Eurosif Theme Report Emerging Markets: Insights for Investors Philippe Spicher, CEO Inrate

1. Eurosif Theme Report Emerging Markets: Insights for Investors Philippe Spicher, CEO Inrate

2. Content The context of Sustainability in Emerging Markets Latest insights from ESG Research Conclusion and recommendations for investors

3. EM economies … a challenging context Big powerhouses with large economies, markets, resources and populations experiencing high growth rates Growth is an essential requirement to reduce poverty, but growth at any cost can generate problems (pollution, over exploitation of ressources, unequal distribution of income,…) Increased environmental pressure, employees and consumers are more demanding on social and consumption issues Investors can play a role by ensuring their capital is contributing to sustainable growth

4. … with opportunities for companies and investors Major technological and infrastructural investments will be required (eco-efficiency, health, education, mobility, products safety,…) Companies in emerging markets can aspire to leading market positions if they are able to anticipate ESG trends and position themselves as committed partners and solution providers A deeper recognition by investors of the impact of ESG factors can lead to better risk-control and over-performance in EM (inefficient markets) Investors have a prominent role to play here by creating the right incentives towards sustainable development

5. Some Signs of ESG Integration in EM Externalities are increasingly being internalized (governments enacting more regulations) Increase stimulus packages by governments to drive technological innovation Public opinion and new media can make a difference (pressure on companies with suppliers in EM) Strikes, food crisis, boycotts, labour shortages are pointing to the need for more stable social contracts between societies and business Sustainability is increasingly part of stock exchanges regulations

6. Latest insights on ESG research on EM Since 4 years we analyse ESG integration on 700 companies in over 20 EM markets Over 150 ESG criteria monitored (some sector specific) External media sources to spot unsustainable behaviour or practices Research partners in EM Recent studies and projects: Capacity building project for Vietnamese Asset Manager Sustainable Investment in Latin America - case study

7. ESG integration – Global Overview

8. Better disclosure but improved accountability needed

9. Environmental Issues

10. Social Issues

11. Governance Issues SELECTED BEST PRACTICE CASE –GOVERNANCE ISSUES Wimm-Bill-Dann (WBD) is the market leader in dairy products and children’s food in Russia and one of the leading players in the market for non-alcoholic drinks in Russia and the CIS. The company has more than 35 production facilities in Russia, Ukraine and Central Asia and employs more than 18,000 people. On governance issues, WBD scores well above its peers, both in a Russian and in a general emerging market context. While some improvements could be made in compensation disclosure, WBD display a majority of independent directors (meeting NYSE’s definition of independence) and a separate chairman and CEO position. Finally, our view is supported by Standard & Poor's corporate governance score that attributes a 7+ grade on a scale from 0 (the worst) to 10 (the best).

12. Recommendations for investors & conclusion Reward transparency and commitment to sustainable development; Monitor unsustainable corporate practices Take into account the various stages of development in emerging markets Identify “pure players” Multinationals can be inspiring leaders in local markets Participate in collaborative networks or initiatives (CDP, UN-PRI, GRI, governance codes, stock exchange SRI indices)

13. Contact information Philippe Spicher, CEO Inratephilippe.spicher@inrate.com Inrate – a leading European sustainability rating agency Inrate Ltd is a leading independent sustainability rating agency active in Europe. It is based in Switzerland and was created through the merger of Centre Info Ltd and INrate Ltd in 2010. Inrate has more than 20 years of experience in linking its know-how on sustainability with the financial markets. At present, Inrate covers about 2600 companies worldwide and provides tailor-made solutions for investors who wish to consider ESG issues in their investments – either on the grounds of socially responsible investment or with the aim of minimizing extra-financial risks in traditional investment. More information: www.inrate.com. Sophie Rahm, Eurosif sophier@eurosif.org Eurosif – Developing Sustainability through Financial Markets Eurosif (European Sustainable Investment Forum) is the pan-European network and think-tank whose mission is to develop sustainability through financial markets. Eurosif acts as a partnership of the national Sustainable European Forums (SIFs) within the EU and with the support and involvement of Member Affiliates. Recognised as the premier European forum for sustainable investment, Eurosif’s Member Affiliates include institutional investors, financial service providers, academic institutes, trade unions and NGOs. The association is a not-for-profit entity that represents assets totaling over €1 trillion through its Member Affiliates .