Advance may 2014 exploring the many colors of sustainability investing

Exploring the many colors of sustainability investing >5 Three ways to look at corporate governance

>6 Using quant investing techniques to make the intangible tangible

Advance SUSTAINABILITY INVESTING IN FOCUS | MAY 2014

In cooperation with:

Flagging problems in advance

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The speed with which the crisis in Ukraine erupted took many people by surprise. But the ingredients for the social unrest that overthrew the government and led to the annexation of Crimea by Russia could be found ahead of time in sustainability analysis.

number of aspects. These include corruption, the effectiveness of national institutions, rule of law, levels of personal liberty and internal stability. The metrics also include economic factors such as energy independence.

Long-standing problems ranging from corruption to potential debt default have been documented in the RobecoSAM Country Sustainability Ranking, which aims to assist investors in assessing the risks of emerging and developed markets.

“Recent attention has been on Crimea, but Ukraine’s economic problems have been brewing for much longer,” says Frank Reynaerts, a portfolio manager with the Robeco fixed income team. “This all shows up in the Country Sustainability Ranking.”

Ukraine scored only 3.7 on a 1-10 scale (with 10 being the best) and was in the bottom 5% of scores on a

For more information on the Country Sustainability Ranking, please click here.

ADVANCE | MAY 2014

COLUMN

CONTENTS 4 Highlights

Getting the ball rolling

An international relations expert explains how globalization aids sustainability; praise for the Dow Jones Sustainability Index; and our quarterly startling statistic

5 Water, water everywhere But not a drop to drink? How investors can turn water scarcity into opportunity

6 Three ways to look at corporate governance Different angles, different approaches: an academic, an asset manager and an engagement specialist debate the issue

8 Cover story: defining sustainability It is one word with many different meanings and interpretations.

A French research group explains how sustainability investing is viewed across Europe

10 Engagement case study When engaging with companies in India, face-to-face contact is crucial

11 Making the intangible tangible How quant can help sustainable investors who cannot afford to take too much relative risk on board

12 External perspective Peter White of the World Business Council for Sustainable Development gives his views on how companies are gearing up for Action2020

What is sustainability investing? In this magazine we investigate how the term means different things to different people.

One thing we are sure about is that the sustainability movement is growing - yet concrete steps towards the development and implementation of appropriate policies are scarce in some areas.

While many institutional investors have the ambition and the need to adopt sustainability in their processes, they often do not get beyond the exclusion of a number of unwanted countries, sectors or companies. That’s going to present a problem to a lot of professional investors, because push is gradually turning into shove as society increasingly demands a more sustainable approach in all things. Many ask for some guidance or our help.

And so for those who have yet to put their first foot on the sustainability ladder, Robeco and our specialist colleagues at RobecoSAM have developed a tool to assist companies with the concept. Our sustainability investing solutions package was launched to create ‘one-stop shopping’ for those interested in adopting it.

Sustainable capitalism The annual RI Europe conference will be held on 4-5 June in London.

Investors, sustainability experts and representatives of pension funds will discuss the most important issues facing long-term responsible investment globally. Topics to be debated include how to focus capital on the long term, what “ownership capital” should look like, and what the future holds for corporate reporting and measurement. During the conference there will be highly focused sessions on the usage of Environmental, Social and Governmental (ESG) criteria.

To get the ball rolling, a Swiss pension fund asked us for a workshop on sustainability investing integration and requested a screening of its portfolio to see what kind of shape it was in. It was an important first step, and bodes well for taking sustainability into the mainstream.

As for spreading the word – just what words would you use to best describe sustainability? Engagement? Exclusion?

Development, reputation, or the old idea of ‘green’? We hope to provide some enlightenment following an excellent survey by the French research house Novethic, and welcome any future converts onto the road to a sustainable future.

For more details click here.

HANS RADEMAKER, CHIEF INVESTMENT OFFICER

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HIGHLIGHTS

Opinion: Globalization is a force for sustainability Globalization is often seen as merciless expansion into undeveloped markets at significant cost to poorer communities.

In fact it is helping companies to act in a more sustainable manner, is improving food distribution and is helping to find new resources, says international relations expert Parag Khanna.

amount of natural resources available to create economic growth,” he says.

“In a way, globalization is creating solutions to the problems of population growth in the first place,” Khanna said in an interview at the Robeco World Investment Forum in Amsterdam.

Khanna says there has been a ‘sea change’ in the way that we view globalization. “Just 10 years ago the world was wracked by antiglobalization protests at all major summits,” he says. “Now we have a more pragmatic approach, in that if we don’t have investment to benefit trade, then we won’t raise the standards of living for anyone, be they rich or poor. That’s why those protests have gone away.”

“This is because increased food production is a direct result of needing to feed more people, so we now use technology to better connect agricultural supplies around the world. This globalized approach has been a driver of diminishing food insecurity around the world.”

He says globalization is directly linked to the need for growth as the world’s population expands. “The pressure of scare resources such as energy has been a key driver for investing in alternative energy, finding new natural gas supplies, all of which are going to raise the

“And there is growing pressure on companies to be agents of change and we’re now expecting them to have very broad social responsibility policies that touch on areas that are not part of their core operations.”

“There is still an inequality that is created by the misdistribution of the gains of globalization, and that is the new debate. While globalization can exacerbate these inequalities, it has also lifted the floor tremendously for everyone.”

For more stories from the Robeco World Investment Forum, visit www.robeco.com/rwif

DJSI Index wins top rating Receiving praise from your peers is always one of the best ways of measuring success.

The Dow Jones Sustainability Index (DJSI) has been recognized as the “most widely recognized global rating” by a think tank that seeks to promote sustainability issues.

‘Rate the Raters’, an annual survey by SustainAbility, also put the DJSI in first place for “having a positive impact on corporate sustainability performance” and in the top three of indices surveyed for the most credible sustainability ratings.

The DJSI is a joint venture between S&P Dow Jones Indices and RobecoSAM. Its constituents are based on RobecoSAM’s Corporate Sustainability Assessment, an annual ESG analysis of over 2,500 listed companies.

“An external party giving us recognition for having a positive impact on corporations endorses our concept of using the DJSI as a valuable tool for engagement and shows that SI can be a door-opener and a business driver,” says Roderick Munsters, Chief Executive Officer of Robeco.

0.2°C The rise in the Earth’s temperature every decade, according to the Intergovernmental Panel on Climate Change. “Ambitious investment” is needed to combat global warming, says Dr Chris Field, co-chair of the group that produced the UN report.

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Opportunities and risk from global water scarcity ‘Water, water, everywhere, and not a drop to drink’. So the famous poem goes – and even for investors this is a phrase to bear in mind. Two angles are relevant for the investment community: the risks associated with water scarcity and the opportunities from solutions to the problem.

Population growth, increasing per capita water consumption, food production and combating pollution are major drivers behind the increasing scarcity of freshwater. This problem is exacerbated by an aging water infrastructure in developed countries, where some cities lose 30% or more of their tap water to leaks.

Improved living standards result in higher per capita water consumption, particularly as a growing middle class – most of which is located

Water Day on 22 March. As conventional energy sources become scarcer, they are progressively being replaced by others that are significantly more water intensive.

Yet while demand for water resources is unlimited, supply is limited. The Water Resources Group, a US think tank set up to try to solve supply problems in the countries in which it operates, estimates that if water consumption continues at the same rate, the world could be

Water and energy are also closely interlinked, as roughly 75% of all water drawn by industry is used for energy production and cooling. This interdependence, known as the ‘water-energy nexus,’ was the theme of this year’s UN World

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In addition to tapping into water-related opportunities, companies – and investors – must also consider their exposures to waterrelated risks within their own operations and supply chains. Not only are some companies finding it harder to secure the water needed to manufacture their products, they are also facing problems related to water quality and pollution, which increases the cost of treating that water.

RobecoSAM’s annual Corporate Sustainability Assessment looks at whether companies across all sectors manage their water-related risks so that water scarcity does not threaten their ability to keep their operations running, and ultimately, their financial survival.

A new RobecoSAM webcast, ‘Water – our most precious resource’, highlights the investment potential of solutions to water scarcity. View it here .

in the emerging markets – consumes more meat. Producing one calorie equivalent of meat requires 10 times more water than producing one calorie equivalent of corn or wheat. An incredible 70% of our freshwater withdrawal is now used in agricultural production, including non-food crops such as cotton and biofuels.

directly address global challenges related to the scarcity, quality and allocation of water.

facing a supply gap of 40% by 2030.

These problems also present opportunities for investors in becoming part of the solution.

RobecoSAM recognized the investment potential of the water challenge as early as 2001 when it launched an investment strategy focused exclusively on the water theme.

The RobecoSAM Sustainable Water Fund identifies companies that develop solutions – such as sophisticated gray water recycling technologies or micro-drip irrigation – that

Once laggards in the area of water-risk management are identified, RobecoSAM’s Governance & Active Ownership team goes one step further, by actively engaging in a constructive dialogue with them. This approach recently encouraged a number of companies in the textile sector to develop a water management policy to mitigate the financial and reputational risks related to water scarcity and water pollution.

For further information on the RobecoSAM Sustainable Water Fund, please click here.

INTERVIEW

Three ways to look at corporate governance

The academic The asset manager The engagement specialist 6

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‘Corporate governance, and board quality in particular, has a great impact on a company’s financial performance. Institutional investors should put more pressure on companies to improve it,’ says corporate governance professor Mijntje Lückerath. Portfolio manager Mark Glazener and Head of Governance & Active Ownership Carola van Lamoen agree, but up to a point.

To what extent is corporate governance discussed between asset managers and companies?

analyzing the situation in Nigeria and its impact on the company’s financial position.

Professor Lückerath: There certainly is a dialogue, but there are two important limitations. First of all, the brunt of the dialogue takes place at the annual general shareholders’ meeting (AGM). If investors think corporate governance is important, they should talk to the company about this throughout the year. Secondly, the dialogue tends to take place along two tracks: on the one hand the investment professionals talk to Investor Relations and on the other there is contact between the company’s sustainability director and the asset manager’s ESG specialist. This should be integrated.

Glazener: I do not consider sustainability and return as two separate issues. Data on ESG issues are taken into account when we decide whether or not to invest in a company. We do focus on sustainability information that is financially material: in terms of corporate governance, for example, someone who is ‘overboarded’ (i.e. holding too many board positions) is not optimally qualified to oversee a company and may therefore have a negative impact on the company’s results.

‘If investors think corporate governance is important, they should talk to the company about this throughout the year’ Is this two-track approach recognized in practice?

Van Lamoen: It used to be like that. But engagement specialists and portfolio managers are increasingly cooperating. Portfolio managers provide input for the engagement specialists’ active dialogue with companies, which can be at an AGM, but also on an ongoing basis in our long-term engagement dialogues with companies. And vice versa, portfolio managers who are invested in Shell use input from engagement specialists when

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How important is the role of investors in discussing board quality?

Professor Lückerath: Very important, since board members have, among other duties, a supervisory duty as representatives of a company’s stakeholder. They should always keep the long-term continuity of the company in mind. It is therefore essential that they are knowledgeable, sufficiently independent, and have enough available time. The topic of board quality shouldn’t even be pushed into the sustainability corner as it has an important impact on the growth and financial position of a company and, consequently, on potential investment returns. I therefore urge investors to put the topic high on the agenda when talking to companies.

Van Lamoen: I acknowledge that it is important. In fact, we recently commissioned a study on corporate board quality in the financial sector and will use the outcome as a starting point for engagement with several companies on this aspect.

Glazener: I agree, but as a portfolio manager

‘What is financially material varies from one sector to another’ I do want to stress that what is financially material varies from one sector to another.

When we look at a bank, for example, board quality is of the utmost importance, not only to identify risks but also to get the most out of the company’s human capital by creating the right culture and service levels. If you look at a chemical company, however, board quality is also important, but the toxicity of its products may be a more urgent topic.

What would the ideal situation look like?

Professor Lückerath: In my ideal world there would no longer be a difference between portfolio managers and ESG specialists. ESG and financial criteria would be considered equally important. An institutional investor would have far more conversations with companies about corporate governance, using measurable corporate governance criteria to make their investment case.

What is the asset manager’s take on this?

Glazener: As asset managers we should enable our clients to reach their financial objectives. In our opinion we need to incorporate financially material ESG factors into the investment decisions because they give us more insight into a company. Sometimes these are corporate governance issues, but sometimes they are not. We focus on the information that is most relevant and that helps us obtain better returns.

COVER STORY

Exploring the many colors of sustainability investing Sustainability – it is one simple word, but it has many different interpretations.

Does it mean excluding weapons manufacturers? Is it still Responsible Investing?

Or does it mean looking for companies engaged in risk-management practices?

In fact, it means all three – and many more things besides. But the extent to which opinions differ on ‘what is sustainability’ can be seen in the latest research from Novethic, a French group which works to improve knowledge and practices on Responsible Investment (RI).

Novethic’s most recent annual survey asked 165 European asset owners with EUR 5 trillion under management for their views on what sustainability investing means to them. “Asset owners increasingly understand what integrating Environmental, Social and Governance (ESG) criteria in their investment practices means, even if they do not all apply RI policies,” says Anne-Catherine Husson-Traore, chief executive officer of Novethic.

‘Dutch investors remain quite divided on their definition of ESG integration’

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No longer purely ethical “ESG integration is no longer seen as a purely ethical or reputational strategy. Moreover, long-term risk management is set to become asset owners’ principal motive to integrate ESG criteria into asset management. They recognize the potential materiality of ESG issues.”

However, she says the campaign is not reaching all ears, and in some quarters, is taking steps backwards. “Awareness of ESG approaches is rising, but ESG integration in practice is running out of steam and the implementation of RI policies is stagnating,” Husson-Traore says.

“Some strategies considered as commonplace, such as controversial weapons exclusions, are even declining. And almost 15% of respondents have not yet planned to implement any RI strategy. So there is still a long way to go before RI policies are implemented across all asset classes.”

National differences are large Differences in opinion as to what is sustainability can be seen in the Netherlands, which has long been seen as a leader in the concept.

“Dutch investors remain quite divided on their definition of ESG integration,” the report says. “Common responses are the exclusion of activities that are deemed unethical and using ESG criteria in investment selection.

However, an increasing number of respondents include engaging with issuers on sustainable development and avoiding sectors or securities with ESG risks in their definition.”

What is unique to the Dutch is that all investors have either adopted, or are in the process of adopting, a formal RI policy, even if respondents disagree about what it actually means, the study shows.

Leading the field in adopting RI policies is Germany, where 94% of respondents said they had adopted a strategy overseen by top management. They may also be the best informed. “German investors devote more resources to ESG analysis than any other country,” Novethic says. “Above all, they are the top users of ESG information provided by specialized rating agencies.”

German investors see contributing to sustainable development and long-term risk

‘The Spanish have gone back to exclusions and green issues’ management as the most important reasons behind their enthusiasm. The country also has the highest number of investors who address ethical investing in agricultural commodities, where deforestation is an issue, in their ESG strategies.

Multiple criteria may be confusing In France, 42% of respondents had an RI policy, and “an unusually high majority of French respondents consider that ESG integration involves selecting companies on the basis of ESG criteria,” the study reveals. However, the trend for French investors to factor in the long-term risks faced by companies may have peaked. And only 3% considered financial implications to be important.

“Indeed, investors seem to be confused by the multiple criteria used by different extra-financial rating agencies and asset managers. They would like to have a clear definition of what ESG criteria are,” Novethic says.

Tax havens are an increasing concern in Spain, which has lagged its European peers in adopting ESG, with only half of investors pursuing the concept. The Spanish definition of what is ESG has shifted towards the more traditional ideas of using exclusion and investing in ‘green’ industries, the report says.

Don’t focus exclusively on exclusions, says French pension fund Exclusions should not be used as a catch-all means of developing a sustainability investing approach, says French pension fund chief executive Philippe Desfossés.

Like most funds, his scheme excludes obvious candidates, such as the bonds of governments engaged in torture, or the equities of companies which make controversial weapons. But the reality of the rest of the investment universe is more complex, he says.

“No business sector is automatically excluded or favored by our fund,” says Desfossés, director of the ERAFP scheme for French public sector workers. He cites the oil industry as a good example where finding the ‘best in class’ is a better option.

“The fact is we are going to need oil for some time,” he says. “Not all oil businesses behave in the same way; we look at ESG factors to rank them on the way they are preparing for the future,” he says.

Changing business models Desfossés believes that encouraging sustainability practices at the companies in which he invests means a change of approach. “We should put more pressure on companies to change their business models away from trying to cut pollution with existing resources, to using fewer natural resources,” he says. “That’s more sustainable and more efficient across the whole of industry.”

“Investing in something which can have a direct impact such as renewable energy and low-carbon projects is obviously good, but this is perhaps 5% of the issue. The main challenge is how we can practice sustainability in the other 95% of the economy.”

Viewing ESG as risk management The country which places the highest importance on financial performance in defining ESG is the UK, where one in ten investors makes it a priority. The country also leads the field in considering ESG from a risk management perspective.

Perhaps the most progressive attitudes towards adopting ESG strategies were found in Austria, one of Europe’s smallest investment markets. “Austrian respondents’ definition of ESG integration is progressive and multidimensional,” says the report.

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The ERAFP has used a Socially Responsible Investing (SRI) filter on all investments since it began operating in 2005, believing that it allows a better assessment of long-term risk and identifies the growth drivers of the future.

The fund is two-thirds invested in bonds and the rest in equities and real estate.

In December 2013, the fund selected Robeco to manage parts of its US equity allocation.

* Philippe Desfossés is speaking at the RobecoSAM Forum 2014 on 2-3 October in Zurich. For more details, please visit: www.robecosam.com/en/forum or email forum@robecosam.com.

ENGAGEMENT CASE STUDY

How to engage with companies in India?

50% BSE 500 companies that have active controlling shareholders

69% Share of India’s crude oil produced by one company, the ONGC India is not the easiest country for investors. Corruption represents the single greatest governance risk, followed by minority shareholder rights in Public Sector Undertakings.

Engagement specialist Sylvia van Waveren visited the country to discuss ESG issues with eight companies in which Robeco invests.

Corruption and minority shareholder rights are concerns

How can asset managers deal with this?

The number one governance risk in India is corruption. It takes multiple forms, including bribes paid to government officials, accounting fraud (Reebok India), or falsification of disclosures to regulators (Ranbaxy).

Any asset manager who wants to engage on these issues with Indian companies will find that access to management is severely limited.

It is therefore useful to join forces with other international institutional investors to gain access to companies. Van Waveren visited India as part of a group of international institutional investors headed by the Asian Corporate Governance Association (ACGA).

Another governance risk is related to the government-owned corporations in the country, known as Public Sector Undertakings (PSUs).

PSUs generally do not comply with corporate governance rules such as the new Companies Act. Company boards are dominated by controlling shareholders (promoters or family).

Promoter holdings in the BSE 500 index amount to around 50% of constituents.

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3,000 Tons of fly ash generated by Hindalco power plants every day

not been able to get hold of before,” Van Waveren explains. Both companies, the Oil and Natural Gas Corporation (ONGC) and Aditya Birla/Hindalco, are faced with an environmental UN Global Compact Breach. “We asked them about remediation procedures, compensation guidelines to the communities and environmental management systems,” Van Waveren says. Both companies were requested to follow up on this visit.

Now the real work starts Face-to-face contact She also found that in India, face-to-face contact is crucial if you want to reach the right people. “The visit proved effective as I was able to talk to representatives of two companies under engagement, which I had

“The visit kick-started our engagement,” Van Waveren states. “We were able to establish contact with the companies and clarify our issues. This provides a basis from which we can begin our active dialogue. Now the real work can start.”

Making the intangible tangible How quant can help sustainable investors What if an institutional investor is committed to sustainable investing, but cannot afford to take too much relative risk on board? An innovative combination of corporate sustainability scores and quantitative portfolio management may offer a solution. We asked Peter Ferket, Robeco’s CIO of Equities, to explain.

The dilemma: increasing sustainability without increasing relative risk Driven by public opinion, regulations or the requirements of their participants, pension funds are increasingly asking for meaningful ESG integration. At the same time, they have little or no room to take on extra relative risk in their portfolios because of low coverage ratios, or because regulators encourage them to invest closer to the market.

No straightforward task Meeting both requirements, i.e. investing sustainably without deviating too much from the equity market index, is not as straightforward as it seems. After all, the more ESG factors are integrated, the more the portfolio can deviate from the generally accepted benchmark. Ferket and his team looked for a way to construct a portfolio that stays as close as possible to the benchmark while integrating as much sustainability information as possible. “We can solve the dilemma by combining the Corporate

Sustainability Assessment scores from RobecoSAM with our quantitative stock selection model,” says Ferket.

management. The QR model is applied to optimize the risk-return profile while keeping the relative risk (tracking error) under control and the sustainability characteristics intact.

Sustainability scores The sustainability scores are the first part of the equation. “RobecoSAM obtains financially material information from around 2,500 companies by inviting them to take part in the annual Corporate Sustainability Assessment survey,” says Ferket. “These companies receive a score between 0-100 on various environmental, social and corporate governance (‘economic’) aspects and are ranked against other companies in their industry.”

“We rank stocks based on their RobecoSAM score compared with their industry peers,” Ferket explains. “Then we calculate the stocks’ rank based on the Quantitative Ranking (QR) model and add this QR rank (20% weight) to the RobecoSAM rank (80% weight). Based on the resulting total ranks we build the portfolio with our own portfolio construction algorithm, applying limits to region, country, sector, beta and size exposures, and limiting turnover.”

Quantitative stock selection

A sustainable portfolio with little deviation from the benchmark

The second part of the equation is Robeco’s proprietary stock selection model. This ‘Quantitative Ranking’ (QR), ranks stocks along three criteria – valuation, responsible management and sentiment – thus benefiting from behavioral biases such as over- and underreaction and overly optimistic

Simulations show that the most sustainable companies in the universe are well represented in the resulting portfolio, with more than three quarters invested in stocks scoring better than average on sustainability. At the same time, return deviations from the benchmark are modest.

Over the simulation period – from September 2001 through December 2012 – the tracking error was 0.85%. Turnover amounted to 19%, keeping transaction costs to a minimum.

“The strategy will have to prove its worth in practice,” notes Ferket. “However, I am a great believer in its two building blocks.” Showing his commitment, Ferket is the lead portfolio manager of the recently launched fund that is based on this strategy.

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EXTERNAL PERSPECTIVE

‘We need to change the culture of the financial sector’ PETER WHITE, CHIEF OPERATING OFFICER, WORLD BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT Peter White believes companies can take the lead on sustainability. He is the former Director of Global Sustainability at Procter & Gamble.

What are the biggest challenges for sustainable development today?

Scaling up the business solutions that can create the transformation the world needs. The reality is that being green makes good business sense and we need to always be innovative in how we communicate this. For example, you can grow faster and reduce costs by dealing with energy in a more sensible way. Buildings use about 40% of all the energy in the world. With the technology that’s available today, you can save 60% on energy costs, and reduce CO2 emissions at the same time. It’s a win-win situation.

How are companies rising to the challenge? Do you face opposition to your ideals?

One way that businesses are rising to this challenge is by getting behind Action2020, which we launched at the World Economic Forum in Davos this year. Back in 2009 the WBCSD had started with a simple question: how can 9 billion people live well and within the boundaries of the planet? The result was Vision2050, a wide-reaching report on the priorities for business and sustainability which we need to address by 2050. However, the fact is that there aren’t too many boards of companies interested right now in spending time thinking about 2050. So we decided we needed to make this a more actionable item. Action2020 emerged from this need to focus on strategic solutions that meet targets over the next few years – a time horizon that business and political

leaders can readily embrace. So far 44 companies representing 15 million employees and USD 7 trillion of revenues have already signed up to Action2020 and more companies are joining as we speak.

Which industries or sectors are making the most progress on sustainable development?

One sector that stands out at the moment is the power sector. This industry is heavily impacted by climate change, but also has the ability to make big differences in stopping climate change in its tracks. In April, leading power companies called for resilience in the face of climate change in a new WBCSD report ‘Building a Resilient Power Sector’. The report combines the technical expertise and best practice of some of the biggest power companies in the world including EDF, DNV and ENtergy to assess the risks the sector faces and develop robust responses to these challenges.

What role should the financial sector play in the progress towards a more sustainable corporate world?

The financial sector, like many other industries, is often accused of adopting a short-term and narrow approach to investment decisions and disregarding the long-term horizon and broad perspective that sustainability demands. We need to change the culture of the financial sector, so that natural and social capital are taken into account alongside financial capital. We need a more holistic way to judge investing success which takes into account sustainability and long-term stability.

Important Information This document has been issued by Robeco Institutional Asset Management B.V. (trade register number: 24123167), which has a license of the Netherlands Authority of the Financial Markets in Amsterdam, and RobecoSAM AG (trade register number: CH-020.3.025.346-2), which has a license of the Swiss Financial Market Supervisory Authority FINMA in Berne. Robeco’s engagement process starts with thematic research by an external consultant focusing on companies within a specific sector. Chinese walls exist between Robeco’s engagement activities and RobecoSAM’s activities related to the RobecoSAM questionnaire. These Chinese walls ensure that confidential information from the RobecoSAM questionnaire will not be used for Robeco’s engagement activities. The details given on this page do not constitute an offer. They are given for information purposes only. No liability is assumed for the correctness and accuracy of the details given. Copyright © 2014 Robeco – all rights reserved.

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Robeco Coolsingel 120, 3011 AG Rotterdam, The Netherlands editors-advance@robeco.nl, http://www.robeco.com/professionals/insights/ sustainability-investing/index.jsp RobecoSAM Josefstrasse 218, 8005 Zurich, Switzerland info@robecosam.com, www.robecosam.com