DJSI 2017 Results Webcast September 2017 - …

1 djsi 2017 Results WebcastSeptember 2017 AgendaGeneral Review & Developments 2017 Manjit Jus, Head of sustainability Application & OperationsMethodology Review & CSA Findings Jacob Messina, Head of sustainability Investing ResearchQ&A232017 Methodology Review djsi 2017 ReviewRobecoSAM CSA: Participation Trend4 Increasing participation of companies in djsi over the yearsSource: robecosam corporate sustainability assessment 1999-20170100200300400500600700800900100 0199920002001200220032004200520062007200 8200920102011201220132014201520162017 Companies ParticipatedRegional Breakdown of Participating Companies52017 Methodology Review 19527316267818723 North AmericaEurope DevelopedEurope Emerging MarketsAsia Pacific DevelopedAsia Emerging MarketsLatin AmericaAfrica & Middle EastSource.

2 robecosam corporate sustainability assessment 2017 Strongest Growth in Participation62017 Methodology Review 0100200300400500600700 PeruGreeceRussian FederationMexicoPercentage growth in participationParticipation Growth (percentage)Source: robecosam corporate sustainability assessment 2016 - 2017 Strongest Growth in Participation72017 Methodology Review 1241016011814622168723020406080100120140 160180 JapanMexicoUnited StatesPeruNetherlandsParticipating CompaniesParticipation Growth (absolute)20162017 Source: robecosam corporate sustainability assessment 2016 - 2017 Major Developments in 20178 Methodology Methodology review of financial materiality of corporate sustainability assessment (CSA)

3 Criteria Industry-based approach to reviewing sustainability topics and trends Introduction of new criterion PolicyInfluence , expansionof Impact Measurement & Valuation , furtherdevelopmentof Human Rights , newquestionsforCorporate Governanceand Supply Chain Management Other Developments Alignmentwithotherglobal sustainabilityreportingframeworkssuch asGRI andSASB Company Information section normalizingcompanies datawithappropriatedenominators, reportingcurrencyunified92017 Methodology Review General RemarksGeneral Remarks102017 Methodology Review 2017 Focus Reducing the overall number of questions within the questionnaire Removing questions or criteria no longer of material significance Introducing new general and industry-specific criteria.

4 To ensure that our assessment continues to raise the bar and challenge companies in their thinking about long-term risks and opportunitiesObservations Companies struggle to provide information for new or updated questionsSolutions Provide additional clarification on new questions Use clearer definitions Better explain our expectationsGeneral Remarks112017 Methodology Review Data Quality Consult the information texts each year, and read the question texts carefully to ensure that nothing has changed from one year to the next Ensure that the provided data meets the definitions provided by robecosam In case something is not clear, consult the CSA Helpline for clarification Supporting References Gradually try to reduce overall number of references while simultaneously providing more public references Be as specific as possible in terms of page number and sections of the documents Only provide comments and documents that are relevant for the question Documents should be provided in a timely manner.

5 Within the assessment timeframe and robecosam should be informed in advance if any of documents will be finalized after the deadlineNon-English Documents The official language of the CSA is English, we rely on translations to verify answers In cases where we specifically ask for public information, we expect this to be in English, so that it is accessible by all investors globally122017 Methodology Review New Methodology Review & CSA FindingsPolicy Influence13 This new criterion has been added to ALL industriesCivil society, consumers, and investors are increasingly aware that: Companies legitimately represent themselves in public discourse However, excessively high contributions and activities that go against the common good can create risk Companies are not transparent around the types of contributions that they makeTwo questions in the criteria: Total contributions and other spending Five largest contributions and expendituresBenefits: Recognized leadership for companies with lower reputational and corruption risk through lower spending on policy influence and superior transparency for investors and the publicPolicy Influence142017 Methodology Review What we were looking for.

6 Disclosure on all types of contributions, except charitable contributions or donations to corporate citizenship activities This includes: Lobbying andinterestrepresentation Industry, trade and other business associations Political candidates, parties and organizations, for campaigns, ballot measures, referendums, etc. Includes activities with a positive purposeObservations: In the CSA, many companies solely reported political contributions Most companies do not disclose beyond what is legally mandated Public disclosure extending beyonddirect political contributions to trade association memberships, etcis extremely lowImpact Measurement & Valuation152017 Methodology Review Piloted in 2016, a revised and expanded version was rolled out to all (non-utility) industries in 2017 Increasing in relevance with UN s Sustainable Development Goals Companies & investors want to understand the externalities inherent in companies business models3 questions.

7 Impact Valuation Monetary, Quantitative/Qualitative, Pilot Valuation Disclosure Business Programs for Social Needs Applicable to 25 industriesBenefits Evaluating business activities impacts can help companies make better decisions and identify opportunities for innovation, and help investors understand such risks and opportunitiesImpact Measurement & Valuation16 Source: robecosam corporate sustainability assessment 2017 Data basedon 896 participatingcompaniesObservationsVery few companies have a viable valuation approach in place to measure their impact on society & the environment but companies are beginning to explore new methodologies to do so:What we were looking for: Companies measuring outcomes: neither outputs nor input costs Environmental/social profit loss statements measuring outcomes Environmental/social return on investment methodologies Application of existing methodologies such as True Value, TIMM, etc.

8 Pilot-testing of frameworks like the Natural Capital PacificEmergingMarketsEuropeNorthAmerica GlobalPilot projectQuantitative or qualitative impact valuationMonetary impact valuation172017 Methodology Review Methodology ChangesCriteria Revised in 2017 corporate Governance18 This criterion has been revised for ALL industriesNew Questions Average Tenure Board Industry ExperienceUpdated Questions Board Structure Clarified and aligned the definition of Independence with global best practices ( NYSE Independence Test), tightening independence requirements (as per information provided in the information button ) Scored companies on overall board size as well as the board s level of independence, shown to be closely linked to company performance Diversity Policy Updated question to focus on the most critical aspects of diversityRegional corporate Governance Performance19 Source.

9 robecosam corporate sustainability assessment 2017 2086 assessed companies0102030405060708090100 AfricaAsia PacificEuropeLatin AmericaNorth AmericaCorporate Governance 2016 corporate Governance 2017 Board Structure 2016 Board Structure 2017 Supply Chain Management20 This criterion has been revised for ALL relevant industriesOverall focus Increased focus on risk awareness and risk management measures New questions on Supplier Code of Conduct and Conflict Minerals (for select industries) Added critical non-tier one suppliers to the scope of the assessment Focus on transparency and public reportingSupply Chain Management212017 Methodology Review The increased challenge and detail in the new and updated questions led to an overall score decline in each question, resulting in an overall average decline of points at the criterion level010203040506070 AwarenessESG Integration in SCMS trategyRisk ExposureRisk Management MeasuresTransparency & Reporting20162017 Source.

10 robecosam corporate sustainability assessment 2017 2086 assessed companiesHuman Rights222017 Methodology Review robecosam Expectations Commitments - should be specific and detailed, in line with international standards and clearly extending throughout the supply chain to suppliers, contractors, business partners, etc. Simply encouraging third-parties to act in accordance with the company s own policies is no longer enough: companies should enforce high standards in those areas where they have an impact. Policies should be prepared in accordance with: The Universal Declaration of Human Rights, The International Covenant on Civil and Political Rights, The International Covenant on Economic, Social and Cultural Rights Clear requirements for suppliers and business partners Presented in a clear and consistent matter, embedded in one formal policy and referenced in other policies Due diligence process needs to clearly include human rights, not just a company s overall risk framework; this due diligence process should be clearly described, not just mentioned assessment we expect