1. Project Delphi ESG Super Factors, Metrics, KPIs and Validation with Investors (Investor section of Enterprise 2020 Collaborative Venture: Valuing Non-Financial Performance, (led by EABIS and CSR Europe) Which are the Environmental, Social and Governance (ESG) factors that the investment community considers most likely to add long-term enterprise value ? How do we measure these super-factors ? Would these super-factors and metrics satisfy the requirements of the largest European institutional investors ? What are ESG Factors ? ESG, short for environmental, social and governance issues, is an analytical framework which seeks to identify, describe and analyze the impact of factors within these areas for the purpose of investment valuation and decision-making. Often, the term ESG is applied interchangeably with the term 'non-financial' (or sometimes 'extrafinancial'). Within the Delphi project we prefer ESG to non-financial. In our view, the financial/nonfinancial distinction is a reference to the early days of ESG understanding when it was deemed necessary to point out that ESG aspects, factors, drivers etc. exist may in fact have financial impacts; conventional investment analysis, however, generally did not (and largely still does not) take these factors into account. In the Delphi view, ESG factors should be placed in a context which considers ESG performance in monetary terms. Investors should seek to enhance and protect their investment objectives through robust processes which include the incorporation of ESG consideration in their analysis, when appropriate. Not only can ESG factors have an impact on the reputation of companies, they may represent significant operational risks and costs to business. Well-developed ESG management systems can also generate efficiencies and enhance productivity, both of which have an effect on shareholder value. Non-financial is no longer sufficiently precise. Project Delphi seeks convergence around the materiality and impact of ESG factors on investment and asset allocation decisions. There has been a great deal of research carried out into the financial impact of ESG factors, which has produced a large number of ESG factors that are deemed to be material. Project Delphi intends to bring these strands of research together to produce a short-list of the most important factors and how to measure them.

2. 1. The Context of Project Delphi The Global ESG market (assets managed according to ESG principles) is becoming mainstream. Estimated at $11.4 trn today and forecast to rise to $25 trn by 2015. (Eurosif) There is little consensus between investors on ESG criteria, which makes it difficult to build collective investment vehicles which cover the requirements of the majority of investors. Intangibles (including ESGs) do account for substantial value. o Which ones ? By how much? Industry Shift from SRI to ESG - more than just negative screening Mission Statement of Project Delphi: Enhance understanding of the impact of the most important ESG factors (super-factors) on the creation of enterprise value. Provide a credible methodology for the measurement of the super-factors. Provide a platform for future models Recommendations to regulators Provide agreed framework for the creation of collective investment vehicles and/or the integration into investment decision making. This framework will be validated by the asset owners. Provide pointers to potential alpha creating and risk mitigating drivers. Provide investor benchmark for corporates to be able to assess the financial impact of their ESG activities. Promote a common language for dialogue between companies and investment professionals, recognizing that both parties need information from each other. From values-based to value-creating approaches Phase Goal Motivation Primary Techniques Management Style First Generation Avoid investments in companies that are not compatible with mission and goals Align investments with values or mission Exclusionary screening Active or Passive Second Generation Incorporate ESG factors into investment decisions Recognize materiality of some ESG issues Improve standards of corporate behavior Positive screening Best in class selection Engagement Proxy voting Active or Passive Generate alpha Risk management Use ESG data to identify companies that managers believe are expected to outperform Mainly Active Third Generation ESG issues can be used to seek enhanced performance and manage risk

3. 2. Objectives Project intended to bring together the strands of research already carried out by asset managers and other market participants, agree basis for measurement and obtain validation from the large institutional investors. Consensus between selection of capital market participants - short-list of material ESG super-factors . Convergence on accepted methodologies for measuring and reporting ESG activity by companies and investors. Validation of materiality of "super-factors" and their metrics by large European investors. 3. Methodology There are three work-streams to the project: 1. A panel of +/- 12 of Europes largest asset managers will agree on a short-list of material super-factors. (led by Chris McKnett, Head of ESG, State Street Global Advisors) 2. A team from EFFAS (European Federation of Financial Analysts Societies) will define the agreed metrics. (led by Ralph Frank, MD of DVFA / EFFAS) 3. A panel of some of Europes largest institutional investors will validate and amend the findings of the two previous work-streams. (led by Frank Curtiss (head of Governance at Railpen Investments & Chairman of ICGN Finance Committee) Overview of Project Delphi Initial Straw-man hypothesis drawn from VNFP Laboratory (including corporate and initial asset owner input) Asset Managers EFFAS + others Short-list of Super-factors + relative importance Metrics for the superfactors Dialogue with panel of investment consultants Proposed Super-factors + metrics Validation by panel of large Asset Owners + Wider survey of Asset Owners Recommended Framework for ESG investment criteria, relative importance and metrics to be included in VNFP Collaborative Venture report

4. Project Organisation: Sponsor: Rick Lacaille Global CIO, State Street Global Advisors Steering Committee: Rick Lacaille, Greg Ehret, Benot Fally, Mark Hooker, Ali Lowe, Mike Karpik, Wolfgang Hoetzendorfer, Chris McKnett, Andrew Letts, Laura Aarnio, Susanne van Dootingh, John Swannick (EABIS), Ralf Frank (DVFA), Frank Curtiss (Railpen Investments & ICGN chairman), Paolo Nazzaro (Telecom Italia), Erik-Jan stork (APG), Stefan Crets (CSR Europe), Other Pension Fund CIO(s), Other Asset Managers, Academic(s) Project Manager: Michael Polya, (SSgA) Project Team: Workstream 1: Asset Managers Team leader: Chris McKnett (Head of ESG, SSgA) Workstream 2: KPIs Team leader: Ralf Frank (MD DVFA, EFFAS) Workstream 3: Asset Owners Team leader: Frank Curtiss (Railpen & ICGN) Work-stream team leaders will be responsible for recruiting their team members as they see fit. Timeline June 2011 March 2013

5. Contacts for Project Delphi: Michael Polya Project Manager Ralf Frank DVFA John Swannick EABIS Frank Curtiss Railpen / ICGN Chris McKnett Head of ESG, SSgA Delphi participants as of 14th December 2011: State Street Global Advisors DVFA / EFFAS EABIS Railpen Investments Axa IM SG Corp & Investment Bank Aberdeen Asset Management F&C APG KLP, Norway Nestl Deutschland DNB (Dutch Central bank) Towers Watson Hymans Robertson BofA Merrill Lynch Hendersons Schroders Pension Protection Fund Cheuvreux KKR Mercer Consultants SAM Research AG Storebrand PGGM (consultative role) ECPI Group Michael_Polya@ssga.com tel: +32 2 663 2032 rf@dvfa.de tel: +49 69 26 48 48 0 john.swannick@eabis.org tel: +32 2 539 3702 frank.curtiss@rpmi.co.uk tel: +44 20 7220 5019 Christopher_mcknett@ssga.com tel: +1 617 664 8315