Expect excellence

Kirsty Jenkinson, Director, Governance & Sustainable Investment

1 April 2008

IWG Spring Symposium

2Expect excellence

Human Rights & the Corporation

What are the investment risks?

Does engagement work?

Is divestment an effective tool?

Business and politics – when do they mix?

What does the future hold for investors?

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What links investment & human rights?

Global economic trends forcing the question– Increasing demand for raw materials

– Weak governance zones = business opportunities

– Companies no longer able to “walk away”

– New business deals - joint ventures, cross-border deals

Business disruption– Managing security of employees & plant

– Community consultation

Changing expectations of company behaviour– Avoid complicity in human rights abuses

– Proactive management of human rights issues

– The “business and politics” debate……

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F&C tracks quarterly “milestones”– 224 milestones recorded in 2007

– 27 milestones relating to human rights & labour standards

Changes on-the-ground (e.g. Burma)– Development of socio-economic programmes

– Increased levels of community engagement

– Appointment of independent consultants to monitor & report findings

Changes at company-level– Integrating human rights into day-to-day operations

– Promoting good governance: accountability & appropriate incentivization

Influence of investor collaboration – EITI Investor Statement

Engagement - a successful track record?

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Benefits for investors– Tangible action to report to beneficiaries

– Clear signal to companies that issue merits action

– Respect sanctions

– Avoid complicity

Limitations– Establishing criteria to sell shares

– Pushing companies to withdraw

– Tackling resources premium – gaps are always filled

– Solving political problems – isolationism

Divestment pressures companies to respond to engagement?

Divestment - an alternative approach?

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Business and politics – when do they mix?

Rise of state-owned companies – increases political dimension

Politics lies at heart of companies operating in difficult areas– Sudan: CNPC/PetroChina, Sinopec, Petronas, ONCG plus Petrofac, Weir Group

– Burma: Total, Chevron

Successful engagement depends on political processes outside its control

Non-intervention yields unsatisfactory outcomes

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What is F&C’s approach?

Assists clients through programme of targeted divestment

Active human rights engagement encourages companies to:

– Provide indications that prepared to engage home governments on human

rights issues

– Demonstrate how presence positively impacts local community &

encourages social, political & economic stability

– Demonstrate positive effects from engagement with national governments to

achieve more stable society

– Disclose royalty, tax, signature bonus & other payments to host

governments

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What does the future hold?

Human rights & the corporation – the issue is escalating

Urgent need to deal with new economic realities– Increasingly valuable assets in difficult locations

– New players in global economy – China, India, Russia

– Growth of sovereign wealth funds

Encourage development of best practice tools, frameworks

Progress debate on public policy & human rights

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In conclusion…..

“Few analysts expect China to walk away from its business ties to Sudan, but its willingness to take up the issue is a rare venture into something China swears it never does…..meddle in the internal affairs of its trading partners”

New York Times, “China, in New Role, Presses Sudan on Darfur” 23 February 2008

“Some of our operations are conducted in countries facing difficult and, often, deep-seated problems and we are committed to using our influence, limited though it may be in certain places, as a positive force helping to promote long-term and sustainable solutions”

Petrofac, Annual Results Statement, 10 March 2008

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Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. The information, opinions estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time. F&C Group Companies may from time to time deal in investments mentioned herein on behalf of their clients. The source of information in all graphs is F&C unless otherwise stated. F&C Management Limited is authorised and regulated by the Financial Services Authority (FSA) FRN:119230. Limited by shares. Registered in England and Wales, No. 517895. Registered address and Head Office: Exchange House, Primrose Street, London, EC2A 2NY, United Kingdom. F&C Asset Management plc is the listed holding company of the F&C group. F&C Management Limited is a member of the F&C Group of companies and a subsidiary of F&C Asset Management plc. F&C, the F&C logo, REO and the ‘reo’ logo are registered trade marks of F&C Asset Management plc. F&C INVESTMENTS and the F&C INVESTMENTS logo are trade marks of F&C Management Limited. © Copyright F&C Management Limited 2007. All Rights Reserved. Neither this document nor any part of it may be reproduced by any party whether by photocopying or storing in any medium by electronic means or otherwise without the prior approval of F&C Asset Management plc.

United KingdomF&C Management LimitedExchange HousePrimrose StreetLondon EC2A 2NY

Tel: +44 (0) 20 7628 8000Fax: +44 (0) 20 7770 5487Website: www.fandc.com

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United KingdomF&C Management Limited80 George StreetEdinburgh EH2 3BUScotland

Tel: +44 (0) 131 465 1000

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Head Office

Marketing &Client Servicing Offices

Investment Offices

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Tel: +44 (0) 1306 651800

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