Global 100 Introduction - 2013 - Corporate Knights

Global 100 Introduction - 2013 - Corporate Knights

The 2015 Future 40 Ranking: Overview of Methodology Future 40 fast facts Eligibility Size: Private or publicly-listed companies and headquartered in Canada with a revenue of under CDN$ 2 billion in 2013. Industry: All industries are considered except the ones engaged in tobacco manufacturing and deriving a majority of revenue from weapons manufacturing. Overview Annual ranking of corporate sustainability performance Showcase Canadas emerging sustainability leaders Approach Ranking is based on publicly-disclosed data (e.g., financial filings, sustainability reports). All required datapoints are pre-populated. Submissions from companies are not required. Eligible companies will be contacted for data verification prior to project completion. Methodology is based on 12 key performance indicators (KPIs) covering resource, employee and financial management Contact info and to learn more Email [email protected] if you would like to confirm the correct contacts for your organization Sign up for email updates on future rankings and research from Corporate Knights and the Global 100 Visit www.corporateknights.com for more details 2 Ranking is conducted by Corporate Knights, a specialized media and investment research firm Corporate Knights is a Toronto-based, employee-owned B Corp that operates in three segments: Corporate Knights Magazine World's largest circulating magazine focused on sustainability and responsible business. Reaches 380,000 of the worlds most influential business and political decision-makers. CK Capital CK Capital helps investors generate financial out-performance implementing alpha-linked sustainability and financial indicators into portfolio construction. CK Capital offers a range of investment products and services, equity indices and customized portfolio solutions. CK Capital also manages several external research projects (e.g. The Global 100). Council for Clean Capitalism CEO-supported group catalyzing smart and efficient public policy. Engages with leading public policy-makers. 3 Companies can be scored on up to 12 KPIs Resource management KPI Methodology Energy Productivity Revenue / energy use Carbon Productivity Revenue / GHG emissions Water Productivity Revenue / water withdrawal

Waste Productivity Revenue / non-recycled/reused waste generated Innovation Capacity Percentage Tax Paid Financial management Employee management CEO-Average Employee Pay R&D expenses / revenue Cash tax / EBITDA CEO compensation / average employee compensation Pension Fund Status Unfunded liabilities / total assets Safety Performance Fatalities and lost time incidents Employee Turnover Number of departures / average total employees Leadership Diversity Female representation on board of directors and executive management team Clean Capitalism Pay Link Mechanisms that link senior executive pay to clean capitalism targets Companies are scored on KPIs that are disclosed by at least 10% of companies in their industry group Scoring methodology is based on a companys performance against its industry group peers Scoring is based on data for performance year 2013 See Appendix III for details 4 Priority indicators are different for each industry group GICS Industry Group Energy Productivity GHG Productivity Water Productivity Waste Productivity Safety Performance Employee Turnover CEO Average Employee Pay Innovation Capacity

Automobiles & Components Yes Yes Yes Yes Yes Yes Yes Yes Banks Yes Yes Yes Yes No Yes Yes No Capital Goods Yes Yes Yes Yes Yes Yes Yes Yes Commercial & Professional Services Yes Yes Yes Yes Yes Yes Yes Yes Consumer Durables & Apparel Yes Yes Yes Yes Yes Yes Yes Yes

Consumer Services Yes Yes Yes Yes No No Yes No Diversified Financials Yes Yes Yes Yes No No Yes No Energy Yes Yes Yes Yes Yes Yes Yes Yes Food & Staples Retailing Yes Yes Yes Yes No Yes Yes No Food Beverage & Tobacco Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes No No Yes Yes Health Care Equipment & Services Household & Personal Products Yes Yes Yes Yes Yes No Yes Yes Insurance Yes Yes Yes Yes No Yes No No Materials Yes Yes Yes Yes Yes Yes Yes Yes Media Yes Yes Yes Yes No No Yes No

Pharmaceuticals & Biotechnology Yes Yes Yes Yes Yes No Yes Yes Real Estate Yes Yes Yes Yes No No Yes No Retailing Yes Yes Yes Yes No No Yes Yes Semiconductors & Semiconductor Equipment Yes Yes Yes Yes No Yes Yes Yes Software & Services Yes Yes Yes Yes No No Yes Yes

Technology Hardware & Equipment Yes Yes Yes Yes No No Yes Yes Telecommunication Services Yes Yes Yes Yes Yes Yes Yes Yes Transportation Yes Yes Yes Yes Yes Yes Yes No Utilities Yes Yes Yes Yes Yes Yes Yes Yes Companies are scored on KPIs that are disclosed by at least 10% of companies in their industry group All companies are scored on Leadership Diversity, Clean Capitalism Pay Link, Pension Fund

Status and Percentage Tax Paid since the required data points are part of mandatory disclosure 5 Appendix: Detailed scoring methodology # Name of KPI Measurement 1 Energy Productivity In the first step, each company's Energy Productivity is calculated. Energy Productivity is defined as Revenue ($US) / Total Energy Use (GJ). It is then percentranked against that of all sameindustry group peers within the CK coverage universe, and multiplied by 0.75. In the second step, the change in each companys Energy Productivity over a two-year period is calculated and percentranked against that of all sameindustry group peers within the CK coverage universe. If the companys percentrank is top quartile, the percentrank is multiplied by 1 and then by 0.25. If the companys percentrank is second quartile, the percentrank is multiplied by 0.75 and then by 0.25. If the companys percentrank is third quartile, the percentrank is multiplied by 0.5 and then by 0.25. If the companys percentrank is bottom quartile, the percentrank is multiplied by 0.25 and then by 0.25. In the third step, the value from the first and second steps are totaled. 2 Carbon Productivity In the first step, each company's Carbon Productivity is calculated. Carbon Productivity is defined as Revenue ($US) / Total Greenhouse gas (GHG) Emissions (CO2e). Only Scope 1 and Scope 2 emissions are included according to the GHG Protocol. It is then percentranked against that of all sameindustry group peers within the CK coverage universe, and multiplied by 0.75. In the second step, the change in each companys Carbon Productivity over a two-year period is calculated and percentranked against that of all sameindustry group peers within the CK coverage universe. If the companys percentrank is top quartile, the percentrank is multiplied by 1 and then by 0.25. If the companys percentrank is second quartile, the percentrank is multiplied by 0.75 and then by 0.25. If the companys percentrank is third quartile, the percentrank is multiplied by 0.5 and then by 0.25. If the companys percentrank is bottom quartile, the percentrank is multiplied by 0.25 and then by 0.25. In the third step, the value from the first and second steps are totaled. 6 Appendix: Detailed scoring methodology (continued) 3 Water Productivity In the first step, each company's Water Productivity is calculated. Water Productivity is defined as Revenue ($US) / Total water (m3). It is then percentranked against that of all sameindustry group peers within the CK coverage universe, and multiplied by 0.75. In the second step, the change in each companys Water Productivity over a two-year period is calculated and percentranked against that of all sameindustry group peers within the CK coverage universe. If the companys percentrank is top quartile, the percentrank is multiplied by 1 and then by 0.25. If the companys percentrank is second quartile, the percentrank is multiplied by 0.75 and then by 0.25. If the companys percentrank is third quartile, the percentrank is multiplied by 0.5 and then by 0.25. If the companys percentrank is bottom quartile, the percentrank is multiplied by 0.25 and then by 0.25. In the third step, the value from the first and second steps are totaled. 4 Waste Productivity In the first step, each company's Waste Productivity is calculated Waste Productivity is defined as Revenue ($US) / [Total waste generated (metric tonnes) waste recycled (metric tonnes)]. It is then percentranked against that of all sameindustry group peers within the CK coverage universe, and multiplied by 0.75. In the second step, the change in each companys Waste Productivity over a two-year period is calculated and percentranked against that of all sameindustry group peers within the CK coverage universe. If the companys percentrank is top quartile, the percentrank is multiplied by 1 and then by 0.25. If the companys percentrank is second quartile, the percentrank is multiplied by 0.75 and then by 0.25. If the companys percentrank is third quartile, the percentrank is multiplied by 0.5 and then by 0.25. If the companys percentrank is bottom quartile, the percentrank is multiplied by 0.25 and then by 0.25. In the third step, the value from the first and second steps are totaled. 5 Innovation Capacity In the first step, each company's Innovation Capacity score is determined by measuring the ratio of research and development (R&D) expenditures to total revenue averaged over a trailing threeyear period. In the second step, each company's Innovation Capacity score is percentranked against that of all sameindustry group peers within the CK coverage universe. 7 Appendix: Detailed scoring methodology (continued) 6

Percentage Tax Paid In the first step, each company's Percentage Tax Paid is calculated as the amount of taxes paid in cash over a trailing five year period divided by their total EBITDA over the same period. Companies score a 0% in the event that their total EBITDA or taxes paid in cash is zero or lower over the five year period. In the second step, each company's Percentage Tax Paid is percentranked against that of all sameindustry group peers within the CK coverage universe. 7 CEO-Average Employee Pay In the first step, each company's CEO to Average Employee Pay ratio is calculated as total CEO compensation divided by average employee compensation. Average employee compensation is calculated by dividing the companys total wage bill by the total number of employees. In the second step, each company's CEO to Average Employee Pay ratio is percentranked against that of all sameindustry group peers within the CK coverage universe. The lower the ratio, the higher the rank. 8 Pension Fund Status In the first step, all companies are segmented into three categories: those with a defined benefit (DB) pension, those with a defined contribution (DC) pension and those with no pension. For companies in the DB category, a test is first performed to determine relevance: if the total assets of a company's DB pension plan divided by the total number of employees is greater than $US 50,000, companies are scored on this metric. If this ratio is less than $US 50,000, companies are assigned to the DC category. Qualifying companies in the DB category are scored as follows: the unfunded liability of their DB plan is divided by their total assets at year-end. This ratio is then percent ranked against that of all same-industry group peers within the CK coverage universe. For companies in the DC category, performance is based on the ratio between their DC expense and their total assets at year-end. This ratio is then percent ranked against that of all same-industry group peers within the CK coverage universe. Companies that are found to have no pension receive a score of 0 on this metric. 8 Appendix: Detailed scoring methodology (continued) 9 Safety Performance Each company's Safety Performance is comprised of the Lost Time Injury Score (50% weight) and the Fatality Score (50% weight). The Lost Time Injury Score is determined by calculating the company's lost time injury rate (defined as the number of lost time incidents per 200,000 employee hours) and percentranking it against that of all sameindustry group peers within the CK coverage universe. The Fatality Score is determined by calculating the companys fatality rate (defined as the number of fatalities divided by the total number of employees) and percentranking it against that of all sameindustry group peers within the CK coverage universe. The priority KPI test described above will be performed on both lost time incidents and fatalities. Accordingly, companies in industry groups that do not prevalently disclose fatalities will only be scored on their Lost Time Injury Score. 10 Employee Turnover 11 Leadership Diversity 12 Clean Capitalism Pay Link In the first step, each company's Employee Turnover is calculated as (1 its retention rate). In the second step, each company's Employee Turnover is percentranked against that of all same industry group peers within the CK coverage universe. The lower the ratio, the higher the rank. Each companys Leadership Diversity is comprised of the Board Diversity Score (50% weight) and Leadership Diversity Score (50% weight). The Board Diversity Score is calculated by determining the proportion of the Board of Directors that is comprised of female directors and percentranking it against that of all sameindustry group peers within the CK coverage universe. The Leadership Diversity Score is calculated by determining the proportion of the senior executive team that is comprised of female executives and percentranking it against that of all sameindustry group peers within the CK coverage universe. The Clean Capitalism Pay Link indicator is designed to reward companies that have set up mechanisms to link the remuneration of senior executives with the achievement of clean capitalism goals or targets. A score of 100% is given to companies that describe such a mechanism in detail (e.g. the company specifies the proportion of a particular named executive's compensation that is linked to the achievement of a corporate clean capitalism target, such as reducing emissions, improving energy efficiency, or reducing health & safety accidents ). A score of 50% is given to companies that provide a high level description of such a mechanism (e.g. the company mentions the existence of a link between executive compensation and corporate clean capitalism targets but does not specify the proportion that is linked, the nature of the link, etc.). A score of 0% is given to companies that do not report any linking mechanisms. Unlike all other indicators, Clean Capitalism Pay Link does not use any percentranking. 9

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