Climate management: Persevering through the economic cycle. CDP Italy 100 Climate Change Report December 2013

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1 1 Climate management: Persevering through the economic cycle CDP Italy 100 Climate Change Report December 2013 Report writer Scoring partner

2 02 The evolution of CDP With great pleasure, CDP announced an exciting change this year. Over ten years ago CDP pioneered the only global disclosure system for companies to report their environmental impacts and strategies to investors. In that time, and with your support, CDP has accelerated climate change and natural resource issues to the boardroom and has moved beyond the corporate world to engage with cities and governments. The CDP platform has evolved significantly, supporting multinational purchasers to build more sustainable supply chains. It enables cities around the world to exchange information, take best practice action and build climate resilience. We assess the climate performance of companies and drive improvements through shareholder engagement. Our offering to the global marketplace has expanded to cover a wider spectrum of the earth s natural capital, specifically water and forests, alongside carbon, energy and climate. For these reasons, we have outgrown our former name of the Carbon Disclosure Project and rebranded to CDP. Many of you already know and refer to us in this way. Our rebrand denotes our progress as we continue to catalyze action and respond to business, finance, investment and environmental needs globally. We now have a look and logo that reflects the scale of the work we must undertake in the coming years to move the markets ahead of where they would otherwise be on these issues and realize truly sustainable economies. Over 5,000 companies from all over the world have been asked to report on climate change through CDP this year; 81% of the world s 500 largest public companies listed on the Global 500 engage with CDP to enable effective measurement of their carbon foot print and climate change action; CDP is a not-for-profit organization. If you would like to support our vital work throught donations or sponsorship opportunities, please paul. [email protected] or telephone +44 (0)

3 Contents CDP CEO Foreword Accenture Foreword Environmental Ministry Foreword Executive Summary Investor Perspective Criteria for 2013 leaders 2013 Leaders Key Statistics The CDP initiative for non-listed companies IMQ Insights on Verification Interview with Fiat Sector Analysis Consumer Discretionary Financials Industrials Materials Utilities Appendix Non-responding companies Responding companies Investor members Signatory Pages Important Notice The contents of this report may be used by anyone providing acknowledgement is given to Carbon Disclosure Project (CDP). This does not represent a license to repackage or resell any of the data reported to CDP or the contributing authors and presented in this report. If you intend to repackage or resell any of the contents of this report, you need to obtain express permission from CDP before doing so. Accenture and CDP have prepared the data and analysis in this report based on responses to the CDP 2013 climate change information request. No representation or warranty (express or implied) is given by Accenture or CDP as to the accuracy or completeness of the information and opinions contained in this report. Company scoring was prepared by IMQ on the basis of CDP s own methodology, without any Accenture involvement. Accenture does not take any responsibility for ranking accuracy. You should not act upon the information contained in this publication without obtaining specific professional advice. To the extent permitted by law, Accenture and CDP do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it. All information and views expressed herein by CDP and/or Accenture and/or any of its contributors is based on their judgment at the time of this report and are subject to change without notice due to economic, political, industry and firm-specific factors. Guest commentaries where included in this report reflect the views of their respective authors; their inclusion is not an endorsement of them. Accenture and CDP and their affiliated member firms or companies, or their respective shareholders, members, partners, principals, directors, officers and/or employees, may have a position in the securities of the companies discussed herein. The securities of the companies mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates. Carbon Disclosure Project and CDP refer to Carbon Disclosure Project, a United Kingdom company limited by guarantee, registered as a United Kingdom charity number Carbon Disclosure Project. All rights reserved.

4 04 CEO Foreword As countries around the world seek economic growth, strong employment and safe environments, corporations have a unique responsibility to deliver that growth in a way that uses natural resources wisely. The opportunity is enormous and it is the only growth worth having. 1 New York State Hurricane Sandy Damage Assessment; Governor Andrew Cuomo; November 12, governor.ny.gov/ press/ damageassessment 2 Based on findings from the report Natural Capital at Risk: The Top 100 Externalities of Business, published by TEEB for Business Coalition in April 2013 This year we passed a significant landmark of 400ppm of carbon dioxide in the atmosphere and are rapidly heading towards 450ppm, accepted by many governments as the upper limit to avoid dangerous climate change. The Intergovernmental Panel on Climate Change (IPCC) 5th assessment report (AR5) strengthens the scientific case for action. Fears are increasing over future climate change impacts as we see more extreme weather events, Hurricane Sandy the most noted with damages totalling some $42 billion 1. The unprecedented melting of the Arctic ice is a clear climate alarm bell, while the first 10 years of this century have been the world s hottest since records began, according to the World Meteorological Organization. The result is a seismic shift in corporate awareness of the need to assess physical risk from climate change and to build resilience. For investors, the Carbon Bubble has been brought to the fore by the work of Carbon Tracker. They calculate around 80% of coal, oil and gas reserves are unburnable, if governments are to meet global commitments to keep the temperature rise below 2 C. This has serious implications for institutional investors portfolios and valuations of companies with fossil fuel reserves. The economic case for action is strengthening. This year, we published the 3% Solution report showing that the US corporate sector could profitably reduce emissions by 3% per year, meeting its share of GHG emissions reductions in line with the 2 degree target. 79% of US companies responding to CDP report higher ROI on emission reductions investments than on the average business investment. This has been noted by the US Administration and reflected in the launch of their Climate Action Plan. Other governments are taking action: China is developing air pollution measures and moving toward pilot cap and trade schemes; the UK government has mandated greenhouse gas emissions reporting for all large listed companies; the EU is looking at improving environmental and other reporting. The pressure on corporations, investors and governments to act continues. At CDP, we have broadened our work to add forests to climate and water so our programs now extend to an estimated 79% of natural capital, by value 2. To reflect this, we rebranded at the start of the year from the Carbon Disclosure Project to CDP and are increasing our focus on projects to accelerate action. One explores how corporations influence public policy on climate change both positively and negatively. Some corporations are still acting both directly and through trade associations to prevent the inevitable: nations need sensible climate regulation that protects the public interest over the long term. As countries around the world seek economic growth, strong employment and safe environments, corporations have a unique responsibility to deliver that growth in a way that uses natural resources wisely. The opportunity is enormous and it is the only growth worth having. Paul Simpson CEO CDP

5 Accenture Foreword 05 When it comes to the management of climate change challenges... competitively pursuing short-time profit is irrational, especially today when the community competitiveness challenge unveils, more than ever, the supremacy of cooperative models against competitive ones. It is widely recognized that some opportunities require a systematic approach to be solved. Being able to look at the world with unexpected, out of the box thinking can spark innovation and apply it successfully and with profit. This belief is the result of our daily work with our clients in defining and executing the strategy to creatively grasp business opportunities. To be fully identified and leveraged, these opportunities need an overall view of the common good and a knowledge of cooperative models. Only in this way can the maximum benefit be reached for both the individual and the community. Nobel prize winner John Nash mathematically proved cooperative behaviors allow reaching the highest benefit for each individual. When it comes to the management of climate change challenges, Nash would say that competitively pursuing short-time profit is irrational, especially today when the community competitiveness challenge unveils, more than ever, the supremacy of cooperative models against competitive ones. Even Michael Porter, the author of Competitive Advantage said that while many companies may still think of global warming as a corporate social responsibility issue, business leaders need to approach it in the same hard headed manner as any other strategic threat or opportunity. For all of the above reasons, the results of the latest survey 3 - conducted by Accenture with the UN Global Compact - were not surprising. The research involved more than 1000 CEOs worldwide and revealed that CEOs see sustainability as an opportunity to increase their competitive advantage: 93% of CEOs see sustainability as important to the future success of their business and 78% see sustainability as an opportunity for growth and innovation. But, at the same time, they are aware that they are not doing all they can: only 33% report that business is making sufficient efforts to address global sustainability challenges and only 38% believe they can accurately quantify the value of their sustainability initiatives. Considering these results, we foresee two main streams to follow. The first is to work on the development of appropriate tools and processes to manage the issue of climate change from a business perspective. If, as CEOs declare, companies still have difficulties in understanding the business case, it will be hard to push the issue forward. The second main stream is to leverage the cooperative model. Following these two streams, we believe companies should invest more in developing internal structures to manage climate change issues and in trying to understand what other companies are doing. They should share experiences and try to leverage on those without necessarily shaping initiatives from scratch. Therefore, as the joint Accenture and CDP working group, we are pleased to participate in the process of creating a sharing platform. To begin, we included some best practices and suggestions on possible new ways to look at business opportunities in the Sector analysis of the report. Danilo Troncarelli Sustainability Lead Italy, Central & Eastern Europe, Russia, Middle East 3 UN Global Compact Accenture CEO Study On Sustainability 2013

6 06 Environmental Ministry Foreword The Italian Ministry for the Environment is committed to promoting carbon management in both the public and private sector, in order to reduce emissions and to foster an Italian transition towards a low carbon economy. Last April we signed with CDP a landmark agreement, in order to mutually endorse each other s activities and together drive action to promote sustainable lowcarbon growth through the voluntary disclosure and measurement of environmental performance in the public and private sector. In this regard, the CDP report plays a significant role in monitoring where we stand. There is growing awareness among companies of the need of designing and producing with low energy consumption and low carbon emissions. Many Italian firms have established that they should put these topics at the core of their business in order to combine sustainability and competitiveness. As the CPD report says, the Italian companies are implementing more advanced management strategies and indicators of climate related activities. Nevertheless, the report explains that companies decreased total investments in carbon reduction initiatives, shifting to projects with shorter payback periods. We need to adjust this trend, leveraging on Public initiatives and fiscal policies designed to encourage the improvement of environmental performance. Since 2009, the Ministry for the Environment has been developing a National Program for the evaluation of the environmental footprint (carbon footprint and water footprint) of industrial processes, products, goods and services. It is a large scale test, involving more than 200 companies, to evaluate the methodologies to assess environmental performances, with the final aim of harmonizing them and making them repeatable. Identifying and testing procedures of carbon management whether through the development and use of low-carbon technologies or the implementation of best practices in production processes and the life cycle management of goods and services the program is a step forward for the green economy in Italy. Companies decreased total investments in carbon reduction initiatives, shifting to projects with shorter payback periods. We need to adjust this trend, leveraging on Public initiatives and fiscal policies designed to encourage the improvement of environmental performance. Corrado Clini Director General of the Department for Sustainable Development, Climate and Energy Ministry of the Environment, Land and Sea

7 There is growing awareness among companies of the need of designing and producing with low energy consumption and low carbon emissions. 07

8 08 Executive Summary CDP requests climate change data on behalf of 722 institutional investors that is used by financial decision makers in their investment, lending and insurance analysis. Accenture, as report writer, has been supporting CDP in analyzing Italian companies responses and identifying key trends in the last three years. This year s report aims to accomplish three main goals: first, to provide insight into key macro trends among our respondents; second, to provide an in-depth look at the behavior of companies in the main sectors; and third, but not least important, to provide insights on best demonstrated practices to bring sustainability to the heart of business. The report is based on 46 responses from companies to the CDP Climate Change Programme the same number as in Out of these, there were 44 unique responses 4, compared to 43 last year, with Banca Generali and Enel Green Power referring to their parent company s response. It should be noted that these 46 responses represent about 77% of the market cap of the top 100 listed companies in Italy and 83% of the FTSE MIB 5. While reviewing results of companies responses, we asked ourselves a couple of main questions. Are companies scaling back measurement, reporting and action in the face of economic headwinds? Do climate issues take a back seat to more traditional bottom line issues? Most people would expect the answer to be an unequivocal yes to both of those questions, but our respondents proved that it is not quite so straightforward. A few main trends emerged, including from the non-responding companies. Climate change is one of those long term issues that need to be addressed now. It has not stopped during the crisis. Europe has not become energy independent. And our energy infrastructure has not become younger This is why reporting through CDP is such an important tool. It can tell investors whether companies integrate climate change challenges into their corporate strategies. It can make companies discover new potential for reducing their own energy use and carbon emissions. It can make new investments more climate-proof. Connie Hedegaard, European Commissioner for Climate Change Action Among firms that declined to participate, in fact, the most common refrain was that they would like to be involved, but they are only just beginning the climate management process and thus do not yet feel comfortable reporting on their activities. Another common response was that firms were funneling resources elsewhere or had downsized the position that would ordinarily be tasked with climate change management and reporting. At a high level, three main trends emerged from the responses of the companies that did participate: 4 These two responses are included to provide a full picture of the response rate, while the remaining analysis in this report is based on the lower total of 44 that excludes these 2 companies 5 FTSE MIB is made of the top 40 listed companies per market capitalization on the Italian Stock Exchange { Companies are becoming more sophisticated in the management and measurement of climate related activities; { Firms are decreasing their total investments in carbon reduction initiatives and are shifting to projects with shorter payback periods; { Improvements struggle to arrive: despite emissions reduction activities and investments reported in the latest years, carbon emissions are not decreasing.

9 09 1. Companies are becoming more sophisticated in the management and measurement of climate related activities. The first key theme is the growing sophistication of Italian respondents, as their responses demonstrate a more comprehensive and involved approach to managing climate change. This maturation is reflected in the scores, as respondents performed markedly better than last year (Fig.1). Indeed, the average 2013 disclosure score for respondents from the 2012 panel qualifies as a high score, a first for Italy. These respondents improved their scores by an average of more than ten points, with 27 firms improving their scores compared to just eight firms whose scores declined. All of this is to say that respondents are getting savvier when it comes to climate change management and reporting, demonstrating that the practice is really beginning to gain traction. Figure 2 shows that more companies across the board are identifying risks and opportunities. In that context, it makes sense that more companies are setting emissions reductions targets (29 in 2013, vs. 25 in 2012), although most have a timeframe of less than five years. More firms are also providing incentives for the management of climate change issues (26 vs. 20). Furthermore, they are undertaking more emissions reduction initiatives (221 vs. 180) and providing more information on their initiatives, adding details about carbon savings, financial savings, and payback period. They also identified more relevant sources of Scope 3 emissions. Translating this sophistication into action is crucial, and as we discuss below, has not quite happened yet. 2. Compared to last year, firms are decreasing their total investments in emission reduction initiatives and are shifting to projects with shorter payback periods. Companies are continuing their quest to reduce emissions, albeit with a slightly different approach that is likely in response to current economic conditions Fig 1. Disclosure scores Average disclosure score in Improvement for 2012 panel 10 Average disclosure score in 2013 for 2012 panel 72 Drop by new companies 6 Average disclosure score in Fig 2. Most commonly reported risks and opportunities Most common risk drivers Risks Opportunities Most common opportunity drivers 77% 72% Regulation Fuel/Energy Taxes (56%) International agreements (48%) Fuel/Energy Taxes (48%) International agreements (42%) 74% 84% 80% 63% Physical 50% Change in precipitation extremes (66%) Change in average temperature (18%) 44% Change in precipitation extremes (63%) Change in average temperature (23%) 66% 60% Other Reputation (52%) Changing consumer behavior (55%) Reputation (47%) Reputation (49%) 63% 73% 80% 60% 40% 20% 0% 20% 40% 60% 80%

10 10 Executive Summary continued Fig 3. Reduction initiative payback periods 45 (34%) 34 (26%) 33 (25%) 19 (15%) 131 (100%) < 1 year 1-3 years 4-10 years >10 years Total and reduced internal resources. The investments have been reshaped, as there is a greater number of smaller investments with quicker payback periods. The number of initiatives with a payback period shorter than three years has increased to 79 from last year s value of 60. The total number of investments increased to 221 from 180 in 2012, while the amount invested decreased by 25% year-over-year, from 3,600 million to 2,700 million. This decrease is strongly related to a reduction in investments by the Materials, Telecommunication Services and Utilities sectors. The increased focus on projects with a payback period of less than one year (Fig. 3) indicates a number of things. Foremost, we believe it is a result of the economic downturn. Capital is limited and firms cannot afford to wait as long for a return on their investments. The second thing this may indicate is that these projects are easier for management to approve. Lastly, this could be a reflection on the difficulty of predicting long term consequences of actions related to climate change. Fig 4. Reduction initiative investment types 104 (48%) 32 (15%) 30 (14%) 16 (7%) 14 (6%) 5 (2%) 4 (1%) 16 (7%) 221 (100%) Another major investment theme revolves around the type of projects firms are undertaking. Energy efficiency projects gained ground in 2013, increasing to 47% from 42% in 2012 (Fig. 4). These projects are broken down into three categories: Building fabric, building services, and processes. Nearly 50% of the energy efficiency initiatives are in the processes category. Energy efficiency projects tend to follow the trend in payback period, with most projects paying off within three years (>60%). 3. Improvements struggle to arrive: despite reduction activities and investments reported in the latest years, GHG emissions are not decreasing. Energy efficiency Low Carbon Transportation Behavioural change Process emissions reductions Product design Fugitive emissions reductions Other Total Taking into account all responding companies, overall reported Scope 1 and Scope 2 emissions 6 decreased (Fig. 5 7 ). However, only a very small portion can be attributed to reduction initiatives. Indeed, this year s respondents reported reductions of only 2.4 million tco 2 e through initiatives, less than 1% of total emissions. Our analysis suggests that the year-over-year decrease in total reported Scope 1 emissions is due to the change in the composition of the panel of respondents, not company improvements; similarly, the decrease in Scope 2 emissions is mostly due to a change in perimeter reporting and a reduction in output, not due to reduction initiatives. Reported Scope 3 emissions increased, though this is likely a result of more accurate reporting and not an increase in emissions. The Utilities sector - in particular power generation - is still the biggest Scope 1 emitter, accounting for over 55% of emissions. These results should drive further reflections: despite the investments, the growing sophistication and integration in company processes, companies emissions are not

11 11 decreasing. Ultimately, the changes cannot be directly attributed to a single cause, like an increase in output. Though this is certainly part of it, a number of other factors also contribute, including acquisitions, changes in boundary, and changes in methodology. Notably, sectors whose emissions increased the most are Consumer Discretionary and Utilities. A few recent events serve to illustrate just how important it is to reverse the trend and decouple emissions from growth. First, in May 2013, the earth surpassed the level of 400 parts per million (PPM) of carbon dioxide in the atmosphere, a level that has not been seen for over one million years. At the time, the Arctic was ice free. For more current context, scientists estimate that at 450 PPM there will be severe and irreversible effects to the climate. Then in September, the Intergovernmental Panel on Climate Change (IPCC) released its fifth climate assessment report, in which it for the first time confirmed with 95% certainty that human activity is responsible for the temperature increase. The report also demonstrates that at the current rate of emissions, we will exhaust our carbon budget by In the IPCC summary for policy makers, the scientists go on to point out that, due to the length of time CO 2 remains in the atmosphere, most aspects of climate change will persist for many centuries even if emissions of CO 2 are stopped. 8 So what can be done to improve the situation? First and foremost, the onus is on the companies themselves to respond to pressure both from investors and from increasingly aware consumers who are beginning to migrate to more eco-friendly companies and products. Though encouraging, investments to date have not been enough to affect real change: it is therefore necessary to further strengthen the business case for sustainability strategies in order to induce more significant and long-term actions. More and more, consumers must exercise their market power by rewarding the more virtuous companies. Investors, with particular regard for long-term investments, must focus more on firms that promote green products and services they must offer easier access to capital and better interest rates for projects designed to reduce our environmental footprint. And finally, the government must create a stable regulatory environment that encourages and incentivizes the achievement of each economic sector s goals, and, ultimately, the collective goal of a sustainable society. The external pressures should be viewed as an opportunity for the firms to become more competitive, providing opportunities for savings in the short run and greater stability in the long run, especially through access to investor capital dedicated specifically to sustainability initiatives. Leaders There are a few companies, however, that have been able to distinguish themselves through exemplary scores in performance and disclosure. This year, three companies made the Climate Performance Leadership Index (CPLI), including Fiat, Yoox, and Assicurazioni Generali. These firms translated action into results, with all three reducing their year-over-year emissions by at least 4% through targeted reduction initiatives, one of the requirements for inclusion in the CPLI. Companies receiving top disclosure scores demonstrate a commitment to climate reporting and transparency. Ten firms made the Climate Disclosure Leadership Index (CDLI) this year, including Buzzi Unicem, Eni, Fiat, CNH Industrial 9, Intesa Sanpaolo, Italcementi, Pirelli, Snam, STMicroelectronics, and Terna. Fig 5. Emissions overview 300 million tco 2 e Scope 1 Scope For the purpose of this report, emissions are global emissions reported by Italian firms in the CDP questionnaire. 7 Scope 2 figures for 2013 are not directly comparable with 2012 as companies can now incorporate the specific emissions factors associated with renewable energy purchases where supported by appropriate tracking instruments. 8 climatechange2013. org/images/uploads/ WGIAR5_WGI- 12Doc2b_FinalDraft_ TechnicalSummary.pdf 9 This year s response can be found online on the CDP site under the company s former name, Fiat Industrial.

12 12 Investor Perspective Things have changed. In 20 years, from Rio to Rio+20 ( ), climate change has become much more than an environmental issue. It is a global challenge whose repercussions are felt in all facets of our society. Climate change threatens, for example, biodiversity and eco-systems, health and food security, with the capacity to affect human well-being and economic development. Isabella Falautano, Chief Corporate Responsibility Officer, AXA Italy 10 The 2013 Earth Overshoot Date, the approximate day when human resource demand exceed nature s budget, fell on August 20th, with a negative trend of an average of 3 days ahead per year since org/psi/ flipbuilder.com/server/ AXA-Paper04/ 14 In the last nine months, we consumed more natural resources than the planet can produce in a year 10, and notably it would take 4 times Italy s area to support our current national rate of consumption. On the one hand, we have an ecological deficit but, on the other, the green economy represents an increasing area of opportunity for innovation and growth. As a leader in the insurance industry, AXA has the responsibility to leverage its expertise to help find solutions to the climate challenge. We have chosen to be active not only in the elaboration of its insurance products by proposing reliable solutions and managing risks, but also by better understanding climate risks and sharing this knowledge with others. AXA, therefore, aims to contribute to increasing society s resilience to climate change and its risks with the ultimate ambition of protecting people, especially the most vulnerable. Since 2003 AXA has supported the CDP by namely taking part in its annual questionnaire. This year, AXA obtained the highest score for the insurance industry (moving from 88 to 94/100) and have been included in the Climate Disclosure Leadership Index (CDLI) for the third year. This index highlights companies within the FTSE Global Equity Index Series (Global 500) which have demonstrated a strong commitment to climate change strategy, governance, stakeholder communications and emission reduction in their CDP responses. In 2012, AXA signed the Principles for Sustainable Insurance 11 at the UN Conference on Sustainable Development. These 4 principles provide a common framework for integrating environmental, social and governance (ESG) criteria into the insurance business. This is one amongst the many ways the private sector, and notably the insurance one, can take action and start implementing solutions. The insurance value chain also includes the investment and asset management activities of our business. AXA is also a long-term global investor with the duty to act in the best interests of its policyholders, shareholders and other stakeholders, which means understanding the risks and the opportunities related to ESG issues in our portfolios. The Group indeed also publicly committed to the United Nations Principles for Responsible Investment 12 (UN PRI), which invite signatories to better ESG criteria into their investment decisions and ownership practices, as well as promote disclosure. Both AXA Investment Managers and AllianceBernstein, the Group s asset management entities, have been UN PRI members since, respectively, 2007 and 2011(as well as the AXA Group in 2012). This complementary Group-level signature indicates an asset owner commitment to integrating responsible investment practices on behalf of AXA s companies. Our role is, as well, underlined by a fast evolution in societal expectations. The comparative 2012 AXA-IPSOS survey, involving more than 13,000 people in 13 countries in Europe, Asia and America, shows clearly that climate change is now a reality that causes people concern regarding its impact on their day-to-day lives.the results for our country, included in the Italian AXA Paper n.4 13, reinforce this key message: in Italy 9 out of 10 people polled (92%, the highest level among in Europe) believe that climate changed significantly in the past 20 years. Far from being fatalistic, 93% of respondents believe that it is possible to limit the consequences of climate change and that each stakeholder has a role to play: insurers should also help in mitigating climate risk -according to the majority of Italian people surveyed (65% vs 61% of the overall average)- while the expectations the most frequently expressed were for insurance products to promote more environmentally conscious behavior, high-level scientific research on climate change and the collaboration with public sector to tackle climate change. These results are very encouraging for us to enhance our work in promoting climate risks research and knowledge-sharing across the general public - as with the AXA Research Fund 14, which, since 2007, has supported globally 139 independent research projects on environmental risks with more than 20M, in Italy the Fund has committed over 7M in nearly 30 projects a third of which linked to climate change and earthquake - as well as to continue addressing climate risks in every aspect of the insurance value chain.

13 Criteria for 2013 Leaders 13 Each year, company responses are analyzed and scored against two parallel scoring schemes: disclosure and performance. The disclosure score assesses the completeness and quality of a company s response. Its purpose is to provide a summary of the extent to which companies have answered CDP s questions in a structured format. A high disclosure score signals that a company provided comprehensive information about the measurement and management of its carbon footprint, its climate change strategy and risk management processes and outcomes. The performance score assesses the level of action, as reported by the company, on climate change mitigation, adaptation and transparency. Its intent is to highlight positive climate action as demonstrated by a company s CDP response. A high performance score signals that a company is measuring, verifying and managing its carbon footprint, for example by setting and meeting carbon reduction targets and implementing programs to reduce emissions in both its direct operations and supply chain. The highest scoring companies for disclosure and/or performance enter the Climate Disclosure Leadership Index (CDLI) and/or the Climate Performance Leadership Index (CPLI). Public scores are available in CDP reports, through Bloomberg Terminals, Google Finance and Deutsche Boerse s website. What are the CDLI and CPLI criteria? To enter the CDLI, a company must: { Make its response public and submit via CDP s Online Response System { Achieve a score within the top 10% of the Italy 100 population (10 companies in 2013) To enter the CPLI (Performance Band A), a company must: { Make its response public and submit via CDP s Online Response System { Attain a performance score greater than 85 { Score maximum performance points on question 12.1a (absolute emissions performance) for GHG reductions due to emission reduction actions over the past year (4% or above in 2013) { Disclose gross global Scope 1 and Scope 2 figures { Score maximum performance points for verification of Scope 1 and Scope 2 emissions { Furthermore, CDP reserves the right to exclude any company from the CPLI if there is anything in its response or other publicly available information that calls into question its suitability for inclusion. How are the CDLI and CPLI used by investors? Good disclosure and performance scores are used by investors as a proxy of good climate change management or climate change performance of companies. Investors identify and then engage with companies to encourage them to improve their score. The Aiming for A initiative which was initiated by CCLA Investment Management is driven by a coalition of UK asset owners and mutual fund managers. They are asking 10 major UK-listed utilities and extractives companies to aim for inclusion in the CPLI. This may involve filing supportive shareholder resolutions for Annual General Meetings occurring after September Investors are also using CDP scores for creation of financial products. For example, Nedbank in South Africa developed the Nedbank Green Index. Disclosure scores are used for selecting stocks and performance scores for assigning weight. For further information on the CDLI and the CPLI and how scores are determined, please visit Note: Companies that achieve a performance score high enough to warrant inclusion in the CPLI, but do not meet all of the other CPLI requirements are classed as Performance Band A- but are not included in the CPLI.

14 Leaders Climate Discloser Leadership Index (CDLI) Companies with a score greater than 70 are considered high scorers, though they are not necessarily Climate Disclosure Leaders. Being a high scorer demonstrates a commitment to environmental transparency, as well as the competence to measure and interpret how the firms impact the environment. The number of high scorers continues to improve, as it went up from 13 in 2011, to 20 in 2012, and now 27 in 2013 (Table 1). Snam in particular makes a significant leap in disclosure performance, jumping from 50 to 95. Disclosure scores are measured across six categories: emissions management, emissions reporting, governance & strategy, opportunities, risks, and verification/stakeholder engagement. CDLI firms outperform their counterparts by at least 20 points per category, though the biggest differences lie in identifying opportunities and risks, where CDLI members score 47 and 43 points higher, respectively. This indicates that CDLI members have given more thought to how climate change will affect them, going beyond mere disclosure. Climate Performance Leadership Index (CPLI) Like 2012, three companies made the CPLI this year, including Assicurazioni Generali, which also made the CPLI Global 500. Fiat continues to lead by example, as this is its third consecutive year in the CPLI. Yoox, in just its second year participating, also joined the ranks of the top performers (Table 2). Though the number of CPLI members remained constant, there was an improvement in general performance, as 21 firms made the top two performance bands, vs. 13 in 2012 (Fig. 7). CPLI members outperform their colleagues by at least 33 points per category, though the largest difference is in emissions performance, where the difference is 57 points. The leaders all demonstrated significant reductions to emissions through the use of reduction initiatives, and in the case of Fiat, even in spite of a significant increase in output. The average disclosure score for firms in the CDLI was 95, demonstrating true leadership in climate reporting. The Consumer Discretionary, Materials, and Utilities sectors were each represented by two firms. The two representatives in the Utilities sector were new this year, as Enel and A2A failed to make it and were replaced by Snam and Terna instead. There is generally a wide range of scores within each industry, though carbon intensive sectors (i.e. Energy, Materials and Utilities) have both smaller ranges and higher averages, indicating that climate management and reporting is particularly important for them (Fig ). Table 1. Italy 100 Climate Discloser Leadership Index 2013 Sector Company Name CDLI 2013 Italy 100 Climate Disclosure Score 2013 CDLI 2012 Italy 100 Climate Disclosure Score 2012 Consumer Discretionary Fiat Pirelli Energy Eni Financials Intesa Sanpaolo Industrials CNH Industrial Information Technology STMicroelectronics Nv Materials Buzzi Unicem Italcementi Utilities Snam Terna 91 82

15 15 Table 2. Italy 100 Climate Performance Leadership Index 2013 Sector Company Name CPLI 2013 Italy 100 Climate Performance Band 2013 CPLI 2012 Italy 100 Climate Performance Band 2012 Consumer Discretionary Fiat A A YOOX A Not Public Financials Assicurazioni Generali A B Fig 6. Range and average of disclosure scores Utilities 87 Telecommunication Services 95 Materials 82 Information Technology 94 Industrials 68 Health Care 25 Financials 52 Energy 87 Consumer Discretionary Disclosure Score Fig 7. Climate performance bands companies per band A B C D 15 Fig 6. The Information Technology and Health Care sectors are each represented by only one company

16 16 Key Statistics 16 They have a higher than average response rate but are represented by fewer companies in the overall sample 17 Fig 8. UTIL = Utilities, MAT = Materials, EGY = Energy, CD = Consumer Discretionary, IT = Information Technology, FIN = Financials, TCOM = Telecommunications, IND = Industrials 18 The number of companies disclosing Scope 1 or 2 emissions includes those that have disclosed their emissions as zero This year, Financials and Consumer Discretionary companies represent over 50% of the respondents but contribute less than 1% of total Scope 1 emissions. Conversely, Utilities, Materials and Energy firms make up less than 30% of the respondents 16 but account for over 95% of reported Scope 1 emissions and over 50% of reported Scope 2 emissions (Fig ). Of total reported extra boundary Scope 1 emissions, 71% occurred outside of Italy this year (Fig. 9). Combined, the 2013 respondents represent nearly 77% of the market capitalization of the 100 firms in our selection. Respondents continue to place significant emphasis on the management of climate change issues, as demonstrated in Figure 10. The percentage of companies assigning top management to the task decreased to 89% from 95% as a result of two new respondents without executive responsibility. Similarly, the percentage of firms providing incentives to achieve specific climate related measures fell to 43% from 47% as a result of no incentive offerings from the six new respondents. Further evidence of progress can be seen in the rates of public disclosure, as 35 companies chose to make their responses public, compared to 29 last year. Moreover, 77% of all respondents voluntarily disclose data to the public via other means than the CDP report, ensuring their stakeholders have access to their climate management data. By being transparent, firms can create an open dialogue with external stakeholders, which is key to advancing the goals of climate management. The number of companies disclosing Scope 1 or Scope 2 emissions was stable in , with five sectors having every company disclose. In total, 82% of the respondents disclose emissions data, providing a near complete picture. Nearly 60% of them also identify at least one source of Scope 3 emissions, though Figure 13 shows that business travel, which should be one of the least relevant sources as not properly linked to the business, is currently the most reported. Evaluating supply chains is a difficult task, though this presents perhaps the greatest opportunity for companies to build their climate management capabilities and identify opportunities to reduce emissions. 91% of Scope 3 emissions are tied to the use of sold products, but it is worth highlighting that this is related to one company only. The key takeaway is that the graph is not representative of actual Scope 3 emissions but instead of the potential impact Scope 3 emissions can have; it demonstrates that the measurement and management Scope 3 emissions needs to play a fundamental role in climate management strategies (Fig ). Landmark agreement signed between Italian Ministry for the Environment and CDP to boost corporate action on environment In April 2013, the Italian Ministry for the Environment, Land and Sea and CDP signed a landmark agreement to mutually endorse each other s activities and together drive action to promote sustainable growth and protect the natural environment via the voluntary disclosure and measurement of environmental information by both the public and private sector. This agreement is the first of its kind in Europe and a direct call for corporate action by the government. From the next disclosure cycle on, Italian companies in the CDP sample will receive an additional invitation by the Ministry, accompanying the official CDP Climate Change Programme, to monitor and manage their carbon emissions. CDP is delighted to support the Italian Ministry for the Environment in the joint efforts to promote emissions reduction activities on a voluntary basis by the private sector as well as public institutions in order to foster an Italian transition towards a low carbon economy.

17 17 Fig 8. Scope 1 and 2 Emissions by sector Scope 1 Scope % 20% 40% 60% 80% 100% million metric tco 2 e UTIL MAT EGY CD IT FIN TCOM IND Fig 9. Extra boundary scope 1 emissions Fig 10. Climate change governance { Italy { Rest of World 89% (39) Board or senior executive oversight (2012: 95%, 41) 29% 69 MtCO 2 e 43% (19) 73% (32) 41% (18) 43% (19) Monetary incentives (2012: 47%, 20) 41% (18) 77% (34) Integrated strategy (2012: 79%, 34) 71% 169 MtCO 2 e

18 31,82% 25,00% 18,18% 18,18% 18 Key Statistics continued Fig 11. Sources of scope 3 emissions 100% 80% 60% 40% 38,69% 20% 13,64% 11,36% 11,36% 2,27% 2,27% 2,27% 2,27% 0% Business travel 0,22% 2,63% 3,15% 0,79% 1,34% 91,14% 0,03% 0,06% 0,09% 0,01% 0,39% 0,15% Purchased goods and services Fuel-and-energy-related activities (not included in Scope 1 or 2) Upstream transportation and distribution Downstream transportation and distribution Use of sold products Waste generated in operations Employee commuting Capital goods Upstream leased assets End of life treatment of sold products Downstream leased assets Total Scope 3 emissions % Companies reporting the Scope 3 source % 19 Fig 11. Only companies reporting Scope 3 emissions using the Greenhouse Gas Protocol Scope 3 Standard named categories have been included below. Whilst in some cases Other upstream or Other downstream are legitimate selections, in most circumstances the data contained in these categories should be allocated to one of the named categories. Reporting companies are encouraged to use these specific categories where appropriate as not doing so and using Other greatly affects data quality and therefore the utility of the data for investors. An attempt to subjectively attribute categories where companies have selected Other has not been undertaken. In addition, only those categories for which emissions figures that are greater than zero and identified as relevant have been provided have been included. >90% of reported Scope 3 emissions are attributed to the use of sold products.

19 The CDP initiative for non-listed companies 19 What about non-listed companies in CDP? Traditionally, only stock market listed companies are requested to respond to CDP. But what about non-listed companies and family owned businesses that want to measure, manage and disclose their climate change data and compare themselves to their peers or customers? For these companies - which anticipate opportunities from responding to CDP - we created the CDP non-listed initiative: Current members: { CTT Portuguese Post { Delipaper { Evonik { Flughafen München { Gesobau { Hermes { HSE { Infraserv { Jean Müller { Robert Bosch { Sofidel Group { Tetra Pak { Werra Papier { Wiedemann Wachswaren This initiative allows non-listed companies of all sizes to evaluate their emissions management and their understanding of potential climate change impacts by using the leading international CDP reporting standard. Members receive support from CDP in-house experts as well as coaching from our consultancy partners. In a second step, the companies results will be subject to a detailed evaluation, highlighting areas of potential improvement and comparative analyses with relevant competitors and/or customers. The focus of the initiative is support our members. Launched in Germany in 2011, CDP decided to expand the initiative to the whole of Europe this year. We currently have two Southern European companies participating: CTT Correios de Portugal who started off with a first-time score of 86 B and the Sofidel Group, an Italian paper manufacturer, who achieved a score of 73 C. 5 good reasons to report voluntarily: { Compare yourself with over 5,000 companies worldwide by using the established CDP reporting standard { Evaluate your emissions management and discover new opportunities in your internal reporting infrastructure { Anticipate climate change related risks (e.g. mandatory GHG-reporting in your country) { Be named in the prestigious local annual report (CDP Iberia Report/CDP Italy Report) { Become an active member of the CDP network and participate in the local launch events and spring workshops

20 20 IMQ - GHG emissions verification, the trend is taken The greenhouse gas (GHG) emissions data that companies quantify and disclose to CDP have become increasingly material for their users, ranging from boardrooms and investors, through business customers, to governments and regulators. The quality and accuracy of GHG emission estimates are therefore regarded by CDP as paramount, and accordingly incentivised by the scoring approach, i.e. through the weight of the score awarded to third party verification or assurance (hereafter, verification) of reported emissions. Third party verification involves a systematic, independent and documented process for obtaining audit evidence (records, statements of facts and other verifiable information), and evaluating it objectively, to determine the extent to which the audit criteria are fulfilled. The audit criteria that CDP accepts to assign full points to the verification questions on its questionnaire are clearly identified as accepted verification standards on its website 20. In 2013 questionnaires, 66% of responding companies reported that they have had (or were having) their Scope 1 and 2 emissions verified, confirming last year s growing trend and highlighting that those companies who had verified their data in 2012, found it beneficial and repeated the process in 2013 (Fig ). In our experience as a conformity assessment body, the benefits of having the reported data verified are both internal to the company, and external. Internally, accurate and reliable figures prove to be necessary to include climate change and environmental sustainability into strategic and development plans. Moreover, being able to discuss the work carried out with a verification team of carbon management experts, is always the best option to understand strengths and weaknesses, to find out where processes can be improved, to provide a sound basis for pushing internal investments and business decisions. Externally, third party verified figures definitely add value to any kind of data analysis, collection and comparison, by assuring that the figures are correct, scientifically sound and that the accounting boundaries have been clearly identified and communicated. Looking at 2013 data in detail, 28 companies verified their Scope 1 and 2 emissions, while 18 verified at least one category type of Scope 3 emissions, generally the scope 3 source(s) stated in the corporate sustainability report and therefore included in the report s assurance process. The discrepancy is mainly due to the lack of data, as 16 companies out of 44 responding ones did not report any Scope 3 emissions, while Scope 1 and 2 emissions data Fig 12. Year on year comparison of companies reporting and obtaining full points for third party verification/assurance of Scope 1 and/or Scope 2 emissions 20 cdproject.net/en-us/ Respond/Pages/ verification-standards. aspx 21 Fig 12. CDP has been working to encourage greater levels of third party verification/assurance of data in response to demands for higher levels of data quality. The term reported and approved refers to the fact that the number of companies with verification is based on the scoring of the verification statements attached to their response. Where companies report verification/assurance of more than one scope, they are only counted once in the statistic provided on the right Companies with third party verification/assurance approved (full points) Companies reporting verification/assurance underway - first year it has taken place

21 21 were not provided by a lower number of companies (9). Companies have also improved their reporting skills, as this year there were only two cases where verification had been reported, but the statement was missing or not relevant (according to CDP scoring requisites) (Figs. 13a & 13b). In 2013, 31% of companies reporting verification have provided third party statements according to ISO standard This verification standard warrants reasonable or high levels of assurance and is tailored on GHG inventories of organisations. The ultimate objective of verification according to ISO is for the third party to guarantee that the calculations are correct, consistent and technically relevant, and that an adequate system is in place for collecting, storing, processing and reporting data. To this end, it is worth mentioning the in-depth verification to which Assicurazioni Generali, Intesa San Paolo and STMicroelectronics have submitted their GHG emissions from 2012 activities. In future reporting years, rewards will indeed be available for companies verifying a high percentage of their emissions, and a new question will be introduced asking whether the company applies a systematic verification approach to data other than GHG emissions, such as GHG targets, year on year changes, product carbon footprints and emission reduction projects. As we said, the trend is taken. Environment Unit, IMQ SpA Fig 13a. Emissions verification/assurance (2013) Scope 1 & Scope 2 9 Companies with third party verification/assurance approved (full points) Companies reporting verification/assurance underway - first year it has taken place Reported but not approved (no full points) No third party verification/assurance No emissions data provided Fig 13b. Emissions verification/assurance (2013) Scope 3 Companies with third party verification/assurance approved (full points) Companies reporting verification/assurance underway - first year it has taken place Reported but not approved (no full points) No third party verification/assurance 9 1 No emissions data provided

22 22 Interview with Fiat You successfully showed that growth does not need to equate with a growth in emissions. In fact, while your revenue and number of employees went up, your GHG emissions went down. How have you achieved this and what would be your recommendation for other companies who are trying to do the same? Fiat Group believes that A culture of responsibility is integral to our business model, because financial success can only be sustainable if it is achieved ethically. The recent global expansion of Fiat Group s product range has resulted in considerable volume increases. Simultaneously, however, we have succeeded in reducing the related manufacturing impacts on the environment, with an 8% energy reduction vs 2010 and a decrease of 9.5% in CO 2 emissions. These achievements were the result of challenging targets for the period that, together with WCM deployment across Group operations, corresponded to a worldwide commitment by the entire company from top management through the entire Fiat-Chrysler workforce. How do you encourage green innovation throughout your value chain? Can you give some examples? The Group is committed to extending the principles of sustainability and green innovation beyond its own operations to include business partners, customers and the community at large. For suppliers, this includes promoting participation in the CDP Supply Chain initiative, sustainability assessments and audits. For the use phase of our products, Fiat Group continues to focus on optimizing fuel efficiency of traditional gasoline engines as well as development of alternative fuel vehicles. In Europe, the Group offers 11 models powered by natural gas. We also play an active role in engaging customers to drive responsibly to improve fuel economy and lower emissions. The Group is committed to extending the principles of sustainability and green innovation beyond its own operations to include business partners, customers and the community at large. Fiat SpA reported this year also to the CDP Water Program, and, on a voluntary basis, to CDP Forests. Which benefits do you see in responding also to the CDP Water and Forests programs, in addition to the CDP Investor Program? Participation in CDP Water and CDP Forest is a means to convey the Group s commitment to all aspects of our environmental footprint, even those that are not as material to the automotive industry (e.g. Forest). The growing scarcity of these essential natural resources should lead all responsible companies to review usage within their operations. Water has been an important topic at Fiat for many years. This year the Group responded voluntarily to CDP Water to inform stakeholders of our extensive commitment and significant results, representing a 25% reduction in water usage in just two years (2010 to 2012). Fiat Group

23 A culture of responsibility is integral to our business model, because financial success can only be sustainable if it is achieved ethically. 23

24 24 Sector Analysis Consumer Discretionary % of Respondents % of Total Scope 1 Emissions 20% 0.5% Total Scope 1 Emissions (tco 2 e) Ratio of Risks to Opportunities % Change from ,374, % 1.5:1 56% % with Reduction Targets Average Disclosure Score & Performance Band 58/C Fig CD1. Emissions intensity Pirelli (169) Fiat (47) Arnoldo Mondadori Editore (16) YOOX (4) Tires & Rubber Publishing gco 2 e/ revenue Automobile Manufacturers Internet Retail The Consumer Discretionary sector is composed of nine companies (Arnoldo Mondadori Editore, Brembo, Fiat, Geox, GTECH, Marr, Mediaset, Pirelli, YOOX). Its Scope 1 emissions have decreased by 2.9% from 2012, and the sector accounts for 0.5% of total reported Scope 1 emissions by Italian firms. The largest non-responding companies are Luxottica, TOD s, and the Campari group. Of the companies that disclose information publicly, Pirelli easily has the highest emissions intensity. This is slightly misleading, however, as none of the four firms are truly comparable when considering their business and activities (Fig. CD1 22 ). The vast majority of the sector s investment money was funneled into energy efficiency projects, with 89% of the money represented by just 22% of the total sector projects (Fig. CD2). Not surprisingly, the sector identifies a dedicated budget for energy efficiency as a main method for investing, along with regulatory compliance and internal finance mechanisms. Fiat represents nearly two-thirds of the money invested, as the firm is putting 22 million into two energy efficiency initiatives, both of which have a payback period of less than one year. These initiatives include the installation of LED lighting, building automation systems, and more efficient HVAC systems, among others. Generally speaking, the sector is more focused than average on long term projects. Of those projects with payback period data, 38% will be longer than 10 years, though over half will pay off in less than three years. An interesting note in the case of the Consumer Discretionary sector is the payback of projects in the behavioral change category. According to the data, firms will receive a payback of about 2,000 for every euro invested, indicating that behavioral programs might represent the lowest hanging fruit in the sector (Fig. CD3). Behavioral projects are generally related to altering employees behavior through trainings and the dissemination of information related to sustainable living and working. By enlightening their employees, they can reduce electricity use, reduce travel, and prevent waste, all of which offer financial and environmental benefits for the firms. 22 Fig CD1. Only companies with a public, nonzero response are represented On the management side of things, Consumer Discretionary companies identify about 1.5 risks for every opportunity. The sector is overwhelmingly focused on regulatory risks, as they comprise nearly two-thirds of all risk drivers, and they almost outnumber opportunity drivers across all categories combined. The overwhelming consensus is that various new regulations could increase

25 25 operational costs for the firms. However, concerns also include a physical change in temperature extremes and reputation. The main opportunities are found in changing consumer behaviors and the ability to strengthen the firms reputations, indicating a certain level of credence in the green consumer (Figs. CD4 & CD5). The Consumer Discretionary sector is led by Fiat, which achieved a disclosure score of 99 and a performance rating A. The sector performs below average, with an average disclosure score of 58, and only four of the six companies that reported publicly achieved a climate performance band. Those firms perform very well, however, as Fiat, Pirelli, Yoox, and Arnoldo Mondadori Editore all improved their scores (Fig. CD6 23 ). issues they engage with are diverse, with no two companies pursuing the same policy. Among the issues of interest are carbon reporting, energy efficiency, and alternative fuels, to name a few. Five of the nine firms have set emissions reductions targets, which is second lowest among the four major sectors, with only Financials having a lower share of firms with targets. The firms with targets, however, are performing admirably, as they have 18 targets combined, 16 of which are either on or ahead of schedule. Fiat is the clear leader in the group, setting a total of 15 targets, including 12 intensity targets that are specific to individual business units (Fig. CD7). Seven of the nine Consumer Discretionary firms engage in some way with policy makers, with four of the seven getting directly involved. The Fig CD2. Reduction initiative investments 258,280 32,400,000 3,600,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Euros Energy efficiency Low carbon Other Fig CD3. Investment metrics 10, , ,071.43; 2, saved/ invested ; ; ,000 10,000 tco 2 saved/1000 invested Low carbon Behavioral change Energy efficiency

26 26 Sector Analysis Consumer Discretionary - continued Fig CD4. Commonly identified risks 35 % of responding companies Reputation Change in temperature extremes Fuel/Energy taxes and regulations Air pollution limits Product labeling regulations and standards Fig CD5. Commonly identified opportunities 60 % of responding companies Changing consumer behaviour Reputation International agreements Cap and trade Product labeling schemes regulations and standards Fig CD6. Disclosure Score vs. Performance Band Pirelli Fiat Disclosure score Arnoldo Mondadori Editore Yoox Brembo E D C B A 23 Fig CD6. Only firms receiving a performance band are included Performance band

27 27 Fig CD7. Emissions reductions targets Company Targets Target Description Change in Scope 1 Emissions Arnoldo Mondadori Editore No targets Change in boundary Fiat 12 intensity targets 3 absolute targets Emissions reductions GTECH No information on targets No information Mediaset No targets No information Pirelli 20% Scope 2 reduction > % Scope 1+2 reduction per ton of product > 2015 Acquisitions, other YOOX 80% Scope 2 reduction per MWh > 2016 Emissions reductions Increase Decrease No change Sector leading management case studies Best initiative Best practice Looking forward Company B&Q Timberland Nest CDP Participation Responded (parent company Kingfisher plc) Responded (parent company VF Corporation) Private, not in sample Company overview B&Q is a British Do-It-Yourself retailer with approximately 300 stores. B&Q employs a comprehensive approach to sustainability, tackling both internal and external opportunities. Timberland is an American footwear, clothing, and accessories maker with global revenue of $1.3 billion. Nest is an American producer of smart thermostats. Internally, the company is installing LED lighting to reduce energy demand and employing the Description use of solar panels and biomass boilers to ensure that the energy they do consume is as renewable as possible. Externally, the company is cutting its logistics emissions by switching to a decentralized warehousing system which cuts the distance per trip and simultaneously using bigger trucks, which reduces the number of trips required. Downstream, the company is helping clients become more sustainable by carrying over 4000 eco-products on their shelves. Since 2006, B&Q has reduced its emissions by 29%. In order to reduce its environmental impact, Timberland adopted a life-cycle based method of product development, focusing specifically on materials and end-of-life planning. By designing their shoes to be disassembled and recycled, they increased the amount of recycled material by 200% and reduced the amount of carbon required by 500 tons per 40,000 pairs when compared with their previous model. Using machine learning algorithms, the thermostat learns the heating and cooling preferences of its owner, as well as the time and energy it takes to achieve these temperatures. By doing so, the thermostat is able to use the least amount of energy to achieve the desired temperatures at the desired time, avoiding any wasted energy consumption.

28 28 Sector Analysis Financials 24 Fig FIN1. Examples with inconsistencies related to the company s business activities have been excluded from this analysis 25 Fig FIN1. Only companies with a public, nonzero response are represented % of Respondents % of Total Scope 1 Emissions 32% 0.2% Total Scope 1 Emissions (tco 2 e) Ratio of Risks to Opportunities % Change from , % 1.2:1 43% % with Reduction Targets Average Disclosure Score & Performance Band 52/D Fig FIN1. Emissions intensity Immobiliare Grande Distribuzione (200) Credito Valtellinese (24) UBI Banca (18) UniCredit (15) Intesa Sanpaolo (6) Banca Monte dei Paschi di Siena (4) Assicurazioni Generali (1) Diversified Banks Other Diversified FS Retail REIT s gco 2 e/ revenue Multi-line Insurance Regional Banks The Financials sector is composed of 14 companies: Assicurazioni Generali, Banca Monte dei Paschi di Siena, Banco Popolare Societa Cooperativa, Beni Stabili, Cattolica Assicurazioni, Credito Valtellinese, Dea Capital, Immobiliare Grande Distribuzione, Intesa Sanpaolo, Mediobanca, Mediolanum, UBI Banca, UniCredit and Unipol. Though it represents the largest percentage of our respondents, the sector accounts for just 0.2% of total Scope 1 emissions. Emissions increased by over 115% from 2012, largely due to Immobiliare Grande Distribuzioni (IGD) reporting its emissions (269,000 tco 2 e) for the first time. The largest non-responding companies are Exor, Banco Popolare di Milano, and Banco Carige. Of the firms that reported publicly, Immobiliare Grande Distribuzione has the highest emissions intensity, with the rest of the firms clustered in a small range. This is likely due to the fact that IGD is a real estate company, not a bank or insurance firm like the rest of the respondents (Fig. FIN1 24,25 ). The Financials sector is also investing heavily in energy efficiency projects, with about 95% ( 247 million) of investments flowing in that direction. However, if we do not consider UniCredit s 240 million investment in office space optimization, energy efficiency only receives 40% of the investment, with low carbon and transportation projects receiving approximately 45% and 5% respectively (Fig. FIN2). Primary investment methods include a dedicated budget for energy efficiency, along with the strongest drive for employee engagement among any of the sectors. With respect to payback period, the Financials sector takes a more intermediate approach. About 33% of the projects will pay back in less than one year, another 26% within three years, about 37% within 10 years, and only 4% in the very long term. Like the Consumer Discretionary sector, the Financials sector also sees the best return on investment from behavioral changes, though not nearly to the same extent. The rationale is the same, as firms seek to educate their employees on strategies to make their daily lives both at home and at work more sustainable. However, behavioral changes represent only a small potential for emissions reductions. Low carbon projects represent the opposite case, presenting a low financial return on investment but large carbon savings (Fig. FIN3). Management in the Financials sector is not quite as pessimistic as in the Consumer Discretionary sector, as managers identify only 1.2 risks to every opportunity. Regulatory and physical risks each comprise about 40% of identified risks, while

29 29 regulatory and physical opportunities comprise about 50% and 30% of identified opportunities respectively. The sector generally believes that changes in precipitation extremes are the biggest risk and the biggest opportunity, as any changes will likely create opportunities in their insurance arms. They also see opportunities in changing consumer behavior and strengthening their firms environmental reputations (Figs. FIN4 & FIN5). The Financials sector is led by Intesa Sanpaolo, which achieved a disclosure score of 92 and a performance rating B, and Assicurazioni Generali, which achieved a score of 87 and a performance band of A. The sector performs significantly below average in general, with an average disclosure score of 52, due primarily to the low scores of the four new respondents in the sector. Seven of the eleven companies that reported publicly achieved a performance band. Both Assicurazioni Generali and Credito Valtellinese improved, while UBI Banca and Banca MPS both decreased slightly (Fig. FIN6 26 ). The Financials sector is actively engaged with policy makers, as 12 of the 14 firms identify at least one method in which they hope to affect policy outcomes. Three of the firms engage in every possible way: directly, through trade associations, through funding research, and other. For firms that get directly involved, energy efficiency is a key concern, while climate finance and clean energy generation are also mentioned by multiple firms. Six of the 14 firms have set emissions reduction targets, representing the lowest share of any major sector. However, the firms implementing emissions reduction initiatives are doing so effectively, as all 11 initiatives are either on or ahead of schedule. UniCredit has the most ambitious target, aiming to reduce combined emissions by 30% by 2020 (Fig. FIN7). Fig FIN2. Reduction initiative investments 338,000 9,111,215 7,858,828 2,703,850 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Euros Low carbon Energy efficiency Transportation Other Fig FIN3. Investment metrics 6.00 saved/ invested ; ; ; ; ; tco 2 saved/1000 invested Behavioral change Low carbon Transportation Energy efficiency Other

30 30 Sector Analysis Financials - continued Fig FIN4. Commonly identified risks 60 % of responding companies Change in precipitation extremes and droughts Reputation Fuel/energy taxes and regulations Fig FIN5. Commonly identified opportunities 45% % of responding companies 40% 35% 30% 25% 20% 15% 10% 5% 0% Changing consumer behaviour Change in precipitation extremes and droughts Reputation Fig FIN6. Disclosure Score vs. Performance Band 26 Fig FIN6. Only firms receiving a performance band are included Disclosure score Unipol Credito Valtellinese UniCredit Intesa Sanpaolo UBI Banca Banca MPS Banco Popolare Società Cooperativa E D C B A Performance band Assicurazioni Generali

31 31 Fig FIN7. Emissions reductions targets Company Targets Target Description Change in Scope 1 Emissions Assicurazioni Generali 10% absolute reduction Scope from > % reduction Scope 2 per FTE > 2012 Initiatives Banca Monte dei Paschi di Siena No targets Initiatives Credito Valtellinese 10% Scope reduction per m > % Scope 2 reduction per m > 2013 Change in boundary Dea Capital No targets No information Immobiliare Grande Distribuzione No targets Not comparable Intesa Sanpaolo 31.4% Scope 2 reduction > % Scope 2 reduction Italy > % Scope 2 reduction Italy > % Scope 1 reduction > % Scope 1 reduction > 2013 Change in output Mediobanca No targets No information Mediolanum No targets No information UBI Banca 2% Scope reduction per FTE > 2015 Operating conditions UniCredit 15% Scope reduction > % Scope reduction > 2020 Methodology Unipol No targets Change in boundary Increase Decrease No change Sector leading management case studies Best initiative Best practice Looking forward Company HSBC AXA Allianz CDP Participation Responded Responded Responded Company overview HSBC is one of the leading global banking and financial services organization with an international network of over 9,500 offices in 86 countries. AXA is a leading global insurance company with 160,000 employees across 57 countries. Allianz is a major global insurer based in Germany with over 75 million clients worldwide. Description HSBC has integrated sustainability into its core strategy by adhering to the Equator Principles, a set of guidelines that ensure environmental impacts of investments are a key part of the investment analysis process. HSBC now guarantees that it does not invest in projects that impact sensitive sites, and it further estimates that it has invested over 2 billion in projects with minimal or no social or environmental impacts. AXA has adopted a set of core principles in order to ensure the sustainability of its insurance practice. The Principles of Sustainable Insurance integrate environmental considerations into risk management, underwriting and capital adequacy decision making processes, including research, models, analytics, tools and metrics, allowing AXA to control the environmental impact of its policies and practices. The company offers micro-insurance products to regional clients most likely to be affected by climate change as part of a larger, global insurance pool, allowing them to spread the risk and maintain inexpensive premiums. This has resulted in the acquisition of hundreds of thousands of new clients.

32 32 Sector Analysis Industrials % of Respondents % of Total Scope 1 Emissions 14% 0.2% Total Scope 1 Emissions (tco 2 e) Ratio of Risks to Opportunities % Change from ,000 37% 1.8:1 100% % with Reduction Targets Average Disclosure Score & Performance Band 68/C The Industrials sector is composed of six companies (Ansaldo, Atlantia, Danieli & C Officine Meccaniche, CNH Industrial, Finmeccanica, Prysmian). The sector s Scope 1 emissions increased by 37% from last year, though this is due to the addition of Prysmian and Atlantia. Among respondents in both 2012 and 2013, emissions actually decreased slightly. Despite the new additions, the sector still only accounts for 0.2% of total Scope 1 emissions. The largest nonresponding firms are GEMINA, SIAS, and Indesit Company. Like the Consumer Discretionary sector, the emissions intensities of industrial firms are not directly comparable due to their varying business activities. Nevertheless, the firms occupy a reasonably small range (Fig. IND1 27 ). The Industrials sector is investing heavily in energy efficiency projects, undertaking 33 in total (64%). However, these projects are smaller financially, as they represent just 31% of the total money invested. The rest of the money is being invested in major low carbon projects, mainly renewable energy installations (Fig. IND2). Interestingly, twice as many managers have a budget for energy efficiency than have a budget for low carbon projects. Of particular note is Atlantia, as they are undertaking the two largest projects which combine to account for nearly 80% of the investment in the sector ( 53 million of 67 million). 44 million of this investment entails installing photovoltaic plants on over 140 company-owned buildings. Like financial firms, industrial firms take a balanced approach when it comes to investment time horizons. About one-third of investments pay back by one year, 24% pay off by three years, another 24% by 10 years, and the remaining 18% are long term. The Industrials sector - Finmeccanica in particular - realizes the greatest benefit from investments in reducing fugitive emissions. These projects only represent small potential CO 2 savings, however. Energy efficiency projects represent the Fig IND1. Emissions intensity Prysmian (70) Atlantia (42) Electrical Components & Equipment Highways & Railtracks Finmeccanica (33) CNH Industrial (21) 27 Fig IND1. Only companies with a public, nonzero response are represented Aerospace & Defense Construction & Farm Machinery & Heavy Trucks Ansaldo STS (8) gco 2 e/ revenue

33 33 greatest carbon benefits, and they range from the installation of solar thermal water heaters to LED lighting to the installation of heat pumps and more efficient HVAC systems (Fig. IND3). Managers of industrial firms are among the most pessimistic, as they foresee nearly two risks for every opportunity related to climate change management. Almost 50% of the risks identified relate to physical climate changes, while only 6% of the opportunities are physical. The biggest concerns are changes in precipitation and temperature extremes, both of which could lead to increased operational costs. Reputation and international agreements are viewed as the biggest opportunities (Figs. IND4 & IND5). The Industrials sector is led by CNH Industrial, which achieved a disclosure score of 93 and a performance rating B. The sector performs in line with the overall averages, with an average disclosure score of 68. All six of the firms reported publicly, and five of the six achieved a performance band. While CNH Industrial was the clear disclosure leader, the industry had four firms in performance band B (Fig. IND6 28 ). All six firms engage with policy makers in some manner, with the most common being direct engagement. Much like in the Financials sector, firms also engage through trade unions and funding research. Interests are generally company specific, as no two companies pursue the same cause. All six of the industrial firms have emissions reductions targets, joining Utilities as the only major sectors with 100% of their members reporting targets. While this is important, the firms have not been as successful in meeting their individual initiatives, as just five of the nine initiatives undertaken are on track to being completed on time. The sector boasts some ambitious targets, including Atlantia s 2020 goal of an absolute reduction of 20% relative to 2005 levels (Fig. IND7). Fig IND2. Reduction initiative investments 43,835 46,194,561 21,237,756 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Euros Low carbon Energy efficiency Other Fig IND3. Investment metrics saved/ invested ; ; ; tco 2 saved/1000 invested Low carbon Fugitive emissions reduction Energy efficiency

34 34 Sector Analysis Industrials - continued Fig IND4. Commonly identified risks 60 % of responding companies Change in precipitation extremes and droughts Reputation Change in temperature extremes Other physical climate drivers Fig IND5. Commonly identified opportunities % of responding companies Reputation International agreements Other drivers Fuel/energy taxes and regulations Fig IND6. Disclosure Score vs. Performance Band CNH Industrial Disclosure score Prysmian Finmeccanica Ansaldo STS Atlantia 50 E D C B A 28 Fig IND6. Only firms receiving a performance band are included Performance band

35 35 Fig IND7. Emissions reductions targets Company Targets Target Description Change in Scope 1 Emissions Ansaldo STS 84% reduction Scope > 2013 (due to outsourcing) 84% Scope 1 reduction per MWh > 2013 (due to outsourcing) Methodology Atlantia 20% Scope 1+2 reduction > 2020 Not comparable Danieli & C Officine Meccaniche No information No information CNH Industrial Finmeccanica 10% Scope 1+2 reduction > 2013, Fiat Group 15% Scope 1+2 reduction per hour worked > 2014, CNH 35% Scope 1+2 reduction per hour worked > 2014, Iveco 30% Scope 1+2 reduction per product unit > 2014, large engine dept. 27% Scope 1+2 reduction per product unit > 2014, small engine dept. 15% Scope 1+2 reduction > % Scope 1+2 reduction > % Scope 1+2 reduction > 2013 Initiatives, other Initiatives Prysmian 1% Scope 1+2 reduction > 2012 Not comparable Increase Decrease No change Sector leading management case studies Best initiative Best practice Looking forward Company Komatsu Skanska EADS CDP Participation Responded Responded Responded Company overview Komatsu is a Japanese industrial, construction, mining, and utility equipment manufacturer with 46,000 employees worldwide. Skanska is a Sweden-based global project development and construction company with 57,000 employees worldwide. EADS is a global aerospace and defense company, with around 140,000 employees at over 170 sites worldwide. They employ a carbon footprinting tactic to Description In order to reduce its environmental impact, the firm reevaluated both its production facility and product designs. This allowed them to implement circular economies, using recycled materials in the production of their equipment, recycling the wastes that come from the production processes, and recycling their products when they reach end-of-life. Furthermore, their equipment comes with embedded energy savings technologies, minimizing the energy consumed in the use of their goods. evaluate projects, allowing them to identify the largest sources of emissions, and hence the greatest opportunities for emissions reductions. One example of this is the Brent Civic Center in the UK, where the company was able to reduce the embedded carbon by 26% through a small design change that permitted the substitution from a large-quantity, high-carbon material to a lower-quantity, lower-carbon material. Furthermore, Skanska spearheaded an initiative with its competitors to create an online body of sustainable best practice knowledge among their communal suppliers, using a cooperative approach to achieve greater sustainability benefits. The firm is taking a holistic approach to reducing carbon emissions. In addition to implementing more efficient production processes, more energy efficient buildings and on site renewable energy plants, they also focus on downstream emissions. They are developing a roadmap for aviation biofuels in order to replace fossil fuels with renewable, carbon neutral fuels. Furthermore, they are reimagining the future of air travel, modeling new methods of taking off, landing, and flying in formation, all with the intent of burning less fuel.

36 36 Sector Analysis Materials % of Respondents % of Total Scope 1 Emissions 7% 22% Total Scope 1 Emissions (tco 2 e) Ratio of Risks to Opportunities % Change from ,649,735 8% 2.3:1 67% % with Reduction Targets Average Disclosure Score & Performance Band 82/C The Materials sector is composed of three companies (Buzzi Unicem, Cementir, and Italcementi), all of which, by virtue of their industry, emit major amounts of greenhouse gases. The sector decreased its Scope 1 emissions by nearly 8% from 2012 levels, primarily as a result of a change in boundary of carbon reporting by Cementir and a reduction in output by Italcementi. Even so, the sector accounts for 21.7% of 2013 Scope 1 emissions. Zignago Vetro was the only non-responding company in the sector. Given their very similar and resource intensive production processes, the firms have the highest emissions intensities of any sector, with Italcementi very narrowly outperforming Buzzi Unicem (Fig. MA1 29,30 ). The firms have undertaken a combined 28 initiatives. Like most other sectors, energy efficiency projects dominate, accounting for 70% of the projects and over 95% of the money invested. Interestingly, more managers have a budget for low carbon projects than for energy efficiency projects, though energy efficiency projects dominate the industry (Fig. MA2). Of special note is that Buzzi Unicem accounts for over 90% of the money invested (though many other initiatives do not contain financial data). They are undertaking a major project to phase out inefficient mills, resulting in an electrical savings of 20KWh per ton of raw material processed. Like the Consumer Discretionary industry, the Materials sector adopts a very short time horizon for its investments. Over 90% of all initiatives will pay off within three years, including more than 50% that have a payback period of less than one year. The Materials sector sees the most financial benefit from projects that reduce process emissions. Most of the gains are achieved by substituting inputs, including adding slag to clinker and rice husks to the fuel mix. This represents a large amount of potential savings as well (over 40%) (Fig. MA3). Like the Utilities sector, the Materials sector does not calculate gain from changing employees behavior. This is understandable, especially considering that both are carbon intensive sectors with major reduction opportunities related to their operations Fig MA1. Emissions intensity Buzzi Unicem (8,048) Italcementi (8,000) 29 Fig MA1. Examples with inconsistencies related to the company s business activities have been excluded from this analysis 30 Fig MA1. Only companies with a public, nonzero response are represented 0 2,000 4,000 6,000 8,000 10,000 Construction Materials gco 2 e/ revenue

37 37 Management in the Materials sector is the most pessimistic of all, identifying more risks per opportunity (2.3) than any other sector. They are also almost singly focused on the regulatory aspect, identifying international agreements, cap and trade schemes, emissions reporting obligations, and carbon taxes as their biggest concerns. They acknowledge that international agreements could open up new business opportunities, and similarly that changing consumer behavior could increase demand for greener products. The emissions-centric focus of the industry masks other potential problems, including the physical risks like extreme precipitation or temperatures that may disrupt production processes or supply chain continuity (Figs. MA4 & MA5). The Materials sector is led by Buzzi Unicem, which achieved a disclosure score of 98 and a performance rating B. The sector performs well overall, with an average disclosure score of 82. Buzzi Unicem and Italcementi achieve performance band B and disclosure scores in the high 90s. Cementir improved from 2012, though it still lags behind with a score of 52 and a D band (Fig. MA6 31 ). Only Cementir does not engage with policy makers, while Italcementi engages directly and Buzzi Unicem participates in trade associations. Italcementi is focused on a few issues, namely mandatory carbon reporting, energy efficiency, and clean energy generation, while the trade associations Buzzi Unicem works with are involved at a higher level on the sustainability debate. Interestingly, only Cementir does not list an official target, though they do claim to have informal intensity targets. Unfortunately, of the two official targets set by the other firms, neither are on track to be completed on time. In an acknowledgment of the Kyoto Protocol, Italcementi sets their base year emissions at 1990 levels with a goal of an 11.5% reduction by 2015, while Buzzi Unicem aims for a 2% reduction from 2010 levels by 2012 (Fig. MA7). Fig MA2. Reduction initiative investments 936,000 31,551,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Euros Energy efficiency Other Fig MA3. Investment metrics ; 1.63 saved/ invested ; ; tco 2 saved/1000 invested Process emissions reductions Other Energy efficiency

38 38 Sector Analysis Materials - continued Fig MA4. Commonly identified risks % of responding companies International agreements Change in precipitation extremes and droughts Cap and trade schemes Changing consumer behaviour Emission reporting obligations Carbon taxes Fig MA5. Commonly identified opportunities % of responding companies International agreements Changing consumer behaviour Emission reporting obligations Reputation Product efficiency regu- schemes Cap and trade lations and standards 31 Fig MA6. Only firms receiving a performance band are included Fig MA6. Disclosure Score vs. Performance Band Buzzi Unicem 100 Disclosure score Italcementi Cementir Holding 50 E D C B A Performance band

39 39 Fig MA7. Emissions reductions targets Company Targets Target Description Change in Scope 1 Emissions Buzzi Unicem 2% Scope 1 reduction per ton of cement equivalent > 2012 Initiatives, output Cementir No targets Other Italcementi 11.5% Scope 1 reduction per ton of cement equivalent > 2015 Output Increase Decrease No change Sector leading management case studies Best initiative Best practice Looking forward Company Lafarge HeidelbergCement Alcoa CDP Participation Responded Responded Responded Company overview French firm Lafarge is the leading global cement producer, with 65,000 employees in 64 countries. HeidelbergCement, based in Germany, is the fifth largest cement producer worldwide. Alcoa is a global mining and metals company operating in 31 countries with more than 63,000 employees. Description Lafarge has reduced its environmental footprint in two important ways. First, it is adopting a circular economy model, reusing aggregate in place of virgin material and reducing waste by recycling traditional waste streams. Second, it has placed increased importance on alternative fuel sources and now gets 14% of its fuel from alternative sources, including biofuels and RDF. The firm sought to reduce its environmental footprint through the use of alternative fuel sources, including RDF and biofuels. On average, the company gets 21% of its fuel from alternative sources. Heidelberg s subsidiary Norcem is undertaking three different carbon capture and sequestration pilot projects in the hopes of identifying a cost-effective method of achieving dramatic CO 2 reductions. The firm developed an innovative way to use one of the byproducts of aluminum productive to capture and store CO 2, reducing both waste and emissions. The pilot plant captures 70,000 tons of CO 2 emissions annually, and Alcoa estimates that it can save 300,000 tons annually in Australia alone.

40 40 Sector Analysis Utilities 32 Fig UT1. Only companies with a public, nonzero response are represented % of Respondents % of Total Scope 1 Emissions ENEL (1,590) A2A (1,000) Snam (610) Iren (590) Hera (444) ACEA (213) Terna (78) 16% 55.5% Total Scope 1 Emissions (tco 2 e) Ratio of Risks to Opportunities % Change from ,550, % % with Reduction Targets 1.3:1 100% Average Disclosure Score & Performance Band 87/B Fig UT1. Emissions Intensity ,000 1,500 Electric Utilities Gas Utilities gco 2 e/ revenue Multi-Utilities The Utilities sector is composed of seven companies (a2a, ACEA, Enel, Hera, Iren, Snam, Terna). The seven firms account for 55.5% of total 2013 Scope 1 emissions, though Enel accounts for over 90% of the sector s contribution. Most utilities increased their emissions slightly, with a2a being the only firm to reduce its emissions. Overall, the sector s emissions increased by 3.3%. The non-responding companies were Acegas-Aps, Ascopiave, and Falck Renewables. The sector experiences the largest variance in emissions intensity, due largely to the varying activities of each company. This is most evident when comparing Enel, which emits 1590 gco 2 e/, to Terna, which emits just 78 gco 2 e/ (Fig. UT1 32 ). The Utilities sector is invested more heavily in low carbon projects than other projects and other sectors, directly as the result of a nearly 1.8 billion investment in renewable energy by Enel. Enel also accounts for 99% of the investment in energy efficiency projects, investing 242 million to improve the efficiency of their thermal generation plants. Similarly, Snam s investments of about 40 million in fugitive emissions reduction initiatives comprise 99% of all investment in that category (Fig. UT2). The sector s main investment method is regulatory compliance. The Utilities sector follows a unique investment pattern with regards to payback period as well, as the majority of its investments are either short term or very long term. About 45% pay back within three years, 45% pay back after 25 years or more, and only about 10% have an intermediate duration. The Utilities sector receives one of the lowest average financial returns on investment, though it also achieves 97% of total CO 2 savings among all respondents with just 77% of the total investment. The low carbon projects provide the best financial returns and the most environmental benefits (Fig. UT3). Overall, it is important to recognize that the Utilities sector is key in terms of investments and emissions. It is equally important to note that despite the large investment numbers, the sector still increased its emissions from the previous year. From the management perspective, the Utilities sector identifies about 1.3 risks for every opportunity related to climate change, with a slight bias toward regulatory issues. Cap and trade schemes are a primary concern, as are change in temperature and precipitation extremes. Interestingly, reputation is the most commonly identified concern, which could indicate a coming competition to be the greenest utility. This is further evidenced by managers identifying changing consumer behaviors as the biggest opportunity, with the most common justification

41 41 being an expected increase in demand for existing products or services. Managers also believe that international agreements could provide opportunities in a number of different ways (Figs. UT4 & UT5). This year, the Utilities sector is led by Snam, which achieved a disclosure score of 95 and a performance rating B. The sector performs much better than the overall averages, with an average disclosure score of 87 and performance band of B. All seven of the firms reported publicly, and all of them achieved a performance band of B. Snam made the biggest disclosure improvement (45 points), Enel and a2a saw their scores fall slightly, and the remainder of the utilities saw moderate improvements (Fig. UT6 33 ). All seven of the utilities are engaged with policy makers, with six companies each involved directly or through trade associations, and five firms also funding research (firms can pursue more than one course of action). Energy efficiency is the most important issue for those engaged directly, followed by clean energy generation and voluntary reporting of climate information. The trade associations and research projects all vary from company to company. All seven firms have emissions reduction targets. Combined, the industry has 16 targets, nine of which are on track to be completed on schedule. a2a is the only firm in any of the major sectors that sets a target for Scope 3 emissions, and, with ACEA, the only utility to set a target for emissions other than Scope 1 (Fig. UT7). Fig UT2. Reduction initiative investments 1,510,000 38,500,000 1,787,050, ,234,000 0% Low carbon 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Energy efficiency Fugitive emissions reduction Euros Other Fig UT3. Investment metrics 0.14 saved/ invested ,88; 0, tco 2 saved/1000 invested Energy efficiency Low carbon 33,16; 0,12 100

42 42 Sector Analysis Utilities - continued Fig UT4. Commonly identified risks % of responding companies Reputation Change in precipitation extremes and droughts Cap and trade schemes Changing consumer behaviour Change in temperature extremes Fig UT5. Commonly identified opportunities % of responding companies Changing consumer behaviour International agreements Reputation Change in mean (average) precipitation Change in temperature extremes Fig UT6. Disclosure Score vs. Performance Band Snam Disclosure Score Terna ACEA A2A ENEL Hera Iren 33 Fig UT6. Only firms receiving a performance band are included 75 D C B A Performance Band

43 43 Fig UT7. Emissions reductions targets Company Targets Target Description Change in Scope 1 Emissions A2A ACEA ENEL 26% Scope 3 "use of products" reduction > % Scope 1 reduction per MWh > % Scope 1 reduction > % Scope 2 reduction > % Scope 1 reduction per MWh > % Scope 2 reduction per product unit > % Scope 1 reduction per MWh > % Scope 1 reduction per MWh > 2015 Initiatives, divestments Change in boundary Operating conditions Hera 11% Scope 1 reduction per MWh > 2016 Initiatives Iren Snam Terna 25% Scope 1 reduction per MWh > % Scope 1 reduction per MWh > % Scope 1 reduction > % Scope 1 reduction (gas emission/gas injection) > % Scope 1 reduction (gas recovered/potential emission) % Scope 1 reduction > % Scope 1 reduction gas loss incidences > 2014 Not comparable No change Operating conditions Increase Decrease No change Sector leading management case studies Best initiative Best practice Looking forward Company E.ON British Gas Smart Grid Billing CDP Participation Responded Responded (parent company Centrica) Private, not in sample Company overview E.ON is one of the world s largest energy providers, with 72,000 employees and approximately 132 billion in revenue during British Gas is a leading utility in the United Kingdom. The company manages 25 million customer accounts and reached 16.2 billion in revenue during Smart Grid Billing is an innovative startup based in California. In a small island community of 1,100 people in the North of Germany, the company recently Description inaugurated what it sees as the energy system of the future. The utility partnered with the local government to install smart meters, approximately 10GW of biomass, solar and wind plants, and both large- and small- scale energy storage. The project will maximize the use of renewable energy, minimize network costs and losses, and demonstrate the viability of using non-central energy sources. The firm hopes to take lessons learned and develop the system on a larger scale. British Gas provides its customers with energy efficiency services, including the Opower energy management dashboard. By analyzing energy consumption patterns, the dashboard shows individual clients how they can take simple steps to reduce their electricity consumption. Thus far, the program has seen energy reductions from 1.5% - 3.5%. The company uses a combination of smart outlets, a mobile and desktop application, and intricate algorithms to aggregate MWh of peak demand and shift them to less expensive, lower-demand hours. By programming energy demand, utilities can better integrate and capitalize on distributed energy sources like wind.

44 44 Appendix I: Non-responding companies Company Response Status a Permission Status b Consumer Discretionary Autogrill DP Not public Brunello Cucinelli DP Public Gruppo Editoriale L'Espresso DP Not public Impregilo DP Not public Luxottica Group DP Not public Marcolin DP Not public Piaggio & C DP Not public Sogefi DP Not public TOD'S DP Not public CAM Finanziaria NR N/A De'Longhi NR N/A RCS MediaGroup NR N/A Salvatore Ferragamo NR N/A Consumer Staples Davide Campari-Milano DP Not public Parmalat NR N/A Safilo Group NR N/A Energy ERG DP Not public Saras NR N/A Tenaris S.A. NR N/A Financials Azimut Holding DP Not public Banca Carige DP Not public BANCA IFIS DP Not public Banca Popolare dell'emilia Romagna DP Public Banca Popolare di Milano DP Not public Banca Popolare di Sondrio DP Not public Banco di Desio e della Brianza DP Not public Banco di Sardegna DP Not public Credito Emiliano DP Not public Exor DP Not public Fondiaria-Sai DP Not public

45 45 Company Response Status a Permission Status b IMA DP Not public Milano Assicurazioni DP Not public Vittoria Assicurazioni DP Not public COFIDE NR N/A Italmobiliare NR N/A Health Care Amplifon DP Not public Recordati DP Not public Sorin NR N/A Industrials Astaldi DP Not public Indesit Company DP Not public Trevi-Finanziaria Industriale DP Not public Autostrada Torino-Milano NR N/A CIR NR N/A Datalogic NR N/A EI Towers NR N/A GEMINA-Generale Mobiliare Interessenze Azionarie NR N/A Interpump Group NR N/A Aeroporto di Venezia Marco Polo NR N/A SIAS NR N/A Information Technology Engineering Ingegneria Informatica NR N/A Materials Zignago Vetro DP Not public Utilities Acegas-Aps DP Not public Falck Renewables DP Not public Ascopiave NR N/A

46 46 Appendix II: Responding companies, scores, and emissions data Company c Response Status a 2013 Score c Scope 1 Scope 2 Scope 3 d Consumer Discretionary Arnoldo Mondadori Editore AQ* 86 C Brembo AQ* 58 D Not Public Fiat AQ* 99 A Geox AQ* 10 Not Public GTECH AQ* MARR AQ* 16 Not Public Mediaset AQ* Pirelli AQ* 96 B YOOX AQ* 90 A Energy Eni AQ* 92 B Saipem AQ* 82 C Not Public Financials Assicurazioni Generali AQ* 87 A Banca Generali (see Assicurazioni Generali) SA (AQ*) See Another Banca Monte dei Paschi di Siena Group AQ* 74 C Banco Popolare Societa Cooperativa AQ* 67 C Not Public Beni Stabili SIIQ AQ* 29 Not Public Cattolica Assicurazioni AQ* 19 Not Public Credito Valtellinese AQ* 79 C Dea Capital AQ* Immobiliare Grande Distribuzione AQ* Intesa Sanpaolo AQ* 92 B Mediobanca AQ* Mediolanum AQ* UBI Banca AQ* 78 C UniCredit AQ* 77 C Unipol AQ* 68 D Health Care Diasorin AQ* Industrials Ansaldo STS AQ* 76 B Atlantia AQ* 78 B Danieli & C Officine Meccaniche AQ* CNH Industrial AQ* 93 B

47 47 Company c Response Status a 2013 Score c Scope 1 Scope 2 Scope 3 d Finmeccanica AQ* 83 B Prysmian AQ* 62 D Information Technology STMicroelectronics Nv AQ* 94 B Materials Buzzi Unicem AQ* 98 B Cementir Holding AQ* 52 D Italcementi AQ* 96 B Sofidel AQ* (NL) 79 C Telecommunication Services Telecom Italia AQ* 95 B Not Public Utilities A2A AQ* 85 B ACEA AQ* 88 B Enel Green Power (see ENEL) SA (AQ*) See Another ENEL AQ* 87 B Hera AQ* 85 B Iren AQ* 80 B Snam AQ* 95 B Terna AQ* 91 B Keys to Appendices a: Response status codes AQ*: Answered Questionnaire on time AQ*(NL): Answered Questionnaire on time, Not Listed DP: Declined to Participate NR: No Response SA: See Another b: Non-Responding Permission status Public: Provided a response explaining why they decline to participate, available on the CDP website Non public: Do not provide a response c: Companies highlighted in bold achieved either the CDLI, the CPLI or both. Companies with numerical scores below 50 did not receive performance scores, as there is insufficient information on which to base a score. d: Scope 3 Emissions are the number of categories identified as relevant, calculated that contain non-zero values.

48 48 Appendix III - Investor members and signatories CDP works with investors globally to advance the investment opportunities and reduce the risks posed by climate change by asking almost 6,000 of the world s largest companies to report on their climate strategies, GHG emissions and energy use in the standardized CDP format. To learn more about CDP s member offering and becoming a member, please contact us or visit the CDP Investor Member section at WhatWeDo/Pages/investors.aspx ABRAPP - Associação Brasileira das Entidades Fechadas de Previdência Complementar ATP Group Aviva Investors Bank of America Bendigo and Adelaide Bank BlackRock Boston Common Asset Management, LLC California Public Employees' Retirement System (CalPERS) California State Teachers' Retirement System (CalSTRS) Calvert Group, Ltd. Capricorn Investment Group Catholic Super CCLA Investment Management Ltd Daiwa Asset Management Co. Ltd. Generation Investment Management Goldman Sachs Group Inc. Henderson Global Investors HSBC Holdings plc Legg Mason, Inc. London Pensions Fund Authority Mobimo Holding AG Mongeral Aegon Seguros e Previdência S.A. Morgan Stanley National Australia Bank Neuberger Berman Newton Investment Management Limited Nordea Bank Norges Bank Investment Management (NBIM) Northwest and Ethical Investments L.P. (NEI Investments) PFA Pension Robeco RobecoSAM AG Rockefeller Asset Management Royal Bank of Scotland Group Sampension KP Livsforsikring A/S Schroders Scottish Widows Investment Partnership Skandinaviska Enskilda Banken AB (SEB AB) Sompo Japan Insurance Inc. Standard Chartered TD Asset Management The Wellcome Trust 1 CDP INVESTOR SIGNATORIES & ASSETS CDP (US$ Investor TRILLION) Signatories AGAINST TIME & Assets (US$ Trillion) against time Investor CDP CDP Signatories Signatory Assets Investor CDP CDP Signatory Signatories Assets Number of Signatories Assets (US$ Trillions) 2013 SIGNATORY INVESTOR BREAKDOWN - Region Africa (15) America - Latin & Caribbean (71) America - North (174) Asia (71) Australia and New Zealand (61) Europe - North & Western (294) Europe - Southern & Eastern (39) Signatory Investor Breakdown - Type 247 Mainstream Asset Managers 39 SRI Asset Managers 167 Pension funds 34 Foundations 160 Banks 51 Insurance 27 Other 22% 5% 7% 4% 23% 34% 5%

49 CDP Investor signatories financial institutions with assets of US$87 trillion were signatories to the CDP 2013 climate change information request dated February 1st Sisters Sustainable Management LLC Aberdeen Asset Management Aberdeen Immobilien KAG mbh ABRAPP - Associação Brasileira das Entidades Fechadas de Previdência Complementar Achmea NV Active Earth Investment Management Acuity Investment Management Addenda Capital Inc. Advanced Investment Partners Advantage Asset Managers (Pty) Ltd Aegon N.V. AEGON-INDUSTRIAL Fund Management Co., Ltd AFP Integra AIG Asset Management AK PORTFÖY YÖNETİMİ A.Ş. AKBANK T.A.Ş. Alberta Investment Management Corporation (AIMCo) Alberta Teachers Retirement Fund Alcyone Finance AllenbridgeEpic Investment Advisers Alliance Trust Allianz Elementar Versicherungs-AG Allianz Global Investors AG Allianz Group Altira Group Amalgamated Bank Amlin AMP Capital Investors AmpegaGerling Investment GmbH Amundi AM ANBIMA Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais Antera Gestão de Recursos S.A. APG Group AQEX LLC Aquila Capital Arisaig Partners Arkx Investment Management ARMA PORTFÖY YÖNETİMİ A.Ş. Armstrong Asset Management ASM Administradora de Recursos S.A. ASN Bank Assicurazioni Generali Spa ATI Asset Management Atlantic Asset Management ATP Group Auriel Capital Management Australia and New Zealand Banking Group Australian Ethical Investment AustralianSuper Avaron Asset Management AS Aviva Aviva Investors AXA Group Baillie Gifford & Co. BaltCap Banco Bradesco S/A Banco Comercial Português SA Banco de Credito del Peru BCP Banco de Galicia y Buenos Aires S.A. Banco do Brasil Previdência Banco do Brasil S/A Banco Espírito Santo SA Banco Nacional de Desenvolvimento Economico e Social (BNDES) Banco Popular Espanol Banco Sabadell Banco Santander Banesprev Fundo Banespa de Seguridade Social Banesto BANIF SA Bank Handlowy w Warszawie SA Bank Leumi Le Israel Bank of America Merrill Lynch Bank of Montreal Bank of Nova Scotia (Scotiabank) Bank Sarasin & Cie AG Bank Vontobel Bankhaus Schelhammer & Schattera Kapitalanlagegesellschaft m.b.h. Bankia Bankinter BankInvest bankmecu Banque Degroof Banque Libano-Francaise Barclays Basellandschaftliche Kantonalbank BASF Sociedade de Previdência Complementar Basler Kantonalbank Bâtirente Baumann and Partners S.A. Bayern LB BayernInvest Kapitalanlagegesellschaft mbh BBC Pension Trust Ltd BBVA Bedfordshire Pension Fund Beetle Capital Befimmo SA Bendigo and Adelaide Bank Bentall Kennedy Berenberg Bank Berti Investments BioFinance Administração de Recursos de Terceiros Ltda BlackRock Blom Bank SAL Blumenthal Foundation BNP Paribas Investment Partners BNY Mellon BNY Mellon Service Kapitalanlage-Gesellschaft mbh Boston Common Asset Management, LLC Brasilprev Seguros e Previdência S/A. Breckinridge Capital Advisors British Airways Pensions British Coal Staff Superannuation Scheme British Columbia Investment Management Corporation (bcimc) Brown Advisory BT Financial Group BT Investment Management Busan Bank CAAT Pension Plan Cadiz Holdings Limited CAI Corporate Assets International AG Caisse de dépôt et placement du Québec Caisse des Dépôts Caixa de Previdência dos Funcionários do Banco do Nordeste do Brasil (CAPEF) Caixa Econômica Federal Caixa Geral de Depósitos CaixaBank California Public Employees' Retirement System (CalPERS) California State Teachers' Retirement System (CalSTRS) California State Treasurer Calvert Investment Management, Inc Canada Pension Plan Investment Board (CPPIB) Canadian Imperial Bank of Commerce (CIBC) Canadian Labour Congress Staff Pension Fund CAPESESP Capital Innovations, LLC Capricorn Investment Group CARE Super Carmignac Gestion Caser Pensiones E.G.F.P Cathay Financial Holding Catherine Donnelly Foundation Catholic Super CBF Church of England Funds CBRE Group, Inc. Cbus Superannuation Fund CCLA Investment Management Ltd Celeste Funds Management Central Finance Board of the Methodist Church Ceres CERES-Fundação de Seguridade Social Change Investment Management Chinatrust Financial Holding Co Limited Christian Brothers Investment Services Inc. Christian Super Christopher Reynolds Foundation Church Commissioners for England Church of England Pensions Board CI Mutual Funds' Signature Global Advisors City Developments Limited ClearBridge Investments Climate Change Capital Group Ltd CM-CIC Asset Management Colonial First State Global Asset Management Comerica Incorporated Comgest Commerzbank AG CommInsure Commonwealth Bank of Australia Commonwealth Superannuation Corporation Compton Foundation, Inc. Concordia Versicherungs-Gesellschaft a.g. Connecticut Retirement Plans and Trust Funds Conser Invest Co-operative Asset Management Co-operative Financial Services (CFS) Credit Suisse Daegu Bank Daesung Capital Management Daiwa Asset Management Co. Ltd. Daiwa Securities Group Inc. Dalton Nicol Reid Danske Bank A/S de Pury Pictet Turrettini & Cie S.A. DekaBank Deutsche Girozentrale Delta Lloyd Asset Management Desjardins Financial Security Deutsche Asset Management Investmentgesellschaft mbh Deutsche Bank AG Deutsche Postbank AG Development Bank of Japan Inc. Development Bank of the Philippines (DBP) Dexia Asset Management Dexus Property Group DLM INVISTA ASSET MANAGEMENT S/A DNB ASA Domini Social Investments LLC Dongbu Insurance Doughty Hanson & Co. DWS Investments DZ Bank Earth Capital Partners LLP East Sussex Pension Fund Ecclesiastical Investment Management Ecofi Investissements - Groupe Credit Cooperatif Edward W. Hazen Foundation EEA Group Ltd Eko Elan Capital Partners Element Investment Managers ELETRA - Fundação Celg de Seguros e Previdência Environment Agency Active Pension fund Epworth Investment Management Equilibrium Capital Group equinet Bank AG Erik Penser Fondkommission Erste Asset Management Erste Group Bank AG Essex Investment Management Company, LLC ESSSuper Ethos Foundation Etica SGR Eureka Funds Management Eurizon Capital SGR S.p.A. Evangelical Lutheran Church in Canada Pension Plan for Clergy and Lay Workers Evangelical Lutheran Foundation of Eastern Canada Evli Bank Plc F&C Asset Management FACEB Fundação de Previdência dos Empregados da CEB FAELCE Fundacao Coelce de Seguridade Social

50 50 CDP Signatory Investors 2013, Cont. FAPERS- Fundação Assistencial e Previdenciária da Extensão Rural do Rio Grande do Sul FASERN - Fundação COSERN de Previdência Complementar Fédéris Gestion d'actifs FIDURA Capital Consult GmbH FIM Asset Management Ltd FIM Services Financiere de l'echiquier FIPECq - Fundação de Previdência Complementar dos Empregados e Servidores da FINEP, do IPEA, do CNPq FIRA. - Banco de Mexico First Affirmative Financial Network, LLC First Commercial Bank First State Investments First State Superannuation Scheme First Swedish National Pension Fund (AP1) Firstrand Limited Five Oceans Asset Management Florida State Board of Administration (SBA) Folketrygdfondet Folksam Fondaction CSN Fondation de Luxembourg Forma Futura Invest AG Fourth Swedish National Pension Fund, (AP4) FRANKFURT-TRUST Investment Gesellschaft mbh Friends Fiduciary Corporation Fubon Financial Holdings Fukoku Capital Management Inc FUNCEF - Fundação dos Economiários Federais Fundação AMPLA de Seguridade Social - Brasiletros Fundação Atlântico de Seguridade Social Fundação Attilio Francisco Xavier Fontana Fundação Banrisul de Seguridade Social Fundação BRDE de Previdência Complementar - ISBRE Fundação Chesf de Assistência e Seguridade Social Fachesf Fundação Corsan - dos Funcionários da Companhia Riograndense de Saneamento Fundação de Assistência e Previdência Social do BNDES - FAPES FUNDAÇÃO ELETROBRÁS DE SEGURIDADE SOCIAL - ELETROS Fundação Forluminas de Seguridade Social - FORLUZ Fundação Itaipu BR - de Previdência e Assistência Social FUNDAÇÃO ITAUBANCO Fundação Itaúsa Industrial Fundação Promon de Previdência Social Fundação Rede Ferroviaria de Seguridade Social Refer FUNDAÇÃO SANEPAR DE PREVIDÊNCIA E ASSISTÊNCIA SOCIAL - FUSAN Fundação Sistel de Seguridade Social (Sistel) Fundação Vale do Rio Doce de Seguridade Social - VALIA FUNDIÁGUA - FUNDAÇÃO DE PREVIDENCIA COMPLEMENTAR DA CAESB Futuregrowth Asset Management GEAP Fundação de Seguridade Social General Equity Group AG Generali Deutschland Holding AG Generation Investment Management Genus Capital Management German Equity Trust AG Gjensidige Forsikring ASA Global Forestry Capital S.a.r.l. GLS Gemeinschaftsbank eg Goldman Sachs Group Inc. GOOD GROWTH INSTITUT für globale Vermögensentwicklung mbh Governance for Owners Government Employees Pension Fund ( GEPF ), Republic of South Africa GPT Group Greater Manchester Pension Fund Green Cay Asset Management Green Century Capital Management GROUPAMA EMEKLİLİK A.Ş. GROUPAMA SİGORTA A.Ş. Groupe Crédit Coopératif Groupe Investissement Responsable Inc. GROUPE OFI AM Grupo Financiero Banorte SAB de CV Grupo Santander Brasil Gruppo Bancario Credito Valtellinese Gruppo Monte Paschi Guardians of New Zealand Superannuation Hang Seng Bank Hanwha Asset Management Company Harbour Asset Management Harrington Investments, Inc Hauck & Aufhäuser Asset Management GmbH Hazel Capital LLP HDFC Bank Ltd Healthcare of Ontario Pension Plan (HOOPP) Helaba Invest Kapitalanlagegesellschaft mbh Henderson Global Investors Hermes Fund Managers HESTA Super HIP Investor Holden & Partners HSBC Global Asset Management (Deutschland) GmbH HSBC Holdings plc HSBC INKA Internationale Kapitalanlagegesellschaft mbh Humanis Hyundai Marine & Fire Insurance Co., Ltd. Hyundai Securities Co., Ltd. IBK Securities IDBI Bank Ltd IDFC Ltd Illinois State Board of Investment Ilmarinen Mutual Pension Insurance Company Impax Group plc Independent Planning Group Indusind Bank Industrial Alliance Insurance and Financial Services Inc. Industrial Bank Industrial Bank of Korea Industrial Development Corporation Industry Funds Management Inflection Point Partners ING Group Insight Investment Management (Global) Ltd Instituto Infraero de Seguridade Social - INFRAPREV Instituto Sebrae De Seguridade Social - SEBRAEPREV Insurance Australia Group IntReal KAG Investec Asset Management Investing for Good Irish Life Investment Managers Itaú Asset Management Itaú Unibanco Holding S.A. Janus Capital Group Inc. Jarislowsky Fraser Limited Jessie Smith Noyes Foundation JOHNSON & JOHNSON SOCIEDADE PREVIDENCIARIA JPMorgan Chase & Co. Jubitz Family Foundation Jupiter Asset Management Kaiser Ritter Partner Privatbank AG (Schweiz) KB Kookmin Bank KBC Asset Management NV KBC Group KCPS and Company KDB Asset Management Co., Ltd. KDB Daewoo Securities Co. Ltd. KEPLER-FONDS Kapitalanlagegesellschaft m. b. H. KEVA KeyCorp KfW Bankengruppe Killik & Co LLP Kiwi Income Property Trust Kleinwort Benson Investors KlimaINVEST KLP Insurance Korea Investment Management Korea Technology Finance Corporation KPA Pension La Banque Postale Asset Management La Financiere Responsable Lampe Asset Management GmbH Landsorganisationen i Sverige LaSalle Investment Management LBBW - Landesbank Baden-Württemberg LBBW Asset Management Investmentgesellschaft mbh LD Lønmodtagernes Dyrtidsfond Legal & General Investment Management Legg Mason, Inc. LGT Capital Management Ltd. LIG Insurance Co., Ltd. Light Green Advisors, LLC Living Planet Fund Management Company S.A. Lloyds Banking Group Local Authority Pension Fund Forum Local Government Super LOGOS PORTFÖY YÖNETIMI A.Ş. London Pensions Fund Authority Lothian Pension Fund LUCRF Super Macquarie Group MagNet Magyar Közösségi Bank Zrt. MainFirst Bank AG Malakoff Médéric MAMA Sustainable Incubation AG Man Group plc Mandarine Gestion MAPFRE Maple-Brown Abbott Marc J. Lane Investment Management, Inc. Maryland State Treasurer Matrix Asset Management Matrix Group McLean Budden MEAG MUNICH ERGO Asset Management GmbH Mediobanca Meeschaert Gestion Privée Meiji Yasuda Life Insurance Company Mendesprev Sociedade Previdenciária Merck Family Fund Mercy Investment Services, Inc. Mergence Investment Managers MetallRente GmbH Metrus Instituto de Seguridade Social Metzler Investment Gmbh MFS Investment Management Midas International Asset Management Miller/Howard Investments Mirae Asset Global Investments Co. Ltd. Mirae Asset Securities Mirvac Group Missionary Oblates of Mary Immaculate Mistra, Foundation for Strategic Environmental Research Mitsubishi UFJ Financial Group, Inc. Mitsui Sumitomo Insurance Co.,Ltd Mizuho Financial Group, Inc. Mn Services Momentum Manager of Managers (Pty) Ltd Monega Kapitalanlagegesellschaft mbh Mongeral Aegon Seguros e Previdência S.A. Morgan Stanley Mountain Cleantech AG MTAA Superannuation Fund Mutual Insurance Company Pension-Fennia Nanuk Asset Management Natcan Investment Management Nathan Cummings Foundation, The National Australia Bank National Bank of Canada National Bank Of Greece National Grid Electricity Group of the Electricity Supply Pension Scheme National Grid UK Pension Scheme National Pensions Reserve Fund of Ireland National Union of Public and General Employees (NUPGE) Nativus Sustainable Investments Natixis SA Natural Investments LLC Nedbank Limited Needmor Fund Nelson Capital Management, LLC Nest Sammelstiftung Neuberger Berman New Alternatives Fund Inc.

51 CDP Signatory Investors 2013, Cont. 51 New Amsterdam Partners LLC New Forests New Mexico State Treasurer New York City Employees Retirement System New York City Teachers Retirement System New York State Common Retirement Fund (NYSCRF) Newton Investment Management Limited NGS Super NH-CA Asset Management Nikko Asset Management Co., Ltd. Nipponkoa Insurance Company, Ltd Nissay Asset Management Corporation NORD/LB Kapitalanlagegesellschaft AG Nordea Bank Norfolk Pension Fund Norges Bank Investment Management (NBIM) North Carolina Retirement System Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC) Northern Star Group Northern Trust Northward Capital Northwest and Ethical Investments L.P. (NEI Investments) Nykredit OceanRock Investments Inc. Oddo & Cie oeco capital Lebensversicherung AG ÖKOWORLD Old Mutual plc OMERS Administration Corporation Ontario Pension Board Ontario Teachers' Pension Plan OP Fund Management Company Ltd Oppenheim & Co Limited Oppenheim Fonds Trust GmbH Opplysningsvesenets fond (The Norwegian Church Endowment) OPSEU Pension Trust (OP Trust) Oregon State Treasurer Orion Energy Systems Osmosis Investment Management Panahpur Park Foundation Parnassus Investments Pax World Funds Pensioenfonds Vervoer Pension Denmark Pension Fund for Danish Lawyers and Economists Pension Protection Fund Pensionsmyndigheten Perpetual Investments PETROS - Fundação Petrobras de Seguridade Social PFA Pension PGGM Phillips, Hager & North Investment Management Ltd. PhiTrust Active Investors Pictet Asset Management SA Pinstripe Management GmbH Pioneer Investments Piraeus Bank PKA Pluris Sustainable Investments SA PNC Financial Services Group, Inc. Pohjola Asset Management Ltd Polden Puckham Charitable Foundation Portfolio 21 Investments Porto Seguro S.A. POSTALIS - Instituto de Seguridade Social dos Correios e Telégrafos Power Finance Corporation PREVHAB PREVIDÊNCIA COMPLEMENTAR PREVI Caixa de Previdência dos Funcionários do Banco do Brasil PREVIG Sociedade de Previdência Complementar Prologis Provinzial Rheinland Holding Prudential Investment Management Prudential PLC Psagot Investment House Ltd PSP Investments Q Capital Partners Co. Ltd QBE Insurance Group Rabobank Raiffeisen Fund Management Hungary Ltd. Raiffeisen Kapitalanlage-Gesellschaft m.b.h. Raiffeisen Schweiz Rathbone Greenbank Investments RCM (Allianz Global Investors) Real Grandeza Fundação de Previdência e Assistência Social REI Super Reliance Capital Ltd Representative Body of the Church in Wales Resolution Resona Bank, Limited Reynders McVeigh Capital Management River Twice Capital Advisors, LLC RLAM Robeco RobecoSAM AG Robert & Patricia Switzer Foundation Rockefeller Asset Management Rose Foundation for Communities and the Environment Rothschild Royal Bank of Canada Royal Bank of Scotland Group RPMI Railpen Investments RREEF Investment GmbH Russell Investments Sampension KP Livsforsikring A/S Samsung Fire & Marine Insurance Samsung Life Insurance Samsung Securities Sanlam Santa Fé Portfolios Ltda Santam Ltd Sarasin & Partners SAS Trustee Corporation Sauren Finanzdienstleistungen GmbH & Co. KG Schroders Scottish Widows Investment Partnership SEB Asset Management AG Second Swedish National Pension Fund (AP2) Seligson & Co Fund Management Plc Sentinel Funds SERPROS - Fundo Multipatrocinado Service Employees International Union Benefit Funds Servite Friars Seventh Swedish National Pension Fund (AP7) Shiga Bank, Ltd. Shinhan Bank Shinhan BNP Paribas Investment Trust Management Co., Ltd Shinkin Asset Management Co., Ltd Siemens Kapitalanlagegesellschaft mbh Signet Capital Management Ltd Skandia Skandinaviska Enskilda Banken AB (SEB AB) Smith Pierce, LLC SNS Asset Management Social(k) Sociedade de Previdencia Complementar da Dataprev - Prevdata Socrates Fund Management Solaris Investment Management Sompo Japan Insurance Inc. Sonen Capital LLC Sopher Investment Management Soprise! LLP SouthPeak Investment Management SPF Beheer bv Spring Water Asset Management, LLC Sprucegrove Investment Management Ltd Standard Chartered Standard Chartered Korea Limited Standard Life Investments State Bank of India State Street Corporation StatewideSuper Stockland Storebrand ASA Strathclyde Pension Fund Stratus Group Sumitomo Mitsui Financial Group Sumitomo Mitsui Trust Holdings, Inc. Sun Life Financial Inc. Superfund Asset Management GmbH SUSI Partners AG Sustainable Capital Sustainable Development Capital LLP Sustainable Insight Capital Management Svenska Kyrkan, Church of Sweden Svenska Kyrkans Pensionskassa Swedbank Swift Foundation Swiss Re Swisscanto Holding AG Sycomore Asset Management Syntrus Achmea Asset Management T. Rowe Price T.GARANTİ BANKASI A.Ş. T.SINAİ KALKINMA BANKASI A.Ş. Tata Capital Limited TD Asset Management Teachers Insurance and Annuity Association College Retirement Equities Fund Telluride Association Tempis Capital Management Co., Ltd. Terra Forvaltning AS TerraVerde Capital Management LLC TfL Pension Fund The ASB Community Trust The Brainerd Foundation The Bullitt Foundation The Central Church Fund of Finland The Children's Investment Fund Foundation The Clean Yield Group The Collins Foundation The Co-operators Group Limited The Daly Foundation The Environmental Investment Partnership LLP The Hartford Financial Services Group, Inc. The Joseph Rowntree Charitable Trust The Korea Teachers Pension The New School The Oppenheimer Group The Pension Plan For Employees of the Public Service Alliance of Canada The Pinch Group The Presbyterian Church in Canada The Russell Family Foundation The Sandy River Charitable Foundation The Sisters of St. Ann The Standard Bank Group The Sustainability Group The United Church of Canada - General Council The University of Edinburgh Endowment Fund The Wellcome Trust Third Swedish National Pension Fund (AP3) Threadneedle Asset Management Tobam Tokio Marine & Nichido Fire Insurance Co., Ltd. Toronto Atmospheric Fund Trillium Asset Management, LLC Triodos Bank Tri-State Coalition for Responsible Investment Tryg Turner Investments UBS Unibail-Rodamco UniCredit Union Asset Management Holding AG Union di Banche Italiane S.c.p.a Union Investment Privatfonds GmbH Unionen Unipension UNISON staff pension scheme UniSuper Unitarian Universalist Association United Methodist Church General Board of Pension and Health Benefits United Nations Foundation Unity Trust Bank Universities Superannuation Scheme (USS) Vancity Group of Companies VCH Vermögensverwaltung AG Ventas Inc Veris Wealth Partners Veritas Investment Trust GmbH Vermont State Treasurer

52 52 CDP Signatory Investors 2013, Cont. Vexiom Capital, L.P. VicSuper Victorian Funds Management Corporation VIETNAM HOLDING ASSET MANAGEMENT LTD. Vinva Investment Management Voigt & Collegen VOLKSBANK INVESTMENTS Waikato Community Trust Walden Asset Management, a division of Boston Trust & Investment Management Company WARBURG - HENDERSON Kapitalanlagegesellschaft für Immobilien mbh WARBURG INVEST KAPITALANLAGEGESELLSCHAFT MBH Water Asset Management, LLC Wells Fargo & Company West Yorkshire Pension Fund WestLB Mellon Asset Management (WMAM) Westpac Banking Corporation WHEB Asset Management White Owl Capital AG Woori Bank Woori Investment & Securities YES BANK Limited York University Pension Fund Youville Provident Fund Inc. Zegora Investment Management Zevin Asset Management Zurich Cantonal Bank Zurich Cantonal Bank

53 Notes 53

54 54 Notes

55 Notes 55 Special thanks for offsetting the carbon impact of the report to South Pole:

56 56 CDP Contacts Report Writer Contacts Scoring partner Trustees Steven Tebbe Managing Director Diana Guzman Director, Southern Europe Katharina Lütkehermöller Project Officer, Southern Europe CDP Europe Reinhardtstraße Berlin Germany Tel: +49 (0) Carbon Discloser Project GmbH Executive Officers: Steven Tebbe; Sue Howells; Roy Wilson; Registered Charity no. HRB B; local court of Charlottenburg, Germany Danilo Troncarelli Sustainability Lead Italy, Central & Eastern Europe, Russia, Middle East Beatrice Lamonica Senior Manager Strategy & Sustainability Accenture Spa Via Maurizio Quadrio Milan Italy IMQ SpA Via Quintiliano Milan Italy Chairman: Alan Brown Schroders James Cameron Climate Change Capital & ODI Ben Goldsmith WHEB Chris Page Rockefeller Philanthropy Advisors Dr. Christoph Schroeder Jeremy Smith Takejiro Sueyoshi Tessa Tennant Martin Wise Relationship Capital Partners Sponsor The sole responsibility lies with the author and the Commission is not responsible for any use that may be made of the information contained therein. Co-funded by the Life+programme of the European Union