Engagement Summary Report (Active dialogue and voting) · safety controls and rebuilding trust are necessary, and that the company is on the way to achieving these improvements. Xstrata

London Pensions Fund Authority

2012 Q2Engagement Summary Report(Active dialogue and voting)

Second quarter 2012 LPFA 2

1. Content 2

2. Responsible investing 3

3. Voting and engagement summary 4

4. Voting highlights 5

5. Engagement showcase – Altria and Kraft Foods 7

6. Carbon Disclosure Project 8

7. Implementation of the UN Global Compact 9

8. Themes and Companies 10

9. Codes of conduct 11

This report describes the active ownership activities that Robeco performed on behalf of LPFA

in the second quarter of 2012. Chapter 2 details how LPFA uses active ownership with the

aid of Robeco to support its responsible investment strategy. Chapter 3 presents a summary

of the voting and engagement activities for the quarter. In Chapter 4 we present the voting

highlights in the second quarter of 2012. Chapter 5 describes the engagement with Altria

and Kraft Foods. Chapter 6 gives an overview of the Carbon Disclosure Project engagement.

Chapter 7 gives an overview of the results of the Implementation of the UN Global Compact.

Chapter 8 provides a summary overview of the engagement themes and corresponding LPFA

investee companies and finally, Chapter 9 summarises the various codes of conduct which

Robeco uses as guidelines to execute its active ownership program.

1. Content


The London Pensions Fund Authority (LPFA) attaches considerable importance to

responsible investing. Responsible Investing is implemented through active dialogue

and voting at shareholders’ meetings of companies in which investments are

made. Within the scope of this active dialogue, companies in which LPFA invests are

encouraged to practice good corporate governance and to take social responsibility.

The LPFA has a long-standing commitment to responsible investment, guided by their

investment principles and beliefs.

2. Responsible Investing

LPFA as an active shareholderLPFA invests in the stocks of different

companies. Each share held entitles LPFA

to vote at shareholders’ meetings. LPFA has

authorised Robeco to vote these shares on

LPFA’s behalf. By making active use of this

voting right, Robeco can encourage the

companies concerned on behalf of LPFA

to increase the quality of their corporate

management and to improve their

sustainability. We expect this to benefit the

development of shareholder value in the

long term, mainly because companies that

have their business in order - in the form

of good corporate governance and good

environmental and human-rights policies

- generally perform better. In other words,

effective corporate governance is good

for LPFA and good for its beneficiaries. For

this reason, LPFA is in favour of responsible

investing and addresses companies as an

active shareholder.

Worldwide, the voting right is exercised

on shares actually held in the investment

portfolio of LPFA. In addition, Robeco, acting

also on behalf of LPFA, seeks to actively

engage the companies in which it invests in

a dialogue on good corporate governance

and social responsibility.

The dialogue in which Robeco is engaged

with companies on behalf of LPFA is

intended to increase shareholder value

and at the same time promote sustainable

behaviour and improve the quality of the

management of these companies. Active

and committed ownership can have a

bearing on social policy, the environment

and ethical behaviour, but also on questions

such as changes in corporate structure,

controlling rights and profit distribution.

A dialogue of this nature addresses

issues linked to opportunities and risks

that can have an influence on the value

of a company. Ultimately, a company’s

management must be in a position to

influence these issues.

CooperationRobeco is a signatory to the United Nations

Principles for Responsible Investment.

Within this initiative, institutional

investors are pledging their commitment

to promoting responsible investing, both

internally and externally. Wherever possible

or necessary, Robeco will collaborate

with other investors. Examples include

Eumedion, a platform for institutional

investors in the area of corporate

governance, and the Carbon Disclosure

Project, a collaboration among investors

encouraging transparency on the CO2

emissions of companies.

International codes of conductRobeco makes use of international codes

of conduct such as the United Nations

Principles for Responsible Investment to

implement responsible investing, and the

United Nations Global Compact to practice

corporate social responsibility. These codes

of conduct are found at the back of this

publication.


Over the last quarter, Robeco voted 151 shareholder meetings forming part of LPFA’s

portfolio. A further breakdown of the voting behaviour for these meetings is provided

below.

3. Voting and engagement summary

In addition, Robeco conducted 32 engagements with different companies on a range of

environmental, social and governance issues across various sectors and geographic regions.

A further breakdown of engagement activities by issue, sector and region is provided below.

Voting behaviour

2nd Quarter YTD

Total number of meetings which was voted 151 172

Total number of agenda items which has been voted for 2.480 2.765

% Meetings voted against management 33% 60%

Europe 55%

North America 22%

Pacific 14%

Emerging Markets 9%

Vergaderingen per regioMeetings per region 2nd quarter 2012

Active dialogue activities per contact event

4

1

18

1

3

4

2

1

Meeting at company offices

Meeting at Robeco offices

E-mail

Meeting

Conference call

Analysis (no actual contact with company)

(Open) Letter

Speaking at a shareholder meeting

Overzicht engagement

Europe 55%

North America 45%

Vergaderingen per regio

Energy 16%

Materials 20%

Consumer Discretionary 16%

Consumer Staples 29%

Health Care 16%Financials 3%

Active dialogue per region 2nd quarter 2012

Breakdown of active dialogue activities by sector

3

4

4

6

2 9

Corporate Governance

Environmental Impact

Community

Healthy Living

1

2

Human Rights

Human Capital

Global Compact Breaches

Environmental Management

Overzicht engagementTopics of active dialogue

68

6

33

6

11

21

Supervision of management

Good citizenship

Remuneration

Audit

Transparency

Shareholder rights

Overzicht engagement

* ICGN Statement on global principles for corporate governance.

Agenda items which Robeco voted against the company’s management according to the ICGN principles*


4. Voting highlights

Robeco votes at annual general meetings (AGMs) for companies in client portfolios

that cover a global investment universe. The nature of topics on the agenda varies per

company, country and sector. Robeco seeks to provide insight into how voting rights at

shareholder meetings are used to contribute to long-term shareholder value. With these

highlights we want to clarify the rationale behind a vote in favour or against the proposals

as presented by the management of the companies in portfolio. These companies were

selected based on the high profile nature of the agenda items at the AGMs and relevance

for LPFA’s portfolio.

Barclays - 27 April 2012 – United Kingdom

During the 2012 AGM season, banks and other financial institutions received considerable attention regarding remuneration. Many perceive that board members at financial institutions receive high levels of fixed and variable pay, while performance often lags.

It is important that pay for board members

is based on clear and relevant performance

targets, as this condition was not met,

Robeco voted against the company’s

remuneration plan. There were two

reasons for this: the gap between pay and

performance, and the tax equalisation

payments for the company’s CEO, Bob

Diamond.

Pay and performance are not alignedMr. Diamond expressed his disappointment

about the company’s performance,

describing it as unacceptable. However, the

bonus awarded to the CEO was relatively

high; 200% out of a possible 250%. The

discrepancy between Mr Diamond’s own

assessment of the company’s performance

and the bonus awarded for his role in that

performance raised serious concerns.

Double tax paymentIn addition, we were worried about Barclays’

arrangements to compensate Mr Diamond

for his double-taxation payments. Although

one could argue that it is reasonable for

a CEO to be able to work in both London

and New York, some factors behind the

double taxation raised some questions.

His employment contract for the time

he spent in New York was not directly

with Barclays but with a New York-based

company. In total, the CEO’s tax liabilities

added up to 60% of his gross employment

remuneration. As a result, he was

reimbursed by Barclays to compensate for

this high level of tax.

Given these two issues, it was difficult to

argue that this remuneration plan was

in the best interests of shareholders. As

such, we could not grant approval to the

remuneration report and had LPFA’s shares

voted against the agenda item.

BP – 12 April 2012 – United Kingdom

BP is one of the world’s largest oil and gas companies. Over the last couple of years, the company has received substantial media coverage after an accident on one of its drilling platforms caused an environmental catastrophe in the Gulf of Mexico in 2010.

Remuneration planIt was noted that non-financial targets

made up 50% of the proposed bonus plan.

These targets were based on improvements

in three areas: operational safety, the

frequency of employees being injured and

the company’s reputation. Although we

usually support remuneration plans that

balance financial and non-financial targets,

BP’s plan does not sufficiently define the

indicators that will be used to measure

whether the targets have been reached.

More specifically, the company outlined a

plan in order to set targets for operational

safety and reinstating the company’s

reputation. The measurement of achieving

the targets in the areas outlined above

was deemed to be highly subjective. They

included undertaking external and internal

surveys, rather than setting measurable

targets. In addition to this, no specific

schedule for delivering data to set these

targets was disclosed to shareholders. As a

result, this proposal gives the remuneration

committee significant discretion regarding

the variable pay of its board members.

Further, the measures it proposed as

performance targets should be part of core

business practice but were instead over

represented in the proposed bonus structure

at 50%.

Notwithstanding the above, it is noted that

we generally believe that the company’s

strategic targets of improving operational

safety controls and rebuilding trust are

necessary, and that the company is on the

way to achieving these improvements.

Xstrata – 1 May 2012 – United Kingdom

Xstrata is an Anglo-Swiss company based in Switzerland and one of the world’s largest diversified mining companies and the largest shareholder of Glencore (the commodity trader). It is one of the world’s largest producers of coal, nickel, copper and zinc with operations in 19 companies.

Engagement is often the best way to

influence unsatisfactory executive-pay

arrangements. However when a company’s

remuneration policy has lagged behind best

practice for several years, there is no other


option but to vote against management.

A raft of remuneration issues – including

excessive pay, inappropriately structured

incentives and a continuing lack of clarity

on retirement benefits-resulted in Robeco

voting against the company’s remuneration

report, as well as rejecting the re-election

of the chairman of the remuneration

committee.

Excessive pay and inappropriate incentivesRobeco was mainly concerned about the

structure of the remuneration plan. Pay

levels remained excessive, particularly

for the Chief Executive Officer, with an

inappropriate emphasis on short-term,

rather than long-term, performance.

Furthermore the terms for outstanding

equity awards which allowed for full vesting

in the event of a change of control at the

company were unwarranted, given at the

time the proposed merger of the company

with Glencore International, the integrated

commodities producer. Robeco’s concerns

were deepened by the company’s refusal to

compromise in the face of a significant level

of sustained shareholder opposition.

The remuneration committee has

undertaken some minor changes over the

years which we deemed to be cosmetic in

nature. It had, for instance, introduced a

new format and layout for its 2011 report,

but had not introduced further changes.

Structural issues had not been addressed

and disclosure of certain elements of

remuneration, such as retirement benefits,

remained largely opaque.

Accountability for remuneration reportAs the remuneration issues such as those

highlighted above did not significantly

improve over the past few years,

Robeco held the board members on the

remuneration committee accountable, as

they have the responsibility of reviewing

all aspects of the remuneration program

for the company’s executive officers. More

specifically, Robeco found that David Rough,

chairman of the remuneration committee,

had not fulfilled his duties.

Thales S.A. – 15 May 2012 – France

Thales S.A. is a French electronics company, which provides services for the aerospace, defence and security markets worldwide. The French state (through the companies TSA and Sofivision) and Dassault Aviation together have majority control of the company’s share capital and voting rights through a shareholder pact. We took issue with auditor independence at the company, as well as with its issuance of restricted stock.

According to the French corporate

governance code, the Association Francaise

des Entreprises Privées-Mouvement des

Entreprises de France (AFEP-MEDEF)

which requires that one third of the

board members be independent in state-

controlled companies, the company’s board

is not sufficiently independent. Nine of

its thirteen directors were either affiliated

with the company or are insiders. This

raised concerns about the objectivity and

independence of the board and its ability to

perform its oversight role properly.

Audit committeeThe company’s audit committee was not

regarded to be sufficiently independent,

which again according to the French

corporate governance code should be

at least two-thirds of board members.

The interests of all shareholders must

be protected by ensuring the integrity

and accuracy of the company’s financial

statements. Allowing affiliated directors to

be responsible for oversight of the audit

process could present an insurmountable

conflict of interest. Board members Segalen

and Trappier were both noted to be affiliated

board members of Dassault Aviation. Their

re-election to Thales’ board would not have

improved its independence. As a result,

we did not support the re-election of these

nominees.

Issuance of restricted stockRestricted stock refers to stock of a company

that is not fully transferable until certain

conditions have been met. One type of

restricted stock is a form of compensation

granted by a company. Typically, the

conditions that allow the shares to be

transferred are continued employment

over a period of time, upon which they are

vested.

Restricted stock is becoming a more

prominent form of employee compensation,

particularly to senior executives. Robeco

regards the issuance of restricted stock as

an effective instrument to attract, retain

and motivate employees. When used

appropriately, it can link executive pay

to a company’s performance, thereby

aligning the interests of executives with

those of shareholders. Tying a portion of an

executive’s compensation to the company’s

performance gives an incentive to maximise

shareholder value to those in the best

position to do so.

Thales proposed an issue of restricted

shares to both senior executives and regular

employees. When evaluating proposals

regarding issuance of restricted shares,

Robeco considers how the plan compares

to best-practice standards in France and the

recommendations set forth in the French

code of corporate governance, AFEP-MEDEF.

In this case, the company stated that

it would make the award of restricted

shares conditional on the achievement

of performance targets. However, it did

not provide details about the metrics it

would apply to future plans. Nor did it

disclose the targets used in past plans. The

company merely stated that the granting of

awards was based on operating profit after

restructuring, cash flow from operations

and incoming orders over the three-year

performance period. Given the lack of

performance targets, we cannot determine

whether this proposal to create shareholder

value. As a result, it could not be supported

by Robeco.


5. Engagement showcase – Altria and Kraft FoodsOver the last two years, Robeco has been engaging with companies in the food,

beverage & tobacco sector to encourage them to improve water management within

their agricultural supply chains. Robeco views water issues for these agricultural

commodities as an emerging risk that can have operational and reputational

consequences for a company and impact shareholder value.

Robeco’s engagement with tobacco company Altria yields positive resultsOn 5 April 2012, a Senior Engagement

Specialist from the Responsible Investing

department met Altria’s Heads of Investor

Relations and Corporate Sustainability at

the company’s headquarters in Richmond,

Virginia (USA) to discuss water management

issues in the group’s supply chain.

After our previous discussions, we were

pleased that Altria was making progress

on identifying environmental risks, more

specifically by recognising that water and

climate change are key sustainability risks.

The company had met its target of reducing

water use at its facilities by 2013. Moreover,

it had also released its first sustainability

report and had disclosed through the CDP’s

water disclosure project in 2010 and 2011.

During our meeting, we had the opportunity

to visit the natural water purification

system at Philip Morris’s Park 500 facility.

This system demonstrated the company’s

innovation in water management, as it

treats the water to a high quality. The

company has also constructed several new

wetlands in the Richmond area.

We discussed the company’s focus on

water risks in its supply chains as an

upcoming theme. The Head of Sustainability

acknowledged that supply-chain

management is of increasing interest to

the company from both environmental and

social perspectives. The company is currently

focusing its resources on assessing the direct

impacts. It plans to expand the scope of its

activities in the coming years as a response

to our engagement.

Finally, we discussed the importance of

leadership in championing sustainability

issues within the group. The Heads of

Investor Relations and Sustainability told us

they are optimistic that the company’s new

CEO will take leadership of these issues, as

the general trend within Altria is increased

awareness and acceptance of sustainability.

During the time that we have been in

dialogue with the company, we have noted

an increasing recognition of and progress

on sustainability matters in general and

on water issues specifically. The company

identified a number of factors behind this

improvement, such as a changing corporate

culture, as well as pressure from investors

and other stakeholders. In addition, it

pinpointed some issues that it deems

material from a sustainability perspective

as the business diversifies from a tobacco

business to an integrated beverage and

tobacco group.

Kraft Foods releases landmark environmental footprint study, Robeco continues engagement on water useSince we started our engagement with

Kraft Foods, we have noted the company’s

increasing awareness of and progress on

sustainability issues in general and in water

management in particular. The company

has taken great strides in analysing its risk

exposure through key commodities that are

vital to its core business.

On 16 April, a Senior Engagement Specialist

from the Responsible Investing Department

met Kraft Foods’ new Head of Corporate

Sustainability at the company’s office in

London. We continued our dialogue on

water analysis, target setting and disclosure.

We recognise the progress the company

has made in undertaking ground-breaking

research (using lifecycle analysis) into the

footprint of its key commodities globally.

The study was carried out in collaboration

with QuantAS, the research house, and the

World Wildlife Fund. The company made the

research’s high-level results available in a

press release in November 2011. The head

of sustainability gave us an overview of the

study’s more detailed results, which show

the geographic impact of sourcing its key

commodities: nuts (cashews), sugar, cocoa,

coffee, meat and dairy products. While this

granular detail will not be released publicly,

we are pleased that the company has

completed the study, especially with such

reputable partners.

We also encouraged the company to

set targets to reduce its impact on land

and water, and to cut carbon emissions

(the three sustainability issues Kraft

has identified). The development

and implementation of an integrated

environmental policy should follow. The

company indicated that this will be an

important next step for it to take.

The company has taken large steps in

analysing and managing its water risks but

it has not been disclosing these efforts.

We highlighted this discrepancy to the

company and reiterated the need for it to

be transparent. The company indicated

that it takes the approach of undertaking

the work first, achieving success and only

then disclosing, rather than announcing

inspirational targets. The company noted

the benefits of continued engagement with

external stakeholders, such as investors, to

encourage improved disclosure.

We are satisfied with the progress that Kraft

Foods is making on water management

issues, particularly in raising its awareness of

the risks it faces in the areas of water, carbon

emissions and land management—and in

analysing those risks.


6. Carbon Disclosure Project

The Carbon Disclosure Project (CDP) is an independent non-profit organisation that

is active on behalf of institutional investors. It strives to encourage companies to be

transparent about their CO2 emissions and about the opportunities and threats they

see in connection with climate change. Robeco’s collaboration with the CDP is trying

to ensure that companies provide better-quality climate change-related reporting.

Recent developmentsThe CDP asks companies for information

about the carbon-related risks and

opportunities they identify in terms of

regulation, about corporate strategy and

about the impact of emissions trading.

It also requires that companies provide

emissions reports and their targets and

programmes for reducing emissions. At the

beginning of 2012, the CDP issued its tenth

annual questionnaire. Robeco values the

information compiled by the CDP highly. We

use it not only in our investment process,

but also in our dialogue with companies in

which we invest. This is why Robeco and the

CDP work together. Robeco asks companies

to participate in the CDP and requests those

that do take part to provide high-quality

responses to the questionnaire.

In 2010, Robeco initiated a collaborative

engagement with the CDP and a group

of other investors on carbon disclosure.

This engagement aims to improve the

quality of climate-change reporting

available to investors. It is trying to do so by

encouraging improvements in the quality

of disclosure to the CDP’s annual survey.

This engagement uses scores from the

Carbon Disclosure Leadership Index (CDLI),

which ranks the quality of CDP responses.

A low carbon-disclosure score indicates

that a company has neither demonstrated

a clear understanding of the business risks

and opportunities associated with climate

change nor reported on established internal

management practices for understanding

GHG emissions.

The engagement is now in its third phase. It

will target 70 companies in carbon-intensive

sectors that provided unsatisfactory

responses to the CDP’s information request

in 2011, on the basis of their CDLI score. In

April 2012, Robeco, together with 22 other

institutional investors worldwide, wrote to

the companies to highlight the importance

of climate reporting and to encourage them

to improve their response to the CDP’s 2012

information request. Members of the group

subsequently followed up with some of the

companies with meetings, phone calls or

emails in May and June 2012. The results of

the dialogue are expected in early 2013.

Theme progress

Succesfully closed Positive progress

Neutral progress Negative progress


7. Implementation of the UN Global CompactCompanies should not only acknowledge principles relating to human rights,

labour standards, the environment and corruption but they should also put them

into practice. Committing to the principles of the UN Global Compact is a good first

step, but implementation and disclosure are also necessary for transparency and

verification purposes. Robeco is trying to make sure that signatories of the UN Global

Compact are adhering to the pledges they have made.

Recent developmentsIt is important to Robeco that companies

acknowledge principles relating to human

rights, labour standards, the environment

and corruption. More important, they

should also apply these principles to their

day-to-day business. Not only do companies

meet internationally accepted standards

in this way, but by implementing these

principles they can also add value in the

longer term. Companies thus invest in

creating a healthy business climate and also

minimise their risks. In addition, focusing on

sustainability often leads to innovation.

Robeco uses the United Nations Global

Compact as a guideline when assessing

companies’ social responsibility. The Global

Compact comprises ten principles relating

to human rights, labour standards, the

environment and corruption. The principles

are derived from internationally accepted

standards, such as the Universal Declaration

of Human Rights and the Rio Declaration

on Environment and Development. The

Global Compact thus provides a framework

that enables companies to practice social

responsibility.

Companies can voluntarily affiliate

themselves with the Global Compact and

then choose to commit publicly to its ten

principles. By participating, companies

pledge to initiate operational changes

to make the Global Compact and its ten

principles part of their corporate policy,

strategy, culture and daily practice.

Furthermore, companies are also required

to demonstrate their progress in complying

with the Global Compact and its principles

in their publications (such as their annual

report, sustainability report or website).

And companies are required to support

the Global Compact in their public

communications.

In practice, companies’ adherence to the

Global Compact varies widely. Some take

their participation very seriously and comply

fully with their commitments. Others,

however, devote less effort to implementing

the principles. We are concerned that such

companies may be harming the credibility

of the Global Compact. That is why Robeco

joined forces with other institutional

investors in 2008. Subsequently, we

have encouraged companies to become

compliant with the principles as quickly

as possible and to meet the associated

reporting obligations. By cooperating

with other institutional investors, Robeco

hopes to be able to put pressure on these

companies more effectively and thus

contribute to the Global Compact’s success.

Early in 2011, together with the other

institutional investors, we sent letters to 33

signatory companies requesting that they

take action to improve compliance with the

Global Compact. In addition, 89 companies

were complimented for their progress on

complying with the ten principles. From

2008 through 2011, the engagement

resulted in an average 40.1% of laggard

companies subsequently submitting their

sustainability reports; this has included firms

such as Severn Trent and LVMH. In addition,

89 companies with a combined market cap

of US $2.45 Trillion were complimented

for their progress on complying with the

ten principles as advanced-level reporters.

The results of this engagement are now

available. Of the companies we asked to

take action, 39% did so last year, which

we view as a good result. The success ratio

is comparable to that obtained in 2010.

Robeco will continue to use the Global

Compact as a guideline when assessing

companies’ social responsibility and will look

out for future engagement opportunities.

Theme progress

Succesfully closed Positive progress

Neutral progress Negative progress


8. Themes and companies

Eco-efficiency in the Metals and Cement IndustryAnglo American

ESG-Investment risks Unconventional Energy SourcesBP

Chevron

Royal Dutch Shell

Total

Carbon Disclosure ProjectAdecco SA

Danone

DS Smith Plc

Honeywell International

McDonald’s

Newcrest Mining

Schlumberger

Thales SA

Tullow Oil

Union Pacific

Verizon Communications

Wisconsin Energy

Water Management in textile related companiesHennes & Mauritz

LVMH Moet Hennessy Louis Vuitton

Water Management in the Food, Beverage and Tobacco IndustryAltria

Danone

Diageo

Kraft Foods

Pernod Ricard

Climate change performance private car makersToyota Motor

Biodiversity Dependency in the Pharmaceutical SectorAstraZeneca Plc

Bayer

Pfizer

Employee Satisfaction & HealthMicrosoft

News Corporation

Verizon Communications

Vodafone

Walt Disney

Forced labour in the supply chainLVMH Moet Hennessy Louis Vuitton

Vodafone

Sustainability reportingKPN

MTN Group

Natura Cosmeticos

Nestlé

Samsung Electronics

UN Global CompactAmerican Express

Merck KGaA

Pfizer

Collaboration in the Sudan Engagement GroupSchlumberger

Total

The energy and resources sector in controversial regimesAnglo American

BG Group

BP

Chevron

Eni

Rio Tinto

Royal Dutch Shell

Total

Food and HealthDanone

Dr. Pepper Snapple Group, Inc.

Kraft Foods

McDonald’s

Nestlé

PepsiCo, Inc.

Remuneration policyKPN

AkzoNobel

Heineken Holding

Nestlé

Royal Dutch Shell

Samsung Electronics

Risk-management reportingAkzoNobel

KPN

Individual engagementsASM International NV

Carrefour

Cisco Systems, Inc.

Microsoft

Mitsubishi Corp.

Nestlé

Pfizer

The Hershey Co.

TNT Express NV

Total

Unilever

In the overview below all themes are listed for which Robeco exercised active

dialogue on behalf of LPFA. Relevant companies in LPFA’s portfolio are listed per

theme. In some cases dialogues are still running, are to be started or are already

closed.


United Nations Principles for Responsible InvestmentRobeco signed the United Nation’s

Principles for Responsible Investment (PRI)

in December 2006. The PRI comprise six

guidelines for good practice in responsible

investing. The principles are as follows:

P1. We will incorporate environmental,

social and governance (ESG) issues into our

investment analysis and decision-making

processes.

P2. We will be active shareholders and

incorporate ESG issues into our ownership

policies and practices.

P3. We will request the entities in which we

invest to provide appropriate disclosure on

ESG issues.

P4. We will promote acceptance and

implementation of the Principles within the

investment industry.

P5. We will work together to enhance

our effectiveness in implementing the

Principles.

P6. We will each report on our activities

and progress towards implementing the

Principles.

The United Nations Global CompactThe PRI provide a framework for

responsible investment. The fundamental

principles of the United Nations Global

Compact offer companies (not necessarily

investors) a framework for responsible

entrepreneurship. The Global Compact

requires companies to embrace, support

and adopt a number of core values within

their own sphere of influence in the field

of human rights, labour standards, the

environment and anti-corruption measures.

The Global Compact consists of ten universal

principles:

Human rights1. Companies should support and respect

the protection of human rights as

established at an international level,

2. They should ensure that they are not

complicit in human-rights abuses.

Labour standards3. Companies should uphold the freedom

of association and recognise the right to

collective bargaining.

4. Companies should abolish all forms of

compulsory labour.

5. Companies should abolish child labour.

6. Companies should eliminate

discrimination in employment.

Environment7. Companies should adopt a prudent

approach to environmental challenges.

8. Companies should undertake initiatives

to promote greater environmental

responsibility.

9. Companies should encourage

the development and diffusion of

environmentally friendly technologies.

Anti-corruption10. Companies should adopt measures to

counter all forms of corruption.

International Corporate Governance Network (ICGN)1

Robeco buys shares in companies, thereby

making us co-owners of these companies.

9. Codes of conduct

Each share entitles the owner to vote at

shareholders’ meetings. By making active

use of this right, we can increase control

over the company’s management and

improve the company’s sustainability, which

may eventually result in higher shareholder

value. This is of course good news for our

clients.

Robeco bases its voting policy on the

principles of the International Corporate

Governance Network (ICGN). This is an

internationally recognized code for good

corporate governance, the basic principles

of which allow sufficient scope for assessing

companies according to local standards.

The national laws and codes of conduct

for corporate governance, such as the

Dutch Corporate Governance Code in

the Netherlands, which was anchored

in legislation in 2009, are leading in the

assessment of companies. Circumstances

specific to individual companies also play a

part in this.

1. Aim of the company – to create

sustainable value for shareholders:

The company aims to achieve optimal

sustainable returns for its shareholders in

the long term.

2. Corporate boards: The board’s

responsibilities include corporate strategy,

risk policy, monitoring implementation and

performance, major capital expenditures,

governance practices, selecting key

executives and aligning their remuneration

with the longer term interests of the

company and its shareholders. Members

of the management or supervisory boards

must act independently in the best interests

of all shareholders of the company; they are

accountable to the shareholder body as a

whole.

3. Good citizenship; relations with

stakeholders and ethical business conduct:

The executive board is responsible for

maintaining relations with stakeholders.

Companies should comply with a widely

recognised national corporate-governance

Robeco uses national and international codes of conduct as guiding principles and

anchors for responsible investing.


code and carry out their activities in an

economically, socially and ecologically

responsible manner.

4. Risk-management: The executive board

is responsible for the effective and dynamic

risk management of a company.

5. Corporate remuneration policies:

Corporations should follow the best

practices for remuneration as set out in

ICGN2.

6. Audits: The annual audit should be

carried out by independent, external

auditors who should be proposed for

approval at the shareholders’ meeting.

7. Disclosure and transparency: Companies

should disclose relevant information that is

pertinent to them on a timely basis.

8. Shareholders’ ownership responsibilities

and voting rights and legal remedies:

Shareholders should be able to exercise

their rights and should be given reasonable

notice of all relevant matters.

9. Responsibility of shareholders:

Shareholders actions should be oriented

towards achieving long-term value creation

and the company’s targets. Shareholders

should observe the national and

international best practices for corporate

governance.

1 This text is a summary of the ICGN statement on global principles for corporate governance, as amended on 18 November 2009 (Washington, DC, USA). The complete text can be found on http://www.icgn.org/files/icgn_main/pdfs/best_practice/global_principles/icgn_global_corporate_governance_principles-_revised_2009.pdf See http://www.icgn.org/files/icgn_main/pdfs/best_practice/exec_remun/2006_executive_remuneration.pdf

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Documents

Engagement Summary Report (Active dialogue and voting) · safety controls and rebuilding trust are necessary, and that the company is on the way to achieving these improvements. Xstrata