Bist Sustainability Index Research Methodology December 2015

BIST SUSTAINABLE INDEX
RESEARCH METHODOLOGY
December 2015
TABLE OF CONTENTS
INTRODUCTION 3
RESEARCH METHODOLOGY 4
ENVIRONMENT 4
BIODIVERSITY 13
CLIMATE CHANGE 17
BOARD PRACTICE 24
COUNTERING BRIBERY 26
HUMAN RIGHTS 37
SUPPLY CHAIN 45
HEALTH SAFETY 53
CORPORATE LOANS 54
RETAIL BANKING 61
APPENDIX
PUBLIC POLICY 65
© EIRIS 2
INTRODUCTION
This guide provides an in-depth explanation of EIRIS’ research methodology and coverage, as well as the
relevance of the different research areas. This document is intended as a practical guide for companies to
enhance their understanding of the assessments being undertaken for the BIST Sustainability Index, and it
provides:
• a list of the indicators for each assessment area of the Index
• detailed explanations or definitions of what the indicators mean
• real examples of the type of evidence that can meet the indicator (which have been taken from
actual EIRIS assessments elsewhere in its global research coverage).
BIST Sustainability Index’s research only relies on information which is available in the public domain since
improving corporate transparency is widely regarded as a key part of improving a company’s sustainability
performance. A definition of what public information means is available as an appendix at the end of this
document.
This document is produced by EIRIS for the purpose of assisting companies in their understanding of the
research behind the BIST Sustainability Index, and is for this purpose only. The methodology was initially
produced in April 2014, with the addition of the Banking criteria in December 2015. EIRIS retains the right
to modify the methodology without prior consent; forthcoming versions will be promptly shared with
BIST.
This document can only be disseminated within your company (including relevant subsidiaries and joint
ventures) to those persons who have a need to address or consider the issues covered within. This
document or its contents, may not be modified, sold or otherwise provided, in whole or in part, to any
person or entity outside the company without the express authorisation of EIRIS in writing.
© EIRIS 3
RESEARCH METHODOLOGY
ENVIRONMENT
Environment Risk
Environment’s Risk exposure according to business activities
High Agriculture
Air transport
Airports
Building materials (includes quarrying)
Chemicals and pharmaceuticals
Construction
Fast food chains
Food, beverages and tobacco
Forestry and paper
Major systems engineering
Mining & metals
Oil and gas
Pest control
Power generation
Road distribution and shipping
Supermarkets
Vehicle Manufacture
Waste
Water
Medium DIY & building supplies

Electronic and electrical equipment
Energy and fuel distribution
Engineering and machinery
Financials not elsewhere classified
Hotels, catering and facilities management
Manufacturers not elsewhere classified
Ports
Printing & newspaper publishing
Property developers
Public transport
Retailers not elsewhere classified
Vehicle hire
Low Consumer / mortgage finance

Information technology
Media
Leisure not elsewhere classified (gyms and gaming)
Property investors
Research & development
Support services
Telecoms
© EIRIS 4
Wholesale distribution
Environmental Policy
Grading Scale: Inadequate Weak Moderate Good Exceptional
Guidance
Indicators Description of the Indicators Examples
Key Issues (Score 1) The environmental policy must “We aim to reduce our energy
contain specific reference to at least reduction, water consumption and
“Some key issues” one sector-specific key issue relevant waste sent to landfill”.*
to the company’s primary
*This example is correct when the Company’s
environmental sector.
primary sector key issues are not all present
(e.g. When air emissions is a key issue, but is
These will be from the following: not included in the above evidence)
 Energy / Climate Change

 Air Emissions
 Water emissions
 Water Use
 Waste generation / recycling
Key Issues (Score 2) The environmental policy must “We aim to reduce our energy
contain specific reference to all reduction, air emissions, water
“All key issues” sector-specific key issue relevant to emissions, water consumption and
the company’s primary waste sent to landfill”.*
environmental sector.
*This example is correct when the Company’s
These will be from the following: primary sector key issues are all present.
 Energy / Climate Change

 Air Emissions
 Water emissions
 Water Use
 Waste generation / recycling
Level of Senior The manager responsible for “The person responsible for oversight
Responsibility – environmental policy oversight is is the Senior Vice President for Human
“environmental greater than 3 reporting levels from Resources”*
manager level” (Score 1) a board member, with no dedicated
*In addition, the person does not have a clear
resource (e.g. sustainability
reporting / communication line to a board
committee). member, relating to environmental policy
© EIRIS 5
oversight.
Level of Senior The manager responsible for “The Company has a HSE committee
Responsibility – environmental policy oversight is a which has specific oversight of
“responsibility at board Board Director / senior manager with environmental policy” (with no
or environmental less than 3 reporting levels from the reporting levels evidence / clarity)
department level” board, but with no evidence of a
(Score 2) dedicated resource (e.g. OR
sustainability committee).
“The CEO is responsible for oversight of
OR its environmental policy” (however
there is no evidence of a dedicated
There IS a dedicated resource (e.g. resource (e.g. sustainability
sustainability committee), but the committee) that reports to the CEO
leader/head of the resource is
greater than 3 reporting levels from
a board member.
Level of Senior The manager responsible for “The Company has a HSE committee
Responsibility - environmental policy oversight is a which directly reports to the CEO. The
“responsibility at board Board Director / senior manager with Company has also an Environmental
level with supporting less than 3 reporting levels from the Committee in charge of monitoring
resources” (Score 3) board. environmental issues at daily basis”.
AND
There IS a dedicated resource (e.g.

sustainability committee).
Commitment to use of Commitment to continual “We are committed to reduce our

Objectives and Targets – improvement environmental impacts”
“commitment to
continual improvement”
(Score 1)
Commitment to use of Commitment to the use of O&Ts “We are committed to reduce our
Objectives and Targets – environmental impacts. We are
“commitment to use AND committed to reduce our energy
objectives and targets “ consumption by 5%; We are
ALL Key Issues are covered
(Score 2) committed to continually improving
CO2 performance (NO QUANT
TARGET), water consumption by 2%,
waste by 5% and air emissions by 7%”.
Commitment to use of Commitment to the use of O&Ts “We are committed to reduce our
Objectives and Targets – environmental impacts. We are
“provision of AND committed to reduce our energy
quantitative objectives consumption by 5%; water
Quantitative O&Ts
and targets for all key consumption by 2%, waste by 5% and
© EIRIS 6
areas “(Score 3) AND air emissions by 7%”.
ALL Key Issues are covered
Commitment to Commitment to ‘monitor’ includes “We are committed to regularly review

monitoring and auditing ANY of: our environmental policy”.
The presence of an EMS

(Environmental Management
System)
A commitment to regularly review

the environmental policy,
A system of regular environmental

monitoring or auditing
Commitment to public Includes ANY of: This could be awarded when the
reporting Company discloses environmental
Commitment to: performance traits.
- Commitment to openness /
transparency about environmental
performance
- A commitment to report next year
- Actual reporting (greater than 2

elements in the ‘Environmental
Reporting’ section)
Globally applicable Commitment to operate to “We are committed to operate

corporate operating standards BEYOND the legal according to the industry best-practice.
standards minimum We are endorsing the ICMM principles”
Commitment to common global

standards
Commitment to industry best

practice/ recognised sector best-
practice initiatives
Commitment to Community Liaison specifically “The Company has a stakeholder

stakeholder involvement relating to environmental impact of liaison officer who engages with
operations stakeholders on an annual basis
regarding environmental issues
Permanent engagement mechanism associated with Company operations”.
for engaging with stakeholders
Regular / annual participation in

environmental NGO round-table /
dialogue
© EIRIS 7
Commitment to address A detailed discussion of product / “We are committed to build
product or service service stewardship impact (i) environmental friendly products which
impact includes fully-integrate and published
OR LCA”.
Demonstration of commitment
through sustainable products (ii)
OR
Membership of WCBSD
Strategic Moves A Company will need to implement N/A

Towards Sustainability all or most of the practices relative
to its sector. Further information
available via contacting EIRIS.
ICC membership ICC membership Self-explanatory
CERES membership CERES membership Self-explanatory
Responsible Care Responsible Care membership Self-explanatory
WBCSD membership WBCSD membership Self-explanatory
UNEP Fin / Ins UNEP membership Self-explanatory

membership
© EIRIS 8
Environmental Management Systems
Guidance
Environmental Policy Has an Environmental Policy Self-explanatory
Identification of Identification of all key impacts: (i) “In the CSR report, the Company has
significant impacts Baseline review for all key impacts or identified energy use, water use,
(ii) Provides quantitative data for all waste, water emissions and air
key issues emissions as significant impacts”.
Setting of objectives and Objectives and targets for all key “In the CSR report, the Company has
targets – “documented issues provided objectives and targets for
objectives and targets in energy use, water use, waste, water
all key areas” (Score Y) emissions and air emissions as
significant impacts”.
Setting of objectives and Objectives and targets for all key “In the CSR report, the Company has
targets – “quantitative issues provided objectives and targets energy
objectives and targets in use, water use, waste, water emissions
all key areas “ (Score Q) AND and air emissions as significant
impacts. In addition, all targets are
All targets are quantitative
quantitative”.
Outline of processes and Procedures and structure of “The Company’s Environmental

responsibilities, responsibilities: (i) Has procedures Manual states that Divisional Heads
manuals, action plans, and structure of responsibilities for put into effect the Environmental
procedures implementing EMS or (ii) Has Policy, using Environmental sub-units
Environmental manual specifying at each business location. These sub-
procedures and responsibilities units facilitate communication of the
policy, training schedules, internal
auditing, and performance monitoring
and setting environmental targets”.
Internal system audits Internal audits that assess the “The Company’s Sustainability
effectiveness of the EMS Committee conducts annual audits of
the efficacy of the Company’s EMS
using input from site managers at each
business location”.
Internal reporting and Management review of the “The Company states in its
management review effectiveness of the EMS Environmental Policy that the
Environmental Manager gathers audit
© EIRIS 9
data on the efficacy of the EMS and
reports to the Board of Directors on a
quarterly basis.”
Commitment to obtain Commitment to obtain ISO 14001 or “We are committed to have all our
ISO 14001 or EMAS EMAS operations ISO 14001 certified by
2015”.
EIA undertaken for all EIA undertaken for all projects “Our Company regularly carries out
projects Environmental Impact Assessment for
prior to the creation of new sites of
operation”.
Supplier Audits Supplier Audits “Our company carefully chooses

suppliers according to their
environmental performance”
ISO 14001 certification The Company has operations “18 plants out of 24 plants are ISO
certified against ISO 14001 14001 certified”.
standards.
EMAS certification The Company has operations “18 plants out of 24 plants are EMAS
certified against EMAS standards. certified”.
Environmental Reporting
Guidance
Text of environmental A public policy The Company has a public policy

policy available through their website.
Description of main Description of main impacts in key A public description of environmental

impacts areas. Some explanation of why impacts.
they are issues or the particular
relevance they have for that
company or industry. This could for
instance be a section of text or some
diagrammatic expression of the life-
cycle of their business and where the
issues/impacts occur. In other words
it requires more than just
table/graphs of data but an
explanation of why it is being
© EIRIS 10
measured.
Quantitative data Provides quantitative data (including Public environmental performance

year-on-year data) in all key areas as data, e.g. Climate change, Waste, Air
tables or graphs (including data). emissions, Water emissions and Water
consumption”.
Data must be within three previous
reporting year periods (year-on-year)
Performance measured Data reported in the context of an The Company has reported CO2 data
against targets existing Quantitative target, covering
at least ONE key issue
Outline of environment The report contains an outline (brief In the public domain, the Company
management system description) of environmental explains the coverage of the EMS and
management systems in place the procedures for monitoring
Details of non- Provision of details of non- “The Company has reported in the
compliance, compliance, prosecutions, fines or Annual Report that In 2013, no
prosecutions, fines, accidents OR statement that it has breaches of environmental regulations
accidents, etc. none of the above. NB these must be were recorded”.
related to environment (not H&S
etc.)
Financial dimensions Inclusion of financial dimensions - “In 2013, our company spent GBP 13m
e.g.: on environmental initiatives”.
 capital investment /
expenditure
 savings and/or additional
income achieved
 environmental provisions,
liabilities or assessment of
risk
Stakeholder dialogue Stakeholder relations or “In 2012, our Company has engaged
involvement: details of initiatives with WWF on the biodiversity issues”.
undertaken beyond regulatory
requirements and liaison with
authorities. Also for invitations to
comment and easy ways to make
views known to company. E.g.
comments/ feedback cards in
reports.
Coverage of General discussion of environmental Self-explanatory

sustainability issues sustainability and what it means for
the company.
© EIRIS 11
External verification Company environmental data is “Bureaus Veritas certifies that the
independently verified by an environmental data for all key issues in
external company (with publicly- the 2013 reporting has been
published assurance statement) independently verified”
AND
All key issues are covered in the

external verification
© EIRIS 12
BIODIVERSITY
Biodiversity Risk
High impact Companies whose operations directly impact upon biodiversity. The net
impact is likely to be negative.
Medium impact Companies which may not have a direct impact on biodiversity, but are in a
position, either through supply chain management or controlling large
landholdings, to exert an influence. Influencing biodiversity through product
stewardship is not covered here.
High risk business activities for Biodiversity
High risk Building materials & quarrying

Construction
Power generators
Energy & fuel distribution
Food, beverages & tobacco
Forestry & paper
Mining & metals
Oil & gas
Ports
Road distribution & shipping
Water
Airports
Medium risk Air transport

Chemicals & pharmaceuticals
DIY & building supplies
Fast food chains
Public transport
Supermarkets
Property developers
Companies classified as having a low risk exposure to biodiversity are not assessed.
© EIRIS 13
Biodiversity Policy
No policy or
Grading Scale: Basic Moderate Good
inadequate
Guidance
Existence of a group- This can be defined through various “In 2012 CSR report the Company
wide or site-level elements which include biodiversity stated that protection of local wildlife,
Biodiversity Action Plan assessment of impacts, monitoring flora and fauna, on or close to
(BAP) impacts, setting of targets, use of development sites is a priority and the
performance indicators, review of Company uses a combination of
impacts and reporting of results. internal and external specialists to
Implementing a BAP may involve carry out environmental assessments
incorporating biodiversity into the to ensure all biodiversity issues are
Company’s EMS – thus biodiversity is identified and appropriate
recognised as a significant aspect conservation measures taken. The
and appropriate monitoring systems Company will protect, conserve and
are put in place as for other aspects. enhance any wildlife, ecology, flora,
fauna, watercourses, woodland or
historic features”.
Involvement of NGOs or The Company commits to “The Company states that it will
other conservation collaborate with organisations to consult all the bodies to comply with
organisations in educate and train local people in the requirements of the wildlife and
developing BAPs or collecting and screening skills. Countryside Act and the Habitats
other biodiversity Directive. In its 2012 CSR report, the
initiatives/some actions Company indicated that it works in
or sponsorship partnership with a wide range of
undertaken to enhance housing associations, Environment
local ecosystems for part Agency (EA), Construction Industry
of the Company Research and Information Association
operations (CIRIA), councils and other public
sector agencies on a number of
schemes. In its 2013 CSR report the
Company also indicated that 'if
following public consultation,
concerned is raised over any
environmental or design issues, often
we may revise and review our
proposals to take account of, and act
on, the public's view”.
Existence of a policy in This pact among the vast majority of “The international agreements and
© EIRIS 14
line with the Convention the world's governments sets out conventions of relevance to the1243
on Biological Diversity commitments for maintaining the Project to which the Company A is
(CBD) - key principles world's ecological underpinnings as involved. This includes UN (Rio)
include protection of we go about the business of Convention on Biological Diversity
biological diversity economic development. The (ratified by Parliamentary Resolution)”.
within protected areas, Convention establishes three main
and the sustainable use goals: the conservation of biological
of biological resources diversity, the sustainable use of its
components, and the fair and
equitable sharing of the benefits
from the use of genetic resources.
Although companies do not sign up
to the pact, companies increasingly
include a statement of support for its
aims as part of their biodiversity
policy. A statement is particularly
relevant for companies extracting
minerals in sensitive ecosystems, and
for the pharmaceutical sector
involved in extracting genetic
resources.
Impacts/potential for The company must disclose evidence “Monitoring the effects of subsidence
enhancement assessed that biodiversity impacts and/or due to gas production in the Wadden
potential for enhancement are Sea region) in a Company A operated
regularly assessed as part of the joint venture that produces gas in the
Company’s environmental Netherlands, including in protected
management systems areas around the coast in the Wadden
Sea and on Ameland island. In these
areas gas production is causing
subsidence.
The Company has been working with

the Ameland subsidence monitoring
supervisory committee since 1986.
They provide financial support to the
monitoring and associated biodiversity
research programme. This is the
longest integrated ecological research
project on the impact of subsidence
worldwide. This research has provided
more insight into the ecological
response to a local, accelerated rising
of sea levels (up to a rate of 1.5 metres
every 100 years)”.
Details of biodiversity The company must disclose “The Company reports that 2010 saw
improvements are quantitative data on biodiversity the launch of their new five year
improvements as result of initiatives project to support wildlife on some of
© EIRIS 15
reported undertaken by the Company. Wessex Waters best sites. This work
focuses on two key habitats and the
associated species, namely, grasslands
for invertebrates (including butterflies,
bees and other insects), and woods
and fields for birds and bats”.
Implementation of a The company must state that it “the Company states in its wood
policy to source natural sources raw materials from suppliers procurement policy that it works to
resources from suppliers operating a certification scheme, e.g. ensure that the Company and its
operating a certification FSC, MSC. sources comply with the law and do
scheme, e.g. FSC, MSC not cause or encourage destruction of
forest areas at risk of loss from un-
sustainable practices. The Company
also states that it will not harvest or
buy wood, wood fibre or products for
distribution from natural forest in
biodiversity hot spots or major tropical
wilderness areas. The Company has set
out guidelines that limit or prohibit it
from harvesting or purchasing wood,
wood fibre or products for distribution
that originate from or old-growth
forests in the US, or illegal logging”.
© EIRIS 16
CLIMATE CHANGE
Climate Change Risk
Climate change’s Risk exposure according to business activities
Very High Agriculture/ Air transport/ Cement production/ Coal mining/ Electricity
generation from fossil fuel/ Metals/ Mining/ Oil & gas
High Aircraft manufacture/ Automobile manufacture/ Commercial buildings/

Commodity chemicals/ Delivery services/ Food producers/ Other building
materials/ Other construction/ Residential buildings/ Road distribution &
shipping/ Specialty chemicals/ Supermarkets/ Waste/ Water
Medium Beverages/ Consumer electrical/ Defense/ Forestry/ Other vehicle

manufacture/ Paper/ Pharmaceuticals/ Property developers/ Public transport/
Tobacco
Companies classified as having a low risk exposure to climate change are not assessed.
© EIRIS 17
Climate change management response
Grading Scale: No evidence Limited Intermediate Good Advanced
Guidance
Senior responsibility for Board level (individual or committee) “Energy/Carbon subcommittee is

climate change related or senior responsibility (direct or 1 responsible for this issue and it is one
issues reporting level from CEO) for climate level from global CEO”.
change related issues
Climate change Publicly recognises company’s “The Company remains acutely aware
commitment responsibility to address climate that it must continue to address the
change and/or commit to minimise challenge of climate change. The
climate change impact. Company is acting to limit greenhouse
gas emissions”
The commitment can also refer to
energy use/ greenhouse gas “The Company recognises the
emissions reductions (no explicit environmental, economic and social
reference to climate change is risks associated with climate change
required) at ‘intermediate’ level but and are developing a global strategy
must refer to climate change at for energy efficiency and mitigation of
‘good’ and ‘advanced’ level. their climate change impacts”
“The Company states that it has policy

on energy saving”
“The Company has committed to

minimise greenhouse gas emission
and maximise energy efficiency”.
Product related climate Publicly recognises company’s “Buildings burn some 40 percent of
change commitment* responsibility to address climate global energy. Reducing this share for
change impact of product and /or the future has for years been part of
commit to minimise climate change our business. The Company has a
impact of product. tradition of sustainable construction,
or green building. Implementing
*Only companies with high product innovative energy management and
impact on climate change should be business models based on renewables,
researched against this indicator. we also help prevent greenhouse gas
emissions and cut project running
costs”.
“The Company aims to reduce traffic-

and transport-related greenhouse gas
and other emissions by producing
© EIRIS 18
cleaner traffic fuel solutions”
“The Company states that it works in

partnership with vehicle and
equipment manufacturers to improve
the overall efficiency of use of its fuel
and lubricant products” .
Policy reflects national Explanation of policy framework e.g. “The Company refers to the Kyoto
or international reference to international targets, Agreement and the targets of the
governmental agenda regulations and accurately disclosing European Union as well as to the
scientific consensus on climate voluntary agreements of the ACEA, the
change and how this relates to the European Automobile Manufacturers'
Company. Association (Association des
Constructors Europeens
d'Automobiles)”.
“The Company refers to EU ETS, United

Nations Framework Convention, the
UN climate change conference in
Cancun and the EU '20-20-20' target to
cut greenhouse gas emissions by 20%,
to increase energy efficiency by 20%
and to increase the share of
renewables in the energy mix to 20%.
The Company signed the Durban
Communique calling for actions such as
the introduction of a global carbon
price, increased funding for low-carbon
technologies, an end to fossil fuel
subsidies, reforms to the Clean
Development Mechanism and action at
a domestic level”.
Public policy leadership Active advocacy of the necessary “The Company participates in the
public policy initiatives to reduce World Business Council for Sustainable
GHG emissions to sustainable levels Development (WBCSD), in the High
over the appropriate time frame, Level Group on the competitiveness of
including binding national and the European chemical industry, in the
international targets. Examples Global Round Table on Climate Change
include Corporate Leaders Group on of the Earth Institute at Columbia
climate change and US climate action University, and in the Community
partnership. Development Carbon Fund of the
World Bank. It is a member of the
World Economic forum, and, in the
USA, a member of the Business
Environmental Leadership Council of
the Centre for Climate and Energy
Solutions. It is also engaged in
initiatives like 'Seal the Deal' and the
© EIRIS 19
'Nairobi Work Programme of the
United Nations”.
Remuneration linked to Board/senior management “The Environmental Management

climate change remuneration linked to GHG Team’s appraisals are linked to GHG
performance emissions reductions or other targets”.
equivalent strategies
Long-term strategic goal Public emissions reductions (or “By 2020, we aim to reduce GHG
linked to GHG emissions intensity improvement) targets emissions by 20% compared to 2004
reductions (>=5years) linked to quantitative GHG/CO2 baseline”.
emissions reductions (including
baseline)
Short-term management Same as above, but short-term. “The Company's Healthy Future 2015
targets linked to GHG goals include a 20% absolute reduction
emissions reductions in facilities CO2 emissions, without the
(<5years) use of voluntary carbon offsets, by
2020 compared to 2010 baseline”.
Target to reduce climate Public commitment/target to reduce “The Company has made a
change impact of climate change impact of product commitment to develop low-carbon
product* and how the company plans to sources of energy by investing USD 8bn
achieve this. This does not need to by 2015 alternative and renewable
be quantitative. energy technologies”.
*Only companies with high product

impact on climate change should be
researched against this indicator.
Absolute emissions CO2 or GHG emissions (basket of six “Total CO2 emissions were 1,176,000
main GHG: Carbon dioxide (CO2), tonnes in 2012”.
Methane (CH4), Nitrous Oxide (N2O),
Hydroflurocarbons (HFCs),
Perfluorcarbons (PFCs) and Sulphur
Hexafluoride (SF6)) as tonnes CO2
equivalent.
High impact companies are required

to disclose GHG/CO2 emissions in
order to be credited with the
indicator ‘Absolute emissions’.
For Medium impact companies only,

energy use figures may be given to
award ‘Absolute emissions’.
© EIRIS 20
Normalised emissions Appropriate denominators “Emissions were 6.57 tCO2-e/KRW
(or appropriate (production volume, or turnover million in 2012”.
denominator) with the same coverage) or
normalised emissions data reported.
Trend data Company reports at least 3 years. “The Company discloses GHG
emissions from 2010 to 2012”.
*Product or service Estimated product emissions (or “Estimated emissions from the use of
related emissions sector specific indicator to be oil & gas products sold in 2012 were
determined) from supply chain, use 267,327,268 tonnes CO2-equivalent”
and/or disposal. Estimated total
emissions from a Company are all “The Company reports that emissions
products worldwide. of products that release greenhouse
gases during their use by our
*Only companies with high product customers, such as CO2 from the
impact on climate change should be combustion of oil and gas or N2O from
researched against this indicator. the application of fertilizers, were
taken into account for the first time in
lifecycle reporting according to the
Greenhouse Gas Protocol Scope 3
Standard for the 2010 Corporate
Carbon Footprint. These scope 3
emissions are published on the
website”.
Reporting against Reporting against own targets or “As stated in 2012 CDP response the
targets where relevant European Union target for 2011 was 82 tonnes
Emissions Trading System permits CO2/kilotons equivalent. The Company
(i.e. explaining performance) reported next to this target that actual
result in 2011 was 95 tonnes
CO2/kilotons equivalent”.
Scope of data Scope disclosed. “The Company’s GHG emissions

reduction plan covers all our
operations”.
“The Company disclosed GHG Protocol

Scope 1 and 2 emissions”.
Methodology applied How companies calculate emissions “The data has been calculated in
accordance with the GHG protocol”.
Verification Internal or external verification of “The GHG emissions are verified by

data Ernst &Young”.
Risk disclosure Assessment and quantified “As part of its enterprise risk
disclosure of financial, regulatory or management system the company has
© EIRIS 21
physical risks and /or opportunities established a Group-wide process
faced by the Company as a result of dedicated to the identification of risks
climate change and opportunities associated with
climate change. It is coordinated by the
Climate Protection Officer (CPO) who is
accountable for it. The Company
identified risks driven by changes in
regulation, risks driven by changes in
physical climate parameters, and risks
driven by changes in other climate-
related developments (changing
consumer behaviour and reputation)
and provides details as well as financial
implications in the carbon disclosure
report 2011. E.g., the Company
estimates that a production reduction
of one of its major production sites due
to an extreme weather event such as a
hurricane, flood or extreme water
scarcity for two weeks could result in a
loss of EBIT of about EUR 4 million”.
Operational emissions 2.5% (significant improvement) “The Company's total GHG emissions in
reductions annual average year on year 2012 were 68.2 million tonnes CO2e,
reduction over 2 years. Please use compared to 74.9 million tonnes CO2e
appropriate denominators for the in 2010. This represents an average
calculation (i.e., the number of annual reduction of 15% relative to
employees for office-based evolution of total revenues over the
operations, production volume for same period”.
manufacturers and turnover figures
if nothing else available).
Operational emissions include scope

1 and 2 emissions. Ideally both need
to be summed before entering the
summed data in access for
calculation of trend. However, if, for
example, only scope 1 emissions
data is available this alone can be
used for calculation of the trend. The
same approach is if only scope 2 data
is available.
Operational Strategic initiative that makes a “The Company reports that in 2012, it
transformational significant contribution (directly, or generated sales of EUR 7.2 billion with
initiatives through wider group/ sector its climate protection products, which
initiative) to the reduction of GHG is about 9% of XXX sales. It calculated
emissions or the commercialisation that in 2012 the use of its products for
of renewable energy/ low carbon climate protection avoided 320 million
© EIRIS 22
technologies. This indicator can be tonnes of carbon dioxide emissions (a
awarded if supporting evidence for reduction of 18%). This exceeds the
at least one the below requirements required rate of reduction of more
is available: than 10% against total emission of
carbon dioxide”.
• Any transformational initiatives
resulting in reduction of 10%
absolute emissions.
• 100% (>95%) energy generation
from renewable sources (for
power generators)
• Any direct involvement in
Carbon Capture and Storage (not
just funding)
Operational efficiency Top quartile of sector performance “The Company has been identified by
relative to sector for cement and electricity EIRIS as being in the top quartile of
companies. companies in cement production
sector. It has demonstrated
operational efficiency less than
666kg/tonnes of cement produced”.
Product emissions As “operational emissions

reductions* reductions”, but relating to product.

Product As “operational transformational

transformational initiatives”, but relating to product.
initiatives*
* High product impact sectors: Oil & gas, Coal mining, Automobile manufacture, Aircraft manufacture,
Residential buildings, Commercial buildings, Consumer electricals, Other vehicle manufacture, Defence,
Property developers.
© EIRIS 23
BOARD PRACTICE
Board Practice
Grading Scale: None One Some All
Guidance
Has a separate chair and This criterion seeks to identify “The roles of the Chief Executive
chief executive whether there is a clear separation Officer and the Chairman are separate
of executive and supervisory roles and both represent the Company”.
and responsibilities. We do not
distinguish between executive and
independent chairs for the
assessment but this information is
added as additional information.
Has more than 33% of This criterion, as well as the one “Biographies of directors”.
the board as related to the independence of the
independent non- audit committee members, must be
executives - four out of handled with extra care. EIRIS has
11 are independent non- identified specific indicators to
executives assess directors’ independence. This
means that EIRIS does not always
agree with a company’s claim of
independence of certain board
directors. EIRIS will accept a
Company's explicit designation of
independence UNLESS we are aware
of evidence which suggests that a
director:
• has served for ten years or more
• has close family relationships with

executive directors of the Company
• is an employee representative
• is an executive of subsidiary
Company of the parent Company
• represents a major shareholder in

the Company (3% or more
shareholding in the Company)
• has a major supplier, customer,
© EIRIS 24
consultancy or advisory relationship
or contract with the Company
• has been employed in an executive

capacity within the previous three
years "
Has an audit committee, The same criteria for directors’ “Biographies of directors”.
the majority of whose independence apply to this question.
members are Again, additional information must
independent non- make clear how many members the
executives - all four audit committee has and how many
members are of them are independent.
independent non- Divergences between what the
executives Company reports and EIRIS’
assessment must also be explained.
Please note that two out of four is
not considered to be a majority. The
number should be OVER 50%.
Discloses the Additional information details “The table below indicates the
remuneration of whether remuneration is disclosed remuneration paid to Directors,
company directors on an individual basis or not, and Statutory Auditors, and Chief Operating
what elements of remuneration are Officers and, at an aggregate level,
disclosed (cash, shares and other other Managers with strategic
benefits). responsibilities, indicating the
recipients’ names. Information on
compensation received from
subsidiaries and/or associated
companies are provided separately. All
parties who filled these roles during
the period are included, even if they
only held office for a fraction of the
year”.
© EIRIS 25
COUNTERING BRIBERY
Countering Bribery Risk
High
A company operates in: a high risk business activity and
one or more high risk countries and
with government contracts or licensing
Medium
A company operates in: a high risk business activity OR
one or more high risk countries OR
in a high risk business activity and in one or more high risk countries without
government contracts
Low
A company does not a high risk business activity and/or

operate in:
one or more high risk countries
High risk business activities for Bribery
High risk sector/activity: Exceptions to these sectors/activity
Public works/construction and associated N/A

engineering
Defence producers and contractors Subcontractors and dual use companies
Oil and Gas Oil equipment and services companies
Mining N/A
Energy and Utilities N/A
Property Development Companies not involved in property development
© EIRIS 26
Global hotel chains and major gaming operators Companies with no gambling activity, or not involved
property development
Telecommunications Producers of phone equipment, instruments and

switching equipment, small retail outlets, etc.
IT and related activities N/A
Pharmaceuticals Companies involved in R&D and Biotechnology only
Steel Companies involved in steel stockholding only
Chemicals N/A
Countries of Concern for Bribery
Afghanistan, Albania, Algeria, Angola, Argentina, Armenia, Azerbaijan, Bangladesh, Belarus, Belize, Benin,
Bolivia, Bosnia-Herzegovina, Brazil, Bulgaria, Burkina Faso, Burma, Burundi, Cambodia, Cameroon, Central
African Republic, Chad, China, Colombia, Comoros, Congo (Brazzaville), Congo D.R. (formerly Zaire), Cook
Islands, Cote D’Ivoire, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Eritrea,
Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, Greece, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti,
Honduras, India, Indonesia, Iran, Iraq, Jamaica, Kazakhstan, Kenya, Kiribati, Kosovo, Kyrgyzstan, Laos,
Lebanon, Lesotho, Liberia, Libya, Macedonia, Madagascar, Malawi, Maldives, Mali, Marshall Islands,
Mauritania, Mexico, Micronesia, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Nepal, New
Caledonia, Nicaragua, Niger, Nigeria, Niue, North Korea, Pakistan, Palestinian Authority, Panama, Papua
New Guinea, Palau, Paraguay, Peru, Philippines, Romania, Russia, Sao Tome and Principe, Saudi Arabia,
Senegal, Serbia, Sierra Leone, Solomon Islands, Somalia, Sri Lanka, South Sudan, Sudan, Suriname,
Swaziland, Syria, Tajikistan, Tanzania, Thailand, Timor-Leste, Togo, Tonga, Trinidad and Tobago, Tunisia,
Turkmenistan, Tuvalu, Uganda, Ukraine, Uzbekistan, Vanuatu, Venezuela, Vietnam, Yemen, Zambia,
Zimbabwe
Definition of government contract
This depends by the sector involvement of the Company (e.g. -Tendering for government contracts and
government licensing). Memorandums of understanding and joint ventures with state-owned companies
(in country of concern for bribery) would also be considered as equivalent to government contracts.
Likewise, the contracts with the state owned companies, e.g. China Air or Gazprom would be also viewed as
a government contract.
© EIRIS 27
Countering Bribery Policy
Guidance
Prohibition of giving and The company needs to state that it “The Company prohibits giving and
receiving bribes prohibits both giving and receiving receiving bribes any forms, including
bribes. cash, money, kickback, profit and
benefit”.
Obeying laws and The company needs to state that it “ The Company's Code of Ethics states
regulations complies with laws and regulations. that employees and contractors must
comply with laws and regulations”.
Restriction of facilitation The company should state that the “Company XX and its employees in all
payments company is restricting the use of countries must comply with the U.S.
facilitation payments and how. Foreign Corrupt Practices Act (FCPA)”.
Restriction of giving and The company should state that it “The Company has a policy regulating
receiving gifts restricts giving and receiving gifts. both giving and receiving of gifts or the
Company has a policy on either giving
gifts or receiving gifts”.
Board level commitment Does the Company show any “The Company’s Board is responsible
evidence of formal board level for overseeing the bribery policy” or
commitment to the overall code of ‘The Board of Directors is committed to
ethics? The board of directors or support the implementation of the
equivalent body should provide Code of ethics/anti-bribery policy”.
leadership/resources/active support
for management’s implementation
© EIRIS 28
of the code of ethics
Prohibition of political The company should state that it “The Company has a policy prohibiting
donations prohibits giving political donations in the provision of political contributions
all circumstances. / donations in any market in which the
company operates. This includes
financial and in-kind contributions
made by the company”.
Transparency of political Does the Company show evidence “Company XX complies with all
donations that they have a stated policy on applicable laws and regulations in
political donations, which includes connection with the Company’s
publicly disclosing them, and political and public policy activities.
showing evidence that there is an Any political or other public policy
authorization process in place for activity in which Company XX engages,
giving political donations? E.g. the including political expenditures, comply
board must approve all political with all internal policies and
donations. procedures, are made solely based
upon the best interests of the
Corporation and its stockholders, and
are not based on personal agendas of
individual directors, officers, or
employees. “ or ‘The Company spent
/donated USD 50,000 as political
contributions/donations in 2013’.
Business partners Does the Company show evidence “Company XX Anti- Bribery policy is
(including contractors, that the code applies to agents/ mandatory for all XX employees,
suppliers, agents) being intermediaries/suppliers/contractors agents, intermediaries, consultants,
covered by the policy distributors, contractors, suppliers and
Joint Venture partners working on the
Company’s behalf anywhere in the
world (“Business Partners”).
Our franchise partners are also

expected to conduct themselves in
accordance with the standards set out
in this policy”.
Prohibition of The company should state that the “The Company prohibits facilitation
facilitation payments company is prohibiting the use of payments of any kinds”.
facilitation payments and not just
restricting it.
© EIRIS 29
The issue of no Does the Company have a policy “The Company has a policy of non
detriment to employees clearly which clearly states that no retaliation against employees who
for refusing to pay employee should suffer demotion, refused to pay bribes’ or there is a
bribes penalty, or other adverse policy where the Company states:
consequences for refusing to pay ‘Employees who refused to pay bribes
bribes? A stated policy needs to be are not going to get penalised”.
seen.
Countering Bribery Systems
Guidance
Communication of The company should communicate “All our employees are communicated
policies to employees their policy to employees. This could our anti-bribery policy through
be through - inductions; workshops; workshops/training. In addition, our
staff handbooks; letters, internet or anti-bribery policy is available via the
intranet. Intranet” .
Employee training Details of the employees trained “In 2012, all our employees receive
(e.g. in high risk countries or training on our anti-bribery policy on
business activities), number, training regularly basis” or ‘In 2013, the
overview. Company conducted 12 training
sessions on bribery and anti-
corruption”.
Compliance monitoring, Evidence of one of the following: “The compliance field managers meet
including details of quarterly on the Corporate Compliance
assurance, audits, - Description of assurance processes Committee and in addition to the
monitoring, board internal audit also carry out annual
- Frequency of internal and/or
reports, etc random audits. Through function
external audits
separation, our Company ensures that
- Assessments/reviews of anti- situations at risk of involving
bribery programmes corruption are avoided. Compliance
within the risk management system at
- Compliance reports the Company is controlled and
monitored at corporate level by the
- Board Reports
Corporate Compliance Committee,
which meets regularly with the
© EIRIS 30
participation of Management Board
members”.
Whistleblowing The company should provide a “Potential violations can be reported

procedures channel or means through which via the anonymous hotline. The
employees can seek advice on, or Company also endorses a non-
draw attention to, what they believe retaliation policy for employees
are dubious activities or malpractices reporting malpractices”.
within the company without fear of
harassment, recrimination or
dismissal.
Sanctions process The Company should demonstrate “Violations of our bribery policy could
evidence of having distinguishing or lead to termination of our business
appropriate sanctions for varying contracts”.
violations of its policy
Risk based assessment This may be a more detailed analysis “The Company requires its businesses
focusing on analysis of specific areas to consider bribery and corruption as
which pose the greatest risks from part of their ongoing risk management
bribery. Alternatively, this could be a practices. If high level risks have been
risk assessment which forms part of identified these are required to be
a wider corporate risk analysis. brought to attention with senior
management of the Company. In
addition the Company assesses
corruption risks for employees within
their roles, entrusted roles and high
exposure entrusted roles. High
exposure entrusted roles have
additional requirements for anti-
corruption training”.
Communication of The company should communicate “All our contractors, suppliers are
policies to contractors, their policy to contractors, suppliers agents receive a copy of our bribery
suppliers and agents and agents. This could be through – policy. Our company also delivers
inductions; workshops; staff regular workshops on our bribery
handbooks; letters, internet or policy for business partners” or ‘Anti-
intranet. bribery clauses are parts of our
contracts with suppliers and
contractors”.
© EIRIS 31
Appropriate systems for The Company should state that it has “The Company has a policy on both
the appointment and systems in place to ensure that the appointment and remuneration of
remuneration of agents remuneration of agents is agents’. The Company will provide
appropriate and for legitimate remuneration to agents for appropriate
services only. and legitimate services only”.
Training for contractors The Company should disclose that it “On regular basis our contractors,
and suppliers trains contractors and suppliers on suppliers receive training on our
its anti-bribery policy. bribery policy” or ‘In 2013 we
conducted three workshops on bribery
for our suppliers and contractors”.
Due diligence before The Company conducts due diligence “We conduct due diligence on
establishing joint before entering into a joint venture corruption issues before establishing
ventures and/or and/or when prospective contractors any business partnership”.
evaluating prospective and suppliers are evaluated.
contractors and
suppliers
A system to identify and The company shows evidence of “In coordination with public
black-list known bribe avoiding dealing with prospective authorities, we have compiled a black-
payers contractors and suppliers known to list for identifying bribe payers”.
be paying bribes.
The audit committee The company shows evidence that “As part of our corporate governance,
making independent the Audit Committee of the board the Company’s Audit Committee
assessment of the makes an independent assessment independently reports and provides
programme and/or of the adequacy of anti-bribery feedback on our anti-bribery policy
disclosing its assessment policy and/or systems. requesting changes if needed”.
in the annual report (or
similar)
Countering Bribery Reporting
Guidance
Reports the extent of the Reports extent of communication of “Our code of conduct and related
communication of its policy to employees and business policies are communicated to all
bribery policy to partners i.e. frequency of employees, business partners. They are
employees and business communication, languages policy is translated in 15 different languages,
partners communicated in etc. including English, Chinese, Spanish,
French and Russian”.
© EIRIS 32
Reports on training of its Reports on training of employees i.e. “All employees are required to
employees how this is undertaken, frequency of complete mandatory online training
training, number of staff trained etc. under the risk accreditation framework
which includes anti-bribery. The
Company’s course “preventing fraud,
bribery and corruption” is mandatory
for all new joiners and must be
revisited by all employees, contractors
and consultants every three years. In
2012, over 30,000 of the Company
people completed the course”.
Reports on details of its In relation to monitoring and “All breaches are logged in a central
monitoring and auditing auditing results -results e.g. database. Regular updates on
systems disclosure of audit committee performance are reported quarterly to
assessments, audit committee the Management Board and form part
assessment is disclosed in the annual of regular risk reporting to the
report – must be publicly available Operational Risk Executive Committee.
Each year, the Company publicly
reports on breaches through the
annual report, and online”.
Reports on details of In relation to the Companies bribery “At least quarterly, the audit
compliance mechanisms systems - e.g. assurance, board committee reviews with the Company's
reports on compliance, ‘black listing management material complaints or
system – must be publicly available investigations arising under the
Company's ethics program. The audit
committee also assists the board of
directors in overseeing the Company's
compliance with ethics programs from
time to time. In addition, the Working
with Integrity program is overseen by
the Company's compliance committee,
which is comprised of the chief legal
officer, chief financial officer, and chief
human resources officer. The
compliance committee is responsible
for ensuring that appropriate policies
and procedures exist to help
employees comply with expectations
of ethical conduct. The Internal Audit
Department reviews each report of a
possible violation of the guidelines on
behalf of the compliance committee
and refers the report to the
appropriate department for
investigation. The Internal Audit
© EIRIS 33
Department reports all complaints and
concerns to the compliance
committee”.
Discloses details of risk Risk assessment of company’s “The Company states that 'Corruption
assessments detailing vulnerability – publicly available risk assessments are an essential
and identifying its aspect of the Group’s procedures. The
vulnerabilities Group’s business units and corporate
functions are required to periodically
conduct corruption risk assessments
using an internally developed risk
assessment tool. Through a series of
questions, the tool assesses the
internal and external risks associated
with the location and nature of an
operation and the internal controls in
place to manage the identified risks.
When a risk is determined to be
unacceptably high, an action plan is
developed to strengthen the internal
controls to manage the risk”.
Discloses details of The Company reports how its “Our sustainability management,
stakeholder stakeholder are involved in the including anti-corruption progresses, is
dialogue/engagement development of its bribery policy reviewed by a multi-stakeholder
advisory group”.
i.e.
• Policy making forum
• Involvement or commentary
of an NGO/Anti-bribery organisation
e.g. Transparency International
Reports on its systems Public reporting on the “According to our anti-bribery

for the appointment and implementation of systems for the guidelines, our business partners are
remuneration of agents appointment and remuneration of appointed using the best practices
agents i.e. reports on due diligence, within the industry dealing with
approved lists, number under bribery. We are always engaging with
contract etc. our business partners to prevent any
future violations associated with
corruption issues. At biennial basis, we
review our suppliers’ performance
against corruptions and we rely on the
third independent party to carry out
the valuations”.
© EIRIS 34
Provides details of its Details of progress/ performance “In 2013, our Company has released a
performance and new anti-bribery policy. We aim to
progresses in relation to E.g. periodically update our anti-bribery
bribery policy” or ‘In 2013, the Company
• Review of policy
reviewed its anti-bribery policy,
• Rolling out of policy whistleblowing procedures and training
policies’.
Provides details on non- Details on non-compliance and “In 2012, we had 1 violation associated
compliance and breaches breaches of bribery policy to bribery”.
of the bribery policy
Provides details of Details on non-compliance and “In 2012, our suppliers reported that
suppliers, joint ventures breaches of bribery policy amongst there were 2 cases of corruption” or
and agents performance business partners. ‘The company terminated two
in relation to bribery contracts with suppliers due to their
involvement in corruption”.
Provides quantitative The company provides quantitative “In 2013, 12 complaints were lodged
data on its whistle- evidence of the effectiveness of its via Company’s hotline, 10 of which
blowing system in whistleblowing procedures in were related to bribery. Five
relation to bribery relation to bribery and corruption employees had their contracts
terminated after investigations”.
Examples of evidence:
 Number of complaints
 Number of complaints which

resulted in disciplinary
actions
Has responded publicly The Company has allegations in “The Company has publicly responded
to any controversial relation to corruption to allegations”.
allegations
Demonstrates The Company reports on the input its “KPMG reviewed the Company's CSR
independent verification stakeholders had in developing its report, including reported and
of its report reporting mechanisms and annual substantiated bribery related
publications in relation to bribery. incidents”.
© EIRIS 35
Reports on the input The Company goes beyond standard “We are working with Transparency
stakeholders had in reporting on the issue of bribery. International in order to map the risks
developing reporting Examples could include: associated with bribery throughout our
mechanisms operations”.
Detailed mapping of challenges and
problems in relation to bribery
within public document
Reporting on proactive engagement

with bribery relevant NGO
Please contact the area specialist for

bribery if you suspect an innovation
in reporting.
Demonstrates The Company demonstrates “ XXX is a supporter of the Extractive

innovation/leadership in innovation and leading in reporting Industries Initiative (EITI), in which
reporting issues related to bribery. companies declare the payments they
make to governments”.
© EIRIS 36
HUMAN RIGHTS
Human Rights Risk
Large presence: =>1000 employees or GBP =>100m annual turnover GBP =>100m assets
Small presence: <1000 employees OR GBP <100m annual turnover OR GBP <100m assets
High Risk Countries of Concern for Human Rights†
Afghanistan, Algeria, Azerbaijan (with Nagorno-Karabakh), Bahrain, Belarus, Burma/Myanmar, Burundi,

Cameroon, Central African Republic, Chad, China, Colombia, Congo (DR), Cuba, Egypt, Equatorial Guinea,
Eritrea, Ethiopia, Haiti, Iran, Iraq, Kazakhstan, Laos, Libya, Nigeria, North Korea, Pakistan (with Kashmir),
Russia, Saudi Arabia, Somalia, South Sudan, Sri Lanka, Sudan, Swaziland, Syria, Tajikistan, Turkmenistan,
Uganda, Uzbekistan, Vietnam, Yemen, Zimbabwe.
† For oil &gas and mining companies, involvement in any non-OECD countries.
Companies classified as having a low risk exposure to human rights are not assessed.
Human Rights Policy
Guidance
At least two of the core A public statement containing at "We respect the fundamental human
labour areas (These are: least two ILO labour areas. rights of our employees, adhering to
child labour, forced Companies must prohibit child International Labour Organisation (ILO)
labour, freedom of labour and forced labour and standards in the field of non-
association, collective support freedom of association, discrimination, child labour, forced
bargaining and non- collective bargaining and non- labour, collective bargaining and
discrimination) discrimination (e.g. equal freedom of association".
opportunities policy)
All of the ILO core labour A public statement containing all the We respect the fundamental human
areas (These are: child ILO labour areas. Companies must rights of our employees, adhering to
labour, forced labour, prohibit child labour and forced International Labour Organisation (ILO)
freedom of association, labour and support freedom of standards in the field of non-
collective bargaining and association, collective bargaining and discrimination, child labour, forced
non-discrimination) non-discrimination (e.g. equal labour, collective bargaining and
opportunities policy freedom of association".
© EIRIS 37
the OECD Guidelines for The Company publicly supports the Self-explanatory.
Multi-national OECD Guidelines for Multi-national
Enterprises (this is a Enterprises
proxy for having a policy
on all the ILO core
labour areas)
the ILO's Tripartite The Company publicly supports the Self-explanatory.

Declaration of Principles OECD Guidelines for Multi-national
Concerning Enterprises
Multinational
Enterprises and Social
Policy (this is a proxy for
having a policy on all the
ILO core labour areas)
A statement of support A public company's wider statement "The Group endeavours to operate in a
for wider fundamental of support for wider human rights manner consistent with the principles
human rights AND/OR a statement of support for of the United Nations Universal
'human rights', including explicit Declaration of Human Rights".
support for Universal Declaration of
Human Rights.
An armed guards policy A public statement saying that the Our Company the Basic Principles on
(only relevant to oil & company endorses the UN Basic the Use of Force and Firearms by Law
gas and mining Principles on the Use of Force and Enforcement Officials and Code of
companies) Firearms by Law Enforcement Conduct for Law Enforcement Officials
Officials and Code of Conduct for
Law Enforcement Officials
A statement of support A public statement saying that the "We respect the rights of indigenous
for indigenous peoples company supports indigenous rights. people"
rights (only relevant to Alternatively, the company should
oil & gas and mining publicly endorse the principles of ILO
companies) Convention 169 or the U.N.
Declaration on the Rights of
Indigenous Peoples.
The Company is a The Company is a signatory to the Self-explanatory

signatory to the UN UN Global Compact.
Global Compact (this is a
proxy for having a policy
on all the ILO core
labour areas)
© EIRIS 38
The Company is a The Company is a signatory to Self-explanatory
signatory to SA8000 for SA8000 for its owned operations.
its owned operations
(this is a proxy for
having a policy on all the
ILO core labour areas)
The Company is a The Company is a signatory to the Self-explanatory

signatory to the Voluntary Principles on Security &
Voluntary Principles on Human Rights.
Security & Human Rights
(this is a proxy for
having an armed guards
policy) this is an oil and
mining initiative
Has allocated Clear responsibility has to rest with "The Chief Legal Officer who is a
responsibility to a main board member, CEO, or a senior member of the Group Management
board member or a manager who reports directly to the Committee and reports directly to the
senior manager who CEO. It is clear responsibility refers CEO".
reports directly to the to the human rights policy.
CEO
Communicates its The Company must communicate ‘The Company communicates its code
human rights policies to the policy to all employees globally, which contains all ILO core labour
all employees globally which includes at least two ILO core areas to all employees through annual
labour areas. trainings. ‘
Has a commitment to The standard evidence here is the The Company states they are currently
incorporate its human company reporting they include their in the process of implementing a
rights policies in human rights policy in contracts with framework for their Human Rights
contracts with its major suppliers, third parties, etc. Policy, which will include screening
partners or suppliers mechanisms for contractors and
suppliers. Implementation of these
mechanisms will begin in 2013/2014.
Plans to report on this indicator will
begin in 2013/2014. During 2009, the
International & Offshore business unit
developed a Contractor Code of
Conduct for use in countries like Syria
and Libya. The document was
developed and approved for use and is
being shared with contractors".
© EIRIS 39
Has a commitment to We expect companies to engage "Following close engagement with the
advocate for human with government authorities in the governments of Turkey, Georgia, and
rights in a case where countries where human rights are at Azerbaijan over the BTC pipeline, the
they were at risk around risk in their operation. Company has continued to discuss
its operations security and human rights issues with
senior government officials in Georgia
and Azerbaijan. They reached an
agreement with the government of
Georgia setting out their shared
commitments on security recruitment,
training, monitoring and the use of
force".
Human Rights Systems
Guidance
has identified the major Automatically awarded if HR policy covers 2 N/A

human rights issues it ILO core labour.
faces
Trains all employees The Company must have a HR policy “At annual basis and at global
globally on its human covering 2 ILO core labour. Evidence should level (translated into a
rights policy (must relate be found that training covers ALL multitude of local languages,
to policy including at least employees. We need details of how and e.g. Russian, Chinese,
2 core ILO areas) where the training occurs. Romanian, Vietnamese, etc.)
the Company has a
requirement for all salaried
employees (and
agency/contract) to train and
certify with its Standard of
Conduct Handbook which
includes its human rights
policies “
© EIRIS 40
Consults with named Consultation must be about relevant human "The Company has provided
independent local rights issues (i.e. core labour areas for own details of consultation with
stakeholders in the employees, impact on the local community the fishing communities in
countries of concern including impacts on livelihoods". Local Vietnam concerning potential
means located in one of the countries of economic impact on their
concern. Independent means NGOs, livelihoods. NGOs include the
community groups, indigenous communities Southern Office of the Fishing
or Trade unions. Society and the Research
Institute of Marine Products".
Monitors the Details of how and how frequently those "Implementation and
implementation of its responsible for implementing the HR policy compliance with the policy is
human rights policy monitor it and report to senior management regularly monitored by
on compliance. internal auditors on the basis
of clear auditing instructions".
Has procedures in place this is about what companies do in event of "Failure to comply with the
to remedy non- breach of human rights policy human rights policy may lead
compliance with its to disciplinary or criminal
human rights policy action being taken against
(must relate to policy individuals".
including at least 2 core
ILO areas)
Has integrated human Human Rights issues should be part of their "human rights risk
rights into its risk risk assessment process assessment is part of business
risks assessment"
Regularly review s its Regular (within 2-year threshold) review of "The company aims to
human rights policy the HR policy regularly review our HR
policy".
Sets targets for its human The company must disclose quantitative "The Company states it has
rights policy/systems targets related to its HR policy. A company set a goal of 98% compliance
stating that it sets a target of zero breaches with the Workplace Rights
of policies for human rights does not count. Policy by 2015".
Supports human rights This has to be examples of what has been "Company X and the United
capacity building projects done, not a statement that company would Nations Institute for Training
in countries of concern be prepared to support such (hypothetical) and Research (UNITAR)
initiatives signed a multi-year
In order to count for this element, such agreement under which
initiatives or projects have to shape the Company X agreed to finance
development of the HR capacity of key or a United Nations training
top hierarchy in that country. program for Burmese
diplomats and government
officials.
The participants will receive

training in areas such as
© EIRIS 41
international humanitarian
law, refugee law, human
rights, etc."
Human Rights Reporting
Guidance
Reports on Details needed on: who, when, how the HR "The Company reports that
communication of its policy is communicated. the XXX handbook is available
policy to employee in ten languages and is
(clear statement that is distributed throughout the
communicated to Company". Alternatively,
employees) "every two years the
Company's employees sign a
pledge renewing their
commitment to upholding the
Principles and XXX".
Reports on monitoring Evidence of monitoring ILO core labour "The Company has been
/auditing of human performance within its operations. Details working with Good
rights policy must contain at least two of the following Corporation since 2002 to
information: what? Where? When? assess the implementation of
their Code of Conduct,
including 35 ethical
assessments since 2002 ".
Reports on procedures This will usually be a statement about how "If we become aware of
to address non- and what actions the Company would take in potential issues or receive
compliances the case of any breaches coming to light. allegations, we will address
them, investigate internally
and if necessary, participate
co-operatively with internal
investigations".
© EIRIS 42
Reports on training of Description of how training is given and to "The Company reports that
employees whom employees are required to
regularly attending training on
various rules, regulations and
policies of the Company,
including the Standards of
Business Conduct".
Discloses details of risk/ Description of how human rights’ risk "The Company has been in
impact assessments. assessment related to human rights is dialogue with Amnesty
undertaken, or case studies of human rights International about human
risks or impacts. Any case studies should be rights issues and security
related to operations based in developing guards in Colombia".
countries.
Discloses details of The Company should provide details on a “Company XX states that it
stakeholder dialogue specific case of engagement with HR and partners with key
/engagement labour rights NGOS. The following details are organisations, such as
needed: name of the NGOs, details of what Partners for Democratic
the engagement is about. Alternatively, Change, around the world to
initiatives between companies, governments support human rights and rule
and NGOs count, and simply being signatory of law issues in specific
to NGOs' initiative would not count. communities. Partners for
Alternatively, the engagement could be local Democratic Change (PDC) is an
governments and local community groups on NGO that aims to build
human rights issues. These could include land institutions that facilitate
rights, but it cannot include local change and conflict
employment, environment and social management to strengthen
development. civil society and democracy
worldwide. Company XX has
1) with human rights/ labour rights NGOs; been active in helping PDC
(2) through involvement in initiatives focus its strategies and raise
between companies and NGOs); (3) with funds from governments,
local/ national governments or local foundations, and business and
community groups on human rights issues has also helped increase
has to be developing world efficiencies within the NGO to
develop better internal
management style and
process”.
Provides a detailed Evidence of human rights performance in Since 2001 the Company has
example of human rights developing world. It should cover human been active with ECPAT
performance in the rights in terms of core labours, security guard Training sessions have been
developing world issues, and indigenous rights. organised for Company's hotel
staff in Thailand with the aim
of teaching them how to act
and react if they come across
abuse of this kind in or out the
vicinity of the hotels. These
© EIRIS 43
sessions were the extended in
2003 to Indonesia, Laos and
Cambodia"
Provides a statement on This can be a simple statement that no (zero) “No cases of child or forced
compliance with human breaches found. It can be a statement that labour were identified”.
rights policies /details of certain number found. Equal opportunities in
any breaches developing country doesn't count
Has reported on at least Only relevant to oil & gas and mining “The Company releases a
one of the countries of companies which have large presence in A list report on their operations in
concern if it is classified country or countries overall. These China providing a commentary
by EIRIS as a large companies must report on at least one of of the issues and problems
presence (all non-OECD these countries to get beyond "intermediate raised in that country”.
for oil and mining) grade".
Demonstrates The letter of assurance must clearly state "PWC confirms that the
independent verification that the Company’s human rights reporting is company's reporting on
of the human rights independently verified. human rights reporting is
elements of its report independently verified".
Demonstrates The Company should engage with “Company XX has amongst

stakeholder verification independent stakeholders which deal with others engaged with Amnesty
of its report or human rights' issues for improving company's International and American
demonstrates that performance towards human rights. Rights at Work on its human
stakeholder engagement rights policies and reporting”.
has informed report
writing
Demonstrates The Company should publish results of The Company published a

innovation/leadership in impact assessments. summary and the full report
reporting related to Human Rights
Impacts Assessment at
Company’s XX mine in
Guatemala in May 2010 and
Final Statement on Company's
XX mine on the 4th of May
2011.
© EIRIS 44
SUPPLY CHAIN
Supply Chain Risk
Grading Low Medium High
Companies are assessed as having high potential risk of supply chain labour standard problems if they retail
high risk products sourced from high risk countries on a large scale.
High risk products are defined as:
Agricultural crops: cane sugar, coffee, tea, cocoa, tropical fruit, fresh vegetables, tobacco and flowers
Consumer products: clothing, footwear, accessories, toys
Consumer electronics or office electronic equipment: including TVs, computers, hi-fi’s, mobiles, office
printers and photocopiers, power tools
High risk countries are defined as all non-high income OECD countries. These are all countries with the
exception of:
High Income OECD: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland Italy, Japan, Korean Rep, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain,
Sweden, Switzerland, UK, US
© EIRIS 45
Other High Income: Andorra, Aruba, Bahamas, Bahrain, Barbados, Bermuda, Brunei, Cayman Islands,
Channel Islands, Cyprus, Faeroe Islands, French Polynesia, Greenland, Guam, Hong Kong, Isle of Man, Israel,
Kuwait, Liechtenstein, Macao, Malta, Monaca, Netherlands Antilles, New Caledonia, Puerto Rico, Qatar, San
Marino, Singapore, Slovenia, Taiwan, United Arab Emirates, Virgin Islands
Companies classified as having a low risk exposure to supply chain are not assessed.
Supply Chain Policy
Guidance
Requires its suppliers The Company has a supply chain “In our supply chain, we do not
and sub-contractors to policy which supports some or all of: tolerate child labour, forced labour,
meet the core ILO and discrimination. We also expect our
convention areas of Prohibition of child labour, suppliers to fully support freedom of
freedom of association prohibition of forced labour, non- association and collective bargaining
and collective discrimination and support trade within their workforce".
bargaining, non- union rights (freedom of association
discrimination, and and collective bargaining).
prohibition of child
labour and forced labour
Covers other labour The Company has a supply chain “We only recruit suppliers which
standards including policy which supports some or all of: support safe working conditions
health and safety, health and safety, working hours and throughout their workforce. They are
working hours, wages wages, and disciplinary practices. also expected to respect the
and disciplinary international regulations on working
practices hours and decent wages. We refrain
from engaging with suppliers which
engage in unlawful disciplinary
practices against their employees”.
Is being clearly The policy is clearly an integral part “Factories may only be approved for
integrated into its of procurement process, for example use if they meet the company's policy”.
procurement process reference is made to how buying
teams take policy into account when
making decisions on who to use as a
supplier. For example, factories may
only be approved for use if they
meet the company’s policy.
Is reinforced by the Companies that are members of the “Since 2011, our company is an official
Company’s membership Ethical Trading Initiative (ETI), Fair member of the ETI”.
of a relevant initiative Labour Association (FLA), Social
dealing with supply Accountability International (SAI),
© EIRIS 46
chain labour standards Fair Wear Foundation or Elimination
of Child Labour in Tobacco
Foundation (ECLT).
Supply Chain Systems
Guidance
Communicates its policy The Company should be “We ensure that suppliers are familiar
to its suppliers communicating the policy to some with the policy”
suppliers. This includes such things
as including the policy within “The policy is included in supplier
supplier contracts. contracts”
Communicates its policy The Company should be “The policy is included in all supplier
to its suppliers globally communicating the policy to all contracts”.
global suppliers. This includes such
things as including the policy within
all supplier contracts.
Communicates its policy The Company should communicate “All our suppliers receive a copy of our
to its suppliers globally, the policy to all global suppliers, supply chain policy when we establish
including to its suppliers’ including to suppliers employees. a business relationship with them. As
employees This includes such things as including part of the contractual agreements, the
the policy within all supplier Company are expected to distribute
contracts. the Supply Chain policy throughout
their workforce”.
With regards to communicating to
supplier employees, this indicator
could be requiring poster versions of
its policy to be displayed in supplier
factories in local languages.
© EIRIS 47
Monitors its suppliers The Company should monitor “Every six-month, we monitor our
for compliance with its monitoring whether are complying suppliers for compliance with our
policy with the code. This could include policy by sending self-assessment
sending self-assessment questionnaires”.
questionnaires to suppliers.
Visits/audits its The company should disclose that “In fiscal 2010, we conducted 349
suppliers for compliance the Company or a third party is inspections in 329 factories”.
with its policy assessing suppliers either during
visits to suppliers or as part of a
formal audit process.
Demonstrates extensive “The company should disclose that “Once garment factories are approved,
auditing and monitoring more than two-thirds of the we strive to re-inspect them at least
of its supply chain, company’s suppliers are being once a year. While we occasionally are
including through the monitored/audited every year and it unable to get to a factory in a
use of external monitors uses external monitors to some particular year, we work with third-
extent. These can be either party auditors and independent locally-
companies or NGOs”. based monitors to make our best effort
to meet this goal”.
Has procedures for The Company should disclose that it “With the goal of helping them to
addressing non- tries to work with the supplier to continuously improve their
compliance remedy the problem and only stops performance. The Company recognises
working with suppliers in the worst that 'compliance may not be achieved
cases. immediately, but our strong preference
is to keep working with factories to
help them improve over time.'
'Unfortunately, there are some
instances where a factory is unable or
unwilling to meet our standards. In
those cases, we will take steps up to
and including the severance of our
business relationship”.
Provides training to This indicator is met if the Company “our buying team is trained on our
relevant employees trains either its own employees or supply chain labour standards policy”
supplier employees but not both.
Or
This indicator could be met if the
Company discloses that its “we conduct regular capacity building
procurement teams received training with our suppliers to ensure they
on supply chain labour standard understand the policy”.
issues or training provided to its in-
house supplier audit team is
provided.
© EIRIS 48
Provides training to both This indicator is met if the Company “In-boarding meetings for new vendors
its own employees and trains both its own employees and and regional training for existing
those of its suppliers supplier employees. suppliers on our Vendor Code of
Conduct and the policies outlined in
our corporate vendor manual”.
Has a clearly-defined A senior person must be responsible “Our CEO is ultimate responsible for
senior person for this issue. our supply chain labour standards”.
responsible for supply
chain labour standards
Demonstrates that its This indicator is met when there is “We target our social audits to
systems are targeted to evidence that the Company targets countries including Bangladesh where
the areas of highest risk its monitoring and auditing systems there are known labour standard
to the areas of most risk. This might issues”.
include targeting systems to
countries with most risk. Or
“we have identified those suppliers

that present the greatest risk and
ensure these are audited annually”.
Demonstrates This indicator is met when there is “Once garment factories are approved,
comprehensive coverage evidence that the Company audits we strive to re-inspect them at least
of its management the majority of its supply chain on a once a year. While we occasionally are
systems regular basis. unable to get to a factory in a
particular year, we work with third-
If the Company meets this indicator party auditors and independent locally-
we do not require the ‘demonstrates based monitors to make our best effort
that its systems are targeted to the to meet this goal”.
areas of highest risk’ as this can be
assumed given the majority of
suppliers are being audited.
Demonstrates clear links The Company should demonstrate “We’re also working to provide more
between its supply chain that its supply chain labour consistent production orders and
labour standards standards management systems are greater assurance to suppliers that we
management systems integrated into its procurement are in this for a longer-term
and its procurement management systems. In order to relationship. We believe these deeper
management systems give a company credit for this it must partnerships offer more speed and
be clear that all sourcing decisions flexibility to get our clothes to market
are based on labour standard and the opportunity to chase trends,
compliance. while providing our suppliers with
greater visibility into future order
volumes and the ability to better
manage production schedules”.
© EIRIS 49
Supply Chain Reporting
Guidance
Reports on Public evidence that the company 'The contractor shall post this Code, in
communication of its reports on how it communicates its the language(s) of its employees, in all
policy to suppliers supply chain policy to suppliers. major workspaces'.
Reports on The Company should disclose the “This year we have undertaken 1,161
visiting/auditing of number of suppliers’ visits and audits, 80 percent of its contract
suppliers audits. factories were audited”.
Reports on procedures to The Company should disclose that it “Sourcing & Manufacturing
address non-compliances tries to work with the supplier to Sustainability Index (SMSI) in order to
remedy the problem and only stops measure factory sustainability
working with suppliers in the worst performance. Factories are awarded
cases. Gold, Silver, Bronze, Yellow and Red
scores”.
Reports on training of The Company should disclose “A centrepiece of our work in the past
relevant employees information on employee training. few years is our HRM (human resource
This could include the number of management) programme, which
relevant employees trained on combines multi-stakeholder
supply chain standards. workshops, training for factory
managers and the surveying of
workers”.
Reports on the number The Company should disclose the “This year we have undertaken 1,161
of facilities number of facilities audited and audits”.
monitored/audited monitored.
Reports on the The Company should disclose the “In 2010, we audited 90% of our main
proportion of its supply coverage of suppliers audited or suppliers”.
chain monitored/audited monitored.
Discloses details of risk The Company should report on “The Risk Index identifies countries
assessments targeting monitoring through risk with the highest risk and most
assessment. potential for low factory performance
on our MI (manufacturing index)
Note that auditing over 66% of
© EIRIS 50
suppliers would also count for this metrics. It assesses four key areas,
indicator. including political risk,
social/compliance risk, economic risk
and infrastructure and climate risk,
weighting each one equally with 25
percent of the total score”.
Discloses details of The Company should report on - “The Company states that it engages,
stakeholder details of involvement in initiatives. formally and informally with
dialogue/engagement Initiative must be multi-stakeholder, stakeholders to receive feedback on
so an initiative just involving reporting. For these engagements, the
companies doesn’t count. Company has established panels of
experts who provided feedback on
early drafts and discussed issues such
as materiality, completeness,
relevance, tone, performance and the
future of our reporting, among other
topics”.
Has responded to any The Company should report details “The Company has appointed an
non-compliances found on how the company has responded independent auditor to investigate the
by external organisations to non-compliances identified in the allegations made by the NGO”.
last year by external bodies, such as
NGOs.
Provides examples of the The Company should report details “In fiscal year 2011, 81% of the
non-compliances found of the types of non-compliance facilities it audited had non-
found during its monitoring and compliances related to factory health
auditing. This might include issues and safety, 62% for overtime hours,
relating to health and safety or and 51% for social benefits issues. We
issues concerning forced overtime. are currently investigating each case of
non-compliance”.
Reports on the amount The Company should report on the “This year, 41 percent of overall
of non-compliances number of non-compliances with its noncompliance incidents were related
found with its policy policy found. to hours; wages represented 36
percent of the incidents; age-related
incidents represented 1 percent;
freedom of association 2 percent of
incidents; and harassment represented
3 percent of noncompliance incidents”.
Provides data on supplier The Company should report on the “In 2011 approximately 53% of tier 1
performance number suppliers in compliance or suppliers were able to maintain
failing to comply with the policy. acceptable levels of compliance,
maintaining their B+ or A grades”.
© EIRIS 51
Demonstrates The Company should demonstrate “PricewaterhouseCoopers has certified
independent verification that its supply chain risk the Annual Integrated Report 2011 of
of its report management is independently Company X. Certification comprises
verified. chapter Company X.SAFE where the
Company reports on its supply chain
policy, activities and performance”.
Demonstrates The Company should provide “Company has published on its website
stakeholder verification feedback/comment from stakeholder comments from the Ethical
of its report and/or stakeholders about its report and Trading Initiative and Social
demonstrates that supply chain management systems. Accountability International. Within its
stakeholder engagement Social and Ethical Report the Company
has informed report Alternatively, the Company should has published a statement from the
writing be able to demonstrate how input Public Reporting Working Group, who
from various stakeholders has advised the Company on compiling the
influenced the report content. report, and includes members from
organisations such as As You Sow, the
Center for Reflection, Education and
Action, and the Interfaith Center on
Corporate Responsibility”.
Demonstrates The Company should report on “The Company publicly reports on the
innovation/leadership in aspects of their supply chain that amount and type of non-compliances
reporting companies previously did not found in the same way that Company X
disclose information on. If a does”.
company follows another company’s
lead this also counts.
© EIRIS 52
HEALTH AND SAFETY
Health and Safety
Little or no
Grading Scale: Some Clear
evidence
Guidance
Provided details of The Company should provide evidence that it “All of our sites acquired prior
awards won has received award from health organisations to 2005 are certified to OHSAS
or it has operations OHSAS 18001 certified. 18001”.
Provided details of its The Company should provide evidence that it “All our staff receive annual
health and safety gives training on health and safety. training on health and safety”.
training
Indicated a senior The Company should disclose evidence that it “The Company HSE
person is responsible for has a senior person responsible for health Committee is responsible for
overseeing health and and safety issues. the health and safety issues
safety throughout the Company’s
operations”.
Provided quantitative The Company discloses one health and “There were two workforce
data on its health and safety’s performance data, e.g. frequency fatalities in the 2011”.
safety record rate, number of fatalities.
Provided substantial The Company discloses at least two health “There were two workforce
quantitative data on its and safety’s performance data, e.g. fatalities in the 2011; the
health and safety record frequency rate, number of fatalities. Company’s injury rate = 0.23
(2013); 0.13 (2012)”.
© EIRIS 53
BANKING CRITERIA
Corporate Loans
A record will only be applied to a Company profile when it has been determined that there is sufficient
evidence of involvement in line with the criteria.
We look at outright exposure to loans financing, and not at income from loan business. In order to have a
record, the Company must have either:
 Total outstanding corporate loan financing exposure representing >5% of total financial assets
within the previous two financial reporting periods.
Or:
 Total outstanding corporate loan financing exposure greater than EUR 20billion within the previous
two financial reporting periods.
Once this condition is satisfied, the Company will be assessed based on the following grading scale and
methodology criteria:
No Low
Grading Scale: Limited Intermediate Good
evidence Intermediate
Methodology - Policy
Guidance
Commitment to This relates to where a Bank applies a The Company states that
include ESG issues into sector-based approach to ESG
credit rating and credit integration of Corporate Loans, with a “Credit policies within our Business
risk processes, applied commitment to integrate ESG criteria Banking, Wealth, Corporate and Capital
specifically for SOME for some selected high-risk sectors clusters were enhanced to include a
Corporate Loans, only., However if there is insufficient focused approach on high-impact
beyond legal evidence of the Bank sufficiently industries to ensure that the related
minimums, covering covering all high-risk sectors, then this social and environment risks are
both Environmental will not be awarded mitigated”, and “[The Group’s] social
and Social elements and environmental policies are linked
to, and supported by, our Social and
Environmental Management System
(SEMS) and have also been integrated
into the Group Credit Policy”.
The Company does not publish sector-

specific policies.
© EIRIS 54
Acceptable Proxies: The Company releases an annual
Equator Principles report. The report
Proxy 1: Commitment to assess new comprehensively breaks down its
Project-specific corporate loans in line commitments covering Environmental
with expanded requirements of and Social aspects, in line with its
Equator Principles III. Equator Principles signatory status.
The Company commits to IFC

Performance Standards on
Proxy 2: Commitment to IFC
Environmental and Social Sustainability
Performance Standards on
Environmental and Social
Sustainability.
This is due to IFC Performance

Standards covering direct investments,
including project and corporate
finance, that has been provided
through financial intermediaries.
Commitment to Commitment to include ESG issues into The Bank states that ‘all lending
include ESG issues into credit risk processes and processes, transactions are subject to its
credit rating and credit applied specifically for: Sustainability Risk for Lending policy,
risk processes and  ALL Corporate Loans in high- stating that ‘The Policy applies to Bank
processes, applied risk sectors (Minimum 4 and all its subsidiaries, branches,
specifically for ALL sectors), representative offices and legal entities
Corporate Loans in  Beyond legal minimums – e.g. that are under its control’. The Bank
high-risk sectors cluster munitions would count has established a set of sector-specific
beyond legal as compliance whereas an policies beyond Project Financing, with
minimums, covering investment policy not to invest policies for Agriculture, Energy / Power
both Environmental in, or finance, companies generation, Mining/Extractive
engaged in Mountain-top
and Social elements industries, Forestry and Fisheries.
Removal does go beyond legal
Policies sufficiently go beyond legal
compliance.
minimums and cover both
 Covering both Environmental
environmental and social aspects. The
and Social elements
bank is also a signatory to the Equator
Principles.
EIRIS requires that a minimum of FOUR

high-risk sectors to have been covered
by specific policies, covering ALL
LENDING in the respective sectors, and
must go beyond legal minimums in
applicable policies. EIRIS have
identified the following six
sectors/areas as being those
© EIRIS 55
representing the highest sensitivity
and risk (using Banktrack1):
 Agriculture
 Fisheries
 Forestry
 Mining
 Oil and gas
 Power generation
Acceptable Proxies: All corporate loan activity is subject to

the bank’s Ethical Policy. The Ethical
Proxy 1: Bank has a ‘Universal Policy covers Environmental and Social
commitment’ restricting corporate aspects, goes beyond legal minimum
finance in all high-risk sectors (at a compliance and relates to all lending
level that goes beyond legal minimum that the bank offers. The Bank states
for ALL Corporate Loans) that “We will only offer business
banking facilities when we are
This criteria covers evidence of Banks
confident that there are no conflicts
that require all loans to adhere to a
with our Ethical Policy. The potential
bank-wide lending policy that goes
financial gain to our business is never a
beyond legal minimums and covers
factor in the decision”.
environmental and social elements, in
order to receive financing.
Methodology - Systems
Guidance
1 www.banktrack.org/download/close_the_gap/close_the_gap.pdf
© EIRIS 56
Evidence of This relates to the Company The Company outlines the extent of its
incomplete demonstrating some evidence that it ESG integration into its risk
systems/procedures in has established systems for how it management processes. In order to
place to integrate ESG applies its E&S policies over its receive a higher assessment, the
issues into credit corporate loans offerings, however the Company is required to disclose
rating and credit risk comprehensive escalation processes
systems have been determined to be
processes where financing potentially breaches
incomplete.
its environmental and social risk policy
This can relate to the existence of a guidelines, review processes and
ultimately refusal to finance based on
referral process for corporate loans
environmental and social aspects.
that breach its existing Environmental
and Social policies for corporate
lending, and an escalation that is
managed by a specific
committee/council/body.
Incompleteness relates to a systems

structure that does not refer
specifically to a potential prohibition of
a loan / transaction / client request, as
part of its process.
Evidence of complete This relates to the Company The Bank screening approach includes
systems/procedures in demonstrating some evidence that it ‘project-related corporate loans (as
place to integrate ESG has established systems for how it long as the total amount of the
issues into credit applies its E&S policies over its operation is equal to or greater than
rating and credit risk corporate loans offerings, however the USD 100 million and each bank’s
processes that relates systems have been determined to be individual share is at least USD 50
to PROJECT FINANCE incomplete. million’. The Bank has adapted internal
ONLY processes to fulfil EPIII requirements.
This can relate to the existence of a
referral process for corporate loans
that breach its existing Environmental
and Social policies for corporate The Company publishes detailed
lending, and an escalation that is systems process details, in relation to
managed by a specific Equator Principles, in its Annual
committee/council/body. Equator Principles report, including
details of escalation due to heightened
Incompleteness relates to a systems E&S risk.
structure that does not include details
confirming that the failure to comply
with explicit policies will result in a
denial of funding or prohibition of a
loan / transaction / client request.
For example, a system that relates to a
© EIRIS 57
subsequent engagement process with
no details of potential refusal to lend
would be deemed incomplete.
Other Project-based proxies:
Bank applying NATURAL CAPITAL

CALCULATOR to Corporate Loan
financing requests
Bank applying CARBON RISK

CALCULATOR to Corporate Loan
financing requests
Evidence of complete Bank must provide evidence that The Bank has an umbrella Sustainability
systems/procedures in potential breaches of such sector- Risk Policy, implemented via its
place to integrate ESG specific ESG criteria will lead to an Sustainability Risk Management
issues into credit engagement process, with a Framework (SRMF), with a specific
rating and credit risk recognition that a failure to satisfy ESG subsection of the policy relating to
processes, BEYOND concerns will lead to a refusal to Lending. The SRMF operates on a
PROJECT FINANCE finance. ‘three lines of defence’ principle, with
the Company Central Sustainability
The systems element does not Department being responsible for
scrutinise the extent that an adequate initiating, developing, reviewing and
number of sectors have been covered, updating its SRMF. The Bank provides
as this is covered in the Policy comprehensive details relating to its
indicators. loan escalation procedures.
This element demonstrates the E&S
integration process is not only applied
to SRI or ESG Funds only, or Project The bank confirms that all loans in
Finance only, and is integrated into the highlighted sectors are at a minimum
Bank's main Corporate Loans / credit referred for additional due diligence,
risk process for all applicable sector- with high/sensitive cases referred
specific Corporate Loans. further to its Reputational Risk
Committee. The Bank outlines its
An adequate system must comprehensive systems structure in its
demonstrate how the Bank applies 2013 Sustainability Report, and
Environmental and Social elements specifies a definitive, end-of-process
into the loan finance offering, from element with final decision/prohibition
receipt of application through to the stage
offering of finance.
Alternatively, a bank can demonstrate

that it actively engages with all loanees
and financing partners post-financing,
in order to ensure that it (i) continues
to improve, and (ii) adheres to the
policies.
© EIRIS 58
Methodology - Reporting
Guidance
ANY quantitative Self-explanatory, publicly available The Company reports in the 2013
reporting on the level of data required Annual Report that it extended EUR
ESG screening against 21.39 billion in Sustainable Financing in
Corporate Financing that 2013
goes beyond Project
Finance
Company reports the Quantitative data provided The Company provides several
absolute amount (USD, comprehensive breakdowns in its 2013
GBP) and/or percentage Annual Report showing the total
of all corporate lending amount of Private Lending and a
(beyond Project Finance) breakdown of this figure in terms of:
that has been subjected
to its Corp Loans E&S  Sector division (Food/Agri,
integration process Trade Industry and Services
(TIS) and Private Individuals,
 Group Entity (Domestic,
Wholesale, Leasing and Real
Estate)
 TIS Loans subdivided by
Industry
 Food/Agri by Industry
The Company states explicitly that all

existing lending is subject to its
Policies.
ANY quantitative Quantitative data provided The Company is a signatory to the

reporting on the level of Equator Principles, and reports data on
ESG screening against the number of project finances on a
Corporate Financing that risk-category basis, in line with EP
only covers Project requirements. In addition, the
Finance Company publishes that in 2014, 302
financing requests were referred to the
relevant Environmental Management
Team.
© EIRIS 59
NEGATIVE CAP - Involvement in Controversial Projects
 Involvement in Controversial Projects
Additional Indicator - PERF1
If a company is found to have provided financing to more than one controversial project, or at least one
project deemed to be highly controversial by EIRIS, then their score should be CAPPED at a maximum
grade.
The scheme uses a combination of Banktrack (to identify potential controversial projects and the EIRIS
Convention Watch service.
Where there is involvement in one or more controversial projects, the maximum grade is Intermediate.
EIRIS will follow a process using checks of third-party NGO data combined with data from Convention
Watch, and will engage with the Company to ensure that the relevant financial support is still in place.
In order to be classed as having direct involvement in financing, the Banktrack database will be used to
identify any financial involvement in the project, parent company or corporate entity operating the site.
Types of financing considered as ‘direct’ includes:
 Project Finance relating to the project

 Advisory services relating to the project, including arranging debt financing
 Corporate Loans with a direct link to a facet of the project
 Cash for land acquisitions
 Shares / bonds underwriter or manager, where there is a direct link
EIRIS will not include as relevant any financing arrangement where there is insufficient evidence of a clear,
direct linkage between the financing arrangement and the controversial project. Types of financial
involvement that are not included are:
 Advisory services where the Bank is producing feasibility study for the project
 General Corporate Loans to management / operating / owner company
 Issuing of bonds on behalf of the management / operating / owner company without a direct link
to the controversial project
 Issuing of equity on behalf of the management / operating / owner company
 Extending loan facilities without evidence of direct linkage to the project in question
Example: [The Bank] has been assessed with a cap of intermediate due to its direct involvement in more
than one controversial project. The projects are:
Shwe gas and pipelines projects Myanmar [Banktrack, 11/03/2015] [Company engagement, XX/XX/20XX]
© EIRIS 60
Retail banking
Responsible Lending & Financial Inclusion
Companies are assessed for their approach to Responsible Lending and Financial Inclusion if, and only if,
the Company has significant consumer retail banking operations.
Guidance
Process outline Description of the Indicators Examples
Does the Company Only NO or YES answer. If NO, then Bank Group is a leading financial
have significant edit notes field of business details. If services provider and one of the largest
banking operations? YES, create Responsible Lending in its region. It consists of a number of
question and complete the business units and support functions.
assessment.
Personal Banking serves personal and
A Company with ‘significant’ retail private baking customers. The unit
banking operations is defined as any focuses on offering innovative digital
bank which either: solutions aimed at making day-to-day
banking simple and efficient and on
(i) Derives greater than 25% providing proactive advice to
of its annual revenue from customers with more complex
retail banking activities or finances.
(ii) Derives greater than EUR
1bn in annual revenue
from retailing banking
activities
Or both (i) and (II)
Responsible Lending:
NOTE: this research area applies only to companies with significant retail banking operations.
* Some of the indicators below have more than one level of attainment.
No Low Advanced
Guidance
© EIRIS 61
A policy or commitment There is evidence of: The Bank has an accurate assessment
on responsible lending of its customer’s risk rating so they are
covering up to two of  General commitment to able to make quick responsible lending
elements responsible consumer decisions in relation to new and
monitored/covering lending; additional credit applications. It is able
three or more of the  commitment against to respond quickly to changes in
elements monitored deliberate mis-selling; customer’s behaviour and
 commitment to not provide circumstances.
high interest rate lending;
checking creditworthiness The Group is committed to responsible
before providing a loan; lending practice. It acknowledges its
 transparency in lending obligation to market products
processes and practices; responsibly in line with the
 Treating Customers Fairly in expectations of customers and the
the context of responsible community.
lending; commitment to try
to keep borrowers in their
homes (i.e. avoid
repossessions); etc.
A responsible lending Evidence of: The Company allocates credit approval

system covering up to authority based on skills and
two/at least two of the  Provision of training on RL; experience. It segregates key
elements monitored  Compliance monitoring; etc. responsibilities ensuring people are
trained and able to carry out their
Advanced Elements:
roles, and ensuring the functional
 Disclosure of results of independence of credit approval from
monitoring; line sales and relationship
 targets for minimising management.
complaints (and other
relevant targets);
 incentives for sales team;
 restructuring debts for those
behind with repayments;
 early debt spiral warning
system; etc.
Provision of Quantitative or qualitative data Bank had disclosed data on lending to

qualitative/quantitative provided. customers on its website and number
data on responsible of complaints received in 2014.
lending performance Responsible Lending Data includes
complaints data related to
responsible lending; data related to
the (avoidance of) repossession of
houses; financial implications of PPI
scams; etc.
© EIRIS 62
No allegations of having Self-explanatory Bank has not been involved in
provided high cost providing high cost lending products
lending products in any during 2013-2015
of the past three
calendar years
No allegations of Self-explanatory There were no allegations that the

irresponsible lending bank has been involved in irresponsible
practices within the past lending practices during 2013-2015
three calendar years
Financial inclusion:
No Low Advanced
Guidance
A programme or Does the Company have a The Company commits to provide

initiative to increase commitment, programme or credits to low-income consumers,
initiative to increase financial including those belonging to
financial inclusion
inclusion to non-traditional indigenous communities as well as to
including provision of
customers in its domestic/ main those who are aged over 65.
bank accounts and
markets?
credit
Provision of qualitative/ Does the Company have a target in The Bank has targets in place to
quantitative targets for place for increasing financial increase financial inclusion to non-
increasing financial inclusion to non-traditional traditional customers by 25% at the
inclusion customers? end of 2017.
Disclosure of Does the Company report The Company reported that it opened
quantitative data on quantitative data on its financial over 5,000 new accounts for non-
financial inclusion inclusion such as number of bank traditional customers in 2015
accounts opened/ active for non-
traditional customers, amount of
credit provided to non-traditional
© EIRIS 63
customers
Reporting against Self-explanatory Bank has reached 85% of its target for
targets financial inclusion in 2015.
Clear evidence of an Has the Company's financial The Company’s figures demonstrate an
increase in financial inclusion of non-traditional increase of non-traditional customers
customers increased from the by 5% in 2015 in comparison to 2014
inclusion
previous 12 month period either by
absolute amount or by ratio (either
for bank accounts or credit
provision)?
© EIRIS 64
APPENDIX
What is meant by ‘publicly available information’ in the context of BIST

Sustainability Index project
The types of sources that can be included are:
 Company annual financial report and accounts

 Company Sustainability, CSR, Environmental, Social or Community -type report
 Company website
 Data filed with regulators or public bodies that can be accessed by the public and / or stakeholders
(e.g. financial authorities, environmental agencies)
 Data filed with other third parties for the purposes of that data being made available to the public
and / or stakeholders (e.g. CDP)
Sources that are to be excluded:

 Information that is not put on a company website but is declared to be "available on request"
 Data coming from sources that are marked as ‘confidential’ or are part of private or informal
communications are not acceptable.
 Survey data or survey responses which cannot be confirmed by public disclosure cannot be used.
 Material that may be in preparation or has not been signed off by the Company (e.g. a policy
document) cannot be counted until it is made public e.g. placed on the company website. (This may
on occasions need to be stressed to the company!)
 Employee handbooks which may be provided as proof of existence of certain policies or
management systems etc., but are asked to be treated as confidential. (Companies can be
encouraged to put summaries on their website, if they challenge the non-acceptance of this rule).
In practice, other nuanced cases may arise which would need further judgement, but the above is produced
for the sake of clarity and ease of explanation.
EIRIS
© EIRIS 65
Further information
Liliya Akhmadullina, Research Analyst
EIRIS | Global research for responsible investors
+44 (0)20 7840 5830 (direct) | +44 (0) 20 7840 5700 (switchboard)
About EIRIS
EIRIS is a leading global provider of environmental, social and governance (ESG) research, empowering
responsible investors with independent analysis and the tools to incorporate this information into
investment decisions. It has over 30 years’ of responsible investment experience and combines an
understanding of ESG issues with a knowledge of corporate practice and experience of practical solutions.
Our research services for responsible investors support a wide range of responsible investment strategies
that assist over 200 clients including pension and retail fund managers, banks, wealth managers, charities
and religious institutions across Europe, the USA and Asia. In addition to offices in London, Paris and
Washington, D.C., EIRIS has a global network of partners in Australia, Brazil, Germany, Israel, Mexico, South
Korea and Spain to further extend our research coverage and to keep us abreast of responsible investment
issues at the local level. EIRIS is a signatory to the UN Principles for Responsible Investment.
On 13 October 2015, Vigeo and EIRIS, two established ESG research agencies from France and the United
Kingdom, announced that they will merge to create a single European agency with a global reach.
For more information on EIRIS’ products and services, visit www.eiris.org or email clients@eiris.org.
© EIRIS 66

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BIST SUSTAINABLE INDEX

• a list of the indicators for each assessment area of the Index

• detailed explanations or definitions of what the indicators mean

Environment’s Risk exposure according to business activities

Medium DIY & building supplies

Low Consumer / mortgage finance

Grading Scale: Inadequate Weak Moderate Good Exceptional

Indicators Description of the Indicators Examples

 Energy / Climate Change

 Energy / Climate Change

There IS a dedicated resource (e.g.

Commitment to use of Commitment to continual “We are committed to reduce our

ALL Key Issues are covered

Commitment to Commitment to ‘monitor’ includes “We are committed to regularly review

The presence of an EMS

A commitment to regularly review

A system of regular environmental

- A commitment to report next year

- Actual reporting (greater than 2

Globally applicable Commitment to operate to “We are committed to operate

Commitment to common global

Commitment to industry best

Commitment to Community Liaison specifically “The Company has a stakeholder

Regular / annual participation in

Strategic Moves A Company will need to implement N/A

ICC membership ICC membership Self-explanatory

CERES membership CERES membership Self-explanatory

Responsible Care Responsible Care membership Self-explanatory

WBCSD membership WBCSD membership Self-explanatory

UNEP Fin / Ins UNEP membership Self-explanatory

Grading Scale: Inadequate Weak Moderate Good Exceptional

Indicators Description of the Indicators Examples

Environmental Policy Has an Environmental Policy Self-explanatory

Outline of processes and Procedures and structure of “The Company’s Environmental

Supplier Audits Supplier Audits “Our company carefully chooses

Grading Scale: Inadequate Weak Moderate Good Exceptional

Indicators Description of the Indicators Examples

Text of environmental A public policy The Company has a public policy

Description of main Description of main impacts in key A public description of environmental

Quantitative data Provides quantitative data (including Public environmental performance

Coverage of General discussion of environmental Self-explanatory

All key issues are covered in the

High risk business activities for Biodiversity

High risk Building materials & quarrying

Medium risk Air transport

Indicators Description of the Indicators Examples

The Company has been working with

Climate Change Risk

Climate change’s Risk exposure according to business activities

High Aircraft manufacture/ Automobile manufacture/ Commercial buildings/

Medium Beverages/ Consumer electrical/ Defense/ Forestry/ Other vehicle

Grading Scale: No evidence Limited Intermediate Good Advanced

Indicators Description of the Indicators Examples

Senior responsibility for Board level (individual or committee) “Energy/Carbon subcommittee is

“The Company states that it has policy

“The Company has committed to

“The Company aims to reduce traffic-

“The Company states that it works in