Journal of Sustainable Finance & Bankingsm

September 2015 Volume II Issue 8 Journal of Sustainable Finance & BankingSM

Global Market Strategy Regional and Sector Strategy: Monthly Updates for August and September Michael Geraghty … p. 13 Gauging Governance Globally: 2015 Update Michael Geraghty … p. 15 Corporate Governance The Networked Corporation John K.S. Wilson & Erika Karp… p. 16 Four Questions for Alphabet John K.S. Wilson … p. 18

Featured Domain Hillel’sVoice.com Erika Karp … p. 20 Open Source Excellence What’s Often Missing in a Healthy C-Suite is… Health and Resilience Derek Yach, The Vitality Group… p. 22

Enhanced Analytics Government Transparency Efforts: Addressing the “S” in ESG Ed Marcum, Kilian Moote, Humanity United … p. 24

Accelerating Impact Seeding a Resilient Future Karla Canavan, Bunge Ltd. … p. 26

Featured Editorials Women & Sports: Microcosm of a World at Play Deborah Slaner Larkin, Women’s Sports Foundation … p. 28

Boosting Returns, Boosting Resilience Susan McArthur and Jamie James, Greensoil Investments … p. 30 ““Resilience”RESILIENCE”

This month in the Cornerstone Journal of Sustainable Finance & Banking (JSFB), we join the global markets in questioning the world’s economic, financial and political resilience in the face of tremendous challenges and opportunities ahead. Among them are the search for a pragmatic solution to the humanitarian crisis demanding the reception, protection and integration of millions of refugees/migrants; the interpretation of the latest US interest rate news and expectations for the US Federal Reserve Bank to take action that will not add risk to the global financial system; the necessity of China and Brazil to offer structural reforms allowing for long-term sustainable growth; and the imperative to come to terms with both mitigation of and adaptation to the realities of climate change. Resilience must be built into the fabric of both the private and public sectors…the ability to withstand, and to thrive. To begin; and to begin; and to begin again until we succeed in achieving a form of capitalism that is more regenerative and more inclusive. And in doing this, as we systematically analyze the Environmental, Social and Erika Karp Governance (ESG) imperatives inherent in the investment process, we Founder & Chief Executive Officer highlight that of the E, S and G, Governance is first among equals. Cornerstone Capital Inc. At Cornerstone Capital Group, John Wilson, our Head of Corporate Governance, Engagement and Research, led our recent flagship report, “The Networked Corporation.” Here we introduce a robust framework to help companies understand their most material governance challenges — The BRAVE MatrixTM (Business Relationship Analytics for Value Enhancement). Employing this analytical tool, corporate managements can engage proactively with shareholders in a quest for the alignment of priorities we call the Shareholder Alignment FrontierTM. In essence, the approach is designed to accelerate the ability of companies to identify and respond to changes in operating environment — i.e., to enhance their resilience.

The Shareholder Alignment FrontierTM (SAF) is sorely needed, as illustrated by John’s subsequent assessment of Google’s transformation into Alphabet, and by Michael Geraghty’s assessment of slipping corporate governance standards in two-thirds of his Governance Composite — most notably within many emerging market economies. Michael posits that efforts to boost economic growth may be a root cause, with lapses in ethics more likely to occur in pressured environments.

On a more positive note, we are seeing great progress toward heightened transparency in the capital markets. Ed Marcum and Kilian Moote of Humanity United offer an overview of how multinationals increasingly embrace their responsibility for potential human-rights abuses that might occur along their supply chain, not only within their own corporations. In their “Enhanced Analytics” article, they note that “by the end of 2016, nearly every multinational company will be required to comply with at least one transparency regulation, either in the US or Europe.”

If resilience is a sign of corporate health, then “health” itself should be on the agenda for C-Suite executives. In “Open-Source Excellence,” Derek Yach, the Chief Health Officer of The Vitality Group (a division of Discovery Holdings,

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 2 Ltd.), makes that case that having a Chief Health Officer should be viewed as a critical role, much as Chief Sustainability Officer and Chief Innovation Officer have become standard roles signaling a company’s commitment to those principles. He writes, “Given that health care costs are often the greatest expense for an employer outside of payroll, it’s critical that the CHO have a seat at the table for executive decision-making.”

Looking beyond a company’s relationships with its immediate stakeholders, there is an increasing recognition of the need to invest in outcomes that benefit society more broadly. For instance:

• agricultural innovation to enable the production of not only more, but also better-quality and more nutritious food, as Karla Canavan of Bunge Ltd cites in “Accelerating Impact”;

• broadening the engagement of young girls, particularly from underserved backgrounds, in the health- and confidence-building practice of sports, as promoted by the Women’s Sports Foundation; or

• encouraging foundations and other institutions with investable assets to direct those monies to project that yield multiple returns, such as energy efficiency in real estate, as argued by Susan McArthur and Jamie James of Greensoil Investments.

Last but not least, in this month’s “Featured Domain,” we revisit a theme that holds particular relevance in these “Days of Awe” in the Jewish faith. In “Hillel’sVoice.com,” we refer to the words of the ancient scholar and leader Hillel, whose words still resonate today: “If I am not for myself, then who will be for me? And if I am only for myself, then what am I? And if not now, then when?” This is sustainable capitalism defined.

My sincere regards, Erika

Erika Karp Founder and Chief Executive Officer

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 3 Table of Contents

CEO’s Letter on Sustainable Finance & Banking 2

Market Summary Overview 5 Market & Global Sector Performance, 6 Monetary Policy & ESG Data

Global Market Strategy Regional and Sector Strategy: Michael Geraghty, Global Markets Strategist 13 Monthly Updates for August and September Cornerstone Capital Group

Corporate Governance Gauging Governance Globally: 2015 Update Michael Geraghty, Global Markets Strategist 16 Cornerstone Capital Group The Networked Corporation John K.S. Wilson, Head of Corporate Governance, 16 Engagement, and Research

Erika Karp, Founder & CEO Cornerstone Capital Group

Four Questions for Alphabet John K.S. Wilson, Head of Corporate Governance, 18 Engagement, and Research Cornerstone Capital Group

Featured Domain

Hillel’sVoice.com Erika Karp, Founder & CEO 20 Cornerstone Capital Group

Open Source Excellence What’s Often Missing in a Healthy C-Suite is… Derek Yach, Chief Health Officer 22 Health and Resilience The Vitality Group, part of Discovery Holdings Ltd.

Enhanced Analytics Government Transparency Efforts: Addressing the “S” in ESG Ed Marcum, Vice President, Investments 24 Humanity United

Kilian Moote, Project Director, KnowTheChain, Humanity United

Accelerating Impact Seeding a Resilient Future Karla Canavan, Director of Sustainable Finance 26 Bunge Ltd.

Featured Editorials Women & Sports: Microcosm of a World at Play Deborah Slaner Larkin, CEO 28 Women’s Sports Foundation Boosting Returns, Boosting Resilience Susan McArthur, Managing Partner 30 Greensoil Investments

Jamie James, Chief Innovation Officer, GBIF Greensoil Investments 31 Upcoming Events: Global ESG Calendar 32 Journal of Sustainable Finance & Banking Subscription Form 34 Articles 35 Cornerstone Capital Team 36 Important Disclosures

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 4 Market Summary Overview

The historically quiet period at the end of August was announcement of the scandal, VW’s preference shares instead marked by heightened volatility, and global are down approximately 40% as investors question financial markets registered one of their worst months whether the overall cost to the company will be in a long time. Market pundits offered hackneyed considerably more. answers, many of which concerned China’s slowing growth, the 3% devaluation of the yuan, or the In Japan, GDP contracted by 1.6% on an annualized government’s inability to support the stock market. basis in the second quarter as both exports and private There still isn’t a consensus explanation for the consumption slumped. With wage growth correction, though some attribute its speed and consistently lagging inflation, skepticism about severity to the prevalence of high frequency trading. Abenomics continues to dominate the narrative Markets have partially retraced their losses, but the around the Japanese markets. recent market turmoil appears to have been a In emerging markets, China’s Shanghai Composite contributing factor to the Fed’s decision to hold rates Index experienced a violent sell-off, losing 8.5% on steady and its dovish accompanying statement. August 24 alone. Fueled by concerns of the country’s Following a sharp fall in August, US equities stabilized economic slowdown and loss of confidence in the in part due to oversold conditions, but also in central government’s support measures, volatility response to mixed economic data. The housing spread to emerging market currencies and market continued to grow, as the September NAHB commodities. Oil took out its low reached earlier this Housing Market Index came in at 62, the highest level year as Brent traded into the mid $40 per barrel since October 2005. The ISM Manufacturing Index range. Elsewhere in the developing world, Brazil fell to 51.1 in August from 52.7 in July, though it still entered a technical recession as its economy indicates expansion in the manufacturing sector. On contracted 1.9% in the second quarter. Brazil faces a the jobs front, the Labor Department’s August report multitude of challenges including inflation, low revealed that the economy added 173,000 jobs, falling commodity prices, falling industrial production, and shy of the consensus estimate of 217,000 jobs. Still, political scandal within the government. As a result, the unemployment rate fell to 5.1%, its lowest level Standard & Poor’s recently cut its rating for the since early 2008, and average hourly earnings rose by country’s sovereign debt to junk. a better-than-expected 0.3%. On a one-month trailing basis, the MSCI World Index Elsewhere in the developed world, economic growth (a developed market proxy) underperformed the in the euro area slowed in the second quarter, with MSCI Emerging Markets Index by approximately France stagnating and Italy expanding by only 0.2%. 1.8%, resulting in YTD relative outperformance of While Germany’s Ifo Business Climate Index rose 9.9%. Small-cap equities outperformed their large- in August to 108.3 from 108.0 in the prior cap counterparts by 0.5%, leading to their month, waning demand from China may outperformance of 0.3% on a YTD basis. From a sector increasingly weigh on the country’s exports. perspective, performance was mixed between Greece secured its third bailout and Alexis Tsipras defensives and cyclicals. In the MSCI ACWI (broad returned as prime minister after a decisive re- index for both developed and emerging equities), election win, despite his U-turn on accepting healthcare and consumer discretionary austerity. The reaction from financial markets outperformed, while energy and materials lagged. has been muted, with the immediate threat of a “Grexit” having already subsided. On the corporate front, Volkswagen is setting aside €6.5 billion ($7.3 billion) to cover the cost of an emissions scandal Andy Zheng contributed to this article whereby “defeat devices” were used to cheat US emissions tests for its diesel cars. Since the

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 5 Market Summary

Market and Global Sector Performance

MARKET / INDEX PERFORMANCE

As of 09/22/2015 (local currency) T1M (%) T3M (%) YTD (%) 2015 P/E 2015 P/B Div. Yield US Equity Indices

DJIA 0.49 -8.29 -5.66 15.1 2.8 2.6 S&P 500 -0.03 -6.85 -3.02 16.7 2.6 2.2 Nasdaq 2.69 -6.03 2.91 21.1 3.3 1.2 Russell 2000 0.49 -9.86 -2.75 25.5 1.1 1.4 MSCI KLD 400 Social -0.15 -6.81 -3.67 18.0 3.1 2.1 Developed International Indices Euro STOXX 50 -5.07 -14.08 0.76 13.4 1.4 3.9 in USD -6.79 -15.65 -7.10 FTSE 100 -3.59 -11.77 -6.29 14.9 1.7 4.3 in USD -5.29 -13.98 -7.17 CAC 40 -4.40 -11.26 6.35 14.3 1.4 3.7 in USD -6.11 -12.86 -1.95

DAX -4.97 -16.05 -1.88 12.0 1.5 3.4 in USD -6.68 -17.58 -9.96 Nikkei 225 -6.98 -11.41 4.51 17.0 1.5 1.8 in USD -5.42 -8.84 4.17 ASX 200 -0.72 -6.95 -0.88 15.1 1.7 5.2

in USD -4.12 -14.73 -13.97 Emerging Market Indices IBOVESPA 1.90 -13.50 -6.83 13.0 1.1 4.7 in USD -10.70 -33.29 -38.19 Shanghai Comp -9.14 -28.10 -0.04 13.5 1.6 2.1 in USD -8.96 -29.97 -2.67 KOSPI 5.65 -3.47 3.57 12.4 1.0 1.5 in USD 6.47 -10.55 -4.25 SENSEX -6.16 -7.09 -5.57 15.8 2.7 1.7 in USD -5.76 -10.58 -9.55 Bovespa Corp. Sustainability 3.37 -7.55 -4.17 17.9 1.2 4.0 in USD -9.41 -28.69 -36.43

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 6

As of 09/22/2015 (local currency) T1M (%) T3M (%) YTD (%) 2015 P/E 2015 P/B Global Market Indices

MSCI World -1.16 -8.82 -2.88 16.1 2.0

MSCI All-Country World -2.05 -11.01 -7.30 13.2 1.4

MSCI EAFE -3.11 -11.15 -1.83 14.7 1.5

MSCI Emerging Markets 0.71 -16.29 -12.77 11.6 1.3

DJ Sustainability World Comp -3.33 -12.15 -7.13 14.2 1.7

FTSE4Good Global -2.43 -9.90 -3.13 10.8 1.3 Fixed Income Barclays US Aggregate -0.49 0.84 0.60 Commodities Levels

9/22/2015 3/23/2015 9/22/2014 WTI Crude 45.20 53.05 89.22 ICE Brent Crude 47.82 60.39 100.16 NYMEX Natural Gas 2.59 2.94 3.87

Spot Gold 1124.43 1189.54 1215.08

LME 3mth Copper 5269 6045 6835 CBOT Corn 380.75 409.25 376.25 ICE ECX Emission 8.02 7.09 6.12

Currencies Levels

9/22/2015 3/23/2015 9/22/2014 EUR/USD 1.12 1.09 1.28 USD/JPY 119.85 119.73 108.84

GBP/USD 1.54 1.50 1.64

AUD/JPY 84.93 94.36 96.56 DXY Index 96.06 97.91 84.75

Source: Bloomberg, Barclays. Equity Returns: All returns represent total return for stated period. Dividends and coupons are not included in the DAX and BOVESPA indices. Bond Returns: All returns represent total return for the stated period. Index characteristics: P/E, P/B, and Dividend Yield are based on Bloomberg consensus estimates for the stated period.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 7

MSCI ACWI SECTOR PERFORMANCE

As of 9/22/2015 1 Month Price Return (%) YTD Price Return (%)

Info Tch Healthcare

Cons Discr Cons Discr Cons Stpl Cons Stpl Energy Tel Sv MSCI ACWI Info Tch

Industials MSCI ACWI

Industials Healthcare Financals Financals Material Utility

Tel Sv Material

Energy Utility -6 -4 -2 0 2 4 -20 -15 -10 -5 0 5 10

Source: Bloomberg. Sector returns are based on GICS methodology. MSCI ACWI is a free-float weighted equity index Source: Bloomberg. Sector returns are based on GICS that includes both emerging and developed world markets. methodology. MSCI ACWI is a free-float weighted equity index that includes both emerging and developed world markets.

US EQUITY STYLE PERFORMANCE Style box returns are based on Russell Indices with the exception of the Large-Cap Blend box, which reflects the S&P 500 Index. All values are cumulative total return for the stated period including the reinvestment of dividends. The index used from left to right, top to bottom are: Russell 1000 Value Index, S&P 500 Index, Russell 1000 Growth Index, Russell Midcap Value Index, Russell Midcap Index, Russell Midcap Growth Index, Russell 2000 Value Index, Russell 2000 Index and Russell 2000 Growth Index.

1 Month Year to Date

Value Blend Growth Value Blend Growth

-1.5 0.0 -1.5 -7.3 -3.0 2.1 Larg Large

Mid -1.1 -0.2 0.7 -5.1 -2.4 0.3 Mi

-0.2 0.5 1.2 -7.1 -2.7 1.7 Sma Small

Source: Bloomberg Source: Bloomberg

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 8

SECTOR SNAPSHOT – TOP 5 COMPANIES BY MARKET CAP

As of 9/22/2015

Total Price Return Div ESG Mkt Cap (Local YTD % P/E EV/EBITD Yield % Disclosure Company name Ticker Industry (US$ Bn) ) (local) 2015E A 2015E 2015E Score

Consumer Disc. Amazon.com AMZN Internet & 256.5 548.4 76.7 100.9 24.7 N/A 16.9 Catalog Retail Toyota Motor Corp 7203.JP Automobiles 206.3 7234.0 -2.9 9.2 9.8 N/A 33.5

The Walt Disney DIS Media 174.5 103.4 10.4 20.4 11.9 1.3 35.5 Co Home Depot Inc HD Specialty Retail 149.7 116.6 12.8 21.9 12.2 2.0 27.3

Comcast Corp CMCSA Media 144.4 57.9 1.1 17.6 7.8 1.7 23.6

Consumer Staples Nestle NESN.VX Food Products 236.4 72.2 1.9 21.5 14.4 3.0 55.0

Wal-Mart Stores WMT Food & Staples 204.3 63.7 -24.4 14.0 7.3 3.1 37.8 Retailing The Procter & PG Household 191.7 70.7 -20.6 18.4 12.1 3.8 46.7 Gamble Co Products Anheuser-Busch ABI.BB Beverages 173.4 96.7 4.9 20.5 12.5 3.1 54.1 Inbev The Coca-Cola Co KO Beverages 170.5 39.2 -4.8 19.5 15.8 3.4 33.5

Energy Exxon Mobil XOM Oil, Gas & 306.0 73.4 -18.6 18.8 7.7 4.0 60.2 Consumable Fuels Petrochina Co 857.HK Oil, Gas & 232.9 5.8 -30.8 17.4 7.7 3.4 32.0 Consumable Fuels Chevron CVX Oil, Gas & 150.9 1528.0 -25.7 11.8 4.5 8.0 52.3 Consumable Fuels Royal Dutch Shell RDSA.LN Oil, Gas & 146.9 78.1 -28.1 23.1 6.0 5.5 58.1 Consumable Fuels Total Sa FP.FP Oil, Gas & 105.7 39.3 -5.2 11.1 4.8 6.2 55.6 Consumable Fuels Financials Berkshire BRK/B Diversified 323.3 131.0 -12.8 18.0 N/A N/A 13.6 Hathaway Financial Services Wells Fargo & Co WFC Banks 264.6 51.6 -4.1 12.4 N/A 2.9 N/A

Ind & Comm Bank 1398.HK Banks 240.2 4.7 -13.0 5.0 N/A 6.8 32.0 of China JPMorgan Chase JPM Banks 227.2 61.5 0.1 10.5 N/A 2.9 42.1

China Construction 939.HK Banks 176.9 5.4 -10.3 4.8 N/A 6.9 31.6 Bank

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 9

SECTOR SNAPSHOT – TOP 5 COMPANIES BY MARKET CAP (CONTINUED)

As of 9/22/2015

Total Return Div ESG Mkt Cap Price YTD % P/E EV/EBITD Yield % Disclosure Company name Ticker Industry (US$ Bn) (Local) (Local) 2015E A 2015E 2015E Score

Health Care Johnson & JNJ Pharmaceuticals 257.9 93.1 -9.0 15.1 10.4 3.2 57.0 Johnson Novartis AG NOVN.VX Pharmaceuticals 249.9 90.9 1.1 17.9 17.2 2.9 64.0

Roche Holdings ROG.VX Pharmaceuticals 221.9 250.4 -4.3 17.8 12.0 3.2 50.0

Pfizer PFE Pharmaceuticals 199.9 32.4 6.7 15.5 10.0 3.5 42.6

Gilead Sciences GILD Biotechnology 155.2 105.7 13.0 9.0 6.7 1.6 14.0

Industrials General Electric GE Industrial 253.3 25.1 2.0 19.3 9.5 3.7 56.6 Co Conglomerates Boeing BA Aerospace & 92.4 136.0 6.6 17.0 9.2 2.7 35.1 Defense United Parcel ups.us Air Freight & 89.3 99.7 -8.4 18.9 9.8 2.9 59.9 Service Logistics 3M MMM Industrial 87.5 140.0 -13.1 18.0 10.8 2.9 55.8 Conglomerates United Tech Corp UTX Aerospace & 81.5 91.6 -19.0 14.7 8.8 2.8 28.1 Defense Info Tech Apple AAPL Technology 657.0 115.2 5.7 12.6 6.2 1.8 45.9 Hardware, Storage & Google GOOGL Internet Software 445.6 667.0 25.7 23.1 12.7 N/A 15.3 & Services Microsoft Corp MSFT Software 352.8 44.1 -3.1 16.6 9.3 3.3 34.3

Facebook FB Internet Software 269.4 95.6 22.5 46.2 23.7 N/A 17.4 & Services Visa V IT Services 172.2 70.8 8.5 27.1 17.1 0.7 19.0

Materials BHP Billiton Ltd BHP.AU Metals & Mining 87.6 23.9 -7.5 23.4 7.0 10.2 61.2

BASF BAS.GY Chemicals 68.2 66.6 -1.7 12.7 7.1 4.2 60.3

Rio Tinto RIO.AU Metals & Mining 61.6 49.2 -10.7 13.5 6.6 8.7 57.4

Saudi Basic Ind. SABIC.AB Chemicals 62.1 77.7 -0.6 11.9 6.3 6.4 32.6

Dow Chemical DOW.US Chemicals 51.0 44.0 -1.9 13.8 7.6 3.8 N/A

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 10

SECTOR SNAPSHOT – TOP 5 COMPANIES BY MARKET CAP (CONTINUED) As of 9/22/2015

Total Return Div ESG Mkt Cap Price YTD % P/E EV/EBITD Yield % Disclosure Company name Ticker Industry (US$ Bn) (Local) (Local) 2015E A 2015E 2015E Score

Telecom China Mobile 941.HK Wireless 256.1 97.0 10.4 14.4 4.7 3.0 43.2 Telecommunication Ser AT&T T Diversified 200.3 32.6 1.1 12.4 6.2 5.8 50.6 Telecommunication Verizon VZ Diversified 182.1 44.8 -0.9 11.5 6.4 5.0 36.6 Telecommunication Vodafone VOD.LN Wireless 87.2 212.9 -1.3 47.3 7.1 5.9 52.7 Telecommunication Ser Nippon 9432.jp Diversified 82.2 4333.0 41.2 14.2 5.2 2.3 N/A Telegraph Telecommunication Utilities National Grid NG/ LN Multi-Utilities 49.3 854.0 -4.0 14.6 10.0 5.6 30.6

Duke Energy DUK Electric Utilities 48.2 70.1 -13.5 15.1 9.5 4.7 50.2

Nextera Energy NEE.US Electric Utilities 45.1 98.1 -5.6 17.4 10.1 3.1 45.3

Iberdrola Sa ibe.sm Electric Utilities 41.0 5.8 6.2 15.3 8.5 2.7 70.2

Dominion D.US Multi-Utilities 41.2 69.3 -7.4 18.8 12.3 3.7 45.7 Resources Source: Bloomberg. The securities in each sector represent the largest companies by market cap in the MSCI ACWI in their respective sectors. Sector classification is based on GICS methodology. Equity characteristics: P/E, EV/EBITDA and Dividend Yield are based on Bloomberg consensus estimates for stated period.

GDP / CONSUMER PRICE INFLATION / RATES

Real GDP (% YoY) CPI (% YoY) Official Rates Long Rates Region/Countries 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E 2014 2015E 2016E United States 2.4 2.5 2.7 1.6 0.3 2.0 0.3 0.6 1.6 2.2 2.5 3.0 Euro Area 0.9 1.5 1.7 0.4 0.1 1.2 0.1 0.1 0.1 - - - Japan 0.2 0.7 1.2 2.7 0.8 1.0 0.1 0.1 0.1 0.4 0.5 0.7 UK 2.6 2.6 2.4 1.5 0.2 1.5 0.5 0.5 1.3 2.2 2.1 2.5 Australia 2.7 2.3 2.7 2.5 1.7 2.5 2.5 2.0 2.0 3.0 2.9 3.2 China 7.4 6.9 6.6 2.0 1.5 2.0 5.6 4.6 4.6 3.7 3.6 3.5 Brazil 0.1 -2.4 -0.5 6.3 8.8 6.2 11.6 14.3 12.9 - - - **India 5.4 7.4 7.6 7.2 6.2 5.3 8.0 7.1 6.9 8.1 7.6 7.1

Source: Bloomberg. Estimates are composite of Bloomberg contributor estimates. *Italicized text represents actual data. ** India fiscal year runs to March 31.

MONETARY POLICY

Sep-15 Mar-15 Sep-14 Monetary Base growth (YoY) 0.4% 4.6% 17.0% M-2 growth (YoY) 6.4% 6.3% 6.3% Money multiplier (M-2/mon base) 3.0 3.0 3.1 1Q15 1Q14 1Q13 Velocity of money (GDP/M-2) 1.50 1.53 1.56 Source: Federal Reserve Bank of St. Louis

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 11

KEY ECONOMIC CHARTS

C&I Loan Growth (%) University of Michigan Survey of Consumer Sentiment 30 120 20 110 10 100 90 0 80 -10 %YoY 70 -20 60 -30 50

1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: Federal Reserve Bank of St. Louis Source: Bloomberg

NFIM Small Business Optimism Index ISM Manufacturing Purchasing Managers Index 110 80 105 70 100 95 60 90 50 85 40 80 30 75 70 20 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1994 1997 2000 2003 2006 2009 2012 1975 1977 1979 1982 1984 1987 1989 1991 1994 1996 1999 2001 2004 2006 2008 2011 2013

Source: Bloomberg Source: Bloomberg

US Treasury Yield Curve US Initial Jobless Claims 700 4.00 9/22/2015 3/22/2015 600 3.00 9/22/2014 500

2.00 400 (000s)

% 300 1.00 200 0.00 100 1M 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 30Y

-1.00 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 Source: Bloomberg Source: Bloomberg

Production Employees Average Hourly Earnings 10.0

8.0

6.0

% YoY 4.0

2.0

0.0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013

Source: Federal Reserve Bank of St. Louis

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 12 Global Market Strategy Regional and Sector Strategy: Monthly Update — August By Michael Geraghty, Global Markets Strategist, Cornerstone Capital Group

 Greater Regional Granularity — Emerging Asia and CEEMEA regions now broken down by major economies. Underweight China and India; Neutral South Korea and Taiwan. In CEEMEA, Neutral South Africa and Russia.

 What’s Changed? — Emerging Asia region previously ranked Overweight. Likely reflecting weakness in Information Technology sector — downgraded to Neutral last month — tech-heavy Korea and Taiwan have experienced slowing earnings momentum.

Figure 1: Regional Over- and Underweights Figure 2: Sector Over- and Underweights

Source: Cornerstone Capital Group Source: Cornerstone Capital Group

This article is an excerpt from a Cornerstone Capital Group research report dated August 3, 2015.

Michael Geraghty is the Global Markets Strategist for Cornerstone Capital Group. He has over three decades of experience in the financial services industry including working as an investment strategist at UBS and Citi.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 13

Global Market Strategy Regional and Sector Strategy: Special Update — September By Michael Geraghty, Global Markets Strategist, Cornerstone Capital Group

 For Sectors, It’s All Up to Earnings — Earnings fundamentals for the majority of MSCI GICS have continued to deteriorate. Global equities may be unlikely to find a bottom until earnings expectations stabilize.

 For Regions, Governance is a Key Factor — Governance in many Emerging Markets has, for some time, been much weaker than in Developed Markets, and has likely only gotten weaker lately.

 Strategy Largely Unchanged — Our proprietary “Investment Clock” is © Stvan4245/ Crystal Graphics still suggesting that the biggest gains for equity markets in the current cycle may be behind us. Some small tweaks to strategy recommendations. U.K. upgraded to Neutral from Underweight based on a stabilizing earnings outlook. Russia downgraded to Underweight from Neutral based on deteriorating earnings outlook, worsening valuations.

 Maintain a Defensive Stance — We are underweight Energy, Materials, and Industrials. In terms of regions, we are underweight Latin America, India, Russia, and China.

Figure 3: Regional Over- and Underweights Figure 4: Sector Over- and Underweights Arrows Indicate Change vs. Last Month

Source: Cornerstone Capital Group Source: Cornerstone Capital Group

This article is an excerpt from a Cornerstone Capital Group research report dated August 24, 2015.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 14

Corporate Governance Gauging Governance Globally – 2015 Update By Michael Geraghty, Global Markets Strategist, Cornerstone Capital Group

 A Governance Update — With some observers attributing recent volatility in EM equities in part to governance issues, we update the analysis in our 2014 report.

 Weakening Governance Generally — The percentile ranking of two- thirds of the countries in a governance composite declined in 2015 versus 2014.

 ©Curraheeshutter/Crystal Graphics Governance Even More of an Issue in Some EMs — Many Emerging Markets saw a notable deterioration in various governance metrics, including national governance (corruption in China and Russia) and corporate governance (India). Paradoxically, as some EMs seek to boost economic growth, it may be the case this only weakens governance — more corruption, an undermining of corporate ethics, etc.

 Worrisome Trends — Given that the quality of country-level governance affects corporate governance and, thus, firm value, some valuations could be at risk of downward readjustment should governance weaken further.

 Strategy Implications — Governance trends are one of the reasons why we are Underweight Latin America, India, Russia, China in our regional strategy model.

Figure 5: The Cornerstone Capital Governance Composite: Ranking 2015 vs. 2014

Source: Cornerstone Capital Group

This article is an excerpt from a Cornerstone Capital Group research report dated September 2, 2015.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 15

Corporate Governance The Networked Corporation By John K.S. Wilson, Head of Corporate Governance, Engagement & Research, and Erika Karp, Founder & CEO, Cornerstone Capital Group

The modern corporation is a network whose value arises from the relationships among its various stakeholders. Stakeholders create value, derive benefit, and may also suffer harm through their interactions with the corporation. Companies achieve excellence by responding appropriately to stakeholder concerns, which mitigates risk and opens up potential opportunities—and contributes to a firm’s resilience. The ability to do this consistently requires identifying key stakeholders; understanding their concerns; and evaluating how these concerns may impact the business. ©9photos/Crystal Graphics In our recent full-length report “The Networked Corporation: Introducing two new tools to help companies make the business case for improved stakeholder relations through shareholder engagement,” we outline a method for developing specific and holistic business cases for corporate excellence in stakeholder relations by understanding both (1) how these stakeholder relationships may affect company financial performance and (2) which stakeholder issues are salient at any point in time. Our method entails thoughtful and ongoing engagement with shareholders, using the following three analytical tools.

The Shareholder Alignment FrontierTM

Companies may struggle to make sense of a cacophony of conflicting stakeholder demands, or they may assume that a lack of explicit stakeholder criticism signals universal support. They may succumb to “group-think” and minimize the relevance of stakeholder demands until it is too late, or they may overreact to loud but ultimately ineffectual gadflies.

Among stakeholders, the interests of shareholders are most closely aligned with those of companies. We introduce the Shareholder Alignment FrontierTM, a method for identifying public issues that are relevant for corporate performance through ongoing dialogue between management and long-term shareholders.

Engaging with shareholders is an indispensable tool of corporate governance. Shareholder dialogue serves several functions, including:

 Framing external public issues for companies and sensitizing management to the importance of these issues;  Encouraging companies to integrate public issues into internal company discussions;  Enabling management to explore solutions to public issues in a neutral and safe environment; and  Providing external assessment of company responses.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 16

Corporate stakeholder relations are dynamic, and issues may evolve alongside technology, scientific knowledge, cultural attitudes, and politics, as well as is John K.S. Wilson company strategies and operations. The correct response to stakeholder the Head of Corporate issues depends in part on where in its lifecycle the issue resides. Governance, Engagement & We adapted our Issue Lifecycle Model for a financial perspective from a tool Research at developed by Novo Nordisk to measure the maturity of issues from a societal Cornerstone Capital perspective (summarized in a classic article by Simon Zadek of Group. John has over AccountAbility). The stages are: 18 years of experience in socially responsible  non-financial (of importance to neither companies nor stakeholders); investing and corporate governance.  pre-financial (of concern to stakeholders but not companies); Erika Karp is the Founder and CEO of  transitional (of strategic importance to both companies and stakeholders); Cornerstone Capital Inc. Prior to launching  financial (of operational importance to companies, but no longer a priority Cornerstone, Erika was for stakeholders). Managing Director and 1 TM Head of Global Sector The BRAVE Matrix Research at UBS The academic research has identified six discrete business drivers affected by Investment Bank, where non-financial stakeholder relationships: Cost, Risk, Sales and Pricing Power, she chaired the UBS Reputation, Attractiveness as an Employer, and Capacity to Innovate. We Global Investment consider how relationships with supply, demand and contextual stakeholders Review Committee. individually may affect each of the six business drivers, positively or negatively. A holistic examination of each of 18 potential business value drivers can help companies identify where their priorities should lie.

The Shareholder Alignment FrontierTM

Source: Cornerstone Capital Group

This article is an excerpt from a Cornerstone Capital Group research report dated July 29, 2015.

1 Business Relationship Analytics for Value Enhancement

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 17

Corporate Governance Four Questions for Alphabet By John K.S. Wilson, Head of Corporate Governance, Engagement & Research, Cornerstone Capital Group

Google’s impending a public-private company hybrid, where the function restructuring into a holding of the public business is to provide returns to company called Alphabet shareholders net of ongoing investments in the doesn’t change the private company. underlying business so much as make explicit the Traditional corporate governance thinking assumes company’s dual-track that a company cannot “serve two masters,” in this nature. On one track, Google case cash generation and a speculative investment strategy. Corporate governance questions need to ©Sirylok/Canva has a mature search/ advertising business; on the address how the company will maintain discipline and other, an investment company with a focus on give appropriate transparency about its progress on speculative technology investments and basic all its goals. research. The new structure, intended to provide What is the role of the board and group transparency to investors about the relative management team? performance of each side of the business, will be welcomed by investors. Most conglomerates fail because the top level of management is redundant, adding neither value to However, the separation of businesses also clarifies investors’ asset allocation decisions nor to the the underlying concerns some investors have management of underlying businesses. The relatively expressed about the company’s corporate governance, few successful conglomerates do one or the other well: and may amplify the typical investment concerns either, like Berkshire Hathaway, they are pure associated with conglomerates. Shareholders may investment companies whose management is skilled question whether the allocation of capital to basic at asset allocation and gives individual businesses research projects is the best use of shareholder wide strategic latitude while engaging in careful resources, or whether some of the non-core oversight; or like General Electric, whose core businesses are consistent with the risk profile of competency has historically been the ability to Google’s investors. Shareholders may also wonder manage diverse businesses. whether management is competent to manage these diverse enterprises. The company’s unequal voting Alphabet’s portfolio of companies is highly structure, which allows insiders to control the diversified, but each business is also dependent on company, limits meaningful shareholder input into Google’s core competency of gathering and using these decisions. Analysts and governance advocates massive amounts of data. Therefore, it seems unlikely have frequently called for Google to adopt a one- that either traditional operating model will be ideally share-one vote structure. suited to Alphabet. Individual businesses will need both autonomy and the ability to cooperate to However desirable greater shareholder democracy optimize the use of this shared resource. would be from an investor perspective, it is unlikely to emerge at Alphabet. The founders’ vision of the Shareholders will need a better understanding of how company was always less about search and advertising the board and management view their roles in and more about “the business of starting new things,” acquiring, coordinating and overseeing the operating to quote Larry Page’s announcement. Given investors’ companies, and how power will be shared between the time horizons and risk profiles, the unequal voting operating companies and the group management structure is the only way to maintain this core vision. team. Moreover, because the group will serve as a layer of management between investors and the From a governance perspective, it is probably more underlying businesses, clear disclosures about how useful to view Alphabet less as a public company than

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 18

these businesses are being evaluated will be important benefit. The firm’s progress toward achieving these to shareholders. goals will be an important consideration for shareholders. The company should integrate both How can the independent directors’ role be social objectives and metrics for each of its non-core strengthened? businesses into its financial disclosures. The company should also integrate an overall social vision to guide An important risk in the public-private hybrid is a these acquisitions into disclosures of its corporate potential lack of discipline arising from the focus on strategy. multiple sets of corporate objectives. For example, the appropriate allocation between dividend policy Does executive compensation create the right and new acquisitions is challenging at any company, incentives? but especially at one where the acquisitions may not generate returns until far in the future, if at all. The According to company filings, over 90% of role of independent board members in maintaining shareholders supported the company’s executive corporate strategy and discipline is particularly compensation plan at the 2014 annual meeting. important. Here are a couple of suggestions: However, assuming that insiders, whose non-public “B” shares confer voting power disproportionate to In the absence of meaningful independent their ownership stake, support the plan nearly shareholder voting power, the power of independent unanimously, the vote could signal underlying directors to serve as a check on management becomes discontent among external shareholders. While it is increasingly important. (Legacy) Google does not not possible to know how publicly traded “A” shares have an independent Chair (Eric Schmidt is the were voted, our back-of-the-envelope calculation former CEO) but it does have a lead independent suggests that approximately 25% of external investors director. However, the power of this position could be voted against the compensation plan, which should strengthened to give shareholders confidence that raise concerns about the plan, since investors are there is some independent check on management usually reluctant to vote against plans at high- decision-making. performing companies.

Under the new company, the board’s Acquisition By establishing incentives to drive executive behavior, Committee may take on greater significance. compensation plans provide the clearest signal of However, the membership of the Acquisition board strategy and priorities. Particularly for a Committee comprises the two founders plus the non- company like Alphabet, executive compensation independent board chair, with no independent disclosures provide an opportunity to explain how the members. Shareholders will want to know more company intends to implement multiple strategies. about how the independent directors can exert Moreover, shareholders will be interested not only in influence over the acquisition strategy of the compensation for the most senior executives but also company. for CEOs of the operating companies. Questions about compensation may include: In the absence of Can the company articulate a social mission and clear financial metrics, how will executives be judged objectives? on the success of acquisitions? How will social and Many of Google’s ventures, including Calico financial goals be balanced? What financial metrics (longevity), Sidewalk (Smart Cities) and Google X are appropriate given the company’s strategy? (driverless cars) will have difficulty setting financial Alphabet is not a traditional company and is unlikely objectives in a time horizon meaningful to investors. to adopt traditional corporate governance. In our However, the promised long-term social benefits of view, its disclosures need to explain how its these projects are more clearly articulated. Over the unconventional structure will serve decidedly long term, meeting traditional financial goals will conventional investors. depend upon delivering on this promise of social

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 19 Featured Domain Hillel’sVoice.com

By Erika Karp, Founder & CEO, Cornerstone Capital Group

Each month in the Cornerstone Journal of Sustainable Finance & Banking (JSFB), we will offer thoughts on a “Featured Domain,” which is selected from our proprietary “Sustainable Domain Bank.” The Cornerstone “Sustainable Domain Bank” contains 2,000+ addresses on the Internet, which are an articulation of business processes, business practices and aspirations for a more regenerative form of capitalism. Many of these domain names have the potential to be developed into business plans reflecting a robust interpretation of sustainable capitalism and finance. In particular, each “Sustainable Domain” captures a principle, or reflects a value inherent in the systematic understanding of the Environmental, Social and Governance (ESG) imperatives facing businesses and the economy today. Each Domain is intended to facilitate dialogue across functions and sectors of the capital markets; and each is available for collaborative partnership, purchase or transfer should it have particular appeal to Cornerstone clients and colleagues.

As leaders from across the globe are set to convene opposition. It is in that context that we revisit an this month in New York City for the UN General article first published in Forbes a couple of years Assembly, we are reminded how important it is to ago: “Sustainable Capitalism… If not now, amplify the voices of progress. We are also inspired by then when?” It is in light of this context that we the occurrence of the Jewish High Holidays ... select HillelsVoice.com as our “Featured Domain.” “The Days of Awe.” The prominent Jewish scholar Hillel is known to have “The Days of Awe” refers to the ten days starting with said “If I am not for myself, then who will be for me? Rosh Hashanah and ending with And if I am only for myself, then what Yom Kippur. They are a time for am I? And if not now, then when?” reflection, repentance and renewal. These questions posed at around 50 In the context of capitalism, there BC are incredibly timely in the can also be “Days of Awe.” Days context of today’s struggling global where market-based approaches economy and threats to our system of deployed to address massive global capitalism. Indeed, “If not now, then challenges can help find alternatives when?” to fossil fuels, drive the rebuilding of crumbling infrastructure, support Today, while the worst appears to be economic inclusion, education, ©Yastremska / Bigstock over for the global financial crisis, we healthcare, and human rights and witnessed the global economy pile on dignity for those threatened by war, illness and food trillions of dollars additional debt through insecurity. quantitative easing, the Eurozone still under siege awaiting cohesive policy and political leadership, and “The Days of Awe” could bring lessons to leverage the China’s leadership driving a dramatic transition while power of capitalism towards its best and highest hoping to maintain enough growth to support the purpose. Fostering global prosperity can be achieved needs of 1.3 billion people. Again, “If not now, then through a more sustainable form of capitalism – a when?” We live in a world which consumes about 1.5 form of capitalism where leaders must be prepared to times the earth’s sustainable level of natural resources engage in a nuanced debate and exchange of ideas that each year to support our current consumption will yield extraordinary resilience. patterns. Our population is aging such that the financial burden on the young to care for the old is In reflecting on the future of capitalism, we draw growing rapidly, the extent of income inequality is from wisdom of the great scholar Hillel, who was said dramatically increasing, the US alone has almost 50 to not only advance his own thoughts, but those of his million people living in poverty, and almost a billion

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 20 people around the world don’t have access to clean analyzed, can now be disclosed in a more coherent drinking water. “If not now, then when?” and efficient matter now that standards are being established as with the GRI (Global Reporting The time is indeed now. All the pieces are in place to Initiative) and the Sustainability Accounting move forward and leverage the extraordinary power Standards Board (SASB). The time is indeed now for of capitalism on behalf of the entire world. We have better transparency. everything we need across the broad realms of technology, science, academia, economics, With regard to collaboration, the time has also come. government and finance to ensure a better future. We As made obvious during the global financial crisis, have the opportunity to repair an economic system independent action by individual economic entities which remains the greatest vehicle the world has ever working towards their own interests will ultimately known for creating wealth and prosperity. The real fail. “If I am only for myself, then what am I?” question is whether we have the force of will to follow Complex problems cannot be solved sequentially. through. In the face of a justified crisis of confidence There must be parallel processes, initiatives and in capitalism, we must rebuild trust and faith in the perspectives which can ultimately come together to system. We can. And now is the time. find solutions. There must be a belief that solutions for the whole will ultimately be beneficial for the To do this though, we need to better acknowledge the individual. Collaboration can be encouraged by shortcomings in our abilities to deal with complex leaders who are incentivized to truly steward global problems. As did Hillel, we need to pose the financial, human and natural capital for the long-run. hard questions to the right people and to ourselves. We have indeed begun to see that in the capital We need two things which are currently in deficit. The markets across the corporate and investment world. first is greater transparency into the mission, Collaboration can be accelerated by embracing strategies, objectives and priorities of the world’s diverse perspectives. The imperative and the private sector companies combined with a regulatory infrastructure is in place, so “if not now, then when?” infrastructure which encourages that transparency. The second is a generation of business leaders who are In summary, I argue that the awesome power of better at facilitating collaboration. capitalism can be unleashed through rebuilding confidence and conviction. Confidence and conviction On the subject of transparency, I would argue that can be restored through greater transparency and many signals now point to the need for more collaboration. Transparency and collaboration will systematic analysis of environmental, social and allow for more creativity, innovation, productivity and governance (ESG) factors in the investment processes growth. Obviously all these things are easy to say, but which drive capitalism. The time is now given that not as easy to execute. In order to actually deliver on there are one thousand asset management firms the promise, I would suggest that we attack representing $30 trillion in assets who need to better complexity with simplicity as did the scholar Hillel. understand business decision-making processes The simple principle of asking questions is the best associated with the inevitable trade-offs inherent in starting point. But, to ask them constructively and running a business for the long run. These firms, all consistently, and to ask again and again until the signatories of the Principles for Responsible answers are forthcoming, is the trick. To elevate Investing, now have access to more ESG data than consciousness around broad environmental, social ever before. This data can now be housed in the cloud, and governance factors and then to ask for better analyzed, better assured, and better accountability is essential. We must ask the right disseminated through social media by the scores of questions to the right people. Then we need to insist investors, accountants, consultants, investment upon robust answers, comparability and banks and academic institutions which are accountability. The future of capitalism can indeed be demanding it. This data, which is pivotal to decisions much brighter if viewed as “a question of around financial investments as risk and return are questions.”

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 21 Open Source Excellence What’s Often Missing in a Healthy C-Suite is… Health and Resilience

By Derek Yach, Chief Health Officer, The Vitality Group, part of Discovery Holdings Ltd.

In the past few years, there has been an explosion and evolution of corporate titles, which I believe reflects the fact that companies are facing new challenges– from sustainability and greater supply chain transparency to data/privacy – and need to be clear both to internal staff and external partners that they are elevating these issues and taking them seriously. But health remains absent from the rank of C-Suite titles.

Naming a Chief Sustainability Officer, a Chief Privacy Officer, or a Chief Innovation Officer makes it loud and clear that these are issues you take seriously as a company – If those titles come with actual responsibility, ©Jakub Jirsak/BigStock decision-making ability, and ideally, a direct reporting line to the Chief Executive Officer.

(Other companies use such titles to show how innovative or creative they are, such as Google with their Chief Internet Evangelist Officer or Kodak with their Chief Listening Officer.)

The bottom line is that issues like data/privacy and sustainability are no longer fringe topics left to pioneers or trail blazers. They are essential to the core way of doing business, and companies need to recognize how important it is to do what is right both for the business and for society as a whole. This concept is the fundamental tenet of shared value as defined by Michael Porter.

So what about companies’ greatest asset, their people?

Traditionally, Human Resource departments have been in charge of managing talent and benefits, and companies sometimes have a Chief Medical Officer (CMO) who addresses medical needs of employees, ranging from occupational safety and health to managing health care costs. With the growing costs of health care, forward thinking companies such as IBM, Dow Chemical, and Johnson & Johnson have added workplace wellbeing programs, focused on health promotion and chronic disease prevention, to the CMO role.

This is a great start, but not enough.

The Case for a Chief Health Officer

The position of Chief Health Officer (CHO) has been identified as critical to ensure strengthened leadership in health. So why the focus on the term health instead of medical, and what even makes a good CHO?

For the CHO to be successful, it’s important that responsibilities not be compartmentalized, and for the role to focus on health as it relates to three key areas:

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 22

• employees, • products and services, and

• interactions with communities (the latter typically being part of a corporate foundation’s mandate).

In a nutshell, companies should take a more integrated approach as this role emerges – in much that same way we’ve seen the responsibilities of Chief Sustainability Officer evolve.

Given that health care costs are often the greatest expense for an employer outside of payroll, it’s critical that the CHO has a seat at the table for executive decision-making. The role of the CHO is guided primarily by sound evidence, science, and ethics. While it may raise the potential for conflict between a company’s profit and loss in the short term, ultimately the presence of a CHO within executive decision-making bodies of companies raises the potential for employee health, healthier products, and more effective prevention services to be addressed proactively and through often tough considerations of short- term versus long-term business interests.

In recent years, the military have shown how strengthening the focus on health enhances the resilience of individual soldiers and their families and that leads to national resilience over the long-term. And they are investing accordingly! What is true in the military is also true within companies.

The cost implications for employers, employees and society (seen through Medicare costs that are rising faster than inflation, growing 68% since 2002) have forced a long overdue debate and we admonish businesses to embrace the sense of urgency when it comes to using the power of prevention to bend future cost curves.

By collaborating across sectors and along common interest lines, employees from the private and public sectors can help curb their costs and keep both their and national competitiveness high, increasing our collective resilience which will help tackle other challenges on the horizon, from data and privacy to aging employees. But those are two whole other stories.

Derek Yach is the Chief Health Officer of The Vitality Group, part of Discovery Holdings Ltd, where he leads the Vitality Institute for Health Promotion. Prior to that he was SVP of Global Health and Agriculture Policy at PepsiCo. He is a member of the Board of Directors at Cornerstone Capital Group.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 23 Enhanced Analytics Government Transparency Measures: Addressing the “S” in ESG

By Ed Marcum, Vice President for Investments, Humanity United, and Kilian Moote, Project Director, KnowTheChain, Humanity United

Sustainable business practices are based on the compliance with labor laws. Yet, similar companies concept of resilience. The ability to create economic have few Key Performance Indicators that correlate value over the long term requires companies to with how they address forced labor in their supply understand the full costs and opportunities of their chains. A recent survey by CERES found that only activities so they can effectively manage their risks. 40% of 600 top companies had a policy that explicitly Companies are increasing their focus on ESG prohibits suppliers from using forced labor. measures as a result. However, measuring the impact of social issues has been particularly difficult. Unlike environmental issues, few companies have instituted measurable practices that relate to Human trafficking is a pervasive global issue rarely social issues to which they could be connected. For discussed during company board meetings, until many companies, quantifying improvements on recently. According to the environmental targets, such as a International Labor Organization, reduction of greenhouse gas this crime contributes nearly $150 emissions, correlate directly to cost billion in illegal profits to the global reduction and can be easily economy each year. Any measured. Measuring social multinational company with a indicators is still an extremely globalized supply chain has some nascent effort, which contributes to degree of exposure to this human weak associations between improving trafficking. Recent reports of labor conditions and the financial trafficking have disrupted the benefit for business to do so. production of seafood caught in ©Semmick Photo/Crystal Graphics Thailand, palm oil produced in When measuring their social impact, Indonesia, and electronics manufactured in Malaysia. companies are stuck in an infinite loop, where they For companies like Costco, implicated in sourcing don’t manage what they cannot measure and they shrimp from Thailand, or Flextronics, associated with cannot measure what they aren’t managing. However, abusive conditions in Malaysia, the financial and the emerging trend of regulated transparency may reputational impact of these disruptions can be break this cycle. significant. In 2012, the little-known and underreported Today, a single product may include components California Transparency in Supply Chains Act took manufactured around the world. To compete in a effect. It required 2,600 companies doing business in globalized world, multinationals forgo direct the state, with global sales of over $100 million and oversight of their entire production in favor of classified as retail sellers or manufacturers, to report outsourcing and contracting, often to locations or on how they manage their supply chains to prevent suppliers where little is known and less is managed. slavery. Today, the law is influencing similar reporting With such globalized production, it is not surprising efforts around the world. Since 2012, three other that multinational companies like Costco can be as transparency and reporting measures have been outraged and incensed as the general public when introduced or have passed: the UK Modern Day they learn slave labor occurs in their supply chain. Slavery Act, the EU Directive 2013/34/EU, and the US Federal Business Supply Chain Transparency on A recent survey by The Economist found that 71% of Human Trafficking and Slavery Act. 853 top executives believe their companies’ responsibility to protect human rights extends beyond

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 24 By mandating disclosure, these measures place an Without a robust set of data or multiple points of emphasis on supply chain social management comparison, it is difficult to identify the efforts that practices, extending companies’ responsibility into might be connected to improved company business their supply chain operations. This trend towards practices. Regardless, by the end of 2016, nearly every transparency should result in companies extending multinational company will be required to comply their oversight of their supply chains deeper into the with at least one transparency regulation, either in the production process of the products they sell. It should United States or Europe. The trend towards annual also make it easier for interested stakeholders to reporting requirements provides investors interested compare actions taken by companies among industry in comparing companies on social risk with unique peers, companies with similar market size, or those insights previously unavailable to them. Alone, these with analogous supply chains. The increase in regulations cannot bridge the gap that exists between accessible data will improve the ability of investors to measuring the “environmental” component in ESG analyze and compare practices of possible and the “social”, but they do provide a path towards investments. improved measurement and reporting. By breaking the vicious cycle of underreporting and under- At Humanity United we are working to make it easier management, these regulations can begin to inform for companies and investors to identify strong investors who have not previously had the tools to practices that go beyond simple reporting or measure and compare practices. compliance requirements. Our KnowTheChain.org unit provides insights, based on compliance analysis, Ed Marcum is Vice President for Investments at and endeavor to identify resources that help Humanity United. Previously he was the deputy companies go beyond compliance to appropriately executive director of World Links, where he oversaw manage their risk. programs focused on improving educational outcomes and economic opportunities for youth in Some environmental indicators correlate directly with developing countries through the use of information efficiency and cost reduction. When a company and communications technology. reduces its carbon footprint, it likely also reduces its costs. Unfortunately, direct correlations among social Kilian Moote is a global expert in supply chain indicators are currently weak, if they exist at all. transparency and legal disclosure. He is the Project Identifying social practices that correlate to cost Director for KnowTheChain, a Humanity United reduction will take time and research. While project dedicated to helping businesses and investors transparency regulations alone will not lead to such understand and address labor abuses within their discoveries, they will make it easier to determine if supply chains. In this role he oversees all aspects of specific practices can be correlated to better business KnowTheChain’s strategy, publications, and decisions. business engagement.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 25 Accelerating Impact Seeding a Resilient Future

By Karla Canavan, Director of Sustainable Finance, Bunge Ltd.

Investment in agricultural technology over the past century or so has been intermittent. After the so- called “Green Revolution” at the turn of the 20th century, investment in agricultural innovation dried up. In the mid-1900s, breakthroughs in use of hybrid seeds and mineral fertilization fueled an amazing increase in crop yields, saving over 1 billion people from starvation. Public focus on food security then went quiet for decades, but in recent years there’s been a resurgence of concern in the international community, given accelerated population growth in a stressed planet facing resource scarcity and climate Photo courtesy of the author. change. The social unrest caused by the increase of food prices in 2008 underscored the critical need to failure to achieve resilience. For the new paradigm, bring agriculture and food systems up to speed. food diversification and crop rotation will be a must. According to the Food and Agriculture Organization Agricultural innovation is needed to enable (FAO), only nine plants supply 75% of human food production of not only more, but also better-quality (wheat, maize, rice, barley, potatoes, yams, sugar cane and more nutritious, food. Crops need to become and soybeans). The human food supply relies on far stronger while planted in increasingly harsh too small a variety of plants, leaving the system conditions such as soil degradation, salinization, and vulnerable. In order to ensure security and stability, drought. The big difference between the advances of crops such as “ancient grains” (e.g., quinoa, the last century and today’s challenge is that the new amaranth, kamut), perennial crops, and nutrient- solutions need to be resilient: able to thrive in this new dense super foods should be cycled into the system to environment. provide diversification.

Monoculture vs. Diversification Making a Better Seed, Naturally

The practice of monoculture poses risks to soil, the Now let’s talk about inputs, about resilient seeds environment and diet. This concept made the global needed to meet the challenge. Hybrid seeds are the system of food production vulnerable and reactive to result of crossbreeding, a combination of natural different threats. Every time seeds faced a new pest, selection among different varieties, which leaves pesticide use increased and as soil nutrients were the DNA chain intact and therefore is not genetically depleted by the same nutrient extraction we would modified. As stated earlier, staple crops form the add more fertilizer reigniting the cycle of land base of world diets and are the key to produce degradation. This is without mentioning the practice a significant impact in the food chain, so it is here of planting whatever crop would come to mind, where work on the effective use of plant hybridization irrespective of the environment, as long as technology must be focused. would make it possible. We need look no further for results with well-documented and publicized cases as dramatic as California and its water crisis. The first seed worth mentioning is a strain of wheat called Luminaria – a hybrid variety developed in This paradigm is just not sustainable – we need to Mexico to be water efficient while having the look into the root of the problem, and that is the necessary characteristics to produce bread. Wheat

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 26

varieties for bread production are usually produced in proven to be more resilient than its hybrid cold weather environments such as Canada or Russia. competitors and might be a solution that can Luminaria resilient wheat allows countries with withstand the threats of climate change such as erratic warmer climates to produce wheat suitable for bread rains and flooding. production, while using less water and producing the same yields. Many actors are involved in this effort Last but not least, ancient grains are important to the and the result is a win/win for both growers and dialogue on seed resiliency. These are seeds that have buyers. An example of how this works in practice: The adapted over millennia to withstand environmental government promotes programs developing local stress, and were largely forgotten in many agriculture, while a private company provides a industrialized countries due to the demand for higher preferential price purchase contract and saves by yields of an industrialized food system. These varieties using local wheat instead of an imported variety have exceptional characteristics which might lead the coming from far away. The water usage with way forward. Examples include wheat varieties like Luminaria is lower than other varieties and the Egyptian kamut, and high protein grains such quinoa community benefits from stable yields with fewer and amaranth. Such foods have been grown under inputs and at a premium price. This effort is scalable extreme conditions such as high altitudes and drought and can be adapted to other weather situations. for ages. Quinoa, for instance, has a high protein content and is also tolerant to soil salinization, which Another smart seed example is the High Quality is one of the main problems facing modern Maize developed by a Mexican woman, Dr. agricultural land. Amaranth proves more nutritious Evangelina Villegas, winner of the World Food Prize than corn, provides more net per hectare income to in 2000 in recognition of her efforts. Maize is the base the farmer and uses less water. As stated earlier, of many diets across Latin America and Africa and perennial crops or tree crops can also be part of the while it provides some nutrients and energy, its resilience solution – Brazilian nuts and avocados are protein content is low. Dr. Villegas and her associate just a few examples. Dr. Vasal realized that increasing the protein content of maize could greatly enhance the quality of nutrition It is very clear that for humanity to face a future of to these countries. Through crossbreeding, they harsher production conditions and exponentially created a high-protein maize that not only has double increasing demand, there needs to be a major the protein content of traditional varieties, but is also systemic transformation within the current world highly digestible, which boosts the net nutritive effect food apparatus. While the methods and means of food when consumed. While the improvement is not a production will continue to underpin a resilient food cure-all for nutritional deficiencies facing countries system, major efforts must be made to reduce post- relying on maize, it is an immediate solution that harvest losses (food waste) and improve directly benefits local subsistence farmers already infrastructure for food distribution. In the meantime, accustomed to growing maize, and provides improved plant hybrids are the seed that can help usher in the nutrition to the population without having to change next “green revolution.” their base diet.

Maize and wheat are not the only grains that have been improved through hybridization. There are also significant innovations in producing varieties of Karla Canavan has been in trading, finance, asset resilient rice, the staple food of Asia. Water-saving management, and agribusiness over the past 20 varieties are increasing yields by 30 % in places like years. Passionate about sustainability, Karla has Laos. These varieties are also being created developed her deep understanding of the food and considering nutritional value improvements. That energy value chains through her work at being said, old traditional varieties continue to be agribusiness giants Cargill and Bunge. relevant. For instance, the local rice variety in Sri Lanka, which was almost driven to extinction, has

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 27

Featured Editorial Sports & Women: Microcosm of a World at Play

By Deborah Slaner Larkin, CEO, Women’s Sports Foundation

Billie Jean King’s trouncing of Bobby Riggs in the Battle of the Sexes in 1973 signaled that women were ready to compete as equals, ready to succeed in all arenas. It was in that spirit that Billie Jean founded the Women’s Sports Foundation (WSF) over 40 years ago to serve as the collective voice for women’s sports. She knew then what research has since confirmed: that the skills girls learn from sports would make them successful on the field, in the classroom and in the C-suites around the world.

© yobro / BigStock The Women’s Sports Foundation is dedicated to providing safe and equitable opportunities so that all girls receive the significant health, education and leadership benefits associated with sports opportunities. WSF’s work shapes public attitude about women’s sports and athletes, builds capacity for organizations that get girls active, ensures equal opportunities for girls and women and supports physically and emotionally healthy lifestyles. We operate through five guiding pillars: research, advocacy, grants and programs, collaborations and leadership. Early on, we recognized the need for a structure that relied on solid data to fuel advocacy and grant programs and to establish broad-based, high-level relationships with stakeholders to maximize human and financial resources. Our strategically directed coalitions and partnerships enable us to serve as the conscience striving for equal opportunities for girls. Importantly, we’ve learned that periodic “disruption days” are healthy ways for our leadership to evaluate relevancy and meet future demands. While we have seen great strides in women and girls’ participation throughout our four decades, we recognize that there is still more work to be done.

In the 1970’s, one in 27 girls played high school sports. Today that number has grown to two in five – and that’s progress. It has been aided by two generations of girls who have benefitted from Title IX of the Education Amendments of 1972, which protects people from discrimination based on sex in education programs and activities that receive Federal financial assistance.

Moving the Numbers: 2 in 5

Millions of girls have participated in sports through their school-aged years and some have gone onto the elite levels. They account for the outstanding players we saw this summer during the US Soccer team’s World Cup win; what we’re seeing all season from the professional women basketball players in the WNBA and Serena and Rhonda wowing us with their record-breaking feats on the tennis court.

It is a great achievement that we now see two in five girls participating in sports, but we can’t let it take another 40 years to get the other 60 percent of girls active. Today, the critical need is to focus on the almost 4 million girls, most of whom are African-American and Hispanic, who are left out of athletics. Our research confirms that these girls are doubly hit by both gender

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 28

and race disparities. Girls in these demographics are less likely to play sports than boys and less likely to play sports than their Caucasian peers. They also enter sports at a later age and drop out earlier. As a society, knowing the significant health, education and leadership benefits derived from sports, we can’t afford to let these girls sit on the bench or worse, sit on the couch.

Research has confirmed that diverse groups of leaders produce better business decisions and are good role models. In the 70’s women were the leaders of women’s sports. Ninety percent of the coaches of women’s sports were women. Today less than 43 percent of coaches of women’s teams and only 2 percent of men’s teams’ coaches are women; women represent 20 percent of all coaches. Female coaches are paid less, are held to higher standards and get less support than their male counterparts and are being fired and not hired at disturbing rates. There is little doubt that gender bias is at play, but up until now, the reasons fall to anecdotal accounts. The WSF is currently conducting research to collect the data, expose the problems and create viable solutions--or coaching will become solely a man’s profession.

Back in the day, conversations around “safety” typically addressed regulatory or liability issues around facilities and equipment. Today “safety” has taken on different meanings. It’s personal. Our advocacy efforts address sexual violence, bullying, sexual harassment and more. We develop sound policies around body image, sexual orientation, disabilities and harassment. Lest we think Title IX has done its job, many schools are still not in compliance with this Federal law. While many girls have an opportunity to participate in sports, they often receive inferior treatment and benefits compared to their male peers. For example, NCAA collegiate female athletes miss out on more than $200 million in athletic scholarship dollars than male athletes annually. The WSF is working to increase athletic department compliance with Title IX at all levels of education.

Sports matter. It’s part of the fabric of our lives. The benefits are too great and the stakes are too high to have girls be anything less than full and equal participants. The issues facing girls and women in sports are but a microcosm of issues women face in other arenas of life. Contact the Women’s Sports Foundation for more information and ways to help provide girls the opportunities which will help them become our future leaders.

Deborah Slaner Larkin is serving her second tour as CEO of the Women’s Sports Foundation. With more than thirty years’ experience in corporate, government and non-profit leadership, she has worked with the Aspen Institute’s Sport and Society – Project Play effort and was Executive Director of the United States Tennis Association (USTA) Foundation. From 1994 to 2002, she served on the President’s Council on Physical Fitness and Sports.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 29

Featured Editorial Boosting Returns, Boosting Resilience

By Susan McArthur, Managing Partner, Greensoil Investments, and Jamie James, Chief Innovation Officer, Greensoil Building Innovation Fund (GBIF)

A hot topic these days on university campuses and 30% ROI depending on jurisdiction and electricity among capital endowment managers for cultural and prices. LED lighting technologies combined with philanthropic organizations is whether or not to automation and controls produce similar returns, and divest from fossil fuel companies. While this is a good the price for quality has come down significantly. For way to express an opinion about an institution’s example, a high-traffic retailer recently retrofitted its values, it will not necessarily contribute to the kind of lighting and controls, generating a 25% ROI. change that would be a much better expression of those values. It says how you don’t like to earn a As a result of the accelerating penetration in the return, but it doesn’t say anything about how you can market for energy-efficient solutions, innovative make a return investing through an aligned manner. companies providing these solutions are growing at high double digit rates. It is a large and active market Instead, consider an investment strategy that for investors, with recent realized investment gains at supports companies which not only improve multiples of revenue, and in the hundreds of millions conditions for of dollars. Many innovations in real estate operations sustainability, but also today also offer new measurement, visualization, offer a means for large wellness and engagement tools that can provide a institutions and their meaningful context to the dialogue on infrastructure stakeholders to planning, renewal, resilience and sustainability — all experience the positive while saving money for our universities. Imagine also impact of those turning campuses into laboratories for advancing the investments firsthand. next generation of building and infrastructure For example, a innovations that will further optimize resource © yobro / BigStock university endowment consumption. And think of how this could energize the strategy that includes young engineers, economists, environmental investments in building-efficiency solutions would scientists, and industrial ecologists who populate their earn attractive returns while also significantly campuses. benefiting the campus community. It’s time for university endowments to invest for Energy efficiency presents some of the most positive outcomes that can save money, make money, immediate and fruitful opportunities to address and reduce our environmental footprint. They could climate change. Again using the example of start by leveraging their extraordinary human, capital universities, many campuses are home to aging and and physical assets to tell a much more empowering outdated physical assets that would fail most story of engagement than simply to say, “Let’s stop environmental, economic and wellness exams and investing in bad stuff.” hardly represent the potential and aspirations—and increasingly, the values—of the students they serve. Susan McArthur is Managing Partner at Greensoil Investments, where she and her partners built the team In today’s economic environment, building owners and developed the strategy for the Greensoil Building are looking for ways to bring savings to their bottom Innovation Fund (GBIF). Susan has over 25 years of line. The falling cost of wireless communication, investment banking experience in New York, Paris and mobile technology, data analytics and storage results Toronto. not only in sustainable practices but also attractive Jamie James is the Chief Innovation Officer at GBIF. He returns on innovation. For example, electric smart has been a green building leader in Canada as a real meters in multi-unit residences can produce up to a estate developer and technology investor. He is also the founder of the non-profit Tower Labs accelerator.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 30

Upcoming Events

Global ESG Calendar

Date/Time Event Location Information

9.22.15 – 9.23.15 2015 Water Innovation Summit Claremont Hotel http://events.cleantech.com/waterinnovati Berkeley, CA onsummit

9.24.15 – 9.25.15 RobecoSAM Forum Bocken Conference Center http://www.robecosam.com/en/forum/ri/ Cornerstone Speaking Event Zurich, Switzerland

9.25.15 – 9.27.15 Green Festivals – LA Convention Center http://www.greenfestivals.org Los Angeles, CA

9.26. 15 – 9.29.15 Clinton Global Initiative 2015 Annual New York, NY https://www.clintonfoundation.org/clinton- Meeting global-initiative/meetings/annual- meetings/2015

9.28.15 National Association of Corporate Marriot Marquis https://www.nacdonline.org/Conference/a Director’s Global Board Leaders’ Summit Washington, DC genda.cfm

9.28.15 How Business Can Tackle Deforestation Hotel Rasa Sentosa Resort http://www.innovation- Conference Singapore forum.co.uk/deforestation-singapore- agenda.php

10.1.15 NextGen Wealth Management – New Princeton Club http://www.frallc.com/conference,aspx?cc Opportunities with Millennial & Gen X New York, NY ode=B976 Investors

10.1 – 10.2.15 The Concordia Summit Grand Hyatt Hotel http://www.concordia.net/the-summit- Cornerstone Speaking Event New York, NY 2015/

10.5.15 The Annual SXSW Eco Convention Center http://sxsweco.com Austin, TX

10.6.15 – 10.7.15 IGCC Climate Change Summit Conference & Exhibition http://www.igcc.org.au Centre Melbourne, Australia

10.6.15 – 10.8.15 Sustainable Brands New Metrics ‘15 The Royal Sonesta Hotel http://events.sustainablebrands.com/new Boston, MA metrics15/

10.6.15 – 10.9.15 SOCAP 2015 – Social Capital Markets Fort Mason http://www.socialcapitalmarkets.net Conference San Francisco, CA

10.12.15 – 10.13.15 Bloomberg New Energy Finance London The Brewery http://about.bnef.com/summit/?utm_sourc Future of Energy Summit London, UK e=eventbrite&utm_medium=link&utm_ca mpaign=Summit2015

10.22.15 High Water Women’s Investing for Impact CUNY Graduate Center http://www.highwaterwomen.org/index.ph Symposium New York, NY p/our-programs/impact-investing- Cornerstone Speaking Event education#!impact2

11.3.15 – 11.5.15 Annual SRI Conference on Sustainable The Broadmoor, Colorado http://www.sriconference.com/ Responsible Impact Investing Springs, CO Cornerstone Speaking Event

11.5.15 Symposium on Integrated Thinking Edelman http://skytopstrategies.com/integrated- Cornerstone Speaking Event New York, NY thinking-ny/

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 31

The Cornerstone Journal of Sustainable Finance & BankingSM Access Form

A regular electronic journal discussing global perspectives on progress towards sustainable finance, banking and capitalism across regions and industry sectors. The JSFB features proprietary content from our Board, our Staff, and our Global Advisory Council. Sections including the Market Summary, Global Sector Research, Open Source Excellence, Corporate Governance, Enhanced Analytics, Accelerating Impact, Featured Domain and Sustainable Product Reviews, and Events are highlighted.

Standard One-Year Access $1,800 / Special Rate for NGOs and Students $500 / Single issues $300 Along with this subscription intended for both professionals at Financial Institutions and Corporate executives from all industries, subscribers will gain global perspectives on the articulation of strategies intended to benefit both the bottom line, and the major societal and economic imperatives of our day. In particular, our expert commentary on the latest research into environmental, social, and governance metrics and business integration, will allow for optimal assessments of risk-adjusted-returns in the capital markets. The JSFB is intended to lend investment insight into both micro-and macro-economic outcomes.

Premium One-Year Access $3,600 / Special Rate for NGOs and Students $1,000 In addition to receiving the “The Cornerstone Journal of Sustainable Finance & Banking,” subscribers will also receive access to exclusive Cornerstone events, consultation with a Cornerstone Executive or Global Advisory Council member and periodic “Flagship Reports from Cornerstone.”

For more details or to subscribe immediately, visit http://cornerstonecapinc.com/journal-of-sustainable-finance-banking/.

Subscriber / Entity Information Additional Subscribers

Company Name Please complete the information for each additional subscriber. Subscriber Name Name

Phone Number Email Address

Email Address Subscription Type ☐ Standard ☐ Premium ☐ NGO/Student Subscription Type ☐ Standard ☐ Premium Name ☐ NGO/Student * *Please mark either standard or premium level of access. Billing Address Email Address

City, State, Zip Code Subscription Type ☐ Standard ☐ Premium ☐ NGO/Student Country Name

Mailing Address (if different) Email Address

City, State, Zip Code Subscription Type ☐ Standard ☐ Premium ☐ NGO/Student Country The Subscription Agreement annexed hereto is incorporated and made part of this Subscription Form and available on our website.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 32

The Cornerstone Journal of Sustainable Finance & BankingSM Access Form (continued)

Access Quantity

Premium $3,600 ______NGO/Student (Premium) $1,000 ______

Standard $1,800 ______NGO/Student (Standard) $500 ______

Single Issue $300 ______

Payment Options

☐ Bill me later

☐ Payment Enclosed

☐ Bill my credit card

Credit Card Details

☐ American Express

☐ MasterCard

☐ Visa

Name on Credit Card:

Number

Expiration Date Card Security Code

Billing Address (if different)

Signature

Please return the subscription form to Cornerstone Capital Group or contact us to expedite your order.

Cornerstone Capital Group 1180 Avenue of the Americas, 20th Floor New York, NY 10036 +1 212 874 7400 [email protected] http://cornerstonecapinc.com

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 33

Recent Articles from Cornerstone Capital Group

Cornerstone Journal of Sustainable Finance & Banking – Summer 2015 Cornerstone Journal of Sustainable Finance & Banking – June 2015 Cornerstone Journal of Sustainable Finance & Banking – May 2015 Cornerstone Journal of Sustainable Finance & Banking – April 2015 Cornerstone Journal of Sustainable Finance & Banking – March 2015 Cornerstone Journal of Sustainable Finance & Banking – February 2015 Cornerstone Journal of Sustainable Finance & Banking – January 2015 Cornerstone Journal of Sustainable Finance & Banking – November 2014 Cornerstone Journal of Sustainable Finance & Banking – October 2014 Cornerstone Journal of Sustainable Finance & Banking – September 2014 Cornerstone Journal of Sustainable Finance & Banking – Summer 2014 Cornerstone Journal of Sustainable Finance & Banking – June 2014 Cornerstone Journal of Sustainable Finance & Banking – May 2014 Cornerstone Journal of Sustainable Finance & Banking – April 2014 Cornerstone Journal of Sustainable Finance & Banking – March 2014 Cornerstone Journal of Sustainable Finance & Banking – February 2014 Cornerstone Journal of Sustainable Finance & Banking – January 2014 Cornerstone Journal of Sustainable Finance & Banking – December 2013 Cornerstone Journal of Sustainable Finance & Banking – November 2013 Cornerstone Journal of Sustainable Finance & Banking – October 2013 Inaugural Edition

The Economist: “Revisiting the Wealth of Nations: The Seas” by Erika Karp – March 2015 http://www.economistinsights.com/opinion/revisiting-wealth-nations-seas

Wall Street Week: “Embrace the Grey” by Erika Karp, Derek Yach – September 2013 www.wallstreetweek.com/guest-post-embrace-the-grey

Forbes: “The Power to Convene” by Erika Karp – December 2012 http://www.forbes.com/sites/85broads/2012/12/10/the-power-to-convene/

Forbes: “Sustainable Capitalism…If Not Now, Then When?” by Erika Karp – November 2012 http://www.forbes.com/sites/85broads/2012/11/08/sustainable-capitalism-if-not-now-then-when/

Forbes: “Could Sustainability by Unsustainable?” by Erika Karp – September 2012 http://www.forbes.com/sites/85broads/2012/09/26/could-sustainability-be- unsustainable/?utmsource=allactivity&utm_medium=rss&utm_campaign=20120926

Wharton Magazine: “The Clients of my Clients....Sustainable Selling” by Erika Karp – July 2012 whartonmagazine.com/blog/sustaining-selling-success/

Wall Street Week: “Leaving Rio....and Going towards Corporate Sustainability” by Erika Karp – June 2012 http://www.wallstreetweek.com/leaving-rio-and-going-towards-corporate-sustainability/

Harvard Business Review | HBR Blog Network "Why Go it Alone in Community Development?" by Andrew MacLeod – June 2012 http://blogs.hbr.org/2012/06/why-go-it-alone-in-community-d/

Forbes: “Sustainable Investing and Moments of Truth” by Erika Karp – March 2012 http://www.forbes.com/sites/85broads/2012/03/28/sustainable-investing-and-moments-of-truth/

Wall Street Week: “Investing in Diversity…Painful but Profitable” by Erika Karp – March 2012 http://www.wallstreetweek.com/guest-post-investing-in-diversity-painful-but-profitable/

Wall Street Week: “Noise Cancelling Investment Research - ESG Analysis and Sustainable Investing” by Erika Karp – February 2012 http://www.wallstreetweek.com/noise-cancelling-investment-research-esg-analysis-and-sustainable-investing/

Forbes: “Superheroes of Capitalism” by Erika Karp – January 2012 http://www.forbes.com/sites/85broads/2012/01/13/superheroes-of-capitalism/

Forbes: “Superheroes of Capitalism: Part II - The Women” by Erika Karp – January 2012 http://www.forbes.com/sites/85broads/2012/02/01/superheroes-of-capitalism-part-ii-the-women/

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 34

The Cornerstone Capital Group Team

Erika Karp* Founder and Chief Executive Officer [email protected]

Cornerstone Capital Investment Management Phil Kirshman, CFA, CFP ® * Urs Weber Chief Investment Officer Senior Portfolio Manager [email protected] [email protected]

Ariane de Vienne Matthew Daly * Managing Director Director, Client Services [email protected] [email protected]

Margarita Pirovska, PhD Policy & Sustainability Analyst [email protected]

Cornerstone Capital Investment Research John Wilson Michael Shavel, CFA * Head of Corp Governance, Engagement, Research Global Thematic Analyst [email protected] [email protected]

Craig Metrick, CAIA Sebastian Vanderzeil Director, Manager Due Diligence and Thematic Research Research Analyst [email protected] [email protected]

Michael Geraghty Andy Zheng Global Markets Strategist Research Associate [email protected] [email protected]

Betsy Emerson Head of Research Operations [email protected]

Cornerstone Capital Institutional Business Development Alice Petrofsky * Mauricio Barbeiro Executive Director, Institutional Business Development Head of Latin America Business Development [email protected] [email protected]

Cornerstone Capital Group Management and Operations Joel Beck * Karen Benezra Chief Operating Officer & Chief Compliance Officer (CCIM) Head of Strategic Marketing & Communications [email protected] [email protected]

Nicola Shelbourne Kara McGouran Treasurer & Director of Executive Financial Services Assistant to the CEO [email protected] [email protected]

*Registered representative of Strategic Marketing Solutions Ltd., LLC. Member FINRA/SIPC.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 35

Cornerstone Capital Inc. doing business as Cornerstone Capital Group (“Cornerstone”) is a Delaware corporation with headquarters in New York, NY. The Cornerstone Journal of Sustainable Finance and Banking (“JSFB”) is a service mark of Cornerstone Capital Inc. All other marks referenced are the property of their respective owners. The JSFB is licensed for use by named individual Authorized Users, and may not be reproduced, distributed, forwarded, posted, published, transmitted, uploaded or otherwise made available to others for commercial purposes, including to individuals within an Institutional Subscriber without written authorization from Cornerstone. The views expressed herein are the views of the individual authors and may not reflect the views of Cornerstone or any institution with which an author is affiliated. Such authors do not have any actual, implied or apparent authority to act on behalf of any issuer mentioned in this publication. This publication does not take into account the investment objectives, financial situation, restrictions, particular needs or financial, legal or tax situation of any particular person and should not be viewed as addressing the recipients’ particular investment needs. Recipients should consider the information contained in this publication as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. This is not an offer or solicitation for the purchase or sale of any security, investment, or other product and should not be construed as such. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities. Investing in securities and other financial products entails certain risks, including the possible loss of the entire principal amount invested. You should obtain advice from your tax, financial, legal, and other advisors and only make investment decisions on the basis of your own objectives, experience, and resources. Information contained herein is current as of the date appearing herein and has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed and should not be relied upon as such. Cornerstone has no duty to update the information contained herein, and the opinions, estimates, projections, assessments and other views expressed in this publication (collectively “Statements”) may change without notice due to many factors including but not limited to fluctuating market conditions and economic factors. The Statements contained herein are based on a number of assumptions. Cornerstone makes no representations as to the reasonableness of such assumptions or the likelihood that such assumptions will coincide with actual events and this information should not be relied upon for that purpose. Changes in such assumptions could produce materially different results. Past performance is not a guarantee or indication of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this publication. Cornerstone accepts no liability for any loss (whether direct, indirect or consequential) occasioned to any person acting or refraining from action as a result of any material contained in or derived from this publication, except to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law. This publication may provide addresses of, or contain hyperlinks to, Internet websites. Cornerstone has not reviewed the linked Internet website of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for your convenience and information, and the content of linked third party websites is not in any way incorporated herein. Recipients who choose to access such third-party websites or follow such hyperlinks do so at their own risk.

Cornerstone Journal of Sustainable Finance & BankingSM / September 2015 / 36