Weapons Screening ESG Pioneer Vigeo Eiris, a Moodys Affiliate, is a - PowerPoint PPT Presentation

Weapons Screening

ESG Pioneer Vigeo Eiris, a Moody’s Affiliate, is a global provider of environmental, social and governance solutions serving the investor and issuer communities. Key Figures Vision Mission To equip market participants with 30+ years of experience the ESG insight they need to To catalyse the global shift to a Present in 12 countries sustainable and responsible manage risks and better address financial system. their social and environmental 300 team members impact. Our Solutions Benchmarks Assessments Data Research Analytics Strictly Confidential 2

Your Needs  Integrate weapons exclusion into investment processes to ensure alignment with your own investment approach or to meet the mandates of your clients.  Manage and mitigate reputational risks.  Report on the exposure of your portfolio to weapons.  Engage with weapons companies in your portfolio. 3

Our Solution Our product provides in depth and up to date assessments on weapons involvement. With comprehensive content and coverage, our experts are here to support a rigorous screening of your investments. In-house specialist Portfolio reporting research team All listed companies and select Monthly updates of the data to bond issuers globally – over integrate corporate actions and 50,000+ companies from all shareholding changes. Annual regions update of all data. Public sources 10 types of weapon screened across the full supply chain; from munitions, to weapons platforms, key parts and services to general parts and services Data spreadsheets Quality certified research methods and processes Evidence-based research based Flexible and granular. Clients set entirely on objective, verifiable their thresholds and parameters. open source data. 4

Product Overview 10 types of weapon covered, 5 types of involvement examined and 3 assessments provided. Weapons Involvement Scope Assessments Full Weapons Systems [ Munitions ] Cluster Munitions Blinding Laser Weapons Full Weapons Systems [ Platforms ] Anti Personnel Landmines Incendiary Weapons Clear Evidence of involvement Key Parts or Services Nuclear Weapons Non Detectable Fragments Some Evidence of involvement General Parts or Services Not Relevant/Additional Commentary Biological Weapons Depleted Uranium Weapons Shareholders Chemical Weapons White Phosphorous Weapons 5

Process Overview Screening Peer Review Company Engagement Delivery Companies are assessed using a rigorous data mining and research process driven by an in house team of experts. Their research is supported by company engagement to ensure the accuracy and credibility of the assessment. 6

Deliverables & Delivery FTP VE DataLab Excel Dataset API Profiles (for each issuers) and datasets can be downloaded from the VE Datalab or delivered to clients via multiple channels. 7

Contacts: Nicolo Scarpat Zain Hussain Maila Beniera Weapons Specialist Weapons Specialist Head of Specialised Research T : +32 2 206 11 18 T : +32 2 206 67 97 T : +33 1 55 82 32 93 nicolo.scarpat@vigeo-eiris.com zain.hussain@vigeo-eiris.com maila.beneira@vigeo-eiris.com Vigeo Eiris Vigeo Eiris Vigeo Eiris Rue du Progrès 333 / B7 Rue du Progrès 333 / B7 Les Mercuriales 1030 Bruxelles 1030 Bruxelles 40 rue Jean Jaurès Belgique Belgique 93170 Bagnolet, France www.vigeo-eiris.com OUR OFFICES: New York . Brussels . Casablanca . Hong-Kong . London . Milan . Paris . Rabat . Santiago de Chile . Tokyo OUR PARTNERS: Hanover . Jerusalem . Mexico City . Rio de Janeiro . Zaragoza

Appendices 9

Appendix 1 - Definitions Full Weapons Systems 1.Company who designs, develops, produces, or acts as the primary contractor of a weapon system, such as: - warheads, rockets, etc - warships, combat vehicles, bomber aircraft - rocket launchers and other CW-designated delivery systems 2. Company who owns at least 50% equity shareholding in a another company involved in (1) – majority shareholding [as a majority shareholder, the company has control over the operations and management of the consolidated subsidiary] 3. Shareholders - entities which own 0.1 to 49.99% equity shares in weapons-involved companies Key Parts or Services Minor parts or Services Company who designs, develops, or produce a bespoke and essential component of a controversial weapon system. This includes: Company who designs, develops, or produce a general component of a Structural parts and primary subsystems – eg. airframes, wings, - controversial weapons system. This includes: Secondary subsystems – e.g. components of subsystems, such as fuses, propulsion systems, guidance systems, fire control systems, - and other that are subsystems of a whole weapon system/platform electro-mechanical components [eg valves, switches, circuits and cables of a nuclear warhead’s guidance systems. - Engines of a warship Systems of C5ISR – command, control, communication, computer, - - IT-related systems or services supplied to state agencies and countermeasures, intelligence, surveillance, and reconnaissance specifically tasked to operate and manage a controversial - Sustainment and modernisation services specific to controversial weapons system [eg US Strategic Command USTRATCOM, HM weapons platforms. This includes repair, upgrade, overhaul, and Naval base Clyde] ‘essential’ is meant indispensable to, or a precondition for, the other similar services, designed to enhance the functioning or - prolong the lifespan of a weapon system or its key components functioning of a weapon system or military operation. - Combat training and simulation, weapons testing services, etc 10

Appendix 2 - Definitions Assessment Criteria This grading applies when the involvement is: 1. Confirmed by the company [through its SEC filings, Annual Reports, Company presentations, Defence exhibits] Confirmed by the government’s defence organisation [DoD publications, reports or database of any government 2. Clear Evidence agency e.g. U.S. Congressional Research, India’s DRDO, UK MoD white papers] 3. Confirmed by multi-lateral defence organisations/groups, NATO, OSCE 4. Confirmed by actual defence contracts indicated in credible and verifiable defence contracting websites When 1 – 4 are not available, at least 2 primary third party sources [ see list of credible primary third party sources ] 5. This grading applies when the involvement is: 1. Confirmed by at least 3 secondary sources [ see list of secondary sources ], or a combination of 1 primary and at least 2 secondary sources. 2. When a company is involved as part of the industry design and development team of a weapon that is currently in operation, in service or stockpiled, but there is no clear evidence of the company’s ongoing sustainment or parts Some Evidence replacement. 3. Within 3-10 years after the last weapons contract has ended, but no clear evidence of new weapons contract and the company is not part of the design and development team, but still has the capability to develop the same system 1. A not relevant grade is provided when: 2. The company manufactures components or provide services to any controversial weapons but are not within the scope of the VE definition. 3. Involvement is not verified by any of the identified primary or secondary third party sources, but allegations exist 4. When a company is involved as part of the industry design and development team of a weapon that has been Not relevant decommissioned – expired involvement 5. 10 years after the last weapons contract has ended, but no clear evidence of new weapons contract and the company is not part of the design and development team. 6. If the company has publicly declared that it ceased production of the CW system and the claim is verifiable through credible third party sources 11

Appendix 3 - Tiered Sources Primary Sources Secondary Sources Established and globally recognised news sources, academic thinktanks Established and globally recognised aerospace and defense specialised specialising in disarmaments and non proliferation websites 1. IHS Janes, The Diplomat, Reuters, other international online news-channels 1. Army Technology eg BBC, CNN 2. Defense News 2. Federation of American Scientists, Centre for Non-proliferation Studies, 3. Naval Technology Royal United Services Institute, Project Alpha – KCL, Arms Control, Nuclear 4. Others in the same level of credibility and market acceptability Threat Initiative, The Landmines and Cluster Munition Monitor 12 Titre de la présentation