State of Responsible Investment in Canada. Jane Ambachtsheer Partner & Global Head of Responsible Investment Mercer

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1 State of Responsible Investment in Canada Jane Ambachtsheer Partner & Global Head of Responsible Investment Mercer

2 Environmental, social and governance ( ESG ) factors - Investors are scrutinizing Canadian issuers on a range of issues Environmental Climate disclosure Environmental risk management and energy efficiency Toxic chemicals Genetic engineering Pollution Water risk management (availability and sourcing) Social Free, prior and informed consent of indigenous peoples Working conditions Supply chain management Health and safety Product safety Treatment of customers Labour relations Human rights Governance Transparency Board structure Independent directors and oversight Separation of Chairman and CEO Diversity Remuneration Executive compensation and Say on Pay Shareowner rights Accounting and audit quality ESG disclosure 1

3 Canadian Coalition for Good Governance The CCGG encourages boards of Canadian public companies to voluntarily adopt a number of corporate governance best practices CCGG articulates the perspectives of many of the largest Canadian institutional investors on corporate governance matters Policy documents meetings with boards a year 2

4 Canadian PRI signatories As of 1 February 2013 there are 48 Canadian signatories to the UN-backed Principles for Responsible Investment, representing in excess of $825 billion in assets under management 18 Asset Owners British Columbia Municipal Pension Plan Caisse de dépôt et placement du Québec Canada Pension Plan Investment Board Comité syndical national de retraite Bâtirente Community Foundation of Ottawa Fondaction CSN Fonds de solidarité FTQ Gestion FÉRIQUE Healthcare of Ontario Pension Plan (HOOPP) Native Benefits Plan Ontario Teachers Pension Plan OPSEU Pension Trust Public Service Alliance of Canada Pension Fund Régime de Retraite de l'université de Montréal Régime de retraite de l Université du Québec Société d'assurance-vie inc. (SSQ) UFCW International Union Pension Plan for Employees University of Ottawa Alberta Investment Management Corporation Addenda Capital Inc. AlphaFixe Capital Inc. Bentall Kennedy Birch Hill Equity Partners Management Inc. British Columbia Investment Management Corporation Caisse d`économie solidaire Desjardins Cordiant Fiera Sceptre Inc. Fonds Desjardins Global Alpha Capital Management Hexavest HR Strategies Inc Corporate Knights Groupe Investissement Responsible Mercer Investment Consulting 25 Investment Managers Matrix Asset Management Inc. Montrusco Bolton Investments Inc. NEI Investments OceanRock Investments Inc Optimum Asset Management Inc. Presima Qube Investment Management Inc. Sarona Asset Management TD Asset Management Tricon Capital GP Inc. Vancity Investment Management XPV Capital Corporation 5 Professional Service Partners PBI Actuarial Consultants Ltd. RRSE SHARE Shareholder Association for Research & Education 3

5 $600.9 billion in Responsible Investment assets in Canada (SIO 2012) Source: 2012 SIO / 2012 Global Sustainable Investment Review, GSIA 4

6 Year Sustained growth in SRI assets in Canada over the past decade SRI assets in Canada ($ billions) Source: Social Investment Organization 2012 Review MERCER 07 March

7 Engagement, Integration and Negative screening most common approaches Source: 2012 SIO / 2012 Global Sustainable Investment Review, GSIA 6

8 Jantzi Social Index vs. S&P/TSX Composite 7

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10 The road ahead Responsible Investing and ESG issues are appearing on a growing number of committee agendas as topics for discussion New interest in the PRI from several large Canadian investment managers But challenges remain Progress on the whole continues to lag other markets Are signals being sent throughout the investment supply chain as in other regions? 9

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