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Benchmark CSR by 25 AEX companiesin the Netherlands 2012

Business Balance method for CSR performance 2010-2012


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Pieterstraat 11

3512 JT Utrecht

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DisclaimerVBDO will assume no responsibility or legal liability for incorrect or misleading information provided by the sources used for this report.

T HE D UTCH A SSOCIATION OF INVES T ORS FOR S USTAINABLE D EVELOPMENT

Benchmark CSR by 25 AEX companies in the Netherlands 2012

Business Balance method for CSR performance 2010-2012

A research paper byVBDO (Dutch Association of Investors for Sustainable Development)

VBDO: Chris Bres,

Philip Cotterell,

Jeroom Remmers

In cooperation with

Cataly Partners: Herbert Eppinga

September 2012

VBDO report by the Dutch Association of Investors for Sustainable Development

(Vereniging van Beleggers voor Duurzame Ontwikkeling)


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Contents

Executive summary 5

Foreword 7

Chapter 1 Introduction 8

Chapter 2 Research method and process 10 2.1 Research objective 10

2.2. Researched companies 10

2.3 Research period 11

2.4. Research process 11

2.5 Scoring model Business Balance 112.6 People 13

2.7 Planet 14

2.8 Pro t 15

2.9 Performance Level 16

2.10 Performance Balance 16

2.11 Business Balance and other CSR ranking methods 16

Chapter 3 Results 18

3.1 Results 2010-2012 183.1.1 Results 2012 People 20

3.1.2 Results 2012 Planet 22

3.1.3. Results 2012 Pro t 25

3.1.4 Performance Level 2012 27

3.1.5 Performance Balance 2012 28

3.2 Results 2011 Performance Level 31

3.3 Results 2010 Performance Level 32

3.4 Feedback of stakeholders 33

3.5 Relationship between CSR- and nancial performance

of AEX companies between 2009-2011 34

Chapter 4 Conclusions and recommendations 36

Appendix: Business Balance Score 2010-2012 401. Aegon

2. Ahold

3. Air France-KLM

4. AkzoNobel


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5. Aperam

6. Arcelor Mittal

7. ASML

8. Boskalis Westminster

9. Corio

10. DSM

11. Fugro

12. Heineken

13. ING

14. KPN

15. Philips

16. PostNL

17. Randstad Holding

18. Reed Elsevier19. Royal Dutch Shell

20. SBM-Offshore

21. TNT Express

22. TomTom

23. Unibail-Rodamco

24. Unilever

25. Wolters-Kluwer

26. Overview table CSR scores 25 AEX companies 2010 - 2012

27. Five year graphics stock rates of AEX companies


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Executive summary

This is the rst VBDO report for the new Business Balance Standard, a CSR measurement methoddeveloped in cooperation with Cataly Partners. This CSR benchmark was applied to the 25 lar-

gest Dutch listed companies, those listed in the AEX. The Standard was created in order to pro -vide retail (and other) investors with a clear and quick insight into both the level of corporatesustainability (scores on environmental, social and pro t criteria) and the balance betweenthese three dimensions. The Business Balance gives information about both CSR performance(environmental and social criteria) and nancial performance. The VBDO hopes that with thistool, investors choose more often to invest in high sustainability companies, with the goodscores for overall environmental, social and economic performance in the Business Balance.Retail investors are often more interested in short term nancial results than in high CSR per -formances of companies. Yet according to international research, high-sustainability companiesperform better over time nancially compared to low-sustainability companies.

The Business Balance results for individual AEX-companies will be published on www.duur -zaamaandeel.nl, a VBDO-website for retail (and other investors). Here they will nd all rele -vant and recent company CSR information. Companies can present their CSR news here as well.

The Business Balance Standard aims to include several other standards and guidelines such asthe Dow Jones Sustainability Index, ISO 26000, SA 8000, GRI, OECD Guidelines and the ILO Dec-laration of Human Rights.

For the Business Balance, each company is scored on three indicators (People, Planet andPro t), comprising 17 sub-indicators. The information that is used for this review comes frompublicly available sources, the most important being the companys Annual Report and CSRReport. The scores thus also depend on the transparency of the companys reporting.

In general, the score depends on the number of criteria that have been mentioned, the ex-tent to which these are part of the organisation (from a general policy level to a speci c ma-nagement level), and the performance on these criteria. Most subjects are soft indicators asdescribed above. There are, however, a few subjects that have stricter criteria. Most notablyhere is Financial Health and Stability (sub-indicator 3.1). Here a number of measurements areused (Liquidity, Solvency, Cash Flow and Reserves) to assess the companies.

The main ndings are summarised below: The average Performance Level (the average combined score for People, Planet and Pro t)

increased over the last three years: 36% in 2010, 48% in 2011 and 55% in 2012. The averagescore for People increased as follows: 40% in 2010, 53% in 2011, 63% in 2012.

The average score for Planet increased as follows: 27% in 2010, 38% in 2011, 45% in 2012. The average score for Pro t increased as follows: 41% in 2010, 53% in 2011, 57% in 2012. The balance score remained roughly the same: 80% in 2010, 78% in 2011, and 80 in 2012. The top three companies for Performance Level in 2012 are: Unilever, DSM, and Akzo Nobel. The top ten companies for Performance Balance in 2012 are: Akzo Nobel, Unilever, Reed

Elsevier, Heineken, Philips, TNT Express, Unibail Rodamco, Corio and ASML. The bottom three companies for Performance Level in 2012 are: Aperam, Fugro, and Tom -

Tom. The bottom three companies for Performance Balance in 2012 are: Air France-KLM, Rand -

stad, and TomTom. Overall, the AEX-companies scored high on the following sub-indicators: Organisational

Governance and Labour Practices for People, Environmental Analysis and EnvironmentalControl for Planet, Capability Management and Shareholder Value and Involvement forPro t.


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Foreword

This is the rst report on the outcome of our new Business Balance Standard, developed incooperation with Cataly Partners. This is a CSR ranking method, used for 25 AEX companies.

As part of our mission is to grow the sustainable capital market, the VBDO stimulates companiesto become better investment opportunities for responsible investors. They can do so by takinginto account non- nancial elements like social and environmental indicators, thus reducing riskand creating value in the long term. Institutional investors have access to relevant data thatwill help them to assess the total performance of these companies. For private investors thisinformation is hardly available.

The Business Balance Standard aims at giving these investors rapid insight in both the level of corporate sustainability (how high do they score on environmental, social and pro t criteria)and the balance between these three dimensions. This information, combined with other con-cise and practical information on our corporate information website www.duurzaamaandeel.nl, will give private investors the tools they need to make a sound and sustainable investmentdecision, assuring their money delivers threefold returns.

Combined with a loyal, long term oriented ownership, including an involved engagement andsound voting practice by the investor, often through organisations like the VBDO, this behaviourwill make companies more solid and our economy more resilient.

This study looks at the corporate responsible performance of the largest Dutch listed compa-nies, those listed in the AEX. I would like to compliment Unilever with their rst place. How -ever, as the top 3 has not changed since last year, I encourage the rest of the group to challengethese positions! The fact that overall results have increased dramatically over the last 3 years

is a promising sign that large corporations understand the value of sustainability and CSR-reporting, and aim at a balanced attention for people, planet and pro t.

Giuseppe van der HelmDirector VBDO


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Introduction

Sustainable and responsible investments are increasing their market share. Institutional inves-tors have long recognised the importance of investing In companies that are long term oriented

and take non- nancial elements into account. This will reduce risks and increase value crea -tion. However, the share of their business that is sustainable is far higher than that of the retailmarket, the private investors. At the same time, the retail markets of SRI (Sustainable andResponsible Investments) funds and savings have been growing for 12 years in a row, in spite of several main crises. We do not know how many private shareholders take non- nancial criteriainto account when making a decision to invest in a company, but based on the retail SRI marketand our experience at annual general meetings (AGMs), this probably is a rather low percen-tage.

How is it possible that the retail SRI market is rather low compared to the institutional mar-ket? One reason might be the lack of knowledge on the highly complex issue of sustainabilityand corporate social responsibility. Is CSR the same as sustainability? How do ethics tie in? Willreturns suffer, and what about risks? How long will I have to wait for positive results, as we talkabout a long term process? Do I limit my universe when I exclude too many companies?

As it is the aim of the VBDO to address sustainability through capital markets, we thought itwould be useful to help private investors to get insight into the level of sustainability of listedcompanies. For this reasons we have launched a website, www.duurzaamaandeel.nl (the Eng-lish version can be found under www.fairshares.nl), that lists information on environmental,social and nancial performance of a company. It also gives speci c information per sector andper theme. All information is based both on publicly available information or made available byprofessional data providers. Also the results of this study, the detailed Business Balance Reviewsof 25 AEX companies, will be published on our website.

Until now we did not have an indicator that gives an overview of both the extent of sustainabi-lity and the balance between the three dimensions: People, Planet and ( nancial) Performance.Thats where Business Balance comes in.

The VBDO analysed 25 AEX companies conform the Business Balance Standard (2012) usingpublicly available information of the nancial year 2011. In the two previous years, the VBDOalso analysed AEX companies conform the Business Balance, but the VBDO did not publish theresults. In 2012, the results of 2010 and 2011 will be published for the rst time, so also trendscan be seen during three years. In 2010 the method was different (more elaborate) than thefollowing years, but the results are still comparable.

In the Business Balance Standard, several standards and guidelines such as the Dow JonesSustainability Index, ISO 26000, SA 8000, GRI, OECD Guidelines and the ILO declaration areincluded.

The Business Balance Standard is a voluntary standard containing concrete, measurable andactionable requirements for the management of an organisation, relevant for a sustainablesociety and business environment. The Business Balance Standard supports measuring CSRefforts and performance improvement, and ts an international application.

1


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Business Balance does not focus on the core business in the rst place, but on the managementof an organisation. According to the Business Balance Standard, a wind park operator could beless sustainable or social responsible than a traditional oil company.

The Business Balance strives for a balanced approach to People, Planet and Pro t, while allo-wing that some of these areas may get more attention than others over time, depending on theeconomic trends, the organisations development and stakeholders interests.Business Balance interprets sustainability as: People: Long-term continuity from a socio-economic perspective; Planet: Long-term continuity from an environmental and ecological perspective; Pro t: Long-term continuity from a business perspective, ful lling current needs without

taking away the possibilities to ful l future needs.


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Research method and process

Research objective

The Business Balance Review has the following objectives: Providing objective and measureable expectations towards several target groups, relevant

for Corporate Social Responsibility. Target groups are: retail and institutional investors, thecompanies involved and its stakeholders;

Promoting the balance between People, Planet and Pro t, and the overall improvementtowards a more sustainable society and business environment;

Promoting Corporate Social Responsibility to become part of the main strategy, organisationand policy of a company;

Providing a tool to support stakeholder dialogue based on balanced facts and gures, ratherthan (single-focused) interests and opinions.

Make sustainability measurable in 17 different criteria for People, Planet and Pro t. See table 1:

Table 1: CSR - criteria Business Balance

1. People 2. Planet 3. Pro t1.1 Organisational

Governance2.1 Environmental Analysis 3.1 Financial Health &

Stability

1.2 Human Rights 2.2 Environmental Control 3.2 Shareholder Value &Involvement

1.3 Labour Practices 2.3 Environmental Response 3.3 Commercial Performance

1.4 Fair Operating Practices 2.4 Environmental Costs 3.4 Capability Management

1.5 Consumer Issues 2.5 Environmental Improvement

3.5 Long-Term Planning

1.6 Supplier Issues

1.7 Socio-EconomicDevelopment

Researched companies

The Business Balance 2012 includes all 25 Dutch AEX companies. In 2010, the Business Balanceincluded 22 companies. Unibail-Rodamco, Aperam and Arcelor-Mittal were not AEX-listed atthat time.

Table 2: researched companies in 2012

Company Index SectorAegon Group AEX Financial

Ahold (Royal) AEX Retail

Air France-KLM AEX Transport

AkzoNobel AEX Chemical

Aperam AEX Industry

Arcelor Mittal AEX Industry

ASML AEX Electronics

Boskalis Westminster (Royal) AEX Construction

Corio AEX Real Estate

DSM (Royal) AEX Chemical

2.1

2.2

2


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Company Index SectorFugro AEX Construction

Heineken AEX Food

ING Group AEX Financial

KPN (Royal) AEX ICT

Philips (Royal) AEX Electronics

PostNL AEX Transport

Randstad Holding AEX Services

Reed Elsevier AEX Media

SBM-Offshore AEX Chemical / technical

Shell (Royal Dutch) AEX Chemical

TNT Express AEX Transport

TomTom AEX ICT

Unibail-Rodamco AEX Real EstateUnilever AEX Food

Wolters Kluwer AEX Media

Research period

The Business Balance Review was executed in june-august 2012 for 2012, in December 2011 for2011 and july august 2010 for 2010. The annual reports and CSR reports of AEX companies inthe years 2009, 2010 and 2012 were subject of the research.

Research process

The Business Balance Review Process consists of the following steps:1. Identify AEX Companies2. Identify Business Balance Reviewer(s)3. Develop Business Balance Review excel sheet per AEX company4. Identify publicly available sources of the AEX Company5. Read publicly available sources6. Verify whether those sources match with 17 Business Balance Criteria7. Describe evidence for compliance with the criteria and describe when criteria are not met8. Score for all criteria, based on implementation level (N/A, 0%, 25% 50%, 75% and 100%)9. Quality Control of content by second reader10. Sent out the Draft Business Balance Review Excel Sheet to AEX Company11. Receive comments of AEX Company and decide when changes are to be inserted12. Finalize Business Balance Review (Overall Scorecard and Detailed Excel Sheet)13. Presentation Business Balance Review Results in Yearly Workshop

Scoring model Business Balance

The Business Balance does not focus on the core business in the rst place, but on the manage -ment of an organisation.

2.3

2.4

2.5


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Set-upThe Business Balance Review contains 17 requirements. These requirements are set against sub-jects and aspects generally recognised as relevant for sustainable development, or CorporateSocial Responsibility.

ApplicationBusiness Balance Review can be applied in small, medium and large organisations, in the pro t,not-for-pro t and public sectors.

Review ApproachReview of compliance with the Business Balance requirements is conducted by measuring thelevel of implementation reported in websites, CSR reports, nancial reports, etc. The level ofimplementation must be demonstrated by communication /reports and websites.\.

Review Principles

1. A Business Balance review is a measurement of the transparancy of the implementation levelof a certain requirement. It is not a matter of compliance or non-compliance;

2. A Business Balance review is focused on demonstrable implementation of the requirements.Publicly available evidence is required. Demonstrating actual performance is most impor-tant.

3. A sustainable business is a long-term business, and should not be the result of a short-termeffort. Therefore, a maximum score of 100% can only be achieved by demonstrating conti-nuous implementation over years;

4. The outcomes of a Business Balance review are not a matter of right or wrong. Implementa-tion levels depend on the size and age of an organisation, and the duration of CSR attention.The outcomes provide an understanding of current performance and are the basis for im-provement towards a more sustainable business, without prescribing improvement targets.

Table 3: Implementation Levels

The implementation of Business Balancerequirements is determined per Aspect,and is expressed with the following le-vels: N/A *)

The Aspect is not applicable to the reviewed or-ganisation. This may only be the case when theorganisation demonstrates that it is not relevantat all to the organisation. The Aspect may then beleft from the performance calculations.

0% Has the organisation reported about the subject?

25% 1. Does the organisation state that formal systemsare in place for the requirements?

2. Does the organisation declare that there areembedded and well-accepted working prac-tices related to the subject, or just that initia-tives or actions have been undertaken?

50% Does the reporting include at least the majority of the requirements from Business Balance?

75% Are there enough examples and evidence in thereporting that prove the statements, claims anddeclarations in the reporting?

100% Has the organisation demonstrated that there hasbeen consistent implementation over the past

three years?*) not applicated in the 2012 research


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Performance determinationImplementation levels are determined per Business Balance Aspect.

The implementation level of a Business Balance Subject is the average of the levels per under-lying Aspect. The implementation level per Focus Area People, Planet or Pro t is the averageof the underlying Subjects.Business Balance performance is expressed in two dimensions:

1. The overall performance level, as a percentage of the maximum implementation2. The performance balance, as a percentage in the range of minimum and maximum stan-

dard deviation between the performance levels of People, Planet and Pro t.

The performance balance indicates the level of equal attention to People, Planet and Pro t.

The following paragraphs describe shortly the 17 criteria (People, Planet and Pro t).

People

1 Organisational GovernanceThe organisation shall implement systems to ensure awareness and understanding of all re-quirements and expectation from direct and indirect stakeholders, and shall make sure thatthese requirements and expectations are respected, and considered in a balanced way in deci-sion making processes, ensuring at least compliance with the law. Decision making processesshall be transparent and prevent con icts of interests. A system of reviews and appraisals shallbe in place to objectively monitor and report compliance and performance.

2 Human RightsThe organisation shall make sure that the human rights of its employees, its contractors, theirrelatives and the people in uenced by the organisations activities are respected, in line withinternational conventions and agreements. Where local circumstances do not allow full compli -ance with human rights, the organisation shall report on this transparently, document its policyto deal with those circumstances, and explain its efforts to change the business environmentinto the desired situation.

3 Labour PracticesThe organisation shall provide a safe and healthy workplace to its employees and service pro-viders, ensure labour conditions and development opportunities in line with the guidelines of the International Labour Organisation (ILO). The organisation shall ensure that its hire person-nel only on the basis of legally sound conditions, and equip personnel with suf cient means toful l their duties properly and safely.

4 Fair Operating PracticesThe organisation shall ensure that their operating practices, contractual agreements and com-petition are free of corruptive actions, undisclosed political involvement and breach of (intel-lectual) property rights. The organisation shall strictly adhere to fair and ethical competitionpractices, not taking unlegitimate advantage of a certain position in society or in relation to(potential) clients.

5 Consumer IssuesClients of the organisation, including private consumers shall be provided with complete, ac-curate and understandable information about the speci cation, application, pricing and serviceof delivered goods and services, including possible health and safety issues. Marketing and sales

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must not be misleading, and clients and consumers must be able to make a good judgementbefore purchasing, and be provided with appropriate services, guarantees and dispute resolu-tion processes.

6 Supplier IssuesAn organisation shall put in place a system to identify its key suppliers in respect of risks tohuman rights, labour practices and fair operating practices. The key suppliers of goods and ser-vices shall be evaluated with respect to their compliance with local legislation, internationallyrecognised standards for human rights, environmental protection and fair business, and theorganisations own requirements and expectations. In case of any identi ed gap, the organisa -tion shall actively promote and support improvements with its suppliers and stop the businessrelation when there is no willingness to improve.

The organisation itself shall maintain fair contracting practices with its suppliers.

7 Social and Economic Development of the CommunityWhere local government or communities do not (have the ability to) support socio-economicdevelopment, the organization shall take responsibility in their sphere of in uence, and to anextent appropriate for the size of the business in a certain area. There must be a policy on theidenti cation of needs, the priority setting, allocation of resources and action tracking withrespect to employment creation, wealth and income, public health, education, technology de-velopment and culture. Local values shall be respected when doing business.

Planet

1 Environmental AnalysisThe organisation shall maintain and implement a system of environmental analysis for its pro-duction processes, its products and services. This system shall take into account the environ-mental impacts of purchased goods and services, as well as the usage of the organisationsown created goods and services. The system shall cover all possible environmental aspects andimpacts including usage of resources, pollution, emissions, waste and nuisance. The organisa-tion shall be transparent about the outcomes of the environmental analyses, and shall keep thisinformation up-to-date.

2 Environmental ControlThe organisation shall de ne a control policy for its environmental impacts, addressing at leastimpact severity levels and associated acceptance and action criteria, the approach to prioritysetting, and the preferred control hierarchy and types of controls. The policy shall at leaststate the organisations position with respect the precautionary principle. Furthermore, theorganisation shall demonstrate its control of environmental aspects and impacts according tothis policy.

3 Environmental ResponseThe organisation shall develop and implement plans and procedures to ensure a properresponse to possible environmental emergencies as well as long term impacts related to theorganisations activities. These plans and procedures include emergency preparedness anddirect response, recovery of caused environmental damage, compensation for non-recoverableimpacts, and possible adaptation to irreversible environmental changes (partly) a result of theorganisations activities.

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4 Environmental CostThe organisation shall make transparent and consider the costs of cause environmentalimpacts. Any control measure implemented shall be evaluated on cost-effectiveness. Moreover,the organisation shall commit to the polluter pays principle and ensure suf cient nancialresources and/or insurances to cover any costs or liabilities.

5 Environmental ImprovementThe organization shall de ne suitable performance indicators, based on its environmental ana-lyses, and measure performance in a consistent way over time. These performance indicatorsshall be both relative to the organisations activity level, and in absolute terms. Based on thede ned performance indicators, the organisation shall set feasible improvement targets anddemonstrate actual environmental performance improvement over time.

Pro t

1 Financial Health & StabilityThe organisation shall ensure and demonstrate that it is nancially healthy and stable. Theliquidity and solvency of the organisation shall be kept at a level to prevent short term and longterm nancial shortages. Any risks of jeopardising these levels shall be identi ed, and cash owmanagement and reservations shall be aligned. Any nancial commitment shall be on the basisof sound business conditions.

2 Shareholder Value & InvolvementA comprehensive and transparent policy should be in place regarding the value for sharehol-ders, members or participants. This policy includes long-term continuity (5 - 10 years), businessand/or social value development, as well as nancial and non- nancial bene ts for sharehol-ders, members or participants. Shareholder involvement, decision making processes and remu-neration of the organisations key personnel shall be supporting the established policy.

3 Commercial PerformanceThe organisation shall pay explicit attention to and demonstrate its commercial performance inorder to ensure long-term continuity of the organisation. As part of this the organisation shallensure that it is not critically depending on any (small group of) parties upstream or down-stream the supply chain, and the innovation of goods and/or services is appropriate to their livecycles and possible chaning business environment.

4 Capability ManagementThe organisation shall keep its organisational capability for continuously meeting the require-ments and expectations from the business environment. This shall include technological deve-lopment, competence management and management development, information management,as well as planning for disaster recovery in case of a major event.

5 Long-Term PlanningThe organization shall make sure that its long-term existence is not endangered. It shall makesure that there is an appropriate business succession plan for management and/or owners, andthat scenarios of changing business environments have been worked out and anticipated on.

2.8


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Performance Level

The results from the Business Balance Review are shown using the graph below.The Performance level (0 - 100%) indicates the performance and the improvement potential.In the graph below, the scores for People, Planet and Pro t are resp. 50%, 39% and 40%. Theaverage of the three scores is 43%. This is called the Performance Level.

Figure 1: example of a PPP-balance sheet for a company

Performance Balance

The Performance balance (0 - 100%) indicates the balance between the attention to People,Planet and Pro t. In this gure 1, the Performance balance is not 100% (but ca. 80%). This iscaused by the higher score for People compared to Planet and Pro t. If all three scores areequal, the balance is 100%.

Business Balance and other CSR ranking methods

More than 100 CSR ranking methods exists, but the most well known are the Dow Jones Sus-tainability Index (DJSI) and SAM. For sustainability aspects, like transparency, CO 2-emissions orsupply chain management, there are also specialised CSR benchmarks, like the Transparan-

tie Benchmark, the Carbon Disclosure Project (CDP), or the VBDO Responsible Supply ChainBenchmark.

Dow Jones Sustainability Index (DJSI)The next ve Dutch AEX companies were the supersector leaders in the Dow Jones SustainabilityIndex 2012, which means they are seen as the global nr. 1 in sustainable business in their sector:

Table 4: Don Jones sustainability Index 2012

Supersector leader DJSI SectorDSM Chemical industry

Philips Household electronics

AirFrance/KLM Travel and leisure

Unilever Food

PostNL Industrial goods and services

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Sustainability leaders SAMAnother CSR benchmark is SAM. A lot of Dutch AEX companies have an internationally good scorehere.

Table 5: sustainability leaders SAM

Sustainability leader ClassDSM Gold

AkzoNobel Gold

PostNL Gold

TNT Express Gold

Philips Gold

Unilever Silver

KPN Silver

Arcelor Mittal Silver

Ahold BronzeHeineken Bronze

Aegon Bronze

ING Bronze

Reed Elsevier Bronze

Wolters Kluwer Bronze

SBM Offshore Bronze

Corio Bronze

ASML Bronze

When the Business Balance Standard is compared with the DJSI, it can be seen that companieswith a high ranking in the DJSI in 2012 are also highly ranked in the Business Balance Standard.In 2012 the DSJI super sector leaders in the world were DSM, Philips, Air France-KLM, Unileverand PostNL.

Another international well know CSR benchmark is SAM. DJSI is part of the Dow Jones Indexes,following a best-in-class approach, including companies across all industries that outperformtheir peers in numerous sustainability metrics. SAM invites the worlds 2,500 largest companiesevery year, measured by free- oat market capitalization, from the 57 sectors to report on theirsustainability performance.

In the SAM benchmark, AkzoNobel, DSM, Philips, PostNL and TNT Express were seen as a leaderin their sector (gold class). Of the above mentioned companies, only Air France-KLM and PostNLare not in the top-10 of the Business Balance Standard. This may indicate that the BusinessBalance underestimates the CSR performance of these two companies. But three out of fourcompanies with the highest rankings in the DJSI and SAM, are also in the top 3 of the BusinessBalance Standard.

The Business Balance has extra elements compared to the DJSI and SAM: the score for the ba-lance between People, Planet and Pro t. The Business Balances compares different companiesin many sectors within the AEX. DJSI has a best-in-class approach.


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Results

In this chapter, the general results are given of the Business Balance of the AEX companies forthe annual reports of 2009, 2010 and 2011 (paragraph 3.1).

Then, speci c results are given of the scores for People, Planet and Pro t, for AEX companiesin the reporting year 2011 (paragraphs 3.1.1. 3.1.3).

In paragraph 3.1.4 the top-10 is given of the Performance Level 2012 and the (CSR) ranking of all 25 AEX companies. Unilever is the number one (reporting year 2011).

Paragraph 3.1.5 explains the Performance Balance: are the scores for People, Planet and Pro tof AEX companies well-balanced?.

In paragraph 3.2 and 3.3. the results are given of the Performance Level of AEX companies inthe reporting years 2010 and 2009, followed by a paragraph with the feedback of ten AEX com -panies on the Business Balance method (3.4) and paragraph 3.5 about the (positive) relationshipbetween stock rates in 2009-2011 and CRS-performance in 2011 of AEX companies.

Results 2010-2012

When looking at the results, it is clear that the average Performance Level scores for People,Planet and Pro t for all 25 AEX companies increased between 2010 and 2012. This indicatesthat all companies have worked to improve their CSR-results during these years or that theyimproved their CSR-reports with more or better information. Off course, an improvement of average results does not mean that all sub-indicators improved during the years 2010 and 2012;some worsened.

Distinctions can be made between the average scores for the three elements (see table 3): The average score for People increased from 40% in 2010, up to 53% in 2011 and 63% in 2012. The average score for Planet increased from 27% in 2010, up to 38% in 2011 and 45% in 2012. The average score for Pro t increased from 41% in 2010, up to 53% in 2011 and 57% in 2012.

In terms of sustainability, this suggests that social-economic indicators (People) had a hig-her importance for AEX companies than environmental or ecological indicators (Planet). Theaverage scores for Pro t are comparable with the average scores for People. The PerformanceLevel, an average score for the People, Planet and Pro t elements, increased from 36% in 2010up to 48% in 2011 and 55% in 2012.

Finally, the Performance Indicator that highlights the balance between People, Planet andPro t, stayed more or less the same in the years 2010-2012 (ca. 80%), as can be seen in table 6:

3.1

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Table 7: Performance Level Results 2010-2012 of 25 AEX companies

3.1.1 Results 2012 PeopleIn this section, we take a closer look at the background of the company results for the bench-mark indicator People.

The indicator People is made up of the following seven sub-indicators:

1.1 = Organisational Governance1.2 = Human Rights1.3 = Labour Practices1.4 = Fair Operating Practices1.5 = Consumer Issues1.6 = Supplier Issues1.7 = Social and Economic Development of the Community

In table 8 AEX companies are ranked in their scores for People. Heineken and Unilever hadthe highest scores. In table 9 the scores for the sub-indicators are given, leading to the scoresfor table 8.


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Table 8: Results of AEX-company scores for People

Company People1 Heineken 75%

1 Unilever 75%

3 Ahold 71%3 DSM 71%

5 Aegon 68%

5 Air France/KLM 68%

5 Akzo Nobel 68%

5 Arcelor Mittal 68%

5 Reed Elsevier 68%

5 Wolters Kluwer 68%

11 ASML 64%

11 Philips 64%

11 PostNL 64%

11 Randstad 64%

11 TNT 64%

16 ING 61%

16 KPN 61%

16 SBM-Offshore 61%

19 Corio 57%

19 Royal Dutch Shell 57%

19 TomTom 57%

22 Boskalis Westminster 54%22 Unibail-Rodamco 54%

24 Aperam 46%

25 Fugro 43%

Table 9: Results of AEX-company scores for People: sub-indicators

1. PeopleSub-indicator 1.1 1.2 1.3 1.4 1.5 1.6 1.7Aegon 100 75 75 75 75 25 50

Ahold 75 75 75 50 75 75 75

Air France KLM 50 75 100 50 75 75 50AkzoNobel 75 100 75 75 25 75 50

Aperam 50 0 75 50 75 25 50

Arcelor Mittal 75 75 100 50 50 50 75

ASML 50 50 75 75 75 50 75

Boskalis Westminster 75 50 50 50 25 50 75

Corio 75 50 50 50 50 50 75

DSM 100 75 75 75 25 75 75

Fugro 50 25 50 50 25 50 50


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1. PeopleSub-indicator 1.1 1.2 1.3 1.4 1.5 1.6 1.7Heineken 100 75 75 75 50 75 75

ING 75 50 75 75 75 25 50

KPN 100 50 75 25 25 75 75

Philips 100 50 50 50 50 100 50

PostNL 75 75 50 75 50 75 50

Randstad Holding 75 75 75 75 50 50 50

Reed Elsevier 100 50 75 50 50 75 75

Royal Dutch Shell 75 50 75 75 25 50 50

SBM-Offshore 50 50 75 75 50 75 50

TNT 75 50 100 75 50 25 75

TomTom 75 50 75 50 25 75 50

Unibail-Rodamco 75 50 75 50 25 25 75Unilever 100 75 75 50 75 75 75

Wolters Kluwer 100 50 75 50 75 50 75

Average Score: 78 58 73 60 50 58 63

The conclusion for the indicator People is that AEX companies have the highest scores for thesub-indicator Organisational Governance (eight companies score the maximum of 100% here),followed by the sub-indicator Labour Practices (three companies with the maximum score of 100%) and Social and Economic Development of the Community.

The sub-indicator with the lowest score is Consumer Issues. Eight companies scored 25% for

this sub-indicator: AkzoNobel, Boskalis Westminster, DSM, Fugro, KPN, Shell, TomTom and Uni -bail-Rodamco. The VBDO urges these companies to pay more attention to Consumer Issues orreport better on this topic.

3.1.2. Results 2012 PlanetThe indicator Planet is made up of the following ve sub-indicators:

2.1 = Environmental Analysis2.2 = Environmental Control2.3 = Environmental Response2.4 = Environmental Costs

2.5 = Environmental Improvement

In table 10 AEX companies are ranked in their scores for Planet. Unilever had the highestscore. In table 11 the scores for the sub-indicators are given, leading to the scores for table 10.


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Table 10: Results of AEX-company scores for Planet

Company Planet1 Unilever 75%

2 Akzo Nobel 65%

3 Reed Elsevier 60%3 Unibail-Rodamco 60%

5 DSM 55%

5 Heineken 55%

5 Philips 55%

5 Corio 55%

5 ASML 55%

5 ING 55%

11 Ahold 50%

11 TNT 50%




16 PostNL 40%

16 KPN 40%

16 SBM-Offshore 40%

19 Aegon 35%

19 Aperam 35%


22 Fugro 30%23 Randstad 25%

23 Boskalis Westminster 25%

25 TomTom 10%

Table 11: Results of AEX-company scores for Planet: sub-indicators

2. PlanetSub-indicator 2.1 2.2 2.3 2.4 2.5Aegon 50 50 25 25 25

Ahold 75 75 0 25 75Air France KLM 50 75 50 25 50

AkzoNobel 75 75 75 50 50

Aperam 50 50 25 25 25

Arcelor Mittal 75 50 25 50 25

ASML 75 75 25 0 100

Boskalis Westminster 50 50 0 0 25

Corio 50 75 25 50 75

DSM 75 75 25 50 50


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2. PlanetSub-indicator 2.1 2.2 2.3 2.4 2.5Fugro 50 50 25 0 25

Heineken 75 75 25 25 75

ING 100 50 50 25 50

KPN 75 50 0 0 75

Philips 75 75 25 25 75

PostNL 75 50 25 0 50

Randstad Holding 50 50 0 0 25

Reed Elsevier 75 75 25 25 100

Royal Dutch Shell 75 25 50 50 25

SBM-Offshore 50 50 50 25 25

TNT 50 75 50 25 50

TomTom 25 25 0 0 0Unibail-Rodamco 75 75 50 25 75

Unilever 100 75 50 50 100

Wolters Kluwer 50 50 25 25 25

Average Score: 65 60 28 23 51

The conclusion for the indicator Planet is that AEX companies have the highest scores for thesub-indicator Environmental Analysis (Unilever and ING with the maximum score of 100%),followed by the sub-indicator Environmental Control.Reed Elsevier, Unilever and ASML also have the maximum score of 100% for EnvironmentalImprovement.

The sub-indicators with the lowest scores are Environmental Cost and Environmental Res-ponse. Eight companies do not report about Environmental Cost (score 0%) and eleven com-panies do this in a minimal way (score 25%). None of the companies score 75% or 100%.

Environmental Cost is a problematic sub-indicator for many companies. This indicator entailsthat the organisation should be transparent and consider the costs of their environmental im-pact. Any control measure implemented shall be evaluated on cost-effectiveness. Moreover,the organisation shall commit to the polluter pays principle and ensure suf cient nancialresources and/or insurances to cover any costs or liabilities.

Another problematic sub-indicator is Environmental Response, where the organisation shalldevelop and implement plans and procedures to ensure a proper response to possible environ-mental emergencies as well as long term impacts related to the organisations activities. Theseplans and procedures include emergency preparedness and direct response, recovery of causedenvironmental damage, compensation for non-recoverable impacts, and possible adaptation toirreversible environmental changes (partly) a result of the organisations activities.

The VBDO recommends AEX companies to pay more attention to the sub-indicators Environ -mental Cost and Environmental Response in CSR-reports and/or annual reports.


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3.1.3 Results 2012 pro tThe indicator Pro t is made up of the following seven sub-indicators:

3.1 = Financial Health & Stability3.2 = Shareholder Value & Involvement3.3 = Commercial Performance3.4 = Capability Management3.5 = Long-Term Planning

In table 12a AEX companies are ranked in their scores for Pro t. DSM had the highest score. Intable12b the scores for the sub-indicators are given, leading to the scores for table 12a.

Table 12a: Results of AEX-company scores for Pro t

Company Pro t1 DSM 75%

2 Unilever 70%

3 Akzo Nobel 65%

3 Reed Elsevier 65%

3 Ahold 65%

3 TNT 65%

3 Unibail-Rodamco 65%

3 Corio 65%


3 Randstad 65%

11 Heineken 60%

11 Philips 60%11 Boskalis Westminster 60%

11 Fugro 60%


16 ASML 55%


16 Aperam 55%

20 Aegon 50%

20 TomTom 50%

22 ING 45%

22 PostNL 45%

22 KPN 45%

22 SBM-Offshore 45%



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Table 12b: Results of AEX-company scores for Pro t: sub-indicators

3. Pro t

Sub-indicator 3.1 3.2 3.3 3.4 3.5Aegon 75 50 25 50 50

Ahold 75 75 50 75 50Air France KLM 0 25 25 50 50

AkzoNobel 50 100 50 50 75

Aperam 75 50 25 75 50

Arcelor Mittal 75 50 50 50 50

ASML 75 50 50 75 25

Boskalis Westminster 50 75 50 75 50

Corio 50 75 75 75 50

DSM 75 75 75 50 100

Fugro 75 75 50 50 50

Heineken 25 75 75 75 50

ING 50 50 50 25 50

KPN 25 50 25 75 50

Philips 75 75 50 50 50

PostNL 25 50 50 50 50

Randstad Holding 75 50 75 75 50

Reed Elsevier 50 75 75 75 50

Royal Dutch Shell 75 75 50 75 50

SBM-Offshore 50 25 25 75 50

TNT 100 50 25 75 75TomTom 25 50 50 75 50

Unibail-Rodamco 50 75 75 75 50

Unilever 50 100 75 75 50

Wolters Kluwer 50 50 50 75 75

Average Score: 56 62 51 65 53

The conclusion for the indicator People is that AEX companies have the highest scores for thesub-indicator Capability Management, followed by the sub-indicator Shareholder Value andInvolvement.

The sub-indicators with the lowest score are Commercial Performance and Long-term Plan-ning. Seven companies had a low score of 25% for Commercial Performance: Aegon, AirFrance-KLM, Aperam, KPN, SBM-Offshore and TNT-Express. However, this score does not meanthat companies did not earn any pro t in 2012.

Commercial Performance means, according to the Business Balance:The organisation shall pay explicit attention to and demonstrate its commercial performancein order to ensure long-term continuity of the organisation. As part of this the organisation shallensure that it is not critically depending on any (small group of) parties upstream or down-stream the supply chain, and the innovation of goods and/or services is appropriate to their livecycles and possible changing business environment.

The overall score of this sub-indicator was relatively low because few companies reported(fully) in the way the Business Balance approaches this subject.


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3.1.4 Performance Level 2012The AEX-company with the best 2012 score for People, Planet and Pro t (the total PerformanceLevel) is Unilever, with a Performance Level score of 73%. DSM is the number two with 67% andAkzoNobel the number three with 65% for the Performance Level.

Unilever has a very high ranking for both Planet and People. DSM has a very high rank for Pro t(and a relative low score for Planet), while AkzoNobel has a high rank for People. This indicatesthat DSM could consider investing more in Planet.

The three companies with the lowest scores for Performance Level are: Aperam (a new com-pany, recently split by Arcelor Mittal), Fugro and TomTom. For these companies, CSR has onlybecome an important item in the last few years. The results, therefore, must be seen in a dif-ferent light compared to companies who are already involved in CSR for 10 or 15 years.

Table 13: Performance Level of 25 AEX companies in 2012

Table 14: Top-10 scores AEX companies Performance Level

Company Performance People Planet Pro t1. Unilever 73% 75% 75% 70%

2. DSM 67% 71% 59% 75%

3. AkzoNobel 65% 68% 63% 65%

4. Reed Elsevier 64% 68% 60% 65%

5. Heineken 63% 75% 55% 60%

6. Ahold 62% 64% 65% 50%

7. Philips 60% 57% 45% 55%

8. TNT Express 60% 64% 50% 60%

9. Unibail Rodamco 60% 60% 65% 49%

10. Corio 59% 57% 55% 65%


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Some companies made more progress in their CSR-ranking between 2011 and 2012 than others.The Performance Level between 2011 and 2012 increased considerably for Reed Elsevier (+17%),Unilever (+16%) and Aperam (+15%). The VBDO compliments these companies for this improve -ment (see table 15).

Table 15: Changes in Performance Level 2012-2011

Reed Elsevier + 17%

Unilever + 16%

Aperam + 15%

Air France-KLM - 5%

TomTom - 5%

ING -1%

Randstad Holding -1%

The previous year showed other fast growers with a signi cant increase in the PerformanceLevel. The most improved company is Randstad Holding with +33% (see table 16). AkzoNobeland Corio also increased their Performance Level with 22% and 14%. Only a small part of thisincrease can be explained by a small change in the research methods of the Business Balance(in 2010 it had more CSR indicators than in the years 2011 and 2012).

Table 16: Changes in Performance Level 2011-2010

Randstad Holding + 33%

AkzoNobel + 22%

Corio + 14%

3.1.5 Performance Balance 2012The Performance Balance determines if there is a good balance in the performance of People,Planet and Pro t. There is, for instance, not a good balance if scores for People and Planet arehigh, but for Pro t very low. Nor is there a balance if the score for Pro t is very high, but lowfor Planet and People.

Companies with the best balance between the three Ps are AkzoNobel, Unilever, Reed Else-vier and Philips. The shape of the triangle is almost perfect, as can be seen in the example of winner AkzoNobel:

Figure 2: Performance Balance of AkzoNobel: 97%


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There are a number of imbalanced companies with good results for Pro t and low(er) scoresfor Planet/People. These are: Aperam, Fugro, Randstad Holding, Shell and Boskalis. Shell andBoskalis have lagging results for Planet. See the example of Shell:

Figure 3: Balance Performance Shell: 83%

Companies with good relatively results for People are SBM Offshore, PostNL, KPN, Aegon andArcelor Mittal.

Figure 4: Balance Performance of PostNL: 87%

Companies with lower scores for Planet are Wolters Kluwer and TomTom, as can be seen in thegure for TomTom:

Figure 5: Performance Balance of TomTom: 56%


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In 2012, compared to 2011, some companies increased their scores for Balance Level conside-rately, see table 19:

Table 19: Changes in Balance Level 2012-2011

ASML + 22%Corio + 21%

ING + 20%

The reasons of the positive change of ASML were:a. The Performance level for Pro t increased from 40% to 55%b. The Performance level for Planet increased from 30% to 55%c. The Performance level for People stayed stable at 65%

The imbalance in 2011 between the two Ps Pro t and Planet disappeared by 2012, and thesescores (55%) became more comparable with the score for People (65%).

Results 2011 Performance Level

For 2011, only the results of the Performance Level are shown:

Table 20: Performance Level results AEX companies, 2011

The Top 5:1. AkzoNobel2. DSM3. Unilever4. Ahold5. Philips

3.2


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Results 2010 Performance Level

For 2010, only the results for the Performance level are shown:

Table 21: Performance Level results AEX companies, 2010

The top 5:1. ING

2. Air France-KLM3. PostNL4. TNT Express5. Unilever

It is surprising to see four companies in the top 5 who are not in the top 5 lists of 2011 and 2012.

The good score in 2010 for ING (nr. 1) is replaced by a lower ranking in 2011 (nr. 6) and 2012(nr. 14). The good score in 2010 for Air France-KLM (nr. 2) is replaced by a lower ranking in 2011(nr. 7) and 2012 (nr. 18).

The lower ranking of ING does not mean that the CSR performance decreased. In 2010 the Per-formance Level of ING was 49%. In 2011 this increased to 55% and 54% in 2012. But other com-panies showed higher increases in the Performance Level than ING, between 2010 and 2012.

Runner-ups in the Business Balance standard are Reed Elsevier and Heineken.Reed Elsevier had a low ranking in 2010 (nr. 11) and even lower in 2011 (nr. 16), but was the nr.4 in 2012. Heineken had a low ranking in 2010 (nr. 14) and a low ranking as well in 2011 (nr. 9),but was the nr. 5 in 2012.

3.3


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Feedback of stakeholders

In a workshop in september 2012, the VBDO presented the results of the Business Balance 2012.At this occasion, several stakeholders had comments and recommendations. At the workshop,ten companies included in the Business Balance were present.

The most important comments were: Make use of more information sources: not only the annual and CSR report and websites, but

also quarterly reports and reports of third parties about the company, articles in newspapersand sector magazines, ISO certi cates etc.

Ten companies of the 25 AEX companies did not review the draft results of the BusinessBalance 2012 scores for their company (Philips, Shell, Reed Elsevier, SBM-Offshore, TomTom,KPN for instance). It is possible that some of the scores of these companies are lower thannecessary.

The scores for 2010 and 2011 were not reviewed by all companies. This means that scoresin the Business Balance have an uncertainty margin. This uncertainty margin is the greatest

for the nancial criteria. The indicator Financial health and stability is dif cult to rate because in different sectors

different methods are used to judge the nancial stability of companies. In the BusinessBalance only one method is used, looking at solvency, liquidity, cash ow and reserves.

Some companies dont publish speci c results in their annual or CSR report because they arepart of the standard operations, like safety and emergency plans, or ILO standards. Theycannot have a good score for this indicator in the benchmark.

Companies already receive many CSR score lists. It costs a lot of time to check all these lists.The Business Balance Standard is quite easy to check compared to other CSR ranking listsand questionaires, but still it costs time for the company to review drafts.

Some results of the top-10 ranking (Performance Level) are a surprise. How is it possible that

real estate funds have a high score? AEX companies differ very much and it is hard to compare one company with another. Rand -stad for instance is completely different from Shell.

Some companies think they more often deserve a 100% score for some indicators.

Recommendations were: All CSR ratings are published in september. It is good to wait until this time and make use

of this data, (eg. Carbon Disclosure Project (CDP) and Transparency Benchmark, SAM, DJSI,etc.)

VBDO can ask all 25 AEX companies to join these initiatives. In 2011, ca. 10 AEX companieswere reviewed bij the DJSI and nearly all in the CDP.

Often, CSR reports of companies are published after the annual report. This is not a goodprocedure. Companies can publish their CSR results at the end of oktober with a forecastof november/december (hard close process). In the annual report, the CSR and other non-

nancial information can be integrated in this way in a timely and reliable way, just like thenancial information.

In CSR ratings and in the Business Balance, there is no attention for brand value in relationto CSR.

The Business Balance is a good tool for private investors to get CSR information for AEX com -panies. The Business Balance results will be published on www.duurzaamaandeel.nl, but itis recommended that results are published also in newsletters of the VEB. Give informationwhy a company has a good or bad score on several indicators.

3.4


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Relationship between CSR- and nancial performance of AEX companies between2009-2011

It would be interesting to know if Dutch AEX companies with a high Performance Level for En -

vironmental, Social and Governmental indicators (like Unilever, DSM, AkzoNobel), also performwell or even better in terms of nancial markets. International research indicates that thisrelationship is positive on the long term. According to a report of the Harvard Business Schoolan invested dollar in high sustainability companies has a 46% better nancial return after 18years compared to an invested dollar in in low sustainability companies, see gure 6.

Figure 6

The Harvard Business School compared 180 companies, with 90 high sustainable and 90 lowsustainable companies.

The VBDO researched the stock prices of AEX companies between 1-1-2009 and 31-12-2011(based on the 5 years graphics of www.beleggers.nl, see appendix 27). It appeared that 8 com -panies of the top-10 companies in the Business Balance (Performance Level) also had a positivescore in the stock markets between 2009 and 2012. Only two companies in the top-10 had aneutral or small negative result between 1-1-2009 and 31-12-2011 (Reed Elsevier 2,8% andCorio 0%). Companies with a negative result in stock prices in this period (Reed Elsevier, WoltersKluwer, Arcelor Mital, KPN, Aegon, TomTom, PostNL and Air France-KLM) are overrepresented inthe AEX-company group with the lowest CSR rankings in the Business Balance (see table: 22).

3.5

Evolution of $1 invested in the stock market in value-weighted portfolios

0.00

5.00

10.00

15.00

20.00

25.00

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

Low

High


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Table 22: relation between stock rates 2009-2011 and CSR performance in 2012

Company Stock rate changebetween1-1-2009 and

31-12-2011

Position in theBusiness Balance CSR benchmark for

Performance Level1 ASML + 160% 112 DSM + 100% 2

3 Fugro + 100% 24

4 Boskalis + 83% 22

5 Heineken + 67% 5

6 SBM Offshore + 60% 21

7 Shell + 53% 13

8 Randstad Holding + 50% 15

9 Unilever + 49% 1

10 Unibail Rodamco + 35% 911 AkzoNobel + 25% 3

12 Ahold + 18% 6

13 Philips + 11% 7

14 Corio 0 % 10

15 ING 0 % 14

16 Reed Elsevier - 3% 4

17 Wolters Kluwer - 7% 19

18 Arcelor Mittal - 14% 12

19 KPN - 17% 20

20 Aegon - 25% 16

21 TomTom - 25% 25

22 PostNL - 57% 17

23 Air France-KLM - 60% 18

24 Aperam No data 2009/2011

25 TNT Express No data 2009/2011

The top 10 high sustainability companies in the AEX (based on the Business Balance Perfor -mance Level) have an average stock rate change in the last three years of 46,2 %. *)

The low sustainability 10 companies in the AEX with the lowest rates in the Business BalancePerformance Level, have an average stock rate change in the last three years of 10,2 %.

The conclusion is that during a period of three years (2009-2011) nancial returns in terms ofstock rate were 36% higher in 10 high sustainability companies listed on the AEX, comparedto 10 low sustainability companies in the AEX. The difference in stockrate between the twogroups even increased to nearly 60% if stockrates are followed till September 2012.

*) excluded TNT Express and Aperam


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Conclusions and recommendations

Conclusions

According to Performance Level of the VBDO Business Balance Standard 2012, the top-10 out of 25 Dutch AEX companies are: Unilever, DSM, AkzoNobel, Reed Elsevier, Heineken, Ahold, Philips,TNT Express, Unibail-Rodamco and Corio. See table 23.

Table 23: Top-10 scores AEX companies Performance Level

Company Performance People Planet Pro t1. Unilever 73% 75% 75% 70%

2. DSM 67% 71% 59% 75%

3. AkzoNobel 65% 68% 63% 65%

4. Reed Elsevier 64% 68% 60% 65%

5. Heineken 63% 75% 55% 60%6. Ahold 62% 64% 65% 50%

7. Philips 60% 57% 45% 55%

8. TNT Express 60% 64% 50% 60%

9. Unibail Rodamco 60% 60% 65% 49%

10. Corio 59% 57% 55% 65%

The top 10 high sustainability companies in the AEX (based on the Business Balance Perfor -mance Level) had an average stock rate change in the last three years (2009, 2010, 2011) of + 46,2 %. In this top 10, TNT Express is replaced by ASML (nr. 11), because there are no stockrate data available for TNT Express for 2009-2011).

The low sustainability 10 companies in the AEX with the lowest rates in the Business BalancePerformance Level *), had an average stock rate change in the last three years of + 10,2 %.

The conclusion is that during a period of three years (2009-2011) nancial returns in terms ofstock rate were 36% higher in 10 high sustainability companies listed on the AEX, compared to10 low sustainability companies in the AEX. For investors, this information is very useful forchoosing companies to invest. Of course, the conclusion holds for groups of companies, not forindividual companies. Fugro for example, has one of the lowest scores in the Business Balance(nr. 24 of AEX), but one of the highest scores for positive stock rates between 2009 and 2011.

The conclusion of higher stock rates over time, of high sustainability companies, is con rmedin international research (e.g. Harvard Business School researched 46% higher rates for highsustainability companies over 18 years time compared to low sustainability companies).

Some remarks have to be made on the ranking of companies. Not all companies reviewed thedraft results of the Business Balance. Some sub-indicators of these companies are thereforprobably underestimated. This has a (small) in uence on the ranking of the company. It alsohas to be recognized that companies are very different in terms of sector, size and other cha-racteristics. A human resource company like Randstad Holding is likely to have a higher scorefor People criteria but will pay less attention to the Planet criteria. Companies with a trackrecord of 15 years or more on CSR, have higher scores than companies who only recently put

4

*) TomTom, Fugro, Boskalis, SBM Offshore, KPN, Wolters Kluwer, Air France-KLM, PostNL, Aegon, Randstad Holding


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CSR on their agendas. A relatively low score for Pro t caused (partly) by bad nancial results,will lead to a lower score for the Performance Level. But at the same time, a company candecide to invest more effort or money into People and Planet, despite bad nancial results.

In 2011, the top-5 of the Business Balance, based on Performance Level, was:1. AkzoNobel2. DSM3. Unilever4. Ahold5. Philips

In 2010, the top 5 of the Business Balance, based on Performance Level, was:1. ING2. Air France-KLM3. PostNL4. TNT Express

5. Unilever

It is surprisingly to see four companies in the top 5 of 2010 that are not in the top- 5 lists of2011 and 2012. The good score in 2010 for ING (nr. 1) is replaced by a lower ranking in 2011 (nr.6) and 2012 (nr. 14). The good score in 2010 for Air France-KLM (nr. 2) is replaced by a lowerranking in 2011 (nr. 7) and 2012 (nr. 18).

Runner-ups in the Business Balance Standard of 2012 are Reed Elsevier and Heineken. ReedElsevier had a low ranking in 2010 (nr. 11) and even lower in 2011 (nr. 16), but was the nr. 4 in2012. Heineken had its lowest ranking in 2010 (nr. 14) and a low ranking in 2011 as well (nr. 9),but was nr. 5 in 2012.

Between 2010 and 2011 all (22 researched) AEX companies improved their scores for Perfor -mance Level. Between 2011 and 2012 nearly all (25) AEX companies improved the scores forPerformance Level (an average improvement of 7%)., except for Air France-KLM and TomTom(-5%). The reason for this is a decline in results for pro t in 2012 (Air France-KLM) and a declinein results for planet in 2012 (TomTom).

Some companies made more progress in their Business Balance ranking between 2011 and 2012than others. The Performance Level between 2011 and 2012 increased considerably for ReedElsevier (+17%), Unilever (+16%) and Aperam (+15%). The VBDO compliments these companiesfor their progress. Aperam for instance, had a low score in 2012 for the Performance Level, butshows good progress.

The rankings in the Performance Level are the average scores for 7 indicators for People,5 indicators for Planet and 5 indicators for Pro t. A good score in the Performance Leveldoes not automatically mean a good CSR performance, because the VBDO believes there has tobe a reasonable balance between People, Planet, and Pro t as well. This balance can bemea-sured and is called the Performance Balance. AkzoNobel, Unilever and Reed Elsevier havethe best balances in 2012 between the three Ps.


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Table 24: Highest scores AEX companies for Performance Balance

Company Balance Performance Level1. AkzoNobel 97% 66%

2. Unilever 95% 73%

3. Reed Elsevier 93% 64%

AkzoNobel and Unilever are in the top-3 of the Balance level and in the top-3 of PerformanceLevel. DSM is in the top-3 of Performance level, but is a little imbalanced because the score forPlanet stays behind, as can be seen in the gure 7 below:

Figure 7: Balance Performance of DSM, 2012

There are ve companies with imbalanced good scores for People and ve companies withimbalanced good scores for Pro t, but no companies with imbalanced good scores for Pla-net. More often, there are companies with imbalanced low scores for Planet (see attach-ments 1-25).

When the Business Balance method is compared with the Dow Jones Sustainability Index (DJSI),it can be seen that companies with a high ranking in the DJSI in 2012 are also highly ranked inthe Business Balance Standard. In 2012, the DSJI super sector leaders in the world were DSM,Philips, Air France-KLM, Unilever and PostNL. Another international well-known CSR benchmarkis SAM. Here, DSM, AkzoNobel, PostNL, TNT Express and Philips were seen as a leader in theirsector (gold class). Of the above mentioned companies, only PostNL and Air France-KLM are notin the top-10 of the Business Balance Standard. This may indicate that the Business Balanceunderestimates the CSR performance of these two companies. But three out of four companies

with the highest rankings in the DJSI and SAM, are also in the top 3 of the Business Balance.


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Recommendations

The VBDO recommends companies with an imbalance in the scores for People, Planet and

Pro t, to analyse the reasons for this and look at the possibilities for a more balanced CRS-performance.

The VBDO recommends investors, looking for long term and high returns on investment, tochoose for (groups of) high sustainability companies. In the last three years, stock rates of those companies were 36% higher than those of low sustainability companies in the AEX. The VBDO recommends all 25 AEX companies to analyse the Business Balance Standard to lookfor possible improvements in CSR performance. This can optimise nancial results as well.

Looking for improvements in CSR performance is especially recommended for the top-5 lowestscoring companies in the Business Balance, the numbers 21-25: TomTom, Fugro, Aperam, Boska -lis Westminster and SBM Offshore.

Some companies reported about CSR in different reports (annual report, CSR report) and web-sites etc.. It is recommended to report about CSR and nancial developments in one report. TheDSM annual report can be seen as a good, integrated, best practice.

Furthermore, the VBDO recommends all AEX companies with very low scores (a score of 0% or25%) on one of the 17 sub-indicators for People, Planet or Pro t, to analyse the reasons forthe low scores and study possibilities for improvements in 2013 and later. For instance, nearlyall companies have low scores for the sub-indicator Environmental Costs of EnvironmentalResponse. Other sub-indicators with low scores are surprisingly Commercial Performance ,

Long-term Planning and Consumer Issues.

The VBDO recommends to study the possibilities to enhance the scores of the low-ranking indi-cators. Perhaps more international study to usefull instruments is required.

The 25 AEX companies have relative high scores in the sub-indicators Organisational Gover-nance (eight companies score the maximum of 100% here), the sub-indicator Labour Practices(three companies with the maximum score of 100%), Environmental Analysis (Unilever and INGwith the maximum score of 100%), Environmental Control and Environmental Improvement(Reed Elsevier, Unilever and ASML have the maximum score of 100% for the latter). High scoresfor the sub-indicators for Pro t were: Capability Management, followed by the sub-indicatorShareholder Value and Involvement. This means that companies report well about these nan -cial indicators and show proof of implementation of policies.


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Appendices


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1 Business Balance Score AEGON 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are

calculated by taking the average of all the questions related to that particular P. An overviewof the scores per question can be found in Appendix 26. On www.duurzaamaandeel.nl more CSRinformation of the company can be found.

The shape of the triangle represents the balance between the scores for People, Planet andPro t. The better the balance, the more the shape represents an equilateral triangle and thehigher the score in the table below (Performance Balance).

The table underneath shows the scores over the last three years for People, Planet and Pro t.It also shows the Performance Level, which is the average score for the three Ps. Finally,the table shows the Performance Balance.


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2 Business Balance Score Ahold 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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3 Business Balance Score Air France KLM 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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4 Business Balance Score Akzo Nobel 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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5 Business Balance Score APERAM 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are

calculated by taking the average of all the questions related to that particular P. An overviewof the scores per question can be found in Appendix 26. On www.duurzaamaandeel.nl more CSRinformation of the company can be found. The shape of the triangle represents the balance between the scores for People, Planet andPro t. The better the balance, the more the shape represents an equilateral triangle and thehigher the score in the table below (Performance Balance).



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6 Business Balance Score Arcelor Mittal 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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7 Business Balance Score ASML 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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8 Business Balance Score Boskalis Westminster 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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9 Business Balance Score Corio 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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10 Business Balance Score DSM 2010-2012The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are





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Business Balance Score Fugro 2010-2012

The rst gure below shows the Business Balance score over 2012. The scores for eachP (People, Planet, Pro t) can be seen also in the graphic below (green colour). The scores are




11


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Business Balance Score Heineken 2010-2012





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Business Balance Score ING 2010-2012


calculated by taking the average of all the questions related to that particular P. An overviewof the scores per question can be found in Appendix 26. On www.duurzaamaandeel.nl more CSRinformation of the company can be found. The shape of the triangle represents the balance between the scores for People, Planet andPro t. The better the balance, the more the shape represents an equilateral triangle and thehigher the score in the table below (Performance Balance).


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Business Balance Score KPN 2010-2012





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Business Balance Score Philips 2010-2012





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Business Balance Score PostNL 2010-2012





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Business Balance Score Randstad 2010-2012





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Business Balance Score Reed Elsevier 2010-2012





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Business Balance Score Royal Dutch Shell 2010-2012





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