Environmental, Social & Governance Practices at Actis

Actis is a signatory to the United Nations Principles for Responsible Investment (UNPRI); an investor initiative in partnership with UNEP FI and the UN Global Compact.

This report outlines Actiss approach to Environmental, Social & Governance (ESG) and provides the responses Actis submitted to the UNPRI Annual Report in April 2010.

contents
ESG at Actis UNPRI Report 2009: Actis responds section 1: Organisational Overview section 2: Governance, policy and strategy principle 1 principle 2 principle 3 principle 4 principle 5 principle 6 appendix A: UNPRI Annual Reporting and Assessment Questions Actiss ESG team 2-3 4 5 6 7 8-10 11 11 12 12 13-17

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the positive power of capital

ESG at Actis
In 2009, Actis became a signatory of the United Nations Principles for Responsible Investment (UNPRI). The UNPRI aims to provide a framework for investors to take into account environmental, social and governance (ESG) issues in their investments. Signatories are required to abide by six key principles (see page 4) and report annually on their compliance.
Responsible Investment is part of how we do business. Its not an add-on, its integral to our investment process. We believe that responsible investment produces better outcomes, for us and for society at large. There can be no good management without ESG. Thats why Actis has always had a dedicated ESG team. With the advent of the UNPRI and increasing scrutiny upon private equity, many other rms are now following suit. ESG issues, dened at Actis as the environment, climate change, health and safety, social issues and business integrity, are embedded in our decision-making process. This starts with investment origination: Actis will not invest in nuclear or military equipment, gambling, tobacco, hard liquor or pornography. Well also approach investments in countries with poor human rights records with particular care. Actis will then determine whether a business meets our standards in environmental, social, governance and health and safety issues during screening and due diligence. Our team will assess shortcomings and the willingness of management to put them right. We dont shy away from dicult investments: if there are signicant gaps in ESG practices but we feel condent that the company can improve with our help, we will go ahead with the transaction. (poles and cables); we have also devised new health and safety measures and launched an awareness campaign to warn the community of the dangers of fallen cables. As part of our investment procedure, we ask all our portfolio companies to sign a statement outlining our ESG principles and to commit to upholding them. We, in return, strive to help them achieve that goal. Our approach is not prescriptive; its about changing the way companies do business: identifying risks, developing mitigation strategies and putting processes in place. For example, a number of social and environmental impact studies were carried out at Songas, a gas power plant in Tanzania developed by Globeleq. The results of these studies were used to set up a management system, which resulted in facilities gaining OHSAS 18001 (occupational health and safety) and ISO 14001 (environmental management) certication. In 2009, the two systems were combined into a certied Integrated Management System at the Ubungo power plant, the rst facility in Tanzania to be awarded this recognition.

The value of investing responsibly

We have many examples of our investees making great strides in ESG, from implementing energy saving measures generating cost savings of US$6,000 to US$200,000 a year, to introducing new HIV-AIDS policies such as voluntary counselling and testing at Ugandan bank DFCU and peer educators at Songas, in Tanzania. We also emphasise the importance of good governance. Former Actis investment Celtel (now called Zain) is today one of the biggest telecoms operators in Africa, something they couldnt have achieved without a world-

ESG in practice
In this spirit, Actis invested in Umeme, a power distribution business in Uganda that experienced years of under-investment and suered a number of accidents and fatalities as a result. Our investment is now funding the refurbishment of Umemes electricity infrastructure

Environmental, Social & Governance Practices at Actis

class board and top senior management. Actis actively championed and facilitated these initiatives through our extensive network. We also encouraged Celtel to demand the best standards of governance from its suppliers and partners and refuse to do business if transparency proved inadequate. Celtel outperformed all expectations, growing revenues of 115% per annum and eventually returning a cash multiple of 4.5. Time and again, these changes have proved to make good business sense. When Actis invested in Suntech, a Chinese solar cell manufacturer in 2005, the company had 50 MW production capacity; Suntech is now not only one of the top ve manufacturers of photovoltaic (PV) cells in the world, but has also become one of China's largest privately held companies. During the investment we worked with the

board to prepare it for a US listing, and assisted Suntech in identifying and recruiting a new CFO.

Actis and the UNPRI

So, when the UNPRI set up a special work stream on private equity in 2008, we felt the initiative chimed with our philosophy and we took a seat on the steering committee. Were still involved, which is why we also decided to sign up to the UNPRI: it epitomises what we stand for and highlights everything we have been doing for the last six years. The framework is voluntary and unlikely to ever become binding, but our hope is that it will set up a precedent for best practice and inspire all investors to embrace responsible investment.

We believe that responsible investment produces better outcomes, for us and for society at large.

UNPRI Report 2009: Actis responds

By being a signatory to the UNPRI a company agrees to the adoption and implementation of six principles, these are listed below. This report contains the list of questions and corresponding answers Actis submitted to the UNPRI in April 2010 as part of its annual reporting and assessment process; it mirrors the structure of the online questionnaire. The questions as posed in the questionnaire are reported in Appendix A and are cross referenced in our answers which are detailed in the following order:

section 1 section 2 principle 1

Organisational overview (questions 2-10) Governance, policy and strategy (questions 11-18) We will incorporate ESG issues into investment analysis and decision-making processes (questions 19-25) We will be active owners and incorporate ESG issues into our ownership policies and practices (questions 16-51) We will seek appropriate disclosure on ESG issues by the entities in which we invest (questions 52-57) We will promote acceptance and implementation of the Principles within the investment industry (questions 58-64) We will work together to enhance our eectiveness in implementing the Principles (questions 65-69) We will each report on our activities and progress towards implementing the Principles (questions 70-77)

principle 2

principle 3

principle 4

principle 5

principle 6

Environmental, Social & Governance Practices at Actis

section 1: organisational overview

1.1
introduction Actis is a leading investment manager1 in the emerging markets, investing exclusively in Asia, Africa and Latin America. Actis has specialist teams dedicated to private equity, infrastructure and real estate2 and has a track record built on growth capital and leadership in control investing across its markets. Actis has over 100 investment professionals in nine oces worldwide who currently manage funds of US$4.8billion3 and a portfolio of around 70 investments4 on behalf of more than 100 institutional investors.5

1.2 investment focus and control of listed stocks

As illustrated in Table 1, Actiss primary focus is on private equity, followed by infrastructure investments (based on funds under management as of December 2009). All of our funds are internally and actively managed.

Asset class
Listed Equity Emerging Markets Private Equity Non-listed real estate or property Infrastructure Other (Empowerment fund) TOTAL

FUM values (US $000)

473.6 3,394.4 203.8 751.4 41.0 4,864.2

%
9.7 69.8 4.2 15.4 0.8 100

table 1: asset mix6

Actis has signicant control, by virtue of having a representative on the board, in over 90% of its listed equity investments (Table 2). This places Actiss investment managers in a good position to inuence the behaviour of our investee companies executive management.7

7 Days

Listed equity investment details

Actis fund
AEM3 Africa F2, CIFA Africa F2, CIFA AEM3 S ASIA2, India 2 Africa F1 Africa F2, CIFA S ASIA2, India 2 Africa F2, CIFA Africa F2, CIFA Africa F1 Africa F2, CIFA S ASIA2, India 2 Africa Agribusiness US$427.3m US$473.5m

Board seat
YES NO YES YES YES YES YES YES YES NO NO NO NO YES

Banro Africa Candax CIB Dalmia Cement DFCU Diamond Bank Halonix Mineral Deposits Orezone Platmin Poulina Swaraj Mazda Tanzania Tea Packers Value of Listed Equity Investments with board seat Value of Listed Equity Investments

table 2: listed equity investments

section 2: governance, policy and strategy

2.1 the Actis ESG approach
The Actis ESG approach to business is founded upon ve key behavioural principles. Actis aims to: 1 respect the dignity and well-being of all our people and those with whom the business brings us into contact 2 operate professionally in a performance-orientated culture and be committed to continuous improvement 3 be open and honest in all our dealings, while respecting commercial and personal condentiality 4 be good corporate citizens, demonstrating integrity in each business and community in which we operate 5 be objective, consistent and fair with all our stakeholders We rmly believe that ensuring that the entities in which we invest share our approach and values will enhance the sustainability and valuation of those businesses. This is why we are active promoters of world-class standards in health and safety, social, environmental and climate change areas, as well as sound corporate governance and transparent accounting practices.8 The rigorous analysis of ESG issues is an integral part of our investment appraisal process, and we demand that all our investee companies follow the highest international standards enshrined in our ESG Code.9

2.3 responsibility
Accountability for ESG resides at all levels of the organisation, with the following having specic responsibilities:11 the Actis supervisory board and its sub-committees Senior Partner/ Chief Investment Ocer/ Investment Committee members investment/ portfolio managers ESG specialists ESG training is provided to new joiners and regular updates are given to more experienced investment managers.

2.4 ESG implementation

At the pre-investment stage Actis applies a multitude of responsible investment approaches including:12 exclusion based on ethical criteria, which prohibit investment in a number of sectors including defence, gambling, tobacco, hard liquor and pornography screening as a way to identify key ESG issues and avoid the potential negative publicity surrounding the companies/sectors in question, as it may adversely reect the Actis brand/license to operate screening based on a belief that exclusion or inclusion of certain investments from our investment universe can have a material eect on portfolio performance ESG analysis within individual investment decisions. These factors sometimes impact our valuation and investment performance models Once the investment is made, Actis adopts an active ownership model through engagement of our portfolio companies on ESG issues,13 detailed in the next section of this report. Upon exit, ESG considerations are made to ensure our approach to responsible investment is consistent and uncompromised throughout the investment process.

2.2 policy and strategy

Our dedicated ESG team actively engages with investment managers and directly with portfolio companies promoting our ESG strategy which includes: policies on climate change, environment, health, safety, social and business integrity issues10 sustainability guidelines and health and safety guidelines for real estate funds encouraging energy eciency and reduction of greenhouse gas emissions in all portfolio companies

Environmental, Social & Governance Practices at Actis

principle 1: we will incorporate ESG issues into investment analysis and decision-making processes
p1.1 introduction
Managers of investee businesses are encouraged to adopt and implement policies relating to the areas of the Actis Five Policies particularly where the business entails specic risks. Managers of investee businesses are encouraged to work towards continuous improvement in these areas.

In order to implement our ESG approach, Actis has developed and implemented a Responsible Investment Management System aimed at continuous improvement of ESG performance in p1.5 monitoring all aspects of business. The system is composed of Policies, Organisation, Planning and Actis ensures responsible investment is an integral part of Actiss Implementation, Monitoring, Reviewing and Investment Review (IR) process. Auditing .14

p1.2 policies
We have developed policies in the areas of Environment, Climate Change, Health and Safety, Business Integrity and Social Issues (the Actis Five Policies) which include commitments to international best practices. Actis has also determined specic sectors which are excluded from investment.

p1.6 reviewing

Actis reports annually on the implementation of its procedures. Actis also provides employment numbers and taxes paid as part of our Limited Partner reporting process.

p1.7 auditing
Actis audits the implementation of the Actis Five Policies and related procedures on an ongoing basis to ensure continuous improvement in performance.

p1.3 organisation
Actis has two internal specialists competent in the areas of the Actis Five Policies. The specialists role is to provide advice within the organisation and to investee companies, both during the initial investment process and during the portfolio management of investee companies, through to exit.

p1.8 ESG integration

ESG integration relates to the consideration of ESG issues alongside traditional nancial measures, based on the belief that these issues can aect the performance of investment portfolios. At Actis, information is analysed and gathered across a comprehensive range of ESG issues and across the entire geographical coverage of the investment universe. Furthermore, the information is updated regularly to reect changes in our portfolio (during the regular investment review). This research and analysis is undertaken internally or may be purchased from an external party, in which case internal resources are nevertheless applied to interpreting the information. This approach ensures that consideration of ESG issues is fully integrated in investment processes pertaining to all our asset classes.15 All relevant sta members undergo regular personal evaluations which can include a review of their ability to incorporate ESG factors and their research capacity on ESG issues.16

p1.4 planning and implementation

The assessment of the impact of all new investments in each of the Actis Five Policies is an integral part of the appraisal process. New investments are given a risk rating in environmental, climate change, health & safety, business integrity and social issues to determine the appropriate level of management and monitoring required. The management of investee companies is required to sign an undertaking conrming that it will operate in line with the Actis Five Policies. Investee companies are assisted in developing action plans to address areas of non-compliance with the Actis Five Policies.

principle 2: we will be active owners and incorporate ESG issues into our ownership policies and practices
p2.1 introduction
Actis takes an active approach17 to ownership through the minimisation of ESG risks and the implementation of opportunities that add ESG value to each investment. This role is carried out through a number of engagement processes including:
optimising the governance of the investee companys board and board sub-committees to ensure principles of good corporate governance are followed formal ESG monitoring (by the non-executive director; as part of the Investment Review process; ESG site visits or independent audits) implementation of the post investment action, or the 100 day plan, which usually contains specic ESG actions to which the investee company commits Actis also incorporates ESG issues in its ownership policies and practices by asking every potential investee company to undertake that the business of the Company (and each member of the Group) will be carried on in a way that: encourages the ecient use of natural resources and promotes the protection of the environment ensures investee companies (in high carbon intensity sectors) determine their greenhouse gas footprint and make this data available on an annual basis to Actis provides safe and healthy working conditions for its employees and contractors treats all employees fairly in terms of recruitment, progression, remuneration and conditions of work, irrespective of gender, race, colour, language, disability, political opinion, age, religion, or national/social origin allows consultative work-place structures and associations which provide employees with an opportunity to present their views to management upholds high standards of business integrity and honesty, complies with local laws and international good practice and does not directly or indirectly oer, pay, solicit or accept bribes in any form With reference to our listed equity investments, it is important to note that Actiss active ownership strategy is implemented through its board representation, rather than through a (proxy) voting activity.18 Actis believes board representation is a highly eective route for raising ESG issues, as it allows us to inuence management and to align portfolio companies activities to our commitment to responsible investment. The Actis board representative is typically a senior investment manager with in-depth expertise of the sector and country in which the portfolio company operates.19 This individual is responsible for making informed decisions, through the careful research and analysis of issues discussed at board level. Research is typically conducted in-house with occasional recourse to external recommendations to ensure the board representative has the necessary information to aid the decision-making process.20 In case of disagreement with the companys management or other shareholders21, Actiss view will have been made clear through discussions at board level.22 takes account of the impact of its operations on the local community and seeks to ensure that potentially harmful occupational health and safety, environmental and social eects are properly assessed, addressed and monitored provides for the reporting as soon as practicably possible to Actis of any incident involving the Company (or any member of the Group) that results in any loss of life or any material eect on the environment; and ii) the reporting of the Companys (and each member of the Groups) compliance with the ESG Principles in an annual report by the Company to its board in a manner which allows a reader to make an informed assessment of the Company and, to the extent relevant, each member of the Group as against the requirements of the ESG Principles implements a social and environmental management system which enables eective identication, management and monitoring of any risks and provides a framework for action

p2.2 voting related to listed equity investments

p2.3 engagement listed equity and corporate fixed income issuers

Actiss engagement policy explicitly addresses ESG issues and is laid out in our ESG guidebook.23 The document includes guidance on how non-executive directors should carry out their
Environmental, Social & Governance Practices at Actis 8

principle 2: we will be active owners and incorporate ESG issues into our ownership policies and practices
investee company board responsibilities, and add value through the minimisation of ESG risks and implementation of opportunities that add ESG value. Last year (2009), Actis engaged at board level with nine of its listed equity portfolio companies, representing 90% of our investment in this asset class.24 Engagement topics typically contain ESG issues, the majority of which are related to governance, followed by environmental and social matters.25. Engagement of the company with respect to ESG issues most often takes place through our board level representation. In addition, there may be engagement on specic issues led by the Actis ESG team.26 Every six months, Actis reviews the competency of its internal sta on the general skills required for investment management, including board representation. This assessment may include a review of ESG engagement competency and capabilities.27 Our investment managers, with the aid of the ESG specialists, are expected to gather and analyse information across a comprehensive range of ESG issues across their markets of operation. This research includes a systematic analysis of the impacts of various ESG matters on the performance of current and prospective portfolio companies, in order to prioritise engagement opportunities.28 Setting engagement objectives and evaluating the success of our engagement activities is an integral part of the investment review processes. Lessons learned during the engagement process are systematically recorded in a central knowledge repository which is readily available to all internal sta involved in investment decision making, and this information is incorporated into the assessment of all investments.30

p2.5 examples of the Actis engagement strategy

An important feature of Actis s investment approach is that it actively engages with portfolio companies in raising their ESG standards to meet international best practice, and in reducing their carbon footprint. Actis has been innovative in nding eective and pragmatic ways to make this work in emerging markets. As part of its commitment to responsible investment, Actis: assesses the impact of all new investments in each of Actis's Five ESG Principles as an integral part of the appraisal process requires the management of investee companies to sign an undertaking conrming that it will operate in line with the Actis ESG Code gives new investments a risk rating against the ESG Principles to determine the appropriate level of management and monitoring required assists investee companies in developing action plans to address areas of non-compliance with the ESG Principles encourages the managers of investee businesses to adopt and implement policies relating to the areas of the ESG Principles, particularly where the business entails specic risks encourages the managers of investee businesses to work towards continuous improvement in these areas Actiss internal specialist (two person) ESG team provides support and guidance to investment managers at each stage of the investment cycle. Pre-investment the ESG team help deal teams with ESG screening and due diligence and postinvestment with ESG issues associated with portfolio management. This assistance can include carrying out investee company visits, drafting ESG terms of reference as well as document review. In 2009, the ESG team helped Actis investment managers/investee companies add value in the following areas:

p2.4 active ownership non listed investments and listed equity with significant control
Actiss active ownership policies covering ESG issues, apply to all other asset classes in which we invest.31 Inuencing our portfolio companies via active ownership is central to our business model, hence we have developed a well dened system to identify and follow through on ESG active ownership and engagement opportunities. ESG is typically included on board or supervisory committee agendas.32 In addition our internal stas ability to add value, which may be related to the management of ESG issues, is regularly assessed.33

Saving energy: The ESG team has been helping investee companies identify energy eciency measures ranging from simple housekeeping, lighting eciency and control and building management systems, to more technical solutions such as fuel switching, installation of more ecient motors,

principle 2: we will be active owners and incorporate ESG issues into our ownership policies and practices
boilers, and higher capacity pumps in euent treatment plants. Estimates of cost savings from identied energy eciency measures at specic sites ranged from US$6,000 to US$200,000 per year depending on the nature and size of the facility. The average pay back periods ranged from the immediate to four years. Energy audits are often conducted as part of the ESG due diligence for new investments.

Earning carbon credits: The ESG team has been working

with companies to earn carbon credits through the Clean Development Mechanism (CDM). These include CDM projects for Halonix lamps, a manufacturer of CFLs and LED lamps in India. One pilot CDM project in the state of Chhattisgarh is already under way and 81 others in dierent Indian states will be implemented in the next 2 years. The ESG team has been instrumental in negotiating a deal with EDF Trading to invest in the CDM projects, including purchase of CERs. As a result of this Halonix will benet from additional sales of CFLs to the tune of 30 million CFLs (for the 82 projects) as well as a share of the associated revenue from carbon credits, estimated at 4.33 million CERs.

Building sustainable real estate: In 2008, the ESG team elaborated world class sustainability guidelines for our real estate investments in India and Africa, with a focus on energy eciency and climate change mitigation. The measures enable rating against international green building rating systems such as LEED and Energy Star. In 2009 the ESG team assisted deal teams and portfolio companies in strengthening their technical skills to implement these measures. In September 2009, a two day real estate sustainability workshop for the Africa team was held in Johannesburg. Ensuring food safety: The ESG team/investment managers worked with the management of the Nilgiris Dairy, India and Xiabu Xiabu, China towards obtaining certication of the ISO 22000 Food Safety Management system. This resulted in environmental as well as sanitary improvements. Improving health and safety: In line with our health and safety standards, the ESG team has assisted portfolio companies in improving their health and safety management systems. Examples include Umeme (electrical distribution in Uganda), 7 Days (hotel chain in China) and Sinai Marble (marble processor in Egypt).

Environmental, Social & Governance Practices at Actis

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principle 3: we will seek appropriate disclosure on ESG issues by the entities in which we invest p3.1 introduction
As a specialist private equity fund manager, we require signicant disclosure of information from our investee companies, including the ESG elements of the investment. Information from each investee company is reviewed monthly, quarterly or every six months as part of our in-depth investment review process. In addition to the information collected for investment review purposes, we also ask each investee company to provide for the prompt reporting to Actis of any incident involving the company that results in any loss of life or any material eect on the environment.34

principle 4: we will promote acceptance and implementation of the Principles within the investment industry p4.1 introduction
Actis is an active member of the UNPRI Steering Committee on Private Equity, a body dedicated to the promotion of responsible investment in this specic asset class. As part of our commitment, we are contributing to a working group on exit strategy and to a General Partner - Portfolio Company support group.

p4.2 promotion of the principles

Actis also promotes acceptance of the Principles amongst its investee companies in the nancial services sector. For example, we have encouraged the National Stock Exchange of India, in which we hold a minority stake, to adopt the Principles. NSE is now in the process of nalising their adherence to the Principles. Another of our portfolio companies, IDFC (the Infrastructure Development Finance Corporation), is also a signatory to the Principles.39 Actis is a member of the World Economic Forums Investor Industry Group, a group of investors committed to the promotion of entrepreneurship in the global public interest, striving for world-class governance, economic progress, social development and environmental stewardship.40 During the 2010 meeting in Davos, Actis was particularly active in sessions dealing with the future of investing in infrastructure and green investing, with the aim of promoting its focus on sustainability among the wider investment community. We are also meeting with other private equity rms as part of a Business in the Community (BITC) roundtable initiative to better manage and embed ESG issues into investment processes. When working with external providers, such as consultancies and research houses, we do not typically include ESG considerations when drafting contractual agreements,41 however we have strongly encouraged peer organisations and institutional investors to consider ESG factors in their business processes.42

p3.2 reporting
The following information is reported to our Limited Partners on each investee company on a quarterly basis: ESG management update ESG inherent risk ratings (Health and Safety, Environment, Climate Change, Social Issues and Business Integrity) taxes paid employee numbers (updated annually) Information about the ESG policies of our investee companies is solicited by the investment manager, with the assistance of the ESG specialists35. We have frequent and direct contact with our portfolio companies and encourage them to systematically report on their ESG policies, practices and performance. We encourage our investee companies to integrate reporting on ESG issues with regular nancial disclosures36 and to deliver the information in a standardised format, whilst ensuring that the unique ESG characteristics of the investment are properly communicated. Actis provides and asks for regular feedback on the quality of reporting and ask for additional information or clarications where this is necessary. In some cases, Actis seeks external verication and assurance of the received information.37 We also regularly inquire about the extent of participation to and compliance with internationally recognised codes of conduct and standards related to ESG issues.38 Examples include OHSAS 18001 for Health and Safety, ISO 14001 for environmental management and SA 8000 for the management of social issues.

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principle 5: we will work together to enhance our eectiveness in implementing the Principles p5.1 introduction
Actis is an active member to the UNPRI Steering Committee on Private Equity, a body dedicated to the promotion of responsible investment in this specic asset class. Our participation on the committee entails that we set up collaborative initiatives (of both formal and informal nature) with industry associations relevant to the Principles and their application in our industry. Given the relatively low rates of PRI signatories in the private equity industry, we have been particularly active with respect to Principle 4: promoting the acceptance and implementation of the principles in our sector.44

principle 6: we will each report on our activities and progress towards implementing the Principles p6.1 introduction
As a private equity investor, Actis is not subject to public report disclosure requirements. We do however, report to our investors on a quarterly basis, and the information we provide includes a section dedicated to ESG management for each entity we invest.47 This allows our investors to monitor the performance of the funds, capturing both nancial and extra-nancial aspects. Our disclosure to our Limited Partners also includes our activities and progress with respect to the implementation of the UNPRI principles.48

p6.2 sharing of case studies

Our Code of Conduct and Policy Commitments are publicly available through our website: http://www.act.is/465/responsible-investment.49 In addition, case studies that demonstrate our ESG approach have been provided to the UNPRI which in turn makes them available to the wider public via their own website: http://www.unpri.org/privateequity/

p5.2 collaboration and networking

To ensure we remain eective advocates, we regularly use the resources and networking opportunities provided by the UNPRI to keep up to date with current engagements and aim to constantly enhance our understanding of the Principles.45 Besides our participation in the Steering Committee, we have engaged in other responsible investment groups such as the World Economic Forum in Davos, and the Oxfams Better Returns in a Better World Project. Other associations we have interacted with include46 Association for Sustainable and Responsible Investment in Asia UK Sustainable Investment Forum Transparency International The Carbon Disclosure Project

Environmental, Social & Governance Practices at Actis

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Appendix A: UNPRI Annual Reporting and Assessment Questions

1

Q 2) What category best describes your organisation?

[Asset Owner or Investment Manager]

2

Q 4) As an investment manager: Which category best describes the products and services your organisation provides?

[Mainstream Investment Manager; Dedicated Socially Responsible Investment manager; Themed fund manager]
3

Q 7) What were your organisation's total assets under management as of 31 December 2009, including the assets of all your consolidated subsidiaries?

Q 6) Please indicate the number of sta your organisation employs and provide details relative to the level of complexity of your organisation. [Complexity is dened by characteristics such as the number of investment strategies and mandates; the number of investment professionals and how they are organised within the rm]
5

Q 5) Which client category represents the highest proportion of your assets under management?

[Institutional Investors; High net worth individual investors; Retail investors]

6

Q 8) Please provide an approximation of your average asset mix for 2009 or your most recent count. Q 9) Please provide the following information based on your asset classes holdings:

What percentage - if any - of your assets invested in publicly listed companies are invested in companies where your organisation or external investment managers have signicant control (for example, have a board representative or other forms that would render other active ownership signicantly more impactful than proxy voting and engagement alone)?
8

Q 11) Please provide a description of how your governance, policies and strategies address RI (Responsible Investment) and ESG issues. Q 13) For the following asset classes, to what extent has your policy or approach to responsible investment been incorporated in internal management processes (e.g. business planning, strategic planning, or similar)? [Asset classes are listed equity, xed income, private equity, listed or unlisted real estate and property, hedge funds and infrastructure] A large extent of incorporation is dened as follows: the organisation has both long and short term RI objectives relating to various aspects of the RI programme across regions that are regularly updated or reviewed. Larger organisational objectives have been reduced to individual objectives for which sta members are held accountable on a regular basis. There are key performance indicators related to responsible investment, and resources have been allocated. The organisation has invested considerably in RI implementation and processes. This approach is applied to all new investments as well as legacy investments when possible.

10

Q 12) Do you have a policy or a set of policies that makes specic reference to responsible investment, and if so, do they cover environmental, social, and governance issues? Q 14) Among the roles within your organisation, who has a clear responsibility related to responsible investment implementation and; are there incentives and training for individuals related to RI/ESG considerations and responsibilities? [Individuals are: board of trustees or board of directors and their committees; Chief Executive Ocer or Chief Investment Ocer or

11

13

equivalent; Other Senior management; Portfolio Managers; Analysts; Researchers; RI or ESG specialists; Other]
12

Q 15) Select any of the following RI, ESG and/or SRI approaches that you or your external investment managers currently apply in the investment decision-making process.

[Approaches are: Exclusion based on ethical criteria; Screening as a way to avoid the potential negative publicity surrounding the companies/sectors in question as it may adversely reect on you or your managers brand/license to operate; Screening based on a belief that exclusion or inclusion of certain investments from your investment universe can have a material eect on portfolio performance; ESG analysis within individual investment decisions, possibly including these factors into valuation and investment performance models; Themed Investing; None of the above]
13

Q 17) Please select any of the following active ownership activities that you, your external service providers or your external investment managers currently undertake on behalf of your organisation. [Activities include: (Proxy) voting related to listed equity; File and/or co-le shareholder resolutions on listed companies; Engagement on ESG issues with listed equity or xed income issuers; Ownership and engagement activities focused on ESG issues related to unlisted investments or listed equity which permit a signicant control; None of the above]

14

Q 19) Please provide a short description of your organisations approach to this Principle. For example, how do your organisations investment analysis and decision-making processes incorporate ESG factors.

Q 20) What percentage, by asset class, of your organisations assets under active management internally integrate the consideration of RI/ESG issues in investment decision-making processes such as researching ESG information and/or constructing/managing portfolios and to what extent? A large extent of integration is dened as follows: You gather and analyse information across a comprehensive range of ESG issues and across a large proportion of the geographical coverage of your investment universe. Furthermore, the information is updated regularly. This research and analysis may be undertaken internally or may be purchased from an external party. In the latter case, internal resources are nevertheless applied to interpreting the information. Q 21) For the assets under active management internally that integrate the consideration of RI/ESG issues, to what extent do you have a process for monitoring the capability of investment analysts, portfolio managers and other relevant investment professionals on how they integrate the consideration of RI/ESG issues into investment analysis and decision-making processes? A large extent is dened as follows: All relevant sta members undergo a regular monitoring of their RI competency, including their ability to incorporate ESG factors and their research capacity on ESG issues.
17 16

15

Q 26) Please provide a short description of your organisations approach to this Principle. For example, how is your organisation an active owner and how does it incorporate ESG issues in its ownership policies and practices. Q 27) Do you have a (proxy) voting policy and if so, does it address environmental, social and governance (ESG) issues? Q 29) For listed equities, who makes voting decisions on behalf of your (or your clients) organisation? Q 30) For those listed equity votes you cast: to what extent is information related to voting items gathered and analysed before voting decisions are made and; do you monitor that voting is done in accordance with your voting instructions?

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A large extent is dened as follows: Research to inform voting decisions is undertaken in-house. The company reviews each ballot item and undertakes any necessary research to make an informed judgement. Alternatively, the company may be buying external voting research and signicantly supplementing it with in-house research and analysis.
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Q 35) To what extent do you and/or your agents review shareholder resolutions put forward by other shareholders to determine whether or not to support the resolution?
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Q 31) Do you inform your listed equity companies of your rationale when you abstain or vote against management recommendations?

Q 37) Do you have a written engagement policy or other documents that address direct engagement with listed equity and xed income issuers; if so, do these policies address environmental, social and governance (ESG) issues?
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Q 39) In total, how many listed equity and xed income issuers did your organisation engage with or were engaged with on your organisations behalf on ESG issues in 2009, by level of engagement?

Q 40) Approximately what proportion of the engagements with listed equity or xed income issuers undertaken by your organisation or on your organisations behalf addressed environmental, social or governance (ESG) issues?
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Q 38) Who engages with listed equity or xed income issuers on behalf of your (or your clients) organisation?

[Please select among: internal sta; external engagement service provider(s); external investment manager(s); or other external entity]
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Q 41) To what extent do you assess and monitor the ESG engagement competency and capabilities of the following groups?

[e.g. internal sta; external engagement service provider(s); external investment manager(s); or other external entity] A medium extent is dened as follows: You take an active interest in the external investment managers engagement progress but do not have regular dialogue with them. You require and review ad hoc reporting on engagement progress performed on your behalf. You evaluate the managers engagement progress regularly (i.e. annually) but do not undertake additional analysis.
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Q 42) Given your (or your clients) engagement policy and/or approach, to what extent do you have or do the third parties acting on your behalf have a process for identifying and prioritising ESG related engagement opportunities?

A large extent is dened as follows: You or your third party agents gather and analyse information across a comprehensive range of ESG issues and across a large proportion of the markets in your investment universe. This research includes an analysis of the impacts of various issues on specic companies performance and prioritisation of engagement opportunities.
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Q 43) To what extent do you or your third party engagement providers or investment managers set ESG engagement objectives and evaluate your engagement success?

A moderate extent is dened as follows: You may have developed a process to measure the impact of your engagement eorts but may not always apply it. You might sometimes set engagement objectives before engaging with companies. Q 44) To what extent do you or your external investment manager integrate the information and progress of the ESG engagements into the investment decision-making process? A large extent is dened as follows: Information related to your organisations engagement activities is readily available to those making investment decisions, systematically analysed and incorporated into the assessment of all investments.
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Q 47) Do you have an active ownership policy and/or strategy that addresses environmental, social and governance (ESG) issues for each of the following asset classes? Listed equity with signicant control Private Equity Non-listed real estate and property Infrastructure

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Q 48) To what extent are ESG issues addressed in the ownership activities conducted by your organisation, your external service provider(s) or your external managers on your behalf in the following asset classes?

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A large extent is dened as follows: Inuencing our portfolio holdings via active ownership is central to our business model. We have developed a well dened system to identify and follow through on ESG active ownership and engagement opportunities. As a rule, ESG is included on every Board or Supervisory committee agenda. Q 49) To what extent do you assess and monitor ESG active ownership competency and capabilities undertaken by the groups listed below in the following asset classes: xed income - sovereign and other non-corporate issuers private equity non-listed real estate/property hedge funds infrastructure [Groups are e.g. internal sta; external engagement service provider(s); external investment manager(s); or other external entity] A moderate extent is dened as follows: Relevant sta members are assessed on their competency in the area of active ownership and engagements but primarily on an ad hoc basis, not in a regular and systematic fashion.
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Q 52) Please provide a description of your approach to this Principle. For example, how does your organisation seek appropriate disclosure on ESG issues by the entities in which it invests. Q 53) Who asked your organisations investee companies (or other investment entities) to provide information about their ESG policies, practices or performance in 2009?

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Q 55) In which format or mechanism have you or your third parties agents requested reporting on ESG issue policies, practices or performance? [Options include: Integrated with regular nancial reports, Standalone corporate (social) responsibility or sustainability reports; Global Reporting Initiative (GRI); Carbon Disclosure Project (CDP); Submission of a tailored survey or Other reporting framework by an industry or association]

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Q 54) To what extent did you or your external engagement service provider(s) or your external investment manager(s) have a dialogue with companies (or other investment entities) regarding the production, by asset class, of standardised and/or systematic reporting about their ESG policies, practices or performance in 2009?

A large extent is dened as follows: Actis has direct contact with companies and regularly encourage them to systematically report on ESG policies, practices and performance. We have a systematic approach to assessing the quality of reporting across a range of ESG issues. We ask for and encourage standardised reporting and where appropriate press for external assurance of ESG information. Actis has taken a leading role in investor collaborations seeking systematic reporting by companies and we regularly provide feedback to companies on their reporting.
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Q 56) To what extent did you or your third party agents seek information from companies regarding their practices related to norms, standards, codes of conduct or international initiatives/ declarations/ conventions related to ESG issues in 2009? A large extent is dened as follows: Actis makes a substantial and systematic eort to seek information from companies regarding their participation in and compliance with a number of relevant norms, standards and codes (such as OHSAS 18001 for health and safety; ISO 14001 for environmental management and SA 8000 for the management of social issues).

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Q 58) Please provide a description of your approach to this Principle. For example, how does your organisation promote the acceptance and implementation of the Principles within the investment industry? Q 63) To what extent did you engage in dialogue, lobbying or initiatives pertaining to government policy and/or industry regulations related to RI/ESG issues in 2009?
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A large extent is dened as follows: You may have initiated dialogue on policy initiatives relating to RI/ESG issues. You may have commented on issues relevant to your domestic market as well as issues relevant to foreign markets.
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Q 59) Did you include RI/ESG considerations when working with service providers and/or external investment managers in 2009 (where applicable)? Specically when: searching for service providers or external managers; drafting contractual agreements; structuring incentive schemes.

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Q 60) To what extent did you encourage peer organisations and/or your institutional clients to consider RI/ESG factors in 2009?

A large extent is dened as follows: Actis has consistently been an active advocate for responsible investment. We actively seek to promote RI in contracts with institutional investors, industry forums and media activity.
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Q 65) Please provide a description of your approach to this Principle. For example, how does your organisation work with other parties to enhance its implementation of the Principles?

Q 66) To what extent did you collaborate with other investors in regard to the Principles, and what Principle did you collaborate most on? Large extent is dened as follows: You may have initiated one or more collaborative initiatives (formal or informal) with industry associations relevant to the Principles or adopted a leadership position within established initiatives or associations. You may also have worked actively with a number of other investors on specic issues of relevance to the Principles. We collaborated most on principle 4: promoting the acceptance and implementation of the Principles within the investment industry. Q 67) Did you log in to the PRI Engagement Clearinghouse in 2009 and if so, how did you use it? (e.g. led an engagement; joined an engagement; or logged in).
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Q 68) Did your organisation participate in any RI/ESG issue-related associations?

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Q 71) To what extent did you disclose, either to clients/beneciaries or publicly, your policy and/or approach to incorporating ESG issues into investment analysis and decision-making processes in 2009?

A moderate extent is dened as follows: You prepared a comprehensive and detailed review of your investment process highlighting how you integrate ESG factors, but it was not necessarily distributed publicly. Alternatively, your review may have contained gaps either in coverage or in detail.
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Q 76) Did you disclose (either to clients/beneciaries or publicly) RI/ESG activities, results and progress related to Principle 3, Principle 4 or Principle 5 in 2009? Q 70) Please provide a description of your approach to this Principle. For example, in what ways does your organisation report your implementation of the Principles? Q 1) Please provide the contact details for your primary and secondary PRI Reporting and Assessment contacts

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Actiss ESG team

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Mark Goldsmith mgoldsmith@act.is

Mark is the Director responsible for leading Environmental, Social and Governance issues at Actis and has over fteen years of experience of advising on ESG issues. Mark joined Actis in 2002 and has specialist experience in the areas of climate change, safety & environmental management systems, contaminated land, air emissions and ethical issues. Mark is currently leading a governance training initiative within Actis. Before joining Actis, Mark worked for Shell International and Arthur D Little. Mark holds a degree in Manufacturing Engineering from Nottingham University and an MSc in Environmental Pollution Control from the University of Leeds.

Ritu Kumar rkumar@act.is

Ritu is a Senior Advisor in the ESG team. She joined Actis in 2006 and has over fteen years of experience working within the industry on environmental and social issues. Ritu has worked with the United Nations Industrial Development Organisation and established the European aliate of a leading Indian organisation, The Energy and Resources Institute in 2000. Ritu holds a BA and an MA in Economics from Delhi University, and an MSC in Economics from the London School of Economics. She has specialised in Environmental Economics from Harvard School of International Studies and has experience in implementing labour standards in developing countries.

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Actis is a leading private equity investor that invests exclusively in the emerging markets.
With a growing portfolio of investments in Asia, Africa and Latin America; it currently has US$4.8bn funds under management. Committed to the highest nancial and non-nancial returns, Actis partners closely with its investors and the companies in which it invests. As a long-term business partner Actis adopts an approach dened by corporate governance, rigorous environmental and social standards, and decency to all that it does. Combining the expertise of over 100 investment professionals on the ground in nine countries with a sophisticated back oce based in London, Actis is proud to actively and positively grow the value of those companies in which it invests.

Africa Cairo +202 2736 1698 Johannesburg +27 11 778 5900 Lagos +234 1 448 5700 Nairobi +254 20 2219 952

China Beijing +86 10 6535 4800

www.act.is

Latin America Sao Paulo +55 11 3844 6300

South Asia Actis is a signatory to the United Nations Principles for Responsible Investment (UNPRI). An investor initiative in partnership with UNEP FI and the UN Global Compact. www.unpri.org Delhi (administration centre) +91 11 6615 7200 Mumbai +91 22 6146 7900

Actis LLP is a Limited Liability Partnership registered in England and Wales (registered number OC305927). A list of the members of Actis LLP is open to inspection at its registered oce, 2 More London Riverside, London SE1 2JT, England. Actis LLP is regulated by the Financial Services Authority. Copyright 2010 Actis LLP. All rights reserved. Reproduction without permission is prohibited. Trademarks and logos are copyrights of the irrespective owners.

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