3iG International Interfaith Investment Group

1. 3iG International Interfaith Investment Group TBLI Faith Consistent Investment Seminar New investments for the Faiths: opportunities or sources of conflict? Mark Campanale, 3iG, Member of Advisory BoardThursday 9 November 2006

2. 3iG International Interfaith Investment Group • Approaches to SRI • Growth across Europe • Mission/faith consistent investment • Investing in social value creation

3. Wide range of SRI providers and approaches

4. Sustainable and responsible investment (SRI) Grappling with different agendas • Europe characterised by four concurrent SRI agendas: • Negative screening • Thematic investing, characterised by investments in businesses with direct social or environmental benefit • Shareholder accountability strategies, • CSR/sustainability/enhanced analytics analysis – the business case • Institutional investors typically focus on ‘the business case’ or engagement strategies 3iG International Interfaith Investment Group

5. European SRI retail market: number of SRI funds From the period of 1980-2005 (as of 30 June 2005) Source: Avanzi SRI Research / SiRi Company (2005) 3iG International Interfaith Investment Group

6. Total European SRI funds under management SRI assets grow by 27% from 2004 - 2005 € Billion Source: Avanzi SRI Research / SiRi Company (2005) Note: The total amount of SRI assets grow by about 27%, from €19bn at mid 2004 to €24.1bn at the end of Q2 2005 3iG International Interfaith Investment Group

7. Mission related investment continuum The F.B Heron Foundation – lessons Below-Market Investments Public Equity Fixed Income Private Equity Cash Guarantees Subordinated Loans Senior Loans Cash Grant Support Equity Market-Rate Investments “ Should a private foundation be more than a private investment company that uses some of its excess cash flow for charitable purposes? ” Luther Ragin Source: FB Heron Foundation,Skoll.EVPA/ACF Seminar 8th September 2005 3iG International Interfaith Investment Group

8. Mission related investment continuum How tight is the fit with values or mission? Below-Market Investments Public Equity Market-Rate Investments Long history of “socially-screened” stock investments and proxy activity: - Avoiding the bad - Investing in the good - Turning the bad into the good 3iG International Interfaith Investment Group

9. Which investments can align with values? MSCI World Index: mega corporations dominate index Top 10 US traded companies from the MSCI World Index Exxon Mobil Corp. 2.7 General Electric Co. 2.6 Microsoft Corp. 2.1 Citigroup Inc. 1.7 Bank of America Corp. 1.5 Procter & Gamble Co. 1.4 Pfizer Inc. 1.4 Wal-Mart Stores Inc. 1.4 Johnson & Johnson 1.3 American International Group Inc. 1.3 Source: FactSet Pirce/Henderson Global Investor, data as at 8 March 06 3iG International Interfaith Investment Group

10. Which investments can align with values? MSCI World Index: mega corporations dominate index Top 10 European traded companies from MSCI World Index BP PLC 2.6 Royal Dutch Shell PLC (A & B Shares) 2.4 HSBC Holdings PLC 2.2 Total S.A. 1.8 GlaxoSmithKline PLC 1.7 Novartis AG 1.7 Vodafone Group PLC 1.5 Sanofi-Aventis S.A. 1.3 Nestle S.A. 1.3 ENI S.p.A. 1.3 Source: FactSet Pirce/Henderson Global Investor, data as at 8 March 06 3iG International Interfaith Investment Group

11. Which investments can align with values? FTSE All Share: top ten stocks dominate UK index Top 10 UK Companies equal 41.7% of total BP £133.4bn Royal Dutch Shell £126.7bn HSBC £107.7bn GlaxoSmithKline £86.4bn Vodafone £81.9bn Royal Bank of Scotland £57.8bn AstraZeneca £46.1bn Barclays £40.7bn HBOS £37.0bn Anglo American £30.5bn FTSE 100 82.4% Mining – 5.6% Pharma – 7.6% Oil & Gas – 15.9% Banks – 16.6% Rest of – 17.6% Index Source: FactSet Pirce/Henderson Global Investor, data as at 11 Jan 06 3iG International Interfaith Investment Group

12. Equities-based faith consistent investment Knowing where to look on stock markets • An equities portfolio can be an extension of mission • Its what companies <do> that counts • Foundations have different areas of focus • Alignment can be around a social benefit agenda e.g health & education • Can also focus on poverty alleviation e.g access to finance or suitable housing • Or a broad sustainability agenda • Some Foundations have focused on one sector, e.g healthcare technology or cleantech • Foundation’s traditional investments are diversified, so an MRI strategy ought to be diversified 3iG International Interfaith Investment Group

13. Mainstream classification methodology Researching companies aligned with values • Researchers focused on total universe of 50,000+ and sought companies in specific mission aligned sectors • 4,765 stocks in our mission aligned universe have a total market cap of US $4.7 trillion Source: Henderson Global Investors Note: As at 31 December 2005 3iG International Interfaith Investment Group

14. Cleaner Energy Efficiency Water Management Environmental Services Sustainable Transport Industries of the Future Health Knowledge Social Property & Finance Safety Quality of Life Mission or values as an investment theme 4,765 stocks in 10 mission aligned themes 3iG International Interfaith Investment Group

15. Ten Investment Themes Investment opportunity in a sustainable world • Cleaner Energy Sources of energy that combat the effects of global warming, increase the use of renewable energy and help pave the way to a hydrogen economy • Efficiency Products and processes that reduce energy consumption, make more efficient use of resources and increase efficiency in business • Environmental Goods and services that improve the quality of the environment and reduce pollution Services and waste • Health Goods and services that help people live longer, healthier lives • Knowledge Supplying educational goods and services that enhance quality of life and improve opportunities for full-time students and those in employment • Quality of Life Goods and services that promote sustainable lifestyles among all age groups, including children and the elderly • Safety Minimising the risk of safety incidents at work, at home and in the community • Social Property Providing property for social benefit, access to housing, regeneration, and better & and Finance wider access to financial services • Sustainable Transport Shifting to less polluting forms of transport, and cleaner transport technologies. • Water Management Managing and conserving water, and minimising pollution 3iG International Interfaith Investment Group

16. Cleaner energy – stock example Evergreen Solar (US) Evergreen Solar Inc. 31 December 2002 to 31 December 2005 • Unique process for manufacturing solar cells • Process requires up to 50% less silicon in manufacture than existing methods • Undertook joint venture with QCells in Germany to prove manufacturing process Source: FactSet Pirce/Henderson Global Investor data as at 31 Dec 05 3iG International Interfaith Investment Group

17. Healthcare - stock example Amplifon (Italy) Amplifon 31 December 2002 to 31 December 2005 • Supplier of hearing aid products and services, selling over 500,000 in 2004 • Amplifon is well-positioned to benefit from ageing populations, growing noise pollution and the application of digital technologies Source: FactSet Pirce/Henderson Global Investor data as at 31 Dec 05 3iG International Interfaith Investment Group

18. Social finance - stock example Debt Free Direct plc Debt Free Direct 31 December 2002 to 31 December 2005 • Provides free impartial advice and appropriate debt management solutions to individuals with debt problems • IVA’s are an alternative to bankruptcy, enabling debtors to repay a proportion of their debts whilst avoiding potential financial exclusion Source: FactSet Pirce/Henderson Global Investor data as at 31 Dec 05 3iG International Interfaith Investment Group

19. Quality of Life - stock example ABC Learning Centres (Australia) ABC Learning 31 December 2002 to 31 December 2005 • Child care is agrowth market in Australia and ABC Learning provides 644 centres • ABC Learning provides day care for children between six weeks and five years old • From 1999 and 2002, children using child care increased by 27% to 732,100. By 2004 this figure had risen to 752,800. Source: FactSet Pirce/Henderson Global Investor data as at 31 Dec 05 3iG International Interfaith Investment Group

20. Performance and risk Aligning with values generates new investment ideas • Investment portfolio in the educational, healthcare, social housing or environmental sectors can be aligned with social value creation • Investment risk has to be carefully managed • Business profitability-test – do these businesses make money? • Valuations relative to the stock market (typically p/e) – buy or leave alone? • Sector relative valuation – is it expensive compared to other businesses? • Social investing is still investing…. it is not philanthropic works, even though it is more closely aligned. 3iG International Interfaith Investment Group

21. Appendices

22. Back tested performance of the 10 themes Market Cap Weighted Median vs MSCI World Index 1 year 2 year 3 year 4 year 5 year 6 year MSCI World Index 10.0 26.8 69.6 36.5 13.9 -0.8 Cleaner Energy 8.0 32.7 59.8 69.3 59 59.7 Efficiency 19.4 41.6 126.5 79.9 42.8 30.2 Environmental Services 16.1 34.7 88.2 139.6 187.2 201.9 Health 15.9 37.6 92.8 52.2 45.0 115.4 Knowledge -2.2 12.0 46.9 15.7 -11.2 -13.6 Quality of Life 18.0 60.0 115.6 69.7 66.1 29.9 Safety 14.1 27.5 52.4 4.1 0.72 -24.2 Social Property & Finance 7.7 37.4 115.5 106.9 127.6 139.3 Sustainable Transport 19.7 35.1 90.0 61.2 55.5 52.9 Water Management 18.1 56.8 81.8 45.4 31.1 76.6 Total Number of Stocks 4765 4558 4344 4087 3791 3326 Total Weighted Median 12.2 33.5 90.0 59.6 43.4 56.6 Note: FactSet Pirce in USD /Henderson Global Investor Data as at 31 December 2005 3iG International Interfaith Investment Group

23. When SRI funds perform Top eco-funds posted average one year return of 39 percent * For the 12 months ended on May 31. Includes assets of at least $50 million. Returns calcuclated in US dollars. Source: Bloomberg 3iG International Interfaith Investment Group

24. FTSE All Share Market When SRI doesn’tperform Source: Datastream (total returns) to end May 2006 3iG International Interfaith Investment Group

25. Worlds largest SRI Managers Asset managers % of total business Source: Capital Bridge, as at 29 June 2006 3iG International Interfaith Investment Group

26. Ethical Investor Analysis - motivation Reasons for Investing Importance of factors influencing investment in Henderson Ethical Fund Base: Variable base for each factor (average across all = 1,414) • Respondents concerned about returns, but not overly • Shareholder advocacy is of greatest importance

27. Ethical Investors – their views on the future Respondents were asked to state which issues are likely to give rise to social dilemmas in the 21st century • Many of the issues revolved around the developing world

28. Mark Campanale Advisory Council Member, 3iG Education: York University BA (Hons) Politics and Economic History Wye Agricultural College, London University MSc Agricultural Economics Career: 1985 Environmental Consultant EC, ERM, World Vision, Band Aid/Live Aid 1989 Jupiter Asset Management SRI Investment Analyst 1994 NPI Asset Management Ltd SRI Investment Analyst 1996 NPI Asset Management Ltd SRI Investment Marketing Manager 1999 Henderson Global Investors SRI Investment Marketing Manager 2001-2006 Henderson Global Investors Associate Director of SRI Business Development Contact: mark@campanale.co.uk