Quality Management Policy April, 2016 This document provides an overview of Sustainalytics’ Quality Management Policy and covers the following areas: • Introduction to Sustainalytics • Statement on quality management and the scope of the Quality Management Policy; • An overview of Sustainalytics’ quality standards; • Role of Sustainalytics’ Quality Management Team; • Quality management for Sustainalytics’ products and services

About Sustainalytics Sustainalytics is an independent ESG and corporate governance research, ratings and analysis firm supporting investors around the world with the development and implementation of responsible investment strategies. With 14 offices globally, Sustainalytics partners with institutional investors who integrate environmental, social and governance information and assessments into their investment processes. Today, the firm has 250 staff members, including more than 120 analysts with varied multidisciplinary expertise of more than 40 sectors. Through the IRRI survey, investors selected Sustainalytics as the best independent responsible investment research firm for three consecutive years, 2012 through 2014 and in 2015, Sustainalytics was named among the top three firms for both ESG and Corporate Governance research.

For more information, visit

www.sustainalytics.com.

Sustainalytics’ Vision Sustainalytics believes it is imperative for the global economy to become more just and sustainable.

Sustainalytics’ Mission Sustainalytics’ mission is to provide the insights required for investors and companies to make more informed decisions that lead to a more just and sustainable global economy.

Quality Management Policy Statement Sustainalytics is committed to delivering superior quality products and services to its clients. The company’s products and quality processes are monitored continuously to ensure deliverables are completed on time and with excellence. Analysts possess a deep understanding of the firm’s objectives and are encouraged to always improve research processes and standards.

Scope of Quality Management Policy This Quality Management Policy applies to Sustainalytics’ products and related processes. The products delivered by Sustainalytics, include: Company ESG Reports, Controversial Weapons Radar, Product Involvement, Global Compact Compliance Service, Country Risk Monitor, and Governance Research. Sustainalytics’ Data Team, which delivers data maintenance services for these products, falls under the scope of this Policy as well.

1|Page

Sustainalytics’ Quality Operating Standards Sustainalytics adheres to the highest-quality operating standards for its products, including: • Authorized analysts or managers must sign-off before any deliverable is sent to a client. • Control mechanisms are in place to ensure Sustainalytics delivers high quality research to its clients in a timely manner. • Analysts apply standard research methodologies to the firm’s products. • To make sure research methodologies are consistently applied, research carried out by analysts is peer reviewed by another analyst before the final deliverables are published. • Analysts follow a set of style guidelines to ensure the research and analysis is coherent. • Internal verifications are conducted on a regular basis to ensure adherence to quality standards and to test control mechanisms. Sustainalytics ensures all personnel understand and adhere to the quality standards. Core to ensuring the quality of our research is the continual development of staff competence. Sustainalytics’ analysts are highly qualified individuals, dedicated to ESG research. Analysts have individual training budgets for external use, participate in internal Sustainalytics’ training sessions and are encouraged to obtain internationally recognized certifications such as Lean Six Sigma or Chartered Financial Analyst.

Role of the Quality Management Team The responsibility for the implementation of quality standards resides with a dedicated Quality Management Team. The Quality Management Team is responsible for the overall quality of Sustainalytics’ processes and outputs. The responsibilities of the Quality Management Team, include: • Ensuring the highest-quality standards are applied for all Sustainalytics’ products. • Translating high-quality standards into detailed and concrete quality standards for specific research methodologies, research processes and written deliverables. • Facilitating adherence to quality standards by enforcing control mechanisms in the research process and providing monitoring tools for research teams. • Conducting periodic quality verifications of processes and client deliverables. • Finding root causes where processes do not deliver desired results and assigning resources to improve such processes. • Reporting to higher management on results of quality verifications and proposing improvements where needed. • Managing a document control system, ensuring all processes are documented by the relevant teams and guidance documents are up-to-date. • Continuous review and improvement of business processes in line with quality standards. • The Quality Management Team liaises with product managers who execute implementation of quality control processes designed by the Quality Management Team and ensure quality standards are followed. The above responsibilities of the Quality Management Team and its interactions with analysts working on Sustainalytics’ products – as described in the next session – are shown in the graph below.

Figure 1. Sustainalytics’ Quality Management processes and involved teams and products

Quality Management for Sustainalytics’ Products and the Role of Analysts All products and client deliverables adhere to the quality standards defined by the Quality Management Team. The quality assurance measures that apply to all Sustainalytics products are described below. 

Analysts are required to follow detailed research guidelines, documented procedures and work instructions.



Analysts are required to follow detailed and stringent procedures on how to collect data, how to source and process and archive research material.



Guidance manuals are reviewed regularly to ensure all processes and methodologies are up-to-date.



All research performed by analysts is peer reviewed by a different analyst or manager prior to publishing or distributing the final deliverable.

The above mentioned quality measures are complemented by some product-specific quality assurance mechanisms. The research processes and specific quality assurance mechanisms that apply to certain products are described in the following sections.

1. Company ESG Report The Company ESG Reports provide comprehensive profiles and ratings of corporate environmental, social and governance (ESG) performance of companies worldwide. Sustainalytics’ research universe covers major global indices, offering asset owners, investment managers and other stakeholders extensive ESG and sustainability information to incorporate into their investment processes. Sustainalytics’ research methodology for Company ESG Reports is focused on the relevant ESG issues within sectors and across markets. Our company profiles are updated regularly and undergo a rigorous research, analysis, and review process, including: 

Review of company reporting such as annual reports, CSR reports, publicly available policies;



Review of external sources such as international newspapers, NGO reports, industry publications;



Analysis by sector analyst;



Peer review by sector specialist; and



Company feedback solicitation for ESG Reports part of the Comprehensive Framework

The quality management standards described above are complemented by product-specific quality controls as follows: 

Guidance manuals are reviewed regularly to ensure all processes and methodologies are up-to-date. Guidance and methodology reviews are subject to approval of an Executive Team member.



As part of the research process, companies are contacted for feedback on the draft profile to ensure accuracy of their profiles.



An oversight committee, consisting of senior management, signs-off on assessment changes of high profile companies before the deliverables are sent to clients.

2. Controversial Weapons Radar Sustainalytics assesses companies’ involvement in controversial weapons based on a clear set of guidelines and definitions. The research is updated quarterly based on a broad range of information sources, including company information, specialized databases and sector specific sources. The quality management standards described above are complemented by product-specific quality controls pertaining to the Controversial Weapons Radar research process and deliverables as follows: 

The Controversial Weapons Radar has a systematic research process where analysts are required to follow well documented research procedures and guidelines. All information found linking a company to a controversial weapon is stored together with a detailed reference to one or more information source(s).



Companies covered by the Controversial Weapons Radar are contacted when included in the database and every time there are significant changes to the findings.



Company feedback is an important element of the research process, ensuring a sound quality control system by allowing companies to raise any factual errors. This procedure also raises awareness on this type of research and the concerns raised by some investors.

3. Product Involvement Sustainalytics assesses companies’ involvement in business activities such as tobacco, alcohol, gambling, controversial weapons, among others, using revenues as a proxy of activity. The quality management standards described above are complemented by product-specific quality controls pertaining to the Product Involvement research process and deliverables as follows: 

Stringent procedures are in place to ensure data is collected from the most credible and reliable sources available. In case the publicly available information is not deemed sufficient, companies are contacted for additional information about a specific business activity.



The screening research is updated annually based on companies’ annual reports. New companies are added on a monthly basis and existing ones are updated to align the research universe with Sustainalytics’ broader universe of coverage.



Analyst are required to follow well established research guidelines to ensure client deliverables are up-to date. On an on-going basis, analysts conduct industry specific research that may also trigger updates to company involvement in specific business activities.

4. Global Compact Compliance Service The Global Compact Compliance Service, also referred to as the Global Impact Radar, screens companies on their compliance with the UN Global Compact principles, a set of ten internationally accepted principles related to the issues of human rights, labour rights, environment and prevention of corruption. Each quarter the Advisory Services Team delivers a report listing compliant, non-compliant and “watch listed” companies scrutinized for potential breaches of the UN Global Compact principles. The Global Compact Compliance Service is integrated with other Sustainalytics processes and supported by research and assessments from the ESG Company Reports. The quality management standards described above are complemented by product-specific quality controls pertaining to the Global Compact Compliance Service research process and deliverables as follows: 

To ensure quality of the deliverable, multiple reviews and checks are integrated in the research process.



Analysts adhere to detailed research methodologies while conducting the research. Detailed guidelines and work instructions are in place that outline the collaboration between the various teams conducting the Global Compact research.



An oversight committee, consisting of senior management, signs-off on the research before the deliverables are sent to clients.

5. Country Risk Monitor The Country Risk Monitor provides insights on the mid to long-term impact of various country-specific ESG issues. The Country Risk Monitor also assesses whether a country is compliant with internationally accepted norms and treaties as well as whether it is subject to national or international sanctions. The quality management standards described above are complemented by product-specific quality controls pertaining to the Country Risk Monitor research process and deliverables as follows: 

A well-established data collection and review process is in place to ensure quality of the Country Risk deliverable.



All research is reviewed by senior analysts before the deliverable is sent to clients.

6. Governance Research The Governance Research provides an analysis of companies based on their governance practices. The quality management standards described above are complemented by product-specific quality controls pertaining to the Governance Research process and deliverables as follows: 

Analysts are required to follow stringent rules on how to collect and process data using the most credible and reliable sources available.



Senior members of the team review the research before it is delivered to clients.

7. Client projects Sustainalytics conducts custom research projects based on client requests. Apart from the Quality Management System, Sustainalytics has established Project Management Office (PMO) to ensure compliance to widely recognized project management standards. The PMO sets out project management standards and ensures all projects undertaken by Sustainalytics are executed in a timely manner and are cost-effective and of high-quality.

Data Quality Assurance Sustainalytics has a dedicated Data Team that deals with and safeguards the quality of its corporate data used for the various products and services delivered by Sustainalytics. The Data Team maintains the information linked to the companies available in the Sustainalytics database, which forms the foundation of various Sustainalytics products. The quality management standards described above are applied in more detail by the Data Team as follows: 

The Data Team has implemented a robust process to assure the integrity of the company data in the Sustainalytics database.



Corporate actions such as takeovers or mergers that may affect the company identification are closely monitored and reviewed on a regular basis.



Regular quality checks are performed to assure consistency of the input data.



Analysts are required to adhere to detailed guidelines and work instructions. Guidance manuals are reviewed regularly to ensure all processes are up-to-date.