R E S P O N S I B L E I N V E S T M E N T F O R A S U S T A I N A B L E E C O N O M Y

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT

January 1 - March 31, 2013

Q1/13

Shareholder Engagement at a Glance

0   5   10   15   20   25   30   35  

 ENV  

 GOV  

 SOC  

Engagement  Themes  

Engaged  22%  

S&P  TSX  Composite  Index  

 Financials  

9%   Consumer  Discre2onary  

7%  

 Materials  

39%  

Energy  36%  

Other  9%  

Sectors  Engaged  

Engaged  40%  

S&P  TSX  60  Index  

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT2

contentsFirst Quarter´s Highlights 3Activity Snapshot 3Shareholder Engagement Activity Summary 4 Environment 4Social 6Corporate Governance 8Company Progress Summary 10

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 3

First Quarter´s Highlights

We wrote to 22 companies regarding gender diversity on corporate boards and provided recommendations intended to assist the boards of those companies in nominating one or more women directors;

We contacted 21companies to ask about their intention to respond to the 2013 Carbon Disclosure Project (CDP) questionnaire or otherwise disclose their management of climate change-related risks and opportunities;

We initiated a dialogue on behalf of the Atkinson Charitable Foundation with Canadian banks on improving the provision of financial services for low-income and other financially under-served groups.

Activity Snapshot

Environment 27Climate Risk Disclosure ATCO Ltd., Bonterra Energy Corp., Canadian Utilities Limited, Crew Energy Inc.,

Ensign Energy Services Inc., Major Drilling Group International Inc., MEGEnergy Corporation, New Gold Inc., Osisko Mining Corporation, Pan American Silver Corp., Pembina Pipeline Corporation, Petrominerales Ltd., Peyto Exploration and Development Corp., Precision Drilling Corporation, ShawCor Ltd., Sherritt International Corporation, Thompson Creek Metals Company Inc., Trilogy Energy Corporation, Trinidad Drilling Ltd., Veresen Inc., Vermilion Energy Inc.

Fossil Fuels Financing Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce

Hydraulic Fracturing - Shale hydrocarbon development

Encana Corporation; Talisman Energy

Sustainable Paper Procurement Quebecor Inc.

Social 14Child Labour and Cotton Supply Chain

Gildan Activewear Inc., Reitman’s (Canada) Ltd.

Conflict Free Mineral Sourcing Shaw Communications Ltd., TELUS Corporation

Human Rights Barrick Gold Corporation, Goldcorp Inc., IAM Gold Corporation, Inmet Mining Corporation, Teck Resources Limited

Phosphate Sourcing and Western Sahara

Agrium Inc., Potash Corporation of Saskatchewan Inc.

Responsible Banking Bank of Nova Scotia, Royal Bank of Canada, Toronto-Dominion Bank

Corporate Governance 29Board Gender Diversity Algonquin Power & Utilities, B2Gold Corporation, Celtic Exploration Ltd., Crescent

Point Energy Corporation, Crew Energy Inc., Dollarama Inc., Eldorado Gold Corporation, Enerflex Ltd., Franco-Nevada Corporation, HudBay Minerals Inc., IAMGold Corporation, Inmet Mining Corporation, Lundin Mining Corporation, New Gold Inc., Niko Resources Ltd., Precision Drilling Corporation, Silver Wheaton Corp., Tourmaline Oil Corporation, Trilogy Energy Corporation, Trinidad Drilling Ltd., Vermilion Energy Inc., Yamana Gold Inc.

Executive Compensation First Quantum Minerals Ltd.

Sustainability Reporting Dollarama Inc., Ensign Energy Inc., George Weston Limited, Jean Coutu Group Inc.

Sustainability Reporting and Climate Risk Disclosure

Shaw Communications Ltd.

Sustainability Reporting and Toxics Canadian Tire Corporation Ltd.

Total Number of Companies 59

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Environment

Climate Risk Disclosure

SHARE continued its annual campaign on behalf of clients advocating for additional climate risk disclosure by encouraging companies to respond to the 2013 Carbon Disclosure Project (CDP) questionnaire or otherwise disclose their management of climate change-related risks and opportunities. We wrote to 21 companies (see list in Activity Snapshot on previous page) and received responses from Sherritt International Corporation and Thompson Creek Metals Company Inc. In its response, Sherritt stated that it provides information on climate change risk and carbon emissions through its annual and sustainability reports. Thompson Creek indicated that it will not be responding to the 2013 CDP questionnaire.

Fossil Fuels Financing

This quarter, we interacted with three of the banks that we contacted in the fourth quarter of 2012 regarding each bank’s assessment and mitigation of risks associated with greenhouse gas (GHG) emissions stemming from their core financial operations (“financed” emissions).

We held a conference call with the Bank of Nova Scotia and the bank provided further information about its approach to climate change and its management of risks associated with financing carbon-intensive industries and companies. SHARE encouraged the bank to consider implementing the new GHG Protocol Financial Sector Guidance that is being drafted by the GHG Protocol and the UNEP Finance Initiative, and to disclose to shareholders the monetary value of loans and trading lines provided to companies in carbon-intensive sectors. The company agreed to provide further information regarding its assessment of reputational risks stemming from its “financed” emissions, particularly those associated with lending and financial relationships with companies and projects in the fossil fuels industry. The Bank of Montreal confirmed that it will meet with us next quarter to continue our discussion on “financed” emissions risk management.

The Canadian Imperial Bank of Commerce (CIBC) provided information regarding its financing of renewable energy projects, its Environmental Credit

HSBC and S&P release studies on financial implications of “unburnable” fossil fuel reserves

This quarter, HSBC and S&P released two noteworthy reports that consider the long-term financial implications of “unburnable” fossil fuel reserves, which are two-thirds of the world’s proven fossil fuel reserves that according to the International Energy Agency will need to stay underground if we are to keep global warming within the internationally-agreed two degree Celsius limit advised by the Intergovernmental Panel on Climate Change. The HSBC study, released in January 2013, considers how “unburnable” carbon reserves may affect the value of major European oil companies, while the March 2013 report by Standard & Poor’s analyzes the long-term creditworthiness of five oil companies, including three Canadian companies active in the oil sands, in a carbon-constrained future. Both reports are available online at: http://gofossilfree.org/files/2013/02/HSBCOilJan13.pdf and http://www.carbontracker.org/wp-content/uploads/downloads/2013/03/SnPCT-report-on-oil-sector-carbon-

Shareholder Engagement Activity Summary

This report outlines SHARE’s shareholder engagement activities for the first quarter of 2013. SHARE conducts focused and constructive shareholder engagement dialogues with public corporations on behalf of institutional shareholders. The goal of our program is to work with clients to improve the environmental, social and governance (ESG) performance of the companies in their investment portfolios. For more information on SHARE’s Shareholder Engagement Services, please visit http://www.share.ca/services/shareholder-engagement/.

During the first quarter of 2013, SHARE corresponded with 59 companies on key ESG issues. Our thematic focus was on climate risk disclosure, fossil fuels financing, hydraulic fracturing, shale practices disclosure, sustainable paper procurement, conflict-free mineral sourcing, child labour and the cotton supply chain, human rights, phosphate sourcing from the Western Sahara, responsible banking, board gender diversity, executive compensation and sustainability reporting. Our dialogues on each of these themes are described in detail below.

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Risk Management Standards and Procedures and its Carbon Management Program. SHARE has requested clarification and additional information on several points raised in CIBC’s response.

Hydraulic Fracturing – Shale Hydrocarbon Development

Encana Corporation confirmed that it expects to provide the information requested last quarter regarding water use and Encana’s fracturing fluids program in upcoming public company materials. SHARE had contacted the company to seek specific information regarding Encana’s water sourcing, implementation of the Responsible Products Program and other relevant information to enable stakeholders to review progress and measure performance with regard to risk mitigation efforts associated with shale hydrocarbon extraction.

Talisman Energy Inc. responded to our inquiry concerning the state of progress in the adoption of targets and performance indicators to implement and report on its Shale Operating Principles, particularly in relation to the use of toxic chemicals in hydraulic fracturing and the quantity of water used in its shale operations. SHARE believes disclosure should include absolute water use. In its response, the company provided information on an industry initiative to categorize toxic chemicals and establish use restrictions of certain chemicals and progressive reduction use of potentially toxic chemicals. Talisman also indicated that it will report on freshwater intensity figures in its 2012 Corporate Responsibility report.

In addition to the above engagement with Talisman, some of our clients joined other investors in North America to urge the company to promptly start disclosing relevant quantitative data to demonstrate its commitment to responsible shale hydrocarbon extraction, and to fulfill pledges regarding performance and public reporting made under the company’s Shale Operating Principles. In the joint investor letter, the shareholders provided a list of indicators and asked Talisman to specify when it will start to provide the information related to each of the indicators to its shareholders and the public.

Sustainable Paper Procurement

Quebecor Inc. communicated to SHARE that it has developed an action plan for its sustainable paper procurement policy at subsidiary TVA Publications and will confirm whether the action plan will be made public once it is finalized. The company also reported that it has obtained FSC chain of custody certification for its two key Quebecor Media Printing facilities.

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Social

Conflict-Free Mineral Sourcing

This quarter, SHARE continued to solicit responses from Shaw Communications Inc. and TELUS Corporation to our request for information regarding each company’s approach to conflict-free mineral sourcing and their assessment of the disclosure requirements regarding mineral sourcing under the final rules of the Dodd-Frank Act in the United States. Despite SHARE’s efforts to reach the company by phone and fax, Shaw Communications has not acknowledged our letter or responded to our request for information. On February 7, 2013, TELUS acknowledged SHARE’s communication and indicated that a response will be provided following inquiries with its suppliers.

Cotton Supply Chain and Child Labour

SHARE first wrote to Gildan Activewear Inc. in July 2011requesting information about its cotton sourcing policies in relation to the extensive use of forced and child labour in the cotton harvest in Uzbekistan, a major global source of cotton. The Government of Uzbekistan continues to force children and teachers out of school and into the fields each autumn to harvest cotton for export, despite international condemnation and a widely-supported pledge by international clothing and textile companies to boycott the use of Uzbek cotton in the manufacture of their goods. Follow-up letters and telephone calls to Gildan have failed to elicit a response from the company. SHARE also wrote to Reitman’s (Canada) Ltd. this quarter requesting information regarding its cotton sourcing policies and practices in relation to the issue of forced and child labour in the Uzbek cotton industry.

Human Rights

In the fourth quarter of 2012, we contacted many of Canada’s leading mining companies to seek feedback on SHARE’s consultation draft document entitled Investor Expectations on Human Rights Performance for Mining Companies. This report outlines what SHARE believes are the most pressing human rights issues for the mining sector and provides an overview of our understanding of best practices for mining companies in meeting their human rights obligations. Responses have been received from Barrick Gold Corporation, Goldcorp Inc. and Teck Resources Limited as well as from an independent consultant. A reminder was sent to IAMGold Corporation. Inmet Mining Corporation did not provide comments and was recently taken over by First Quantum Minerals.

Responsible Banking

On behalf of the Atkinson Charitable Foundation, SHARE wrote to the Royal Bank of Canada, the Bank of Nova Scotia and Toronto-Dominion Bank requesting information on their efforts to determine and meet the financial service needs of low-income and financially underserved Canadians. Access to affordable and appropriate financial services is essential for individuals to function effectively in society and to improve their economic situation. In the current economic context in Canada, where high levels of indebtedness and

Investors call for enhanced human rights oversight in Burma

A group of institutional investors, including several of SHARE’s clients, made submissions to the European Parliament and the United States Government in support of strong accountability and transparency measures for companies doing business with Burma. The submission made to the US Department of State called for risks identified in human rights reporting to be made available to institutional investors and the general public, among other recommendations, and affirms the importance of mandatory reporting on US business operations in Burma. The submission to the European Parliament urged authorities to require European companies doing business with or in Burma to undertake human rights due diligence, to disclose publicly company policies, practices and actions to protect and promote human rights and to support the creation of an effective complaints mechanism and dispute settlement mechanism.

Review the Submission to the US Department of State here

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low savings rates are prevalent and the payday lending industry continues to grow, innovation from Canada’s financial services sector is urgently needed to improve access to affordable and appropriate financial products that will help meet Canadians’ immediate and long-term financial needs. We also requested information from the banks on whether or not they broker lending products to alternative financial institutions, such as payday lenders, or via third party channels.

Phosphate Sourcing from Western Sahara

SHARE continued its engagement with Agrium Inc. and Potash Corporation of Saskatchewan regarding their sourcing of phosphate rock from the Non-Self Governing Territory of the Western Sahara, currently occupied by Morocco. On August 14, 2012, SHARE wrote to Agrium. Agrium responded this quarter, providing its views on the legality of purchasing rock phosphate from a Moroccan government-owned company operating in the Western Sahara. Following up on an engagement initiated through the Principles for Responsible Investment Clearinghouse, we also sent a letter to Potash Corporation requesting additional information about the implications of the company’s practice of sourcing phosphate from the Western Sahara. Our intention is to acquire information about Potash Corporation’s assessment of human rights issues in the Western Sahara, whether the company includes the Saharawi population living in refugee camps outside of the Western Sahara among its key stakeholders, and whether the company has undertaken or plans to undertake an independent review of its human rights obligations regarding importation of phosphate from the Western Sahara.

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Corporate Governance

Board Gender Diversity

SHARE wrote to 22 companies this quarter (see list in Activity Snapshot on page 3 above) on the topic of gender diversity on corporate boards and provided a set of recommendations intended to assist those boards in nominating one or more women directors. SHARE’s research indicates that there are business case arguments for increasing the number of women on corporate boards. These arguments include capitalizing on opportunities to draw on untapped talent pools, illustrating that the company thinks creatively about human talent and is interested in reducing the risk of groupthink by drawing on new people with potentially new perspectives. Finally, companies that have a greater percentage of women on their board build a public perception that gender diversity is a key part of enhancing reputation and value in the market.

We received responses from 4 of the 22 companies that we contacted. Inmet Mining Corporation indicated that the Board has recently implemented many of the recommendations we suggested. Vermilion Energy Inc. stated that gender diversity on the board is a high priority consideration in its director searches but that to date it has not identified a female within the candidate groups who possessed the specific skills and experience sought by the board. SHARE will follow-up with Niko Resources Ltd, as it appears from the company’s response that the Chairman of the Corporate Governance Committee misinterpreted the purpose of our letter. Finally, Tourmaline Oil Corporation acknowledged that gender diversity is a valid investor concern but that its search process does not give any consideration to the gender of potential director candidates.

Executive Compensation

SHARE received a letter from First Quantum Minerals Ltd. responding to our request for enhanced disclosure of their short-term compensation plan. The company thanked SHARE for providing constructive feedback on its Statement of Executive Compensation and advised SHARE that the Compensation Committee made a decision to expand disclosure in 2013 to provide further details on the linkages between pay and performance, including results against performance metrics, in their upcoming Compensation Report.

Sustainability Reporting

This quarter, we wrote to Dollarama Inc. to inquire about the company’s plans to start producing sustainability reports to keep investors apprised of its social and environmental performance through relevant metrics and measurable indicators. In its response, the company indicated that it does not plan to produce a stand-alone sustainability report in the short term, but will discuss internally our request for measurable targets and indicators. We wrote back to the company to encourage consideration of relevant materials such as the Global Reporting Initiative Sustainability Reporting Guidelines, which enable incremental improvements in reporting, and offered to provide feedback on some initial key performance indicators that are of most interest to our clients and other long-term institutional investors to inform the company’s internal discussions.

Gender diversity on the board: Why Canadian companies present a significant challenge According to a recent report by TD Economics (Get on Board Corporate Canada), there are two key contributors to the “remarkably low” percentage of women on the boards of Canadian companies relative to those based in many other industrialized nations. First, the current drive to populate public company boards with “industry-experts” has negative implications for gender diversification on Canadian boards given the relatively high percentage of energy and materials companies in our market. Women are less likely to be trained and employed by companies in these sectors than in most others, and are therefore less likely to acquire the requisite expertise for board service. Yet, U.S. energy and materials companies have far higher levels of women serving as directors than Canadian firms. According to TD’s report, the relatively small size of Canadian companies and their boards compounds the sectoral problem. Over time, there are simply fewer occasions on which Canadian companies conduct a search for new directors. Clearly, investors face significant impediments to changing the gender mix on Canadian boards, pointing to the need for engagements on this issue to be patient and very persistent.

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SHARE sought confirmation from Ensign Energy Services Inc. that it received the feedback we provided in June 2012 on the company’s sustainability disclosures, contained on its website and in its annual report. We followed up with George Weston Limited subsidiary Loblaw regarding its near-term plans to provide additional performance indicators and relevant metrics in upcoming Loblaw sustainability reports. Loblaw confirmed receipt of the letter and indicated it will respond to our inquiry shortly.

We received a response from Jean Coutu Group Inc. regarding the company’s near-term plans to provide measurable data to its shareholders on its social and environmental performance. The company indicated that it has put in place procedures to comply with relevant social and environmental regulations and best practices, but does not produce a sustainability report. We urged Jean Coutu, regardless of whether it decides in the future to publish full-fledged sustainability reports, to consider providing, as soon as possible, relevant data on the implementation of its Environmental Policy and sustainability action plans. We stressed that without this information external analysts cannot appreciate Jean-Coutu’s implementation efforts, or assess its sustainability performance or progress. We asked the company whether, and if so when, it will provide to the public measurable data and other relevant information concerning the implementation of its Environmental Policy and related sustainability action plans.

Canadian Tire Corporation provided additional information on its efforts to ensure vendor compliance with its sustainable packaging guidelines, as agreed during a conference call we held with the company last quarter. SHARE has requested more detailed information from the company on certain issues and Canadian Tire has indicated a response will soon be forthcoming. Finally, SHARE followed up with Shaw Communications Inc. regarding the request we sent last quarter asking the company to clarify whether it will answer the 2013 CDP questionnaire and produce its first sustainability report in 2013. We have not yet received a response from the company.

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Company Progress Summary

Company Topic ProgressAgrium Inc. Phosphate Sourcing from Western Sahara uAlgonquin Power &≠ Utilities Corp. Board Gender Diversity ☼ATCO Ltd. Climate Risk Disclosure ☼B2Gold Corporation Board Gender Diversity ☼Bank of Montreal Fossil Fuels Financing ☼Bank of Nova Scotia Responsible Banking ☼Bank of Nova Scotia Fossil Fuels Financing ☼Barrick Gold Corporation Human Rights uBonterra Energy Corp. Climate Risk Disclosure ☼Canadian Imperial Bank of Commerce Fossil Fuels Financing ☼Canadian Tire Corporation Ltd. Sustainability Reporting &Toxics ☼Canadian Utilities Limited Climate Risk Disclosure ☼Celtic Exploration Ltd Board Gender Diversity ☼Crescent Point Energy Corporation Board Gender Diversity ☼Crew Energy Inc Board Gender Diversity ☼Crew Energy Inc Climate Risk Disclosure ☼Dollarama Inc. Board Gender Diversity ☼Dollarama Inc. Sustainability Reporting uEldorado Gold Corporation Board Gender Diversity ☼Encana Corporation Hydraulic Fracturing uEnerflex Ltd. Board Gender Diversity ☼Ensign Energy Services Inc. Sustainability Reporting ☼Ensign Energy Services Inc. Climate Risk Disclosure ☼First Quantum Minerals Ltd. Executive Compensation pFranco-Nevada Corporation Board Gender Diversity ☼George Weston Limited Sustainability Reporting ☼Gildan Activewear Inc. Cotton Supply Chain qGoldcorp Corporation Human Rights uHudBay Minerals Inc. Board Gender Diversity ☼IAMGold Corporation Human Rights ☼IAMGold Corporation Board Gender Diversity ☼Inmet Mining Corporation Human Rights uInmet Mining Corporation Board Gender Diversity pJean Coutu Group Inc. Sustainability Reporting qLundin Mining Corporation Board Gender Diversity ☼Major Drilling Group International Inc. Climate Risk Disclosure ☼MEG Energy Corporation Climate Risk Disclosure ☼New Gold Inc. Board Gender Diversity ☼New Gold Inc. Climate Risk Disclosure ☼Niko Resources Ltd. Board Gender Diversity qOsisko Mining Corporation Climate Risk Disclosure ☼

Pan American Silver Corp. Climate Risk Disclosure ☼Pembina Pipeline Corporation Climate Risk Disclosure ☼Petrominerales Ltd. Climate Risk Disclosure ☼Peyto Exploration and Development Corp. Climate Risk Disclosure ☼Potash Corporation of Saskatchewan Inc. Phosphate Sourcing from Western Sahara ☼Precision Drilling Corporation Board Gender Diversity ☼Precision Drilling Corporation Climate Risk Disclosure ☼Quebecor Inc. Sustainable Paper Procurement uReitman’s (Canada) Ltd. Cotton Supply Chain ☼Royal Bank of Canada Responsible Banking ☼Shaw Communications Inc. Conflict Minerals ☼Shaw Communications Inc. Sustainability Reporting & Climate Risk Disclosure ☼ShawCor Ltd. Climate Risk Disclosure ☼Sherritt International Corporation Climate Risk Disclosure uSilver Wheaton Corp. Board Gender Diversity ☼Talisman Energy Inc. Hydraulic Fracturing - Shale Hydrocarbon Development qTalisman Energy Inc. Hydraulic Fracturing - Shale Hydrocarbon Development (Collaborative

Engagement) ☼Teck Resources Limited Human Rights uTELUS Corporation Conflict Minerals ☼Thompson Creek Metals Company Inc. Climate Risk Disclosure qToronto-Dominion Bank Responsible Banking uTourmaline Oil Corporation Board Gender Diversity qTrilogy Energy Corporation Board Gender Diversity ☼Trilogy Energy Corporation Climate Risk Disclosure ☼Trinidad Drilling Ltd. Board Gender Diversity ☼Trinidad Drilling Ltd. Climate Risk Disclosure ☼Veresen Inc. Climate Risk Disclosure ☼Vermilion Energy Inc. Board Gender Diversity pVermilion Energy Inc. Climate Risk Disclosure ☼Yamana Gold Inc. Board Gender Diversity ☼       p Positive       u On Track/Neutral       q Negative/ No Response       ☼ Response Pending

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The Shareholder Association for Research and Education (SHARE) is a Canadian leader in responsible investment services, research and education for institutional investors.

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