Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F Responsible Sourcing Social Investment Organization | June 18, 2013

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F About SHARE  National non-profit based in Vancouver  Mission is to encourage and support responsible investment by institutional investors  Research and educational programs, including annual Proxy Vote Survey  Proxy voting and shareholder engagement services to pension plans, foundations, mutual funds, religious institutions, asset managers.

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM Complex supply chains For goods and services  Well established pattern in manufacturing, services  Purchaser bargaining power may be limited  Information asymmetry (customer-retailer, retailer-mfgr)  Sudden events can shift public perception, reputation  Stakeholders can be workers (Rana Plaza factory collapse) and local communities (Conflict minerals, Western Sahara)

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM Supply chain risks for investors  Risks that portfolio companies will decline in value for reasons linked to supply chain (legal, reputational, operational)  Expectation that pension plans as minority shareholders will act in a manner consistent with international standards and norms  OECD Guidelines for Multi-National Enterprises: “Avoid causing or contributing to adverse impacts on matters covered by the Guidelines through their own activities includes their activities in the supply chain.”

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM What should investors expect?  Clear and transparent policies and practices  Implementation, including embedding performance requirements in contracts  Accountability for outcomes

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM What are investors looking for?  Alignment with UDHR, ILO core conventions  Compliance with local laws is not enough  Recognize structural issues (e.g. freedom of association)  How goods and services are procured affects the outcome (timing of orders, price)  Supply chain disclosure  Robust monitoring/certification

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM Examples of investor action  Canadian Investor Statement on Bangladesh  Investing in Decent Work case studies on investor action on Forced Labour ( activism/campaigns/forced-labour/) activism/campaigns/forced-labour/

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F THE CANADIAN RETIREMENT SYSTEM Forced labour International Labour Organization definition  “All work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.”  Forced labour takes many forms including:  Slavery  Bonded labour  Forced overtime  Control of travel documents (passports)

Suite 1200, 1166 Alberni Street, Vancouver, BC V6E 3Z3 Canada T F