DJSI 2017 Results Webcast September 2017
Agenda General & Developments 2017 Manjit Jus, Head of Sustainability Application & Operations Methodology & CSA Findings Jacob Messina, Head of Sustainability Investing Research Q&A 2
2017 Methodology DJSI 2017 3
RobecoSAM CSA: Participation Trend Increasing participation of companies in DJSI over the years 1000 900 800 700 600 500 400 300 200 100 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Companies Participated Source: RobecoSAM Corporate Sustainability Assessment 1999-2017 4
Regional Breakdown of Participating Companies 87 23 195 North America Europe Developed 81 2017 Methodology Europe Emerging Markets Asia Pacific Developed 267 273 Asia Emerging Markets Latin America 16 Africa & Middle East Source: RobecoSAM Corporate Sustainability Assessment 2017 5
Strongest Growth in Participation 700 Participation Growth (percentage) Percentage growth in participation 600 500 2017 Methodology 400 300 200 100 0 Peru Greece Russian Federation Mexico Source: RobecoSAM Corporate Sustainability Assessment 2016-2017 6
Strongest Growth in Participation Participating Companies 120 100 2017 Methodology 80 60 Participation Growth (absolute) 180 168 160 160 146 140 124 40 20 10 22 23 18 7 1 0 Japan Mexico United States Peru Netherlands 2016 2017 Source: RobecoSAM Corporate Sustainability Assessment 2016-2017 7
Major Developments in 2017 Methodology Methodology review of financial materiality of Corporate Sustainability Assessment (CSA) criteria Industry-based approach to reviewing sustainability topics and trends Introduction of new criterion «Policy Influence», expansion of «Impact Measurement & Valuation», further development of «Human Rights», new questions for Corporate Governance and Supply Chain Management Other Developments Alignment with other global sustainability reporting frameworks such as GRI and SASB Company Information section normalizing companies data with appropriate denominators, reporting currency unified 8
2017 Methodology General Remarks 9
General Remarks 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, to ensure that our assessment continues to raise the bar and challenge companies in their thinking about long-term risks and opportunities 2017 Methodology Observations Companies struggle to provide information for new or updated questions Solutions Provide additional clarification on new questions Use clearer definitions Better explain our expectations 10
General Remarks 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 2017 Supporting Methodology 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, within the assessment timeframe and RobecoSAM should be informed in advance if any of documents will be finalized after the deadline Non-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 globally 11
New Methodology 2017 Methodology & CSA Findings 12
Policy Influence This new criterion has been added to ALL industries Civil 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 make Two questions in the criteria: Total contributions and other spending Five largest contributions and expenditures Benefits: Recognized leadership for companies with lower reputational and corruption risk through lower spending on policy influence and superior transparency for investors and the public 13
Policy Influence What we were looking for: Disclosure on all types of contributions, except charitable contributions or donations to corporate citizenship activities This includes: 2017 Methodology Lobbying and interest representation Industry, trade and other business associations Political candidates, parties and organizations, for campaigns, ballot measures, referendums, etc. Includes activities with a positive purpose Observations: In the CSA, many companies solely reported political contributions Most companies do not disclose beyond what is legally mandated Public disclosure extending beyond direct political contributions to trade association memberships, etc is extremely low 14
Impact Measurement & Valuation 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 models 2017 3 questions: Methodology Impact Valuation Monetary, Quantitative/Qualitative, Pilot Valuation Disclosure Business Programs for Social Needs Applicable to 25 industries Benefits Evaluating business activities impacts can help companies make better decisions and identify opportunities for innovation, and help investors understand such risks and opportunities 15
Impact Measurement & Valuation 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. Pilot-testing of frameworks like the Natural Capital Protocol Observations Very 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: 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Asia Pacific Emerging Markets Europe North America Global Pilot project Quantitative or qualitative impact valuation Monetary impact valuation Source: RobecoSAM Corporate Sustainability Assessment 2017 Data based on 896 participating companies 16
2017 Methodology Methodology Changes Criteria Revised in 2017 17
Corporate Governance This criterion has been revised for ALL industries New Questions Average Tenure Board Industry Experience Updated Questions Board Structure Clarified and aligned the definition of Independence with global best practices (e.g. 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 diversity 18
Regional Corporate Governance Performance 100 90 80 70 60 50 40 30 20 10 0 Africa Asia Pacific Europe Latin America North America Corporate Governance 2016 Corporate Governance 2017 Board Structure 2016 Board Structure 2017 Source: RobecoSAM Corporate Sustainability Assessment 2017 2086 assessed companies 19
Supply Chain Management This criterion has been revised for ALL relevant industries Overall 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 reporting 20
Supply Chain Management 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 11.2 points at the criterion level 70 60 2017 50 Methodology 40 30 20 10 0 Awareness ESG Integration in SCM Strategy Risk Exposure Risk Management Measures Transparency & Reporting 2016 2017 Source: RobecoSAM Corporate Sustainability Assessment 2017 2086 assessed companies 21
Human Rights 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 thirdparties 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: 2017 Methodology 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 all companies to have assessed their own operations, at a minimum, for potential human risks, regardless of their region(s) of operations Disclosure we only accepted disclosure on specific points if minimum requirements were met in the previous questions 22
Human Rights - Commitment 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Commitment according to international standards Commitment covering own operations Commitment covering suppliers Commitment covering partners Commitment outlining actions and procedures % answered % accepted Source: RobecoSAM Corporate Sustainability Assessment 2017 942 participating companies 23
2017 Methodology Upcoming Webcasts 24
More Information and Upcoming Webcasts Annual Scoring & Methodology Read up on this year s major changes: http://www.robecosam.com/images/csa_2017_annual_scoring_methodology_.pdf Webcasts Policy Influence and Human Rights Thursday, October 5 Impact Measurement & Valuation and Supply Chain Management Thursday, October 26 Topic TBD* November 9 Topic TBD* November 30 *You can choose the topics to be discussed in the last two webcasts here: https://www.surveymonkey.com/r/mnhhvd7 Send us your questions in advance! assessments@robecosam.com 25
Potential Topics for Upcoming Webcasts Topics include: Corporate Governance Materiality Product Stewardship Operational Eco-Efficiency Human Capital Development 26
Other Updates Selected percentile rankings at the total and dimension levels will be published on Bloomberg in late September Benchmarking database is now available to companies with 2017 results through https://assessments.robecosam.com Leading Practices Database will be available at the end of September 2017 Methodology If they have been assessed by RobecoSAM on publicly available information, non-participating companies can also log in and download their benchmarking scorecard 27
Questions? Contact us: RobecoSAM CSA Helpline +41 44 653 10 30 assessments@robecosam.com 2017 Methodology Visit the CSA website: www.robecosam.com/csa 28
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