RepRisk AG, Zurich, Switzerland (www.reprisk.com). RepRisk® is a registered trademark.

RepRisk ESG Business Intelligence An ESG risk analyst’s view on the extractive industries in Latin America

TBLI Latin America, Buenos AiresMay 29, 2015

Tamara Melina Tisminetzky, ESG Research Analyst, RepRisk AGtisminetzky@reprisk.com

Agenda

About RepRisk

My job as a RepRisk ESG research analyst

Extractive industries: the external view

Main ESG issues for the extractive industries in Latin America

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About RepRisk

RepRisk is a leading business intelligence provider on ESG risks

Global research and business intelligence provider specializing in dynamic ESG risk analysis and metrics

Founded in 1998 as environmental risk consultancy

Launch of RepRisk ESG database in 2006 as a due diligence tool and early warning system for the financial sector

Today, runs most comprehensive database on ESG risks related to companies, projects, sectors and countries worldwide

Data used by global banks, insurances, asset managers and multinationals for risk management, compliance, supply chain, as well as monitoring reputation, peers, NGOs and issues

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Headquarters and Analyst Hub

Analyst Hub

Headquarters in Zurich and over 40 risk analysts in North America, Europe and Asia

LondonZurich

Bishkek

Manila

Seoul

Tampa

Washington DC

Montreal

Stockholm

Tokyo

Brussels

Beijing

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Vienna

Research partner: Ethix

Research partner: JRI

Milan

Research partner: SRQ

Amsterdam

Buenos Aires

RepRisk’s broad language coverage supports the early identification of risks

German

Dutch

English

French

Korean

Portuguese

Spanish

Danish

Finnish

Norwegian

Chinese

Italian

Japanese

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Russian

Swedish

RepRisk serves over 100 global clients, helping them to manage and mitigate ESG risks

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RepRisk partners with key sustainability index providers and initiatives to advance ESG issues

More coming in 2015…

My job as a RepRiskESG Research Analyst

Big data: How can we help to navigatethe endless stream of open-source intelligence?

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Source: cloudtimes.org

My job is to analyze stakeholder data to support transparency and informed decision-making

Print media

NGOs

Blogs

Think tanks

Gov’t agencies

News sites

Newsletters

Extracting relevant ESG risk information that supports informed decision-making

Risk-based approach:Criticism, negative incidents,

violation of international standards, controversies

+80,000 sources in 15 languages

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Twitter

RepRisk follows a strict, rules-based approach to capture ESG and reputational risks

1. Screen2. Identify3. Filter4. Analyze5. Quantify

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Projects

Sectors

Companies

Issues

Gov’t bodies

Countries

NGOs

Topic Tags

Reputational and ESG

Risks

+12,000

All sectors

+50,000*

28 ESG issues

+7,000

All countries

+9,000

36 ESG Topic Tags

* Approx. 37,000 privately-held; 13,000 publicly-traded

Daily 5-step rules-based

process

RepRisk’s scope of 28 ESG issues guides the risk screening and identification process

Environmental Social Governance

Environmental Footprint

CommunityRelations

Employee Relations

Corporate Governance

Global Pollution (Inc. Climate Change and GHG Emissions)

Human rights abuses, corporate complicity

Forced labor Corruption, bribery, extortion, money laundering

Local pollution Impacts on communities Child labor Executive compensation

Impacts on ecosystems and landscapes

Local participation issues Freedom of association and collective bargaining

Misleading communication, e.g., “greenwashing”

Overuse and wasting of resources

Social discrimination Discrimination in employment

Fraud

Waste issues Health and safety issues Tax evasion

Animal mistreatment Poor employment conditions Tax optimization

Anti-competitive practices

Controversial products and services

Product-related health and environmental issues

Violation of international standards

Violation of national legislation

Supply chain

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Note: All 10 Principles of the UN Global Compact map to

RepRisk’s ESG scope

OECD Guidelines for Multinational Enterprises

Universal Declaration of Human Rights

RepRisk selects, defines and assesses ESG issues in line with key international standards

The Equator Principles

UN Convention Against Corruption

ILO Conventions

World Bank Group (IFC) Performance Standards

World Bank Group Environmental, Health and Safety Guidelines

United Nations Principles for Responsible Investment (UN PRI)

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United Nations Global Compact (UNGC)

RepRisk’s scope also includes 36* Topic Tags –specific ESG “hot topics” and themes

Agricultural commodity speculation

AlcoholAnimal

transportation

Automatic weapons

Cluster munitions

Coal-fired power plants

Conflict minerals

DiamondsEndangered

speciesForest burning Fracking

Genocide/ethnic cleansing

High conservation value forests

Illegal loggingIndigenous

people

MonoculturesMountaintop

removal miningNegligence Nuclear power

PornographyPrivacy

violationsProtected areas Sea-bed mining

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* An additional 4 Topic Tags will be added by June 2015: Hydropower (dams); Migrant labor; Predatory lending; Tax optimization

Abusive/illegal fishing

Arctic drilling

Deep sea drilling

Gambling

Land grabbing

Oil sands

Tobacco

Asbestos

Depleted uranium

munitions

GMO

Landmines

Palm oil

Water scarcity

Risk incident

RepRisk’s analysis process is strict and rules-based, ensuring consistent data over time

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1st level analyst

Identification and filtering

2nd level analyst

Analysis and summary

Senior analyst

Print media

News websites

NGOs

Blogs

Think tanks

Gov’t agencies

Newsletters

Screening

Risk incident

Risk incident

Risk incident

Risk incident

Key criteria: In scope? Is it a risk? Severity threshold

Analysis parameters: Reach of source Severity Novelty

Incidents added only once unless there is: Story development Source escalation Reoccurrence after

6 weeks

Published in database

Quality assurance

Twitter

Database grows daily as new risk information is screened, identified and analyzed

Risk incidents linked to relevant

entities

Risk incident

Risk incident

Risk incident

Risk incident

Projects

Sectors

Companies

Issues

Gov’t bodies

Countries

NGOs

Topic tags

Entities in database* RepRisk coverage Database growth

+12,000

All sectors

+50,000**

28 ESG issues

+7,000

All countries

+9,000

36 Topic tags

+7 per day

+10 per day

+2 per day

+2 per day

Added based on client requests

17** 37,000 privately-held; 13,000 publicly-traded

* Each entity has its own Profile Page, with both qualitative and quantitative data

After analysis, ESG risk exposure is quantified using the RepRisk Index (RRI)

The RRI is a proprietary algorithm that quantifies reputational risk exposure related to ESG issues

Calibrated from 0-100, it is a metric available for companies, projects, sectors and countries

Calculated as a function of severity, reach and novelty of the risk incidents, as well as the number and timing of the incidents

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Quantification

Current RRI: current level of criticism Peak RRI: highest level of risk exposure

over the last two years RRI Change: change over the last 30 days

3 key RRI metrics

Extractive Industries:The external view

Two megatrends: Increased stakeholder attention and transparency amplify ESG issues

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Increased and rapidly changing stakeholder expectationsEnvironmental, social and governance

(ESG) issues have evolved from tangential importance to material

relevance over the last decade

Increased transparency and disclosure

The internet and social media create a hyper-transparent and hyper-connected

world, which serves to amplify stakeholders’ expectations about ESG issues

Financial risksReputational risksCompliance risks

E.g. Direct impact on cash flows and capital, including credit or investment risks, business continuity, etc.

E.g. Risks to earnings and capital from adverse

public perception

E.g. Violation of policies, commitments, international standards

A new business imperative: ESG risks can translate into bottom-line impacts

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Environmental, social and governance (ESG) risks

E.g. Environmental degradation, human rights abuses, corruption and fraud

Country-Sector Analysis

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Most exposed projects in the extractive industries sector

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Main ESG issues for the extractive industries in Latin America

Key ESG Issues

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Key ESG Topic Tags

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RepRisk AGStampfenbachstrasse 428006 ZurichSwitzerland

Tel: + 41 43 300 54 40Fax: + 41 43 300 54 46Email: contact@reprisk.com