Navigating the ratings and rankings landscape

March 31, 2011

A focus on the Dow Jones Sustainability Indexes

AgendaIntroduction

Context

DJSI overview

Reasons to respond

Navigating the application

Questions and answers

Peter Truesdale – Associate Director

Peter is an Associate Director of Corporate Citizenship, he specializes in a number

of aspects: reporting, report assurance, and external standards. He has worked

with a range of global companies and professional firms including ANZ, Lafarge,

Mars, and SABMiller.

Megan DeYoung – Director, United States

Megan manages Corporate Citizenship’s US practice and works with clients to

develop and implement citizenship strategies that are closely tied with the

business and to communicate clients’ initiatives to internal and external

stakeholders. She has worked with many global companies including Abbott,

Hershey’s, Aramark, and Unilever.

Presenters

� Corporate Citizenship is a corporate responsibility management

consulting company with offices in the US and UK

� Since 1997, we have advised leading, global corporations on how to

enhance and align their citizenship and traditional business activities to

create strategic business value

� We have a team of 30 and experience in

40 countries

“They have a real understanding of the

issues in diverse countries around the world”

- Unilever

Corporate Citizenship’s work is global

We work across the spectrum of corporate responsibility and

sustainability activity

� We have developed strategy for several FTSE 100, Fortune 500, and DJSI Super Sector leaders

� We have devised and implemented environmental data management systems in over 100 countries

� We helped businesses invest $2.2 billion in local communities in 2009

� We are one of the most awarded and trusted reporting consultantsworldwide, working on 135 reports over for more than a decade with FTSE 100 and S&P 500 companies

� We are global market leaders for assurance (135 reports verified)

“They understood what was important to the way we operate, and where we could make the greatest difference” - Abbott

• Engage managers and employees about value of corporate responsibility

• Focus on priority areas• Align with business

objectives• Engage internal and

external stakeholders

• Be yourself• Communicate, don’t

just report• Create transparency

• Pursue ratings and rankings

• Enable others to praise you 1.

Internal buy-in

2.

Robust CR

program

3.

Authentic

communications

4.

External

recognition

Reputation comes from a robust CR program and authentic

communications

It is easy to become overwhelmed by ratings and rankings,

but you can survive and prosper

Trends � Enormous growth� Consolidation of research firms� Some coverage in mainstream media

Challenges � Variation in methodology (information sources, criteria)

� Varied performance by single company

Added value � Third-party validation of corporate responsibility commitment

� Comparison with competitors

� Internal buy-in and support of corporate responsibility

� Insight into company’s strengths and weaknesses

� Leverage for increased transparency

Tips � Prioritization (ratings/rankings, programmatic improvement areas)

� Leverage of existing material

Many ratings / labels focus on a subset of citizenship issues

Economic Environment Social

Dow Jones Sustainability Indexes

are one of the few ratings that touches numerous aspects of citizenship across a

company

Dow Jones Sustainability Indexes combine finance with corporate responsibility

� Dow Jones launched the first set of global sustainability indexes in 1999 called Dow Jones Sustainability Indexes (DJSI)

� DJSI tracks financial performance of leading sustainability-driven companies worldwide

� DJSI focuses on how company recognizes risks and opportunities arising from sustainability issues in its business strategy

� Sustainability Asset Management (SAM), an investment group focused exclusively on sustainability investing, manages DJSI

� Top companies within industry group are included in DJSI

DJSI is four indexes that include top companies by sector

DJSI World2,500 largest global

companies

DJSI Europe

DJSI North America

DJSI Asia/Pacific

• Top 10% in each industry

group selected

• Each industry group has 20%

target market cap

* Includes Canada and US.

** Includes companies from South Korea, Australia, New Zealand, Japan, Hong Kong, Taiwan, and Singapore.

• Top 20% in each industry

group selected

• Each industry group has 45%

target market cap

• Top 20% in each industry

group selected

• Each industry group has 45%

target market cap

• Top 20% in each industry

group selected

• 45% market cap coverage in

each market sector

SA

M a

ssessm

en

t

600 largest European

companies

600 largest North American*

companies

600 largest Asia/Pacific**

companies

Do

w Jo

ne

s T

ota

l Glo

ba

l Sto

ck

Ma

rk

et In

de

x

Investors can opt to exclude certain sectors

XXAdult

Entertainment

XXXXArmaments &

Firearms

XXXXTobacco

XXXXGambling

XXXXAlcohol

DJSI Asia

Pacific

DJSI North

America

DJSI EuropeDJSI World

� Food & Beverage� Beverages� Food Producers

� Health Care� Healthcare Providers� Medical Products� Biotechnology� Pharmaceuticals

� Media� Media

� Oil and Gas� Oil & Gas Producers� Oil Equipment & Services� Pipelines� Alternative Energy

� Industrial Goods & Services� Aerospace & Defense� Containers & Packaging� Diversified Industrials� Electrical Components &

Equipment� Electronic Equipment� Industrial Engineering� Industrial Transportation� Support Services� Waste & Disposal Services

� Personal & Household Goods� Durable Household Products� Furnishing� Home Construction� Nondurable Household Products� Leisure Goods� Personal Products� Clothing, Accessories & Footwear� Tobacco

� Insurance� Insurance

� Utilities � Electricity� Gas Distribution� Water

� Real Estate� Real Estate

� Travel & Leisure� Gambling� Hotels, Restaurants, Bars, and

Recreational Services� Travel & Tourism� Airlines

� Retail� Food & Drug Retailers� Specialized Consumer

Service� General Retailers

� Telecommunications� Fixed Line Telecommunications � Mobile Telecommunications

� Technology� Software� Computer Services & Internet� Communication Technology� Semiconductors� Computer Hardware & Electronic

Office Equipment

� Automobiles & Parts� Auto Parts & Tires� Automobiles

� Chemicals� Chemicals

� Basic Resources� Forestry & Paper� Aluminum� Steel� Mining� Pipelines� Alternative Energy

� Construction & Materials� Building Materials &

Fixtures� Heavy Construction

� Banks� Banks BNK

� Financial Services� Financial Services

Companies within a sector are evaluated for listing

Two (2) Sectors

• Beverages

• Food Producers

Supersector

• Food & Beverage

Polling question #1

� Did your company respond to the DJSI invitation in 2010?

� Yes

� No

� Did not receive an invitation

The DJSI selection process is competitive

2,617 companies invited to submit applications

1,393 companies analyzed• 698 companies submitted questionnaire

• 695 companies analyzed exclusively on publicly available information

318 companies qualified

2010 Selection Process

There are external and internal benefits to even responding

to DJSI

Inclusion is competitive: what do companies gain?

1,393 companies analyzed

DJSI is the equivalent of a

sustainability Oscar!

� Most prestigious

� Most recognized

� Most respected

benchmark of

sustainability

performance

318

companies

listed

There are numerous internal gains

whether companies are listed or not:

� Build corporate citizenship

reporting

� Increase awareness and

reputation of citizenship

internally

� Identify areas for operational and

strategy improvement

Polling question #2

� Is your company planning to respond to the DJSI invitation in 2011?

� Yes

� No

� Not anticipating an invitation

DJSI evaluates companies based on several sources of

information

1. Survey � There are generic questions and sector specific questions � Dozens of questions; can be as much as 100� Sector survey usually changes only slightly year-to-year, but occasionally is

overhauled � Topics related to economic, environment, and social� Web-based application process

3. Media and stakeholder analysis

� SAM conducts additional research to review media coverage and stakeholder views on certain topics are considered

2. Company

documentation� Inclusion of documents that support our responses and provide additional

information and/or proof points of our activities; DJSI accepts documents which are:� Publicly available (preferred)� Confidential

� Documents may be policies, spreadsheets, snapshots of intranet web pages, and many other types of support

What criteria does DJSI cover?

� DJSI focuses on how a company recognizes the risks and opportunities

arising from sustainability issues in its business strategy

� DJSI looks at a company’s economic, environmental, and social impacts

Economic

� Corporate governance� Risk and crisis management� Codes of conduct /

compliance / anti-corruption and bribery

Environment

� Environmental reporting

Social

� Labor practice indicators� Human capital development� Talent attraction and

retention� Corporate citizenship /

philanthropy� Social reporting

General criteria

What is the survey format?

Question

Answer (table, check boxes)

Relevant documents

(attachments)

Location to provide requested data or indicate the answer choice(s) that apply to your company

Option to add references to support or expand your response

Area to provide comments to explain answer and provide additional information

Qualitative response

General question or industry specific question on company’s economic, environmental, and social impacts

What are the key considerations when responding?

Investor survey � DJSI is not interested in sustainability per se; they are interested in how the risks and opportunities arising from sustainability issues are recognized in business strategy

� DJSI lists companies with systems and processes that drive continuous performance improvement and lead to effective business long-term

Confidentiality � The entire submission is confidential

� Sensitive documents can be marked confidential

Relative

scoring

Expectations � If this is your first submission, have realistic expectations

� There is much to gain internally just by going through the process

� Companies can improve their responses year-on-year without changing their position on an index because other companies improve as well

� DJSI rewards continuous performance

There are three models for external review

Quick review of

response� We identify questions

with perceived easy opportunities to enhance a company’s response

� We can conduct this review at any point, but find it is often useful to perform this review at the beginning and when the draft is close to complete, but there is still time to make revisions before the submission deadline

Deep dives of response

� We conduct a review of priority sections of a company’s response, providing insight on what the section is asking and probing about structures and processes a company has that may apply to the section

� We provide ongoing support for owners of priority sections as the owners develop their response

Management of

submission� We develop the first

draft of the submission based on last year’s submission and publicly available information

� We meet with internal stakeholders to discuss individual questions to enhance responses

� We revise responses based on internal meetings and new or updated documentation

April May June

Turn around time of the submission is about two months

The entire DJSI process runs over several months

DJSI Survey

released –

April 7

DJSI Survey

Due – June 2

September

DJSI Results

Released –

September 8

March

Where we

are now

Give us a ring

For further information please contact:

Corporate Citizenshipwww.corporate-citizenship.com

Peter TruesdaleAssociate Director

Corporate Citizenship5th Floor, Holborn Gate330 High HolbornLondon WC1V 7QGUnited Kingdom

T: +44 (0)20 7861 1631E: peter.truesdale@

corporate-citizenship.com

Megan De YoungDirector, United States

Corporate Citizenship241 Centre Street4th FloorNew York, NY 10013United States

T: +1 212 226 3702 E: megan.deyoung@

corporate-citizenship.com