RESPONSIBLE INVESTMENT FOR A SUSTAINABLE ECONOMY

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT Q1/13 January 1 - March 31, 2013 Shareholder Engagement at a Glance

Engagement Themes

SOC

GOV

ENV

0 5 10 15 20 25 30 35

S&P TSX Composite Index

Engaged 22%

S&P TSX 60 Index

Engaged 40%

Sectors Engaged Financials 9% Consumer Discre2onary Other 7% 9%

Energy 36% Materials 39% contents

First Quarter´s Highlights 3 Activity Snapshot 3 Shareholder Engagement Activity Summary 4 Environment 4 Social 6 Corporate Governance 8 Company Progress Summary 10

2 SHAREHOLDER ENGAGEMENT ACTIVITY REPORT First Quarter´s Highlights

We wrote to 22 companies regarding gender diversity on corporate boards and provided recommendations intended to assist the boards of those companies in nominating one or more women directors;

We contacted 21companies to ask about their intention to respond to the 2013 Carbon Disclosure Project (CDP) questionnaire or otherwise disclose their management of climate change-related risks and opportunities;

We initiated a dialogue on behalf of the Atkinson Charitable Foundation with Canadian banks on improving the provision of financial services for low-income and other financially under-served groups.

Activity Snapshot

Environment 27 Climate Risk Disclosure ATCO Ltd., Bonterra Energy Corp., Canadian Utilities Limited, Crew Energy Inc., Ensign Energy Services Inc., Major Drilling Group International Inc., MEGEnergy Corporation, New Gold Inc., Osisko Mining Corporation, Pan American Silver Corp., Corporation, Petrominerales Ltd., Peyto Exploration and Development Corp., Precision Drilling Corporation, ShawCor Ltd., Sherritt International Corporation, Thompson Creek Metals Company Inc., Trilogy Energy Corporation, Trinidad Drilling Ltd., Veresen Inc., Vermilion Energy Inc. Fossil Fuels Financing , Bank of Nova Scotia, Canadian Imperial Bank of Commerce Hydraulic Fracturing - Shale Encana Corporation; Talisman Energy hydrocarbon development Sustainable Paper Procurement Quebecor Inc. Social 14 Child Labour and Cotton Supply Activewear Inc., Reitman’s () Ltd. Chain Conflict Free Mineral Sourcing Ltd., Corporation Human Rights Corporation, Goldcorp Inc., IAM Gold Corporation, Inmet Mining Corporation, Limited Phosphate Sourcing and Western Agrium Inc., Potash Corporation of Saskatchewan Inc. Sahara Responsible Banking Bank of Nova Scotia, , -Dominion Bank Corporate Governance 29 Board Gender Diversity Algonquin Power & Utilities, B2Gold Corporation, Celtic Exploration Ltd., Crescent Point Energy Corporation, Crew Energy Inc., Inc., Eldorado Gold Corporation, Enerflex Ltd., Franco-Nevada Corporation, HudBay Minerals Inc., IAMGold Corporation, Inmet Mining Corporation, Lundin Mining Corporation, New Gold Inc., Niko Resources Ltd., Precision Drilling Corporation, Silver Wheaton Corp., Tourmaline Oil Corporation, Trilogy Energy Corporation, Trinidad Drilling Ltd., Vermilion Energy Inc., Yamana Gold Inc. Executive Compensation Ltd. Sustainability Reporting Dollarama Inc., Ensign Energy Inc., , Jean Coutu Group Inc. Sustainability Reporting and Climate Shaw Communications Ltd. Risk Disclosure Sustainability Reporting and Toxics Corporation Ltd. Total Number of Companies 59

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 3 Shareholder Engagement Activity Summary

This report outlines SHARE’s shareholder engagement activities for the first quarter of 2013. SHARE conducts focused and constructive shareholder engagement dialogues with public corporations on behalf of institutional shareholders. The goal of our program is to work with clients to improve the environmental, social and governance (ESG) performance of the companies in their investment portfolios. For more information on SHARE’s Shareholder Engagement Services, please visit http://www.share.ca/services/shareholder-engagement/.

During the first quarter of 2013, SHARE corresponded with 59 companies on key ESG issues. Our thematic focus was on climate risk disclosure, fossil fuels financing, hydraulic fracturing, shale practices disclosure, sustainable paper procurement, conflict-free mineral sourcing, child labour and the cotton supply chain, human rights, phosphate sourcing from the Western Sahara, responsible banking, board gender diversity, executive compensation and sustainability reporting. Our dialogues on each of these themes are described in detail below. Environment HSBC and S&P release studies Climate Risk Disclosure on financial SHARE continued its annual campaign on behalf of clients advocating for implications of additional climate risk disclosure by encouraging companies to respond to “unburnable” fossil the 2013 Carbon Disclosure Project (CDP) questionnaire or otherwise disclose their management of climate change-related risks and opportunities. We fuel reserves wrote to 21 companies (see list in Activity Snapshot on previous page) and received responses from Sherritt International Corporation and Thompson This quarter, HSBC and S&P Creek Metals Company Inc. In its response, Sherritt stated that it provides released two noteworthy information on climate change risk and carbon emissions through its annual reports that consider the long- and sustainability reports. Thompson Creek indicated that it will not be term financial implications responding to the 2013 CDP questionnaire. of “unburnable” fossil fuel reserves, which are two-thirds Fossil Fuels Financing of the world’s proven fossil fuel reserves that according to the International Energy Agency This quarter, we interacted with three of the banks that we contacted in the will need to stay underground if fourth quarter of 2012 regarding each bank’s assessment and mitigation of we are to keep global warming risks associated with greenhouse gas (GHG) emissions stemming from their within the internationally-agreed core financial operations (“financed” emissions). two degree Celsius limit advised by the Intergovernmental Panel We held a conference call with the Bank of Nova Scotia and the bank on Climate Change. The HSBC provided further information about its approach to climate change and its study, released in January 2013, management of risks associated with financing carbon-intensive industries considers how “unburnable” and companies. SHARE encouraged the bank to consider implementing carbon reserves may affect the value of major European oil the new GHG Protocol Financial Sector Guidance that is being drafted companies, while the March by the GHG Protocol and the UNEP Finance Initiative, and to disclose to 2013 report by Standard & shareholders the monetary value of loans and trading lines provided to Poor’s analyzes the long-term companies in carbon-intensive sectors. The company agreed to provide creditworthiness of five oil further information regarding its assessment of reputational risks stemming companies, including three from its “financed” emissions, particularly those associated with lending and Canadian companies active in the financial relationships with companies and projects in the fossil fuels industry. oil sands, in a carbon-constrained The Bank of Montreal confirmed that it will meet with us next quarter to future. Both reports are available continue our discussion on “financed” emissions risk management. online at: http://gofossilfree.org/ files/2013/02/HSBCOilJan13.pdf and http://www.carbontracker. The Canadian Imperial Bank of Commerce (CIBC) provided information org/wp-content/uploads/ regarding its financing of renewable energy projects, its Environmental Credit downloads/2013/03/SnPCT- report-on-oil-sector-carbon- 4 SHAREHOLDER ENGAGEMENT ACTIVITY REPORT Risk Management Standards and Procedures and its Carbon Management Program. SHARE has requested clarification and additional information on several points raised in CIBC’s response.

Hydraulic Fracturing – Shale Hydrocarbon Development

Encana Corporation confirmed that it expects to provide the information requested last quarter regarding water use and Encana’s fracturing fluids program in upcoming public company materials. SHARE had contacted the company to seek specific information regarding Encana’s water sourcing, implementation of the Responsible Products Program and other relevant information to enable stakeholders to review progress and measure performance with regard to risk mitigation efforts associated with shale hydrocarbon extraction.

Talisman Energy Inc. responded to our inquiry concerning the state of progress in the adoption of targets and performance indicators to implement and report on its Shale Operating Principles, particularly in relation to the use of toxic chemicals in hydraulic fracturing and the quantity of water used in its shale operations. SHARE believes disclosure should include absolute water use. In its response, the company provided information on an industry initiative to categorize toxic chemicals and establish use restrictions of certain chemicals and progressive reduction use of potentially toxic chemicals. Talisman also indicated that it will report on freshwater intensity figures in its 2012 Corporate Responsibility report.

In addition to the above engagement with Talisman, some of our clients joined other investors in North America to urge the company to promptly start disclosing relevant quantitative data to demonstrate its commitment to responsible shale hydrocarbon extraction, and to fulfill pledges regarding performance and public reporting made under the company’s Shale Operating Principles. In the joint investor letter, the shareholders provided a list of indicators and asked Talisman to specify when it will start to provide the information related to each of the indicators to its shareholders and the public.

Sustainable Paper Procurement

Quebecor Inc. communicated to SHARE that it has developed an action plan for its sustainable paper procurement policy at subsidiary TVA Publications and will confirm whether the action plan will be made public once it is finalized. The company also reported that it has obtained FSC chain of custody certification for its two key Quebecor Media Printing facilities.

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 5 Social Investors call for enhanced human Conflict-Free Mineral Sourcing rights oversight in This quarter, SHARE continued to solicit responses from Shaw Burma Communications Inc. and TELUS Corporation to our request for information regarding each company’s approach to conflict-free mineral sourcing A group of institutional investors, and their assessment of the disclosure requirements regarding mineral including several of SHARE’s sourcing under the final rules of the Dodd-Frank Act in the United States. clients, made submissions to the Despite SHARE’s efforts to reach the company by phone and fax, Shaw European Parliament and the Communications has not acknowledged our letter or responded toour United States Government in request for information. On February 7, 2013, TELUS acknowledged SHARE’s support of strong accountability communication and indicated that a response will be provided following and transparency measures inquiries with its suppliers. for companies doing business with Burma. The submission Cotton Supply Chain and Child Labour made to the US Department of State called for risks identified in human rights reporting to be SHARE first wrote to Gildan Activewear Inc. in July 2011requesting made available to institutional information about its cotton sourcing policies in relation to the extensive use investors and the general public, of forced and child labour in the cotton harvest in Uzbekistan, a major global among other recommendations, source of cotton.The Government of Uzbekistan continues to force children and affirms the importance of and teachers out of school and into the fields each autumn to harvest cotton mandatory reporting on US for export, despite international condemnation and a widely-supported business operations in Burma. pledge by international clothing and textile companies to boycott the use The submission to the European of Uzbek cotton in the manufacture of their goods. Follow-up letters and Parliament urged authorities to require European companies telephone calls to Gildan have failed to elicit a response from the company. doing business with or in Burma SHARE also wrote to Reitman’s (Canada) Ltd. this quarter requesting to undertake human rights due information regarding its cotton sourcing policies and practices in relation to diligence, to disclose publicly the issue of forced and child labour in the Uzbek cotton industry. company policies, practices and actions to protect and promote Human Rights human rights and to support the creation of an effective In the fourth quarter of 2012, we contacted many of Canada’s leading complaints mechanism and mining companies to seek feedback on SHARE’s consultation draft document dispute settlement mechanism. entitled Investor Expectations on Human Rights Performance for Mining Review the Submission to the US Companies. This report outlines what SHARE believes are the most pressing Department of State here human rights issues for the mining sector and provides an overview of our understanding of best practices for mining companies in meeting their human rights obligations. Responses have been received from Barrick Gold Corporation, Goldcorp Inc. and Teck Resources Limited as well as from an independent consultant. A reminder was sent to IAMGold Corporation. Inmet Mining Corporation did not provide comments and was recently taken over by First Quantum Minerals.

Responsible Banking

On behalf of the Atkinson Charitable Foundation, SHARE wrote to the Royal Bank of Canada, the Bank of Nova Scotia and Toronto-Dominion Bank requesting information on their efforts to determine and meet the financial service needs of low-income and financially underserved Canadians. Access to affordable and appropriate financial services is essential for individuals to function effectively in society and to improve their economic situation. In the current economic context in Canada, where high levels of indebtedness and

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 6 low savings rates are prevalent and the payday lending industry continues to grow, innovation from Canada’s financial services sector is urgently needed to improve access to affordable and appropriate financial products that will help meet Canadians’ immediate and long-term financial needs. We also requested information from the banks on whether or not they broker lending products to alternative financial institutions, such as payday lenders, or via third party channels.

Phosphate Sourcing from Western Sahara

SHARE continued its engagement withAgrium Inc. and Potash Corporation of Saskatchewan regarding their sourcing of phosphate rock from the Non-Self Governing Territory of the Western Sahara, currently occupied by Morocco. On August 14, 2012, SHARE wrote to Agrium. Agrium responded this quarter, providing its views on the legality of purchasing rock phosphate from a Moroccan government-owned company operating in the Western Sahara. Following up on an engagement initiated through the Principles for Responsible Investment Clearinghouse, we also sent a letter to Potash Corporation requesting additional information about the implications of the company’s practice of sourcing phosphate from the Western Sahara. Our intention is to acquire information about Potash Corporation’s assessment of human rights issues in the Western Sahara, whether the company includes the Saharawi population living in refugee camps outside of the Western Sahara among its key stakeholders, and whether the company has undertaken or plans to undertake an independent review of its human rights obligations regarding importation of phosphate from the Western Sahara.

7 SHAREHOLDER ENGAGEMENT ACTIVITY REPORT Corporate Governance Gender diversity on the board: Why Board Gender Diversity Canadian companies SHARE wrote to 22 companies this quarter (see list in Activity Snapshot present a significant on page 3 above) on the topic of gender diversity on corporate boards challenge and provided a set of recommendations intended to assist those boards in nominating one or more women directors. SHARE’s research indicates that there are business case arguments for increasing the number of women on According to a recent report by corporate boards. These arguments include capitalizing on opportunities TD Economics (Get on Board to draw on untapped talent pools, illustrating that the company thinks Corporate Canada), there are creatively about human talent and is interested in reducing the riskof two key contributors to the groupthink by drawing on new people with potentially new perspectives. “remarkably low” percentage of Finally, companies that have a greater percentage of women on their board women on the boards of Canadian companies relative to those based build a public perception that gender diversity is a key part of enhancing in many other industrialized reputation and value in the market. nations. First, the current drive to populate public company We received responses from 4 of the 22 companies that we contacted. Inmet boards with “industry-experts” Mining Corporation indicated that the Board has recently implemented has negative implications for many of the recommendations we suggested. Vermilion Energy Inc. stated gender diversification on Canadian that gender diversity on the board is a high priority consideration in its boards given the relatively director searches but that to date it has not identified a female within the high percentage of energy and candidate groups who possessed the specific skills and experience sought by materials companies in our the board. SHARE will follow-up with Niko Resources Ltd, as it appears from market. Women are less likely the company’s response that the Chairman of the Corporate Governance to be trained and employed by Committee misinterpreted the purpose of our letter. Finally, Tourmaline Oil companies in these sectors than in most others, and are therefore Corporation acknowledged that gender diversity is a valid investor concern less likely to acquire the requisite but that its search process does not give any consideration to the gender of expertise for board service. potential director candidates. Yet, U.S. energy and materials companies have far higher levels Executive Compensation of women serving as directors than Canadian firms. According SHARE received a letter from First Quantum Minerals Ltd. responding to our to TD’s report, the relatively small request for enhanced disclosure of their short-term compensation plan. The size of Canadian companies and company thanked SHARE for providing constructive feedback on its Statement their boards compounds the of Executive Compensation and advised SHARE that the Compensation sectoral problem. Over time, Committee made a decision to expand disclosure in 2013 to provide further there are simply fewer occasions details on the linkages between pay and performance, including results against on which Canadian companies conduct a search for new directors. performance metrics, in their upcoming Compensation Report. Clearly, investors face significant impediments to changing Sustainability Reporting the gender mix on Canadian boards, pointing to the need for This quarter, we wrote to Dollarama Inc. to inquire about the company’s engagements on this issue to be plans to start producing sustainability reports to keep investors apprised patient and very persistent. of its social and environmental performance through relevant metrics and measurable indicators. In its response, the company indicated that it does not plan to produce a stand-alone sustainability report in the short term, but will discuss internally our request for measurable targets and indicators. We wrote back to the company to encourage consideration of relevant materials such as the Global Reporting Initiative Sustainability Reporting Guidelines, which enable incremental improvements in reporting, and offered to provide feedback on some initial key performance indicators that are of most interest to our clients and other long-term institutional investors to inform the company’s internal discussions.

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 8 SHARE sought confirmation from Ensign Energy Services Inc. that it received the feedback we provided in June 2012 on the company’s sustainability disclosures, contained on its website and in its annual report. We followed up with George Weston Limited subsidiary Loblaw regarding its near-term plans to provide additional performance indicators and relevant metrics in upcoming Loblaw sustainability reports. Loblaw confirmed receipt of the letter and indicated it will respond to our inquiry shortly.

We received a response from Jean Coutu Group Inc. regarding the company’s near-term plans to provide measurable data to its shareholders on its social and environmental performance. The company indicated that it has put in place procedures to comply with relevant social and environmental regulations and best practices, but does not produce a sustainability report. We urged Jean Coutu, regardless of whether it decides in the future to publish full-fledged sustainability reports, to consider providing, as soon as possible, relevant data on the implementation of its Environmental Policy and sustainability action plans. We stressed that without this information external analysts cannot appreciate Jean-Coutu’s implementation efforts, or assess its sustainability performance or progress. We asked the company whether, and if so when, it will provide to the public measurable data and other relevant information concerning the implementation of its Environmental Policy and related sustainability action plans.

Canadian Tire Corporation provided additional information on its efforts to ensure vendor compliance with its sustainable packaging guidelines, as agreed during a conference call we held with the company last quarter. SHARE has requested more detailed information from the company on certain issues and Canadian Tire has indicated a response will soon be forthcoming. Finally, SHARE followed up with Shaw Communications Inc. regarding the request we sent last quarter asking the company to clarify whether it will answer the 2013 CDP questionnaire and produce its first sustainability report in 2013. We have not yet received a response from the company.

9 SHAREHOLDER ENGAGEMENT ACTIVITY REPORT Company Progress Summary

Company Topic Progress Agrium Inc. Phosphate Sourcing from Western Sahara u Algonquin Power &≠ Utilities Corp. Board Gender Diversity ☼ ATCO Ltd. Climate Risk Disclosure ☼ B2Gold Corporation Board Gender Diversity ☼ Bank of Montreal Fossil Fuels Financing ☼ Bank of Nova Scotia Responsible Banking ☼ Bank of Nova Scotia Fossil Fuels Financing ☼ Barrick Gold Corporation Human Rights u Bonterra Energy Corp. Climate Risk Disclosure ☼ Canadian Imperial Bank of Commerce Fossil Fuels Financing ☼ Canadian Tire Corporation Ltd. Sustainability Reporting &Toxics ☼ Canadian Utilities Limited Climate Risk Disclosure ☼ Celtic Exploration Ltd Board Gender Diversity ☼ Crescent Point Energy Corporation Board Gender Diversity ☼ Crew Energy Inc Board Gender Diversity ☼ Crew Energy Inc Climate Risk Disclosure ☼ Dollarama Inc. Board Gender Diversity ☼ Dollarama Inc. Sustainability Reporting u Eldorado Gold Corporation Board Gender Diversity ☼ Encana Corporation Hydraulic Fracturing u Enerflex Ltd. Board Gender Diversity ☼ Ensign Energy Services Inc. Sustainability Reporting ☼ Ensign Energy Services Inc. Climate Risk Disclosure ☼ First Quantum Minerals Ltd. Executive Compensation p Franco-Nevada Corporation Board Gender Diversity ☼ George Weston Limited Sustainability Reporting ☼ Gildan Activewear Inc. Cotton Supply Chain q Goldcorp Corporation Human Rights u HudBay Minerals Inc. Board Gender Diversity ☼ IAMGold Corporation Human Rights ☼ IAMGold Corporation Board Gender Diversity ☼ Inmet Mining Corporation Human Rights u Inmet Mining Corporation Board Gender Diversity p Jean Coutu Group Inc. Sustainability Reporting q Lundin Mining Corporation Board Gender Diversity ☼ Major Drilling Group International Inc. Climate Risk Disclosure ☼ MEG Energy Corporation Climate Risk Disclosure ☼ New Gold Inc. Board Gender Diversity ☼ New Gold Inc. Climate Risk Disclosure ☼ Niko Resources Ltd. Board Gender Diversity q Osisko Mining Corporation Climate Risk Disclosure ☼

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 10 Pan American Silver Corp. Climate Risk Disclosure ☼ Pembina Pipeline Corporation Climate Risk Disclosure ☼ Petrominerales Ltd. Climate Risk Disclosure ☼ Peyto Exploration and Development Corp. Climate Risk Disclosure ☼ Potash Corporation of Saskatchewan Inc. Phosphate Sourcing from Western Sahara ☼ Precision Drilling Corporation Board Gender Diversity ☼ Precision Drilling Corporation Climate Risk Disclosure ☼ Quebecor Inc. Sustainable Paper Procurement u Reitman’s (Canada) Ltd. Cotton Supply Chain ☼ Royal Bank of Canada Responsible Banking ☼ Shaw Communications Inc. Conflict Minerals ☼ Shaw Communications Inc. Sustainability Reporting & Climate Risk Disclosure ☼ ShawCor Ltd. Climate Risk Disclosure ☼ Sherritt International Corporation Climate Risk Disclosure u Silver Wheaton Corp. Board Gender Diversity ☼ Talisman Energy Inc. Hydraulic Fracturing - Shale Hydrocarbon Development q Talisman Energy Inc. Hydraulic Fracturing - Shale Hydrocarbon Development (Collaborative Engagement) ☼ Teck Resources Limited Human Rights u TELUS Corporation Conflict Minerals ☼ Thompson Creek Metals Company Inc. Climate Risk Disclosure q Toronto-Dominion Bank Responsible Banking u Tourmaline Oil Corporation Board Gender Diversity q Trilogy Energy Corporation Board Gender Diversity ☼ Trilogy Energy Corporation Climate Risk Disclosure ☼ Trinidad Drilling Ltd. Board Gender Diversity ☼ Trinidad Drilling Ltd. Climate Risk Disclosure ☼ Veresen Inc. Climate Risk Disclosure ☼ Vermilion Energy Inc. Board Gender Diversity p Vermilion Energy Inc. Climate Risk Disclosure ☼ Yamana Gold Inc. Board Gender Diversity ☼ p Positive u On Track/Neutral q Negative/ No Response ☼ Response Pending The Shareholder Association for Research and Education (SHARE) is a Canadian leader in responsible investment services, research and education for institutional investors.

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