Responsible Investment Lunch

1. Presented by Angus Dennis, Senior Investment Specialist, Sustainable Alpha and RIL August 2009 Responsible Investment Lunch Riding the long wave of sustainability

2. Leadership in Responsible Investment • AMP Capital is Australasia’s largest manager of Responsible Investment Funds* • Significant resources including: RI fund managers, researchers and investment specialist • Offer product choice to clients: • Sustainable Alpha Australian Shares ($1.7 bn) • Responsible Investment Leaders range ($700 million) • Range targets quality investment and social and environmental outcomes • Future Directions Fund Team actively involved in manager selection for RIL range * RIAA Benchmarking Study as at June 2008, with total of $2.77 billion

3. What is Responsible Investment? • Responsible Investment describes an investment process that systematically takes environmental, social, and/or governance (ESG) considerations into account • Elements of a responsible investment approach can include: • Favouring or avoiding companies or sectors on ESG grounds • Integrating ESG factors into company analysis • Thematic investment (eg clean energy) • Corporate engagement and shareholder activism

4. Company Value • Financials • Investments • Capital Assets Tangible Assets • Employee and customer relationships • Brand and corporate reputation • Supply chains • Intellectual Property • Corporate Governance • Environmental and socially responsiblepractices Intangible Assets 75% of the value of the typical Australian company is made up of intangibles. Source: AMP Capital Sustainable Alpha Analysis, ASX Top 200 Companies. (Dec 2007)

5. Favouring leaders in sectors – banking study Global Banking Sector ESG Ranking – Case Study • Favouring the leading ESG rated companies (A rated etc) and avoiding worst (CCC) • Avoiding worst ranked stocks on underlying pillars – governance, environment, human capital & stakeholders • Banking sector provides useful case study • Responsible lending and links to sub-prime exposure • Remuneration & disclosure of banks • Investment banks ESG ranking pre-credit crunch: 1. Goldman Sachs; 2. Morgan Stanley, 3. Merrill Lynch, 4. Lehman Brothers, 5. Bear Stearns Innovest - Performance of Top Quartile IVA Rated Bank Stocks v Bottom Quartile Rated Global Bank Stocks Period: May 2007 - January 2009 120 100 Top Quartile 80 60 Bottom Quartile 40 Difference 20 0 5/07 7/2007 9/07 11/07 1/08 3/08 5/08 7/08 9/08 11/08 1/09 -20 Source: Innovest Strategic Advisors

6. Investing in Industries of the Future Cleaner Energy Environmental Services • 1,643 stocks identified within themes • Knowledge example of strong performing theme • Increase importance as world becomes more knowledge intensive • Individuals living longer & switching occupation • Held up well during down turn Water Management Health Sustainable Transport Knowledge Global higher education Millions Social Property and Finance Quality of Life Safety Efficiency Source: IFC 2007

7. RIL International SharesRange of Responsible Investment Strategies Lazard / Innovest Colonial First State Henderson Global Currents / Boston Common Core Emerging Markets Investment Style Growth Value Draw on Innovest 55 ESG analysts worldwide Emerging markets team have a focus on ESG and advisor “Ethix” ESG Capability In-House ESG Researchers 12 year partnership with BC’s Social Research & Advocacy Team Quant strategy with key factors incl value, growth, quality Long term horizonwith focus on quality management teams and absolute return focus Core Financial Process Initial quant screening bottom up stock picking & specialist knowledge Global Currents apply value stock selection & fundamental analysis ESG Strategy Breadth and depth of analysis 2,300 co’s from 65+ industries Positive screening investing in sustainability innovators Focus industries of future strong growth aligned with sustainability Grassroots assessment of companies together with social advocacy 30% 5% Current Target Weighting 30% 35%

8. The role of Corporate Engagement • Should investors be targeting corporate engagement? • How should it be done, particularly in the case of multiple managers? • The aim is to protect and enhance shareholder value through: • Reducing social and environmental risks for companies within the fund • Target companies to benefit from social and environmental opportunities • Typically target companies held by the portfolio • Be aware of manager/ESG research house expertise and encourage company specific activity • Look to partner on offshore initiatives – letter writing, teleconferences, co-filing resolutions reinforced by investor coalitions, industry wide initiative building on leaders • How do we make sure it is relevant for our clients? • We draw on RIL Ethics Committee forum to draw out themes; interested in broader client input • How do we measure the results?

9. Example: Supply Chain / Occ Health & Safety One theme – with multiple applications • Electronics industry targeted to support of Electronic Industry Code of Conduct; targets minimum standards across the electronics supply chain – focus on labour (working hours, child labour,...), health and safety; Boston Common - key partner • Used strategy to build on initial signatories at blue chip end (eg IBM), to provide example for broader sector, together with concerted communication by group investors • Through targeted engagement, succeeded in Sun Microsystems and Philips signing on to EICC • Investment outcome – protect brand from scandal, lower cost implementation, practical application across common factories and support of suppliers • Extended focus to auto sector after found bonded/unpaid labour in pig iron production in Brazil, with Toyota identified as one of recipients • Engaged with Toyota to join Automotive Industry Action Group, via investor coalition with letters, teleconferences; Toyota agreed to share standards with suppliers by Q3 ‘09 • Investment outcome – Protect highly regarded brand built on hybrid leadership and build investor base

10. Brand, sustainability and work practices Accident at Texas City refinery Brand Value Support through Investment in safety & renewable energy 1999 2004 2005 Source: Interbrand

11. Resolutions and New Frontiers • In Australia there is an Advisory Vote on executive remuneration – AMP Capital has voted against approximately 35% of proposals in last 2 years • In the US there is no equivalent, but there is scope for putting forward non-binding resolutions • Co-filed with Boston Common a proposal to Waddell and Reed Financial to allow shareholder vote annually on exec pay packages - 49.5% shareholder support in 2008 • Looking to recognise the positive: worked with Henderson to be Australian participant in Access to Medicines Investor Statement – and ranking the world’s pharmaceutical companies on access to medicine in the developing world • The global financial crisis and sub-prime provides poses challenges, with Fannie Mae voted top corporate citizen in America between 2000 and 2004 • Investigating global finance engagement initiative around responsible lending to underprivileged, with linked governance, remuneration and ethics issues with Innovest

12. Consider the ESG quality of differing security types State & Agency Corporate National Asset Backed Applying ESG to Fixed Income - Assessment Debt Type Proposed issues and assessment National Government • Within ESG assessment consider: • Environmental: country’s protection of atmosphere, water, land and biodiversity • Governance: Targeting well governed and non-corrupt countries • Social: Country catering for the education, health, welfare and social needs of inhabitants • Also assess support of key international conventions • Considerable “AAA” quality ESG opportunities including rail and reconstruction/development banks Quasi-Government • For corporate debt assessing risk is critical and ESG provides insights in line with RIL Charter: • Evaluating environment, workplace, social, community and governance issues • Can assess securities by industry, particularly concerns around high social impact sectors • ESG assessment by AMPCI for Aus debt securities and global ESG research house for offshore credit securities Corporate Securities Asset-Backed • Review both asset and issuer - can be problematic eg auto loans and credit cards

13. ESG FI Performance – US Experience “Causing the stir among US investors is how SRI fixed-income funds have out-performed traditional funds by four percentage points in the past 12 months. According to Cerulli, while traditional funds earned -6.3 per cent, their SRI equivalents earned -2 per cent.” "In fact, socially conscious mutual funds have held their ground over the last ten years. SRI fixed-income funds outperformed other fixed-income mutual funds in five of the past ten years," said Pamela DeBolt, author of the Cerulli Quantitative Update: Retail Products and Strategies 2009. 24 April 2009 Financial Standard

14. Important note Neither AMP Capital Investors Limited (ABN 59 001 777 591) (AFSL 232497), nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this presentation. Past performance is not a reliable indicator of future performance. While every care has been taken in the preparation of this document, AMP Capital Investors makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.