you plan to live on the earth for more than one decade. The future and externalities do matter to you, and you are not alone. Many of the world pension funds agree with you, pension funds invest within a of multiple decades. For them, the long-term matters, as do externalities, because the participants will not only benefit financially from their investment. But also will live in that future world and society, so how do you value externalities in the long-term? The main tested entrance tried methodology for that is the scenario methodology. It's been used for centuries by the military government to plan for the unknown future. It's also used by companies, for over 40 years, and it's used by institutions like the intergovernmental panel on climate change. And the International Energy Agency as a way to assess uncertain long-term developments, possible discontinuities and the impact of policy on society. In finance, the task force on climate related financial disclosures recommended the use of scenario analysis. To disclose climate related risks as did the high-level expert group on sustainable finance. So how does it work, scenario analysis evaluation? The first step is easy, try to find existing scenarios, for many sectors and industries scenario studies are publicly available. If scenarios do not exist, are not good enough, the alternative is to make scenarios yourself. This starts by studying all relevant external factors, like ecological conditions, decide on customer preferences. Government policies, competitive behavior and even new technology. Assess how these factors could change in the future and how they influence each other, these are your scenarios. The second step is to model the connectedness of these long lists of externalities. And assess the potential impact on future financial cash flows. But also the ecological and societal impact the investment has, you will see that investment value this way is no longer just one outcome. But the range of outcomes, given the inherent uncertainties that the future brings. Valuation in this way is no longer simple, and reduces the financial impacts only. Valuation using scenarios make uncertainty explicit, and will show possible upside and downside on a range of impacts. For asset owners and asset managers, this provides valuable insights in the broad risks and opportunities that investment could bring. Which can be used for better decision making or engagement purposes. With the help of this much broader assessment of potential impacts, the investor can decide how they value these impacts. Due to the potential upsides are greater potential downsides, the story doesn't end here. Once scenarios are identified and potential impacts are assessed on behalf of the investor. It is up to the investee to express in their strategies how they intend to deal with the forcing scenarios. Investees being a company or a real estate fund manager, or even the government can develop options. To maximize potential upside or mitigate potential downside, these real options have value. Investees can actively increase their value to investors by lining their value creation strategies to better meet invested amounts. As a result, capital markets will change from transaction-oriented marketplaces focused on short-term financial gains only. To an actual meeting place of investors and investees, where risks and values are and optimized in dialogue. And this is how it all started, right here, centuries ago in this capital market, a place where real people met. And shared dreams, money and risks to invest for a better future for all involved. [MUSIC]