The ESG Ecosystem

2. / 2© 2018 BrownFlynn Ltd. All Rights Reserved. Introduction Executive Summary As part of its ongoing work to enable multinational corporations to collaborate and share sustainability best practices, WBCSD commissioned BrownFlynn to develop and chair a special working group focused on environmental, social, and governance (ESG) ratings and rankings. Over the past decade, the investment community’s interest in ESG issues has grown exponentially. The Global Initiative for Sustainability Ratings (GISR) states there is growing certainty that those organizations that perform well on ESG indicators are also performing better from a financial point of view. In 2016, more than $8 trillion in assets under management considered ESG factors, a 33 percent jump over the previous two years.1 This in turn has resulted in a rapid growth of specialized ESG research firms and products offering investors more detailed evaluations of company and industry performance. Firms such as Bloomberg, MSCI, Sustainalytics, and Vigeo Eiris, collect and analyze a vast array of metrics and measurements to capture the sustainability performance of thousands of businesses and sectors. To differentiate their respective ESG-related products and services, the ESG research community continually evolves its methodologies and data collection processes. While many of these research firms rely on similar sources of ESG data, it is becoming increasingly challenging for corporate responders to manage the ever- expanding and ever-changing ecosystem of ratings and rankings. This results in a complex and sometimes confusing marketplace which companies must navigate from a resource perspective, as well as determine which ratings and ranking firms best represent the interests of its shareholders, employees, institutional customers, and consumers. 1 US SIF, Report On US Sustainable, Responsible And Impact Investing Trends (2016)

3. / 3© 2018 BrownFlynn Ltd. All Rights Reserved. About BrownFlynn Founded in January 1996, BrownFlynn is a leading, women-owned, corporate sustainability and governance consulting firm. The Firm exclusively advises Fortune 500 and privately held companies on corporate sustainability and governance strategies. BrownFlynn partners with its clients so they can achieve positive and tangible social, environmental, and economic impact—leading to sustained value. BrownFlynn understands and anticipates emerging sustainability trends, stakeholder expectations, reporting frameworks, engagement tools, and best practices to keep its clients ahead of the curve. BrownFlynn is the first U.S.-certified trainer for the Global Reporting Initiative (GRI). The Firm has been training clients and guiding them through reporting using the GRI framework (from G2 through the GRI Standards) since 2005. In addition, BrownFlynn supports its clients by helping respond to the leading international standards and reporting bodies, such as GRI, CDP (Climate, Forests, and Water), RobecoSAM (DJSI), EcoVadis, and a range of the most influential ratings and rankings organizations. The Firm’s deep experience provides clients with insights into performance and score improvement and identifies streamlining opportunities between the various frameworks. BrownFlynn & WBCSD Partnership As Chair of the ESG Ratings and Rankings Working Group, BrownFlynn collaborates with WBCSD to bring unique sustainability developments and perspectives to fellow WBCSD members. BrownFlynn provides expertise in the financial markets, ratings and rankings, sustainable purchasing, and reporting arena to WBCSD members through collaborative programming. The WBCSD/BrownFlynn ESG Ratings & Rankings Working Group brings the latest information to corporate practitioners through in-person meetings, webinars with leading experts, and private updates on the latest developments in the ratings and rankings field. A sampling of the content produced is available at brownflynn.com. Corporate practitioners interested in learning more about this work should contact Mike Wallace at mikew@brownflynn.com.

4. / 4© 2018 BrownFlynn Ltd. All Rights Reserved. About the Authors Barb Brown Barb is a 25+ year veteran in the field of corporate responsibility and sustainability. As one of BrownFlynn’s co-founders she has guided the Firm’s evolution to respond to market trends, leading the development of service offerings to ensure clients have the tools they need to respond. She is Principal-in-Charge of several clients and is recognized as an expert in the industry. Barb is a sought-after speaker, author, and thought leader. In addition to her active participation in many leading sustainability organizations, Barb serves as a 'Liaison Delegate' to WBCSD. You can reach Barb at barbb@brownflynn.com. Mike Wallace As Managing Director, Mike is responsible for expanding BrownFlynn’s market engagement, developing new and existing strategic partnerships, providing innovative solutions to clients, and helping shape the strategic direction of the Firm. Having helped establish and then direct the Global Reporting Initiative’s North American operations from 2010 to 2014, Mike was instrumental in driving sustainability and reporting across the continent. Mike’s 20+ years of international experience in the sustainability field provides BrownFlynn clients and strategic partners with a global view of the sustainability landscape. You can reach Mike at mikew@brownflynn.com.

5. / 5© 2018 BrownFlynn Ltd. All Rights Reserved. Historical Context Origins Approximately 15 years ago, the gap between corporate disclosure and investor demand for increased transparency on sustainability led to rapid growth in socially responsible investing (SRI). The initial result of this direct investor engagement was an inundation of environmental, social, and governance (ESG) surveys and questionnaires that began to overwhelm the individuals responding, who were primarily from publicly traded companies. Top-performing companies could be rewarded by making so-called “Best” lists, or by being publicly listed in a sustainability index. However, there was an inherent friction between the two sides because the supply and demand of disclosure requests was constantly fluctuating. Leaders in corporate disclosure often enjoyed accolades from some ratings firms while being punished by others. Furthermore, as the field evolved and the bar continued to be raised, companies found that the evaluators expected them to do even more each year to build upon their accomplishments. As a result, the investment community, research firms, and standards bodies driving these disclosures were pressed to differentiate their approaches to appeal to their own customers and stakeholders. To address the growing survey fatigue, Allen White, who co-founded the Global Reporting Initiative (GRI), formally launched the Global Initiative for Sustainability Ratings (GISR) in 2011. GISR’s stated mission is: “to drive transparency and excellence in environmental, social, and governance (ESG) research, ratings and indices to improve business performance and investment decision-making.” The organization has an impressive range of supporting stakeholders dedicated to this mission. GISR’s free database, the Ratings Hub, provides a glimpse into the morass that is today’s ESG ratings and rankings world. Expansion and Contraction Today, we are seeing mainstream asset managers increasingly looking for new opportunities to differentiate their investment expertise. To support this need, the specialized research firm market is going through significant expansion while also experiencing a flurry of mergers and acquisitions. Through the purchase of established ratings and rankings firms, mainstream firms are expanding and deepening their ESG capabilities and product offerings.

6. / 6© 2018 BrownFlynn Ltd. All Rights Reserved. The first wave of these acquisitions began in 2009 when RiskMetrics Group, a spinoff of JPMorgan Chase and a provider of risk management and corporate governance services, purchased both Innovest Strategic Value Advisors and KLD Research & Analytics. A few months later, MSCI made a blockbuster deal when it acquired RiskMetrics for $1.55 billion in stock and cash. Around the same time, Thomson Reuters bought Swiss ESG data provider ASSET4 and quickly integrated ASSET4’s ESG data on over 3,000 companies into its core financial products. Those paying attention to these events wondered: were these consolidations one- off deals or a sign of times to come? Between 2009 and 2015, Bloomberg reported a 680 percent increase in the number of users accessing ESG data on the Bloomberg platform. According to Bloomberg, the compounded growth rate for users accessing ESG data corresponds with growing asset allocation. The renewed flurry of merger and acquisition activity in the last year indicates a growing trend toward the mainstreaming of ESG research firms. In late 2016, Standard & Poor’s (S&P) acquired a controlling stake in Trucost, a leading environmental data and risk analysis firm. A few months later, International Shareholder Services (ISS) bought IW Financial. In July 2017, a third major consolidation occurred when the investment research firm Morningstar acquired a 40 percent stake in Sustainalytics, a leading ESG research firm. The overarching goal of these mergers is for firms to strengthen their research, consulting, and/or portfolio management solutions to meet growing investor demand for further integration of ESG data. We anticipate continued acquisitions and mergers as the movement of ESG data into mainstream investing continues. The timeline below illustrates the rapid progress and evolution of the ESG ratings and rankings field.

7. / 7© 2018 BrownFlynn Ltd. All Rights Reserved. In addition to the increase in mergers and acquisitions in recent years, we have also seen growing collaboration between research bodies and frameworks. This activity is likely driven both by a need to stay relevant and accurate in the changing landscape, as well as to reduce survey fatigue. Many leading organizations sought—and continue to seek—methodological alignment with their peers, as well as incorporate external research into their proprietary analyses. For example, Bloomberg openly integrates information from GRI, the Sustainability Accounting Standards Board (SASB), CDP, Sustainalytics, RobecoSAM (DJSI), and other information providers on its terminals. RobecoSAM publicly references its use of EcoVadis and RepRisk in its assessment methodology. Corporate Knights is transparent about its use of Bloomberg as the primary data partner for both their own products and the Newsweek Green Rankings. Formal partnerships, direct collaborations, and alignment between organizations like GRI, SASB, CDP, the International Integrated Reporting Council (IIRC), UN Global Compact and other influential organizations may signal progress towards eventual harmonization on the concept of materiality. In turn, such harmonization will influence the type and amount of data that companies are expected to disclose. Are there any benefits? While corporations generally feel overwhelmed with surveys and questionnaires, they increasingly understand that their key stakeholders—investors, customers, and employees—want more ESG transparency alongside evidence of good management. In addition, many of the questions contained in the surveys prompt internal conversations that uncover future risks and opportunities. Many companies benefit from leveraging these surveys as a driver of cross functional collaboration and as a management improvement tool. While this activity will continue the demand for sustainability disclosure and create more survey fatigue, the increasing market focus on the materiality of ESG issues provides a glimmer of hope for all vested stakeholders.

8. / 8© 2018 BrownFlynn Ltd. All Rights Reserved. Evaluator Perspective Current ratings and research firm market activity clearly demonstrates that demand for ESG information is on the rise. Mainstream investors, original equipment manufacturers (OEMs), large retailers, consumer product companies, media outlets, and current/potential employees are all evaluators of corporate ESG performance. Investors When the largest institutional investors in the world—BlackRock, State Street and Vanguard—are actively requesting the companies they invest in to be accountable on ESG issues, the market can confidently say that sustainability is mainstream. The chief executive officers of each of these firms have stated publicly the importance of considering environmental, social, and governance impacts when developing long-term plans for value creation.2 The amount of U.S. assets under management that follow ESG strategies totaled $8.72 billion in 2016, a growth of 33 percent from 2014 levels.3 This total also represents approximately 22 percent of U.S. assets under management. This growing demand stems from several factors. The growth of asset owner signatories to initiatives like the CDP and PRI, COP21, and the Task Force on Climate-related Financial Disclosures (TCFD), is driving investor activism around climate change.4 Additionally, a younger generation of ESG-minded professionals is becoming more involved in the investment process.5 Large Corporations (OEMs, Retailers, Consumer Product Firms) While much of the focus within the ratings and rankings landscape centers on the ESG disclosures from publicly traded companies, increasingly, other stakeholders use this information to evaluate a range of public and private companies. These evaluators include customers and suppliers who want to understand the potential risks and opportunities associated with their business partners and want a clearer line of sight into their business partners’ ESG performance and expectations. — 2 See letters from BlackRock CEO Larry Fink, State Street CEO Ronald Hanley, and Vanguard CEO F. William McNabb III. 3 US SIF, Report On US Sustainable, Responsible And Impact Investing Trends (2016) 4 Institutional Shareholder Services, The Growth in Responsible Investing (2016) 5 U.S. Trust Insights on Wealth and Worth, Bank of America Wealth Management (2017)

9. / 9© 2018 BrownFlynn Ltd. All Rights Reserved. As companies are increasingly evaluated on their ESG performance, they often find that their own operational footprint is less significant than the impact of their supply chain. For example, Walmart is looking to reduce its upstream/downstream Scope 3 emissions by 1 billion tons CO2e by 2030.6 This pursuit requires focusing on how its suppliers approach and manage environmental performance activities. In another example, Microsoft is not only looking at direct and indirect suppliers, but also helped establish the Committee on Supplier Ratings (COSR) to explore the leading practices for assessing public and private companies in any supply chain. Media and Other Reputational Forces We also see more associations and media organizations creating what they deem to be definitive corporate rankings in sustainability. The first part of 2017 included the release of some long-standing ESG-related ratings and rankings, as well as several brand-new entrants. For example: ▪ RobecoSAM – Over 3,400 listed companies were invited to complete the annual Corporate Sustainability Assessment and offered the opportunity to be listed on the Dow Jones Sustainability Index (DJSI). ▪ Reputation Institute – The annual Global RepTrak measures the general public’s perception of the world’s top companies on seven key dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership, and performance. ▪ Ethisphere Institute – The annual World’s Most Ethical Companies aims to define the global standards of ethical business practices. ▪ Corporate Human Rights Benchmark – The first-ever public ranking of corporate human rights performance launched in March 2017. It seeks to incentivize companies in a race to the top for the moral and commercial advantages of a strong human rights record. ▪ Most Controversial Companies Report – RepRisk’s latest research looks at activities in 2017 and focuses on companies that were most exposed to ESG risks in 2017. The report spotlights ESG issues faced by multinational companies. ▪ Corporate Responsibility Magazine – The 100 Best Corporate Citizens (18th annual) list examines companies on a range of sustainability topics. — 6 Walmart Press Release: https://news.walmart.com/2017/04/19/walmart-launches-project-gigaton-to- reduce-emissions-in-companys-supply-chain

10. / 10© 2018 BrownFlynn Ltd. All Rights Reserved. Changing Workforce & Expectations Current and potential employees represent another stakeholder group interested in a company’s ESG performance, as they increasingly look to key social and governance ratings to evaluate potential employers. Companies are taking notice as baby boomers retire and the competition increases for qualified, skilled workers. As of September 2017, the unemployment rate stands at 4.2 percent. As of December 2017, there were 5.8 million jobs open in the U.S., not far from the record of 6.2 million job openings set in July 2017. This competitive market requires companies to find new ways to attract and retain talent. Reporting on ESG-related issues is increasingly viewed as a unique differentiator, especially as a growing number of workforce entrants express interest in such issues. A study by Cone Communications provides evidence for this trend.7 Cone found that: ▪ 58 percent of all employees and 79 percent of millennials consider a company’s social and environmental commitments when deciding where to work ▪ 55 percent of all employees and 76 percent of millennials would choose to work for a socially responsible company, even if the salary were less ▪ 70 percent of all employees and 83 percent of millennials are more likely to be loyal when they feel they can make a positive impact on issues at work The competition for talent is also becoming an important concern in specific industries, such as the energy sector. The energy industry overall is expecting “a massive wave of retirements over the short to medium term, which has been dubbed ‘The Great Shift Change.’”8 In the electric power industry, skilled workforce availability is a major sustainability issue.9 The employment supply and demand imbalance is evident in the electric power transmission industry. One analysis found that, in 2014, 10 states were experiencing a shortage of workers for electric power transmission. The analysis projects that the number of states that will experience a shortage of worker supply will exceed 12 by 2018.10 — 7 2016 Cone Communications Employee Engagement Study. 8 O’Sullivan, 2014. “This Week’s Top Energy Jobs,” Breaking Energy, August 13, 2014. 9 EPRI, 2013. Material Sustainability Issues for the North American Electric Power Industry. 10 Transforming the Nation’s Electricity Systems: The Second Installment of the QER | January 2017, Chapter 5, “The Electricity Workforce.”

11. / 11© 2018 BrownFlynn Ltd. All Rights Reserved. Practitioner Perspective Working Group The WBCSD ESG Ratings & Rankings Working Group initially convened at the annual WBCSD meeting at Yale University in June 2016. Over 50 participants joined in a two-hour workshop to explore the breadth and depth of the ratings and rankings field. Presenters included representatives from GISR, CDP, EcoVadis, the Sustainable Purchasing Leadership Council (SPLC), and COSR. Together, they helped the participants appreciate the full spectrum of market activity, from the public markets, to the private B2B activity between customers and suppliers. The Working Group meets regularly via webinar and in-person meetings to discuss market trends, learn from each other, and assess the risks and opportunities of responding versus declining to respond to requests for ESG information. Survey Methodology To better understand the interests and concerns of the WBCSD Ratings & Rankings Working Group members, BrownFlynn developed a survey to assess the true dynamics corporate practitioners face in their daily work lives. The working group distributed the survey to over 150 companies. More than 60 corporate practitioners provided details regarding how their organizations address ESG questionnaires and surveys from stakeholders such as investors, ESG research firms, and customers. Most participants responded by saying they are directly responsible for fielding and responding to ESG questionnaires or surveys from investors, customers, and other external stakeholders. The survey asked several questions, including: ▪ How many external ESG surveys and/or questionnaires do you respond to per year? ▪ Who are your internal partners as you respond to external inquiries? ▪ From what type of stakeholders are you generally fielding questions? ▪ What organizations would you be most interested in hearing from during a private forum?

12. / 12© 2018 BrownFlynn Ltd. All Rights Reserved. Survey Results Our survey found that corporate practitioners are facing extensive pressure from from external stakeholders on ESG topics. Reinforcing the notion of growing demands on chief sustainability officers (CSOs), over 50 percent of the survey participants indicated they are responding to 10 or more surveys per year. This finding illustrates the high volume of ESG questionnaires companies are completing every year. Practitioners also expressed a desire to engage directly with raters and rankers. Over 90 percent of respondents said that they would benefit from having regular, direct engagement with leading ESG firms, and also from comparing notes with other peers about their own engagements with ESG research firms. 57% 8% 11% 13% 11% 10 or more 7 to 9 5 to 7 3 to 5 1 to 3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Survey Respondents On average, how many surveys are you responding to per year?

13. / 13© 2018 BrownFlynn Ltd. All Rights Reserved. Given that the level of data requested by many of these surveys can become very granular, resource capacity and internal availability of subject matter experts become important considerations for many responding companies. Responses to the question below exemplify how investor surveys can drive integration and cross-functional collaboration between sustainability managers and the subject matter experts within their organizations. A common outcome of completing external questionnaires is that the exercise fosters greater awareness of the importance of ESG management across all areas of a given business. Once department heads and other subject matter experts interact and share ESG-related data, department heads begin to see the interconnectedness of their roles and responsibilities as related to overall organizational performance—not only ESG performance. 30% 73% 73% 84% 86% 93% Sales & Marketing Procurement Investor Relations Human Resources EH&S Legal 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Survey Respondents Who do you usually partner with to respond to external inquiries?

14. / 14© 2018 BrownFlynn Ltd. All Rights Reserved. With respect to the overall ecosystem of ESG surveys and questionnaires, respondents to several questions demonstrated a lack of consistent knowledge of the types of players in this market. It is important to understand that firms are not all the same type of entities serving the same function within the ratings and rankings space. Some firms are asset owners; firms such as BlackRock are asset managers; firms such as RobecoSAM, Sustainalytics, and Vigeo Eiris are specialized ESG research firms; CDP is an NGO that also has business-to-business (B2B)-driven lists such as the Climate Change supplier request; and so on. Asset owners and managers in particular are an under-engaged stakeholder group often overlooked by responding companies when considering engagement. The Working Group is helping to align and refine the way practitioners differentiate between asset owners and asset managers, ESG research firms, and media firms. We asked Working Group members about surveys from different entities using the following categories: ▪ Asset Owners may include: CalPERS; CalSTRS; University endowments (Harvard, Stanford, etc.); and/or labor organizations (TIAA-CREF, AFL-CIO, etc.) ▪ Asset Managers may include: signatories to the UN PRI or CDP, BlackRock, Goldman Sachs, Morgan Stanley, etc. ▪ Specialized ESG Research Firms may include: RobecoSAM (DJSI), Sustainalytics, Vigeo Eiris, Trucost, IW Financial, etc. ▪ Mainstream Research Firms may include: S&P, Moody’s, Thomson Reuters, Bloomberg, MSCI, etc. ▪ Media-related organizations may include: Corporate Knights/Newsweek Green Rankings, CRA/IW Financial Top 100 Corporate Citizens, Ethisphere’s World’s Most Ethical Companies, etc. ▪ NGOs may include: CDP, ICCR, CERES, UNGC, GRI, SASB, etc. ▪ Customers may include: B2B, public agency, CDP Supplier, EcoVadis, etc. The charts on the following page illustrate which entities are sending surveys to practitioners, and there were many consistencies across the findings.

15. / 15© 2018 BrownFlynn Ltd. All Rights Reserved. *Other: BlackRock, Calvert, Trucost (S&P), GRI, Investor Groups, Wellington, Vanguard, etc. Other* IW Financial EcoVadis Thomson Reuters VigeoEiris RobecoSAM Sustainalytics CDP Bloomberg MSCI - 1 2 3 4 5 6 7 8 9 10 Number of Responders Requesting Firm Which organizations would you be most interested in hearing from during a private forum? 49% 69% 77% 85% 85% 88% 88% Asset Owners Asset Managers Mainstream Research Firms Specialized ESG Research Firms Media NGOs Customers 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Survey Respondents Which of these stakeholders are you receiving questions from regarding your company’s ESG performance?

16. / 16© 2018 BrownFlynn Ltd. All Rights Reserved. Responses to these questions are a clear illustration of how the ratings and rankings universe is increasingly cluttered with organizations requesting ESG information. These responses also demonstrate that CSOs are managing not only ESG research firm and investor requests, but also direct questions from a range of external stakeholders. ESG research firms compile their data from a variety of sources, and CSOs must constantly assess the similarities and differences between the different rating methodologies. Through understanding what each ESG research firm values most in compiling their data, CSOs can develop more efficient means to navigate this field and reach their key stakeholders in more effective ways. On the surface, the ratings and rankings landscape can appear to be quite simple. Many CSOs file all of these external stakeholders into a single category. In fact, these firms exist in different spaces within the ESG ratings ecosystem and there are many interrelationships at play. In addition, different stakeholder groups rely on different ESG ratings and lists to assess a company’s performance, so today’s CSOs are faced with trying to hit a moving target with their ESG reporting. Next Steps The outcomes of this research will help to inform WBCSD members, corporate practitioners, and key stakeholders. Our goal is to incorporate these outcomes into a more formal work-plan for this effort. The workplan will entail outlining specific goals and objectives for this effort. We are looking for leading companies and corporate practitioners to help shape the future of this work and explore how this collective can help shape not only the evolution of the ESG ecosystem, but also utilize these market dynamics to help align the demand for ESG disclosure.

17. / 17© 2018 BrownFlynn Ltd. All Rights Reserved. Appendix A: Important ESG Research, Ratings, and Rankings Firms Bloomberg Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people, and ideas. The company’s strength – delivering data, news, and analytics through innovative technology, quickly and accurately – is at the core of the Bloomberg Professional service, which provides real time financial information to more than 325,000 subscribers globally. Headquartered in New York, Bloomberg employs more than 15,500 people in 192 locations around the world. Bloomberg’s environmental, social, and governance (ESG) news, data, and research are a fully integrated feature of the Bloomberg Professional service. Bloomberg reports on more than 11,300 companies with ESG data, covering hundreds of key performance indicators, and more than 16,000 companies with executive compensation data in 69 countries. Bloomberg also provides subscribers with access to ESG ratings and rankings data, including Sustainalytics scores, ISS Governance scores, and RobecoSAM scores. ESG data is fully integrated with all of Bloomberg’s analytics, such as the Equity Screener (EQS), Portfolio Analytics (PORT), Relative Value (RV), and Excel-based analytical models, including their ESG Scorecard and Carbon Risk Valuation Tool. Investors, analysts, and corporate research firms around the world recognize Bloomberg as the preeminent information provider of ESG data. Since ESG data comes standard with any Bloomberg subscription, users can access a company’s information at any time. Customers using ESG data increased by 76% in 2014 – Bloomberg ESG research activity is documented on Bloomberg’s website. It is important to note that Bloomberg collects data based upon publicly available information. In order for a company to receive credit for its ESG management, it needs to be transparent through publicly available reporting. We encourage companies whose data may be missing from Bloomberg to share their data with Bloomberg and make it publicly available to investors and other stakeholders. For questions about how Bloomberg collects or updates ESG data, contact: bbesg@bloomberg.net. BrownFlynn insight: Bloomberg is the ultimate source for data provision. The largest asset owners and managers hold Bloomberg subscriptions and ESG analysts access this data daily.

18. / 18© 2018 BrownFlynn Ltd. All Rights Reserved. CDP Climate change, water scarcity, and deforestation are unparalleled global challenges that require a systemic change in market behavior. To achieve this, CDP, formerly the Carbon Disclosure Project, runs a global disclosure system that enables companies, cities, states, and regions to measure and manage their environmental impacts. It has built a comprehensive collection of self-reported environmental data with an investor and purchaser network backed by 827 institutional investors representing over $100 trillion in assets. Policy makers can use CDP data and insights to make better-informed decisions. CDP is a non-profit with offices and partners in 50 countries. BrownFlynn insight: CDP information feeds into Bloomberg ESG Disclosure Score, Newsweek, Climate Counts, and others. Corporate Knights Corporate Knights Inc. (CK) includes the award-winning business and society magazine Corporate Knights, as well as a CSR research division which produces corporate sustainability rankings, research reports, and financial product ratings based on corporate sustainability performance. Its best-known rankings include the Best 50 Corporate Citizens in Canada and the Global 100 Most Sustainable Corporations. BrownFlynn insight: CK has a strong reputation, and its information feeds into other rankings. CK takes an annual download from Bloomberg and its research has been layering on new data sources each year. EcoVadis EcoVadis operates the first collaborative platform allowing companies to assess the environmental and social performance of their global suppliers by providing Supplier Sustainability Ratings for global supply chains. Since its founding in 2007, EcoVadis has become a trusted partner for procurement organizations in more than 150 leading multinationals worldwide including Verizon, Nestlé, Johnson & Johnson, Heineken, Coca-Cola Enterprises, Nokia, L’Oréal, Bayer, Alcatel-Lucent, ING Bank, Air France-KLM, Centrica/British Gas, BASF, and Merck. Combining People, Process and Platform, EcoVadis has developed the industry- leading team, innovative technology, and a unique CSR assessment methodology that covers 150 purchasing categories, 110 countries, and 21 CSR indicators. More than 30,000 companies use EcoVadis to reduce risk, drive innovation, and foster transparency and trust between trading partners.

19. / 19© 2018 BrownFlynn Ltd. All Rights Reserved. IW Financial Established in 2001 and acquired by ISS in January 2017, IW Financial is a leading provider of environmental, social, and governance (ESG) research, consulting, and portfolio management solutions for asset management firms, managed accounts sponsors, institutional investors, plan sponsors, and investment advisors. As investor demands have grown to incorporate a broader range of ESG issues and a wider range of perspectives, IW Financial developed a flexible approach that gives investors the ability to include or exclude stocks or conduct best in class analysis based on a broad range of user-defined criteria. IW Financial’s solutions help organizations identify risks, enhance productivity, provide higher levels of service to their underlying clients, and increase revenues. IW Financial has developed technology which allows advisors and money managers to rate companies and to quickly identify the investments that best meet investment guidelines and client expectations. JUST Capital JUST Capital Foundation is a nonprofit research organization founded in 2013 that seeks to establish the definitive source of information and rankings on how large publicly traded corporations measure up against the American people's definition of JUST business behavior. The organization's mission is to leverage the power of the markets to drive positive change on the issues Americans care most about. The annual "JUST 100 List" ranks America's top companies on how they perform on the issues Americans care most about. The ranking is the result of a survey of over 50,000 members of the American public. In 2016, the inaugural list ranked U.S companies against their peers within 32 major industries. In future years, Forbes and JUST Capital will rank companies across industries.

20. / 20© 2018 BrownFlynn Ltd. All Rights Reserved. MSCI MSCI is an independent provider of research-driven insights and tools for institutional investors. MSCI has deep expertise in the areas of risk and performance measurement that is based on more than 40 years of academic research, real-world experience, and collaboration with clients. MSCI ESG Research provides in-depth research, ratings, and analysis of the environmental, social, and governance-related business practices of thousands of companies worldwide. MSCI ESG Ratings are an evolution of ESG research and analysis, combining environmental and social expertise with leading corporate governance analysis in one integrated offering. MSCI’s research is designed to provide critical insights that can help institutional investors identify risks and opportunities that traditional investment research may overlook. MSCI ESG Ratings are designed to help institutional investors understand ESG-driven risks and opportunities and integrate those factors into their portfolio construction and management process. BrownFlynn insight: MSCI has a long history and provides respected ESG analysis to institutional investors, law firms, and others. MSCI has very robust data sources from corporate documents, government data, academic journals, media, and relevant industry experts/organizations. RobecoSAM (DJSI) Founded in 1995, RobecoSAM is an investment specialist focused exclusively on Sustainability Investing. It offers asset management, indices, engagement, voting, impact analysis, sustainability assessments, and benchmarking services. Together with S&P Dow Jones Indices, RobecoSAM publishes the globally recognized Dow Jones Sustainability Indices (DJSI). Based on its Corporate Sustainability Assessment (CSA), an annual ESG analysis of 3,400 listed companies. RobecoSAM has compiled one of the world’s most comprehensive databases of financially material sustainability information. The CSA is an assessment that evaluates the quality of management of ESG topics for individual companies. DJSI measures topics that drive long-term financial performance. RobecoSAM evaluates criteria annually to verify the link to financial performance. BrownFlynn insight: RobecoSAM is a well-known, well-respected firm, driven by a robust research approach and focused on sound criteria to maintain its reputation. Being listed on the DJSI is viewed as a coveted trophy. The process of responding to the CSA adds value to internal operations and enhances management practices.

21. / 21© 2018 BrownFlynn Ltd. All Rights Reserved. Sustainalytics Sustainalytics is a leading provider of ESG research, offering broad coverage of major global markets and flexible environmental, social, and governance (ESG) tools designed to be easily incorporated into investment processes and systems. BrownFlynn insight: Sustainalytics provides information through many sources, including Bloomberg, Morningstar, and Glass Lewis. Scores influence investors and create a ripple effect across additional publications. Thomson Reuters The Thomson Reuters ESG Indices help you mitigate and assess the risk of companies against ESG factors, and help socially responsible investors to navigate around ESG risks. Developed jointly with S-Network Global Indexes, and leveraging the Thomson Reuters ASSET4 database, the corporate responsibility indices offer an objective and transparent, rules-based benchmarking solution for measuring ESG performance. These indices mirror the performance of major global benchmarks via companies that have substantially higher than average ESG ratings. Trucost Trucost is a part of S&P Dow Jones Indices, a division of S&P Global. Trucost is the world’s leading environmental data provider established in early 2000 to help organizations, investors, and governments understand the environmental impacts of business activities. Trucost provides data and analysis on company emissions and natural resource usage and presents these in financial as well as quantity terms, providing the basis for an improved dialogue between companies, investors, and other stakeholders. Trucost was established to provide the data, tools, and insights needed by companies, investors, and policy makers to deliver the transition to a low carbon, resource-efficient economy. Vigeo Eiris Vigeo Eiris is a global provider of ESG research and services to investors as well as private, public, and non-profit organizations. Vigeo Eiris Rating offers decision- making tools designed for all types of investors, covering all ethical and responsible investment approaches. Vigeo Eiris Enterprise works with organizations of all sizes and from all sectors, supporting them in the integration of ESG criteria into their business functions and strategic operations.

22. / 22© 2018 BrownFlynn Ltd. All Rights Reserved. Appendix B: Shareholder Activity, 2014-2016 SOURCE: ISS, US SIF Foundation, Report On US Sustainable, Responsible And Impact Investing Trends (2016) NOTE: Data for 2016 show number of proposals known to be filed for 2016 meetings as of August 15, 2016, and all vote results known as of August 15, 2016 Key Takeaways ▪ Shareholders focused their resolution efforts on the way companies fill select and approve their Directors. The most common initiative in this area was the campaign on proxy access, generating 350 proposals from 2014-2016. ▪ Proxy Access: Fewer than one percent of S&P 500 had adopted proxy access rules, and by June 2016 this increased to about 40 percent. ▪ Other major Governance topics covered by resolutions: Majority Voting Standards, Board Declassification, CEO Duality, Board Diversity, Executive Pay Shareholder Proposals on Key Governance Issues, 2014-2016 No. of Resolutions Filed No. of Resolutions Voted Average Vote (%) 2014 2015 2016 2014 2015 2016 2014 2015 2016 Board Diversity 24 30 30 3 5 10 30.1 13.3 24.0 Board Elections: Board Declassification 28 27 10 17 16 5 82.5 72.5 74.7 Board Elections: Majority Vote for Directors 49 26 23 29 12 19 58.2 61.6 71.4 Board Elections: Proxy Access 26 121 203 18 91 76 34.0 54.8 50.6 Independent Board Chair 80 78 58 63 62 47 31.1 29.2 29.3 Executive Pay 119 140 71 73 78 54 26.5 26.4 18.7

23. © 2018 BrownFlynn Ltd. All Rights Reserved. Do Good. Do Well. Win.™ For more information on BrownFlynn’s services, please visit www.brownflynn.com or contact us below. Barb Brown Principal & Co-Founder (216) 303 6002 barbb@brownflynn.com Mike Wallace Managing Director (424) 320 3501 mikew@brownflynn.com

The ESG Ecosystem

ERM

The ESG Ecosystem