TBLI ASIA, Yokohama, 28 May 2009 Creating Value(s) During Manager Selection Floris Lambrechtsen Director, Double Dividend B.V.

Profile Double Dividend B.V. Double Dividend is an independent advisory company on Responsible Investment, based in Amsterdam The Netherlands since 2007. Its passion is to provide institutional investors and asset managers with support on RI policies, research, portfolio management, active ownership and reporting. Double Dividend works for large European institutional investors like pension funds and asset managers such as ABN AMRO Pensioenfonds, F & C Investments, Pensioenfonds Vervoer, PGGM Investments, AXA Investments and Pioneer Investments. The assets under management of these clients vary from 6 to 200 billion euros. Typical projects include: Development and implementation of a Responsible Investment policy for pension funds; Matching demand and offering between pension funds and asset managers; Review/Development Sustainable Investment funds for asset managers; Thematic Investment Manager selection on e.g. Microfinance. Double Dividend uses the Principles for Responsible Investment (PRI) of the United Nations as a reference framework, and is a signatory to the PRI (see www.unpri.org). Its director Floris Lambrechtsen was a member of the Expert Panel that assisted in developing the PRI.

Double Dividend is an independent advisory company on Responsible Investment, based in Amsterdam The Netherlands since 2007. Its passion is to provide institutional investors and asset managers with support on RI policies, research, portfolio management, active ownership and reporting.

Double Dividend works for large European institutional investors like pension funds and asset managers such as ABN AMRO Pensioenfonds, F & C Investments, Pensioenfonds Vervoer, PGGM Investments, AXA Investments and Pioneer Investments. The assets under management of these clients vary from 6 to 200 billion euros.

Typical projects include:

Development and implementation of a Responsible Investment policy for pension funds;

Matching demand and offering between pension funds and asset managers;

Review/Development Sustainable Investment funds for asset managers;

Thematic Investment Manager selection on e.g. Microfinance.

Double Dividend uses the Principles for Responsible Investment (PRI) of the United Nations as a reference framework, and is a signatory to the PRI (see www.unpri.org). Its director Floris Lambrechtsen was a member of the Expert Panel that assisted in developing the PRI.

Responsible Investing provides several opportunities PRI signatories grow to US$14 trn globally Improvement in the willingness of corporations to increase disclosure and provide detail on ESG operating risks (asria.org) Failure of the Western financial sector to manage risks Opportunity to: Restore trust Align interests with beneficiaries Develop investment products that anticipate to ESG needs Create desired skills and culture to manage risks

PRI signatories grow to US$14 trn globally

Improvement in the willingness of corporations to increase disclosure and provide detail on ESG operating risks (asria.org)

Failure of the Western financial sector to manage risks

Opportunity to:

Restore trust

Align interests with beneficiaries

Develop investment products that anticipate to ESG needs

Create desired skills and culture to manage risks

The Evolution of Responsible Investment (RI) Strategy Process redesign Process support Filter before 1900 1970 1990 2010

RI in Manager Selection; adding value Financial performance Listed Equity ‘ESG best practice’ outperforms 6 bp ‘ESG worst practice’ Fixed Income undecided on causal effect Green RE outperforms RE with 16% of selling prices/sq.ft. (source: ECCE) >70 studies available Social Value Sustainability quality in investments Assets (and trust!) allocated to activities with social benefit Integrity of investment managers Note: Social values differ per region

Financial performance

Listed Equity ‘ESG best practice’ outperforms 6 bp ‘ESG worst practice’

Fixed Income undecided on causal effect

Green RE outperforms RE with 16% of selling prices/sq.ft. (source: ECCE)

>70 studies available

Social Value

Sustainability quality in investments

Assets (and trust!) allocated to activities with social benefit

Integrity of investment managers

Note: Social values differ per region

Reasons for screening Investment Managers on non-financial qualities Conviction that traditional financial indicators alone do not deliver returns in the long run Non-financial (ESG) factors are priced in, this price factor will continue to gain weight Discussing new (and relatively unknown) issues with managers demonstrates how they think and act Raising awareness on importance of long term stability in the economy and financial markets Yasumono kai no zeni ushinau (Penny wise, pound foolish)

Conviction that traditional financial indicators alone do not deliver returns in the long run

Non-financial (ESG) factors are priced in, this price factor will continue to gain weight

Discussing new (and relatively unknown) issues with managers demonstrates how they think and act

Raising awareness on importance of long term stability in the economy and financial markets

Yasumono kai no zeni ushinau (Penny wise, pound foolish)

RI Assessment Framework Note: interpretations on ESG are not prescriptive

First survey: low average scores 2 Projects in 2008, scope: > 30 selected Listed Equity Funds (actively managed) Only 2% of selected listed equity managers score above 60%

Findings and Next Steps

Expected progress of investment managers Risk Management Integration in core activities Value creation Level of integration time

In conclusion Selected Asset managers score low on ESG integration, action is needed to: Add financial and social value Restore trust and alignment with beneficiaries Improve risk management Next steps to benefit from opportunities: Start dialogue with managers on RI Demand transparency from managers Adjust assessment framework and incentives Chiri mo tsumoreba yama to naru (Great oaks grow from little acorns)

Selected Asset managers score low on ESG integration, action is needed to:

Add financial and social value

Restore trust and alignment with beneficiaries

Improve risk management

Next steps to benefit from opportunities:

Start dialogue with managers on RI

Demand transparency from managers

Adjust assessment framework and incentives

Chiri mo tsumoreba yama to naru (Great oaks grow from little acorns)