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Stichting Philips Pensioenfonds is a corporate pension fund. The pension fund carries out the pension arran- gements covering all Philips employees in the Netherlands.

4.49.1 (Socially) responsible investment policy

Philips Pensioenfonds sets the financial interest of its participants as its priority. The fund however is of the opinion that this duty to its participants can be well combined with the integration of environmental, social and governance (ESG) criteria in the investment policy. The fund – being a long-term investor - finds itself in an excellent position to engage in a dialogue with companies that lag behind in ESG-areas.

During 2008 Philips Pensioenfonds gained experience in responsible investments with a so-called ESG pilot- portfolio. Based on this pilot, the Board of Trustees decided early 2009 upon a gradual integration of ESG cri- teria covering the full breadth of investments. The fund today measures the ESG-content of all equity and credit portfolios and intends to gradually scan the rest of the portfolio against ESG criteria. In order to do this, cooperation has been sought with leading providers of ESG-research. Investments are assessed periodi- cally on criteria such as environment, human rights, labour conditions, and good governance. Guiding prin- ciples in this assessment are the principles of the Global Compact, an initiative of the uN, that promotes cor- porate social responsibility. In eventual cases, the asset manager (BlackRock) will engage in dialogue with companies, when these are clearly noncompliant with the aforementioned criteria. As a shareholder, Philips Pensioenfonds can influence the policy of the companies in which it invests.

Score: 4 points

SRI policy is described on the website. It is based on the principles of the uN Global Compact, includes various instruments, and covers multiple asset classes.

4.49.2 ESG-criteria for exclusion of investments (negative selection)

Philips Pensioenfonds has decided to exclude investments in producers of controversial weapons (anti-per- sonnel landmines, cluster bombs, chemical, biological and nuclear weapons). The fund also excludes compa- nies that – after engagement activities - don’t improve their behaviour with respect to ESG criteria.

Score: 3 points

No policy document, but description on website. Exclusion based on controversial weapons and where engagement fails, but no list of excluded companies provided.

Description Numbers (in millions €)

Premium income € 139 million

Number of participants Active 19,652

Pensioners 60,254

Number of employees 20

Value of investments € 13.2 billion

Distribution among investment categories:

Equity 13.4 %

Fixed Income 74.6 %

Real Estate 4.1 %

4.49.3 ESG-criteria for the selection of investments (positive selection)

The fund assesses all equity and credit investments periodically on criteria such as environment, human rights, labour conditions and good governance, for which the principles of the uN Global Compact form the guiding prin- ciples. Based on external research from amongst others Asset4 and EIRIS, the fund measures the ESG-content of all equity and credit portfolios. It is the intention of the fund to expand this ESG-scan to all investment cate- gories. Finally, the fund has signed the uN Principles for Responsible Investments (uNPRI) in 2009. By signing, the fund underlines the importance of the integration of ESG aspects in the investment policy.

Score: 3 points

Signatory of uN PRI and ESG information acquired from third parties for screening equity portfolio.

4.49.4 Engagement

The periodic scan of the ESG-content of the equity portfolio (based on sources and principles described in 1.1.3) enables the fund to identify laggards. In the eventual case the fund can decide to engage in dialogue with these companies that lag in ESG-performance. A major role is played by the fund’s asset manager BlackRock. Companies that – after engagement – don’t improve their behaviour with respect to ESG criteria, are excluded from investment.

Score: 3 points

Engagement via BlackRock based on uN Global Compact. However, no information provided on ESG engagement activity.

4.49.5 Voting policy

Philips Pensioenfonds actively exerts its voting rights for Governance issues, based on BlackRock’s responsible investment policy.

Score: 2 points

Philips Pensioenfonds has a voting policy limited to corporate governance.

4.49.6 Sustainable project financing

Philips Pensioenfonds decided in 2009 to actively start investing in sustainable projects and funds. The first investments are to be made by the end of November 2009. The fund will have invested approximately €40 million in renewable energy funds. Future sustainable project financing will mostly focus on themes in which Philips is a major player: energy and health care.

Score: 1 point

Sustainable project financing in development.

4.49.7 Transparancy on outsourcing

Philips Pensioenfonds has its asset management activities outsourced to: Black Rock (Netherlands) B.V. BlackRock is responsible for the execution of the ESG policy as being formulated by Philips Pensioenfonds. Additionally, the fund uses explicit ESG criteria for the selection of new external managers, e.g. in the recent search for managers in indirect real estate.

Score: 3 points

Transparency on outsourcing of asset management to BlackRock, yet no transparency to the public on agreements regarding SRI policies. Extra point rewarded for using ESG criteria for selection of new external managers.

4.49.8 Dialogue with society

Philips Pensioenfonds participates in various ESG working groups within the Dutch pensions sector. Moreover, the person responsible for ESG issues within the fund, participates in the academic network of the uNPRI, by

active participation in the European Centre for Corporate Engagement (ECCE) of the university of Maastricht. Besides, Philips pays attention to ESG in its communication to stakeholders. Finally, Philips Pensioenfonds organizes an annual meeting during which participants can raise questions, amongst others concerning the fund’s ESG policy.

Score: 4 points

Active dialogue on SRI with different players in society via ESG-workgroups, the uNPRI network and the academic institute of ECCE.

4.49.9 Reporting on responsible investment policy

In order to inform participants with regard to social responsible investment procedures, Philips Pensioenfonds pays attention to ESG aspects in the 2008 annual report, within the investment policy, and on the website. A detailed ESG report can only be drawn after the implementation year 2009 is over.

Score: 2 points

Philips Pensionfund reports only generally about progressions in the fund’s responsible investment policy and activities. The fund has not yet started reporting on voting, engagement, exclusion and inclusion instruments, but is planning to do so over the year 2009.