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My-Linh NgoAssociate Director - SRI ResearchSustainable & Responsible Investment

Tuesday 1st April 2008London

IWG Spring Symposium 2008

Different approaches to ESG corporate engagement

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Agenda

Henderson SRI

What and why

Strategies

Top tips for success

Challenges

Conclusions

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Global independent fund manager with expertise in diverse asset classes AUM*: US$ 117.8 billion

>30 years track record in SRI AUM*: US$ 1.7 billion Mutual and institutional fund offerings Reputation for innovation and quality

Exploring global SRI opportunities - USA Sept ‘07: launched institutional SRI strategy Early 2008: formal membership of SIF Future plans: launch mutual SRI product

Overview

Henderson Global Investors & SRI

USA

UK

France

Spain

Italy

Switzerland

India

Singapore

JapanHong Kong

Germany

Austria

The NetherlandsLuxembourg

*AUM as of 31st December 2007

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What & why

Dialogue/interactions with a company on ESG-related matters for the purposes of:

Adding value to investment through gaining INSIGHT and/or INTELLIGENCE to uncover risks and opportunities not revealed by traditional financial analysis

Fulfilling commitment to advancing a sustainable and responsible society by encouraging POSITIVE CHANGE

Engagement is a legitimate and critical role as a responsible shareholder

For Henderson engagement is about advanced analysis

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Engagement strategies

Going it alone: direct one-to-one Companies: Reed Elsevier, Apple Computers, SunTech Power Holdings Issues: tax, workplace wellbeing, human capital management Sectors: banking & responsible lending

Working with others: collaborative initiatives, corporate committee m’ship Issues: ESG integration into investment – UN PRI Sectors: pharma & AtM – PSG; labour standards & supply chain – UKSIF working group

Mix & match: combination of direct & collaborative Companies: GSK Issues: climate change Sectors: pharma & AtM

Henderson is active in using and exploring different approaches

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Tips for effective engagement (1)

1. Define goals, objectives and targets Be clear - with yourselves, the company, and others Emphasise the business case Manage expectations – be realistic and clear about engagement implications

2. Never assume a ‘one approach/value fits all’ mentality No two companies are the same What may work in one sector/region may not necessarily work in another

3. Know your stuff Research & preparation are critical for your credibility and integrity Speak with other stakeholders e.g. NGOs, regulators, brokers

4. Learn from others, but don’t be afraid to try something new Perfectly fine to adapt your approach if it’s not working

5. Work with/abuse the system Evaluate what conventional mechanisms are in place to help you

Henderson is committed to sharing our experiences

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Tips for effective engagement (2)

6. Talk to the right people Speak to most senior, appropriate and qualified individuals

7. Proximity/closeness helps Awareness of your brand will vary between companies - so affecting their receptiveness

8. Size does matter Unfortunately not all shareholders are equal in the eyes of companies! Don’t be afraid to call on your friends for support

9. Monitor, record and evaluate Keep track of your progress

10. Follow through – have a ‘nuclear’ option(s) and be prepared to exercise it! Vote accordingly at the AGM, divest, go underweight, etc.

Henderson is committed to sharing our experiences

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Challenges

Choosing the ‘right’ issue(s) to engage on Could be the ‘right’ issue but the wrong time to engage e.g. nanotechnology, pharma & PiE

Deciding on the ‘right’ strategy to adopt What is ‘right’ determined by factors intrinsic to the issue, and cultural/temporal factors e.g. pharma &

AtM

Maintaining enthusiasm and momentum - yet knowing when to stop Particular issue for collaborative engagement efforts

Demonstrating the value of engagement Evidence of added investment value and brought about positive change KPIs: input/process, output, outcomes / lagging, forward looking indicators

Being transparent (when & how much to tell) and honest about engagement efforts Transparency about the purpose & value of engagement Engagement does not always result in success the first time around

Getting it right all the time is not easy

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Conclusions

Engagement is a key component of Henderson’s SRI proportion

A legitimate and critical aspect of being a responsible shareholder

Adding value to investment through insight & intelligence, and promoting societal change

With over 30 years in the business, Henderson SRI has a strong track record on engagement

Different approaches have their strengths and weaknesses – learn from others but don’t be afraid to experiment

Ways to maximise your chances of success – but recognise it does not always work

Engagement if done correctly can add real value

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Contact details

My-Linh Ngo

Associate Director – SRI Research

Sustainable & Responsible Investment

Henderson Global Investors

4 Broadgate

London

EC2M 2DA

Tel: +44 (0) 20 7818 2164

E: my-linh.ngo@henderson.com

W: www.henderson.com/sri

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