R E S P O N S I B L E I N V E S T M E N T F O R A S U S T A I N A B L E E C O N O M Y

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT

April 1 - June 30, 2013

Q2/13

Shareholder Engagement at a Glance

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT2

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

SHAREHOLDER ENGAGEMENT ACTIVITY REPORT 3

Second Quarter´s Highlights

SHARE has received constructive feedback from three major Canadian mining companies on its consultation draft document on investor expectations on human rights performance in the extractive sector and is preparing for the public release of the document in the third quarter;

We initiated a dialogue with Loblaw Companies Ltd. to provide recommendations related to its supply chain monitoring practices in light of the collapse of the Rana Plaza apparel factory in Bangladesh in April and the investor risks associated with occupational health and safety issues in retailer supply chains;

We held productive conversations with two banks on their assessment and mitigation of risks associated with greenhouse gas (GHG) emissions stemming from their core financial operations (“financed” emissions). Since we initiated this dialogue in November 2012, SHARE has had substantive interactions with all five of the banks that we initially contacted.

Activity SnapshotEnvironment 10

Climate Risk Disclosure ATCO Ltd., Precision Drilling Corporation

Fossil Fuels Financing Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada

Hydraulic Fracturing - Shale hydrocarbon development

Calfrac Well Service Ltd., Encana Corporation, Talisman Energy

Toxics in Consumer Products and Packaging

Canadian Tire Corporation Ltd.

Social 11

Child Labour and Cotton Supply Chain

Canadian Tire Corporation Ltd.

Conflict Free Mineral Sourcing TELUS Corporation

Human Rights Goldcorp Inc.

Occupational Health and Safety in Supply Chain

Loblaw Companies Limited

Phosphate Sourcing and Western Sahara

Potash Corporation of Saskatchewan Inc.

Responsible Banking Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank

Sustainable Coffee Sourcing Tim Hortons Inc.

Corporate Governance 5

Executive Compensation Yamana Gold Inc.

Sustainability Reporting Husky Energy, Loblaw Companies Limited

Sustainability Reporting and Climate Risk Disclosure

Shaw Communications Ltd.

Sustainability Reporting and Toxics Shoppers Drug Mart Corporation

Total Number of Companies 18

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Environment

Climate Risk Disclosure

Two companies acknowledged receipt of communications sent last quarter by SHARE on behalf of clients encouraging companies to respond to the 2013 Carbon Disclosure Project (CDP) questionnaire or otherwise disclose their management of climate change-related risks and opportunities. ATCO Ltd. has indicated that it will not respond to the 2013 CDP survey and will instead work on improving its sustainability reporting under the Global Reporting Initiative (GRI) guidelines. In its response, Precision Drilling Corporation stated that it would not respond to the 2013 CDP survey.

Fossil Fuels Financing

This quarter, we continued our conversation with Canada’s leading banks on reputational and other risks associated with each bank’s “financed” greenhouse gas (GHG) emissions. We followed up with the Bank of Nova Scotia (“Scotiabank”) about two issues that remain outstanding from a conference call we held with the bank in late January regarding the banks assessment of regulatory, reputational and carbon pricing risks associated with having significant financed GHG emissions or with being associated with industries in high-emissions sectors. We also held meetings with senior staff at the Bank of Montreal (BMO) and the Canadian Imperial Bank of Commerce (CIBC) to discuss in further detail their approach to, and mitigation of, potential risks associated with their “financed” GHG emissions. SHARE provided BMO with information on possible ways the bank could get involved in the GHG Protocol Financial Sector Guidance that is being drafted by the GHG Protocol and the UNEP Finance Initiative, should the bank decide to do so. Finally, we wrote to the Royal Bank of Canada (RBC) to follow up on past exchanges with the company, specifically in relation to the bank’s environmental disclosures in its 2012 Corporate Responsibility report and 2012 Blueprint report card. RBC has indicated that a response will be forthcoming.

Investors engage with COSIA to seek environmental improvements in Canada’s oil sandsThis quarter, SHARE joined a conversation between a group of investors and the Chief Executive of Canada’s Oil Sands Innovation Alliance (COSIA), as well as senior staff at two COSIA member companies, to learn about COSIA’s work and near-term plans to accelerate environmental performance improvements in the oil sands industry. Among other things, we learned that COSIA expects to release broad performance-related aspirations within the next few months, and will then work on producing quantifiable targets on its four “environmental protection areas” (EPAs), namely water, greenhouse gas emissions, tailings and land. COSIA also indicated it is considering how investors and other stakeholders may participate in the goal-setting process. For more information on COSIA, see http://www.cosia.ca/.

Shareholder Engagement Activity Summary

This report outlines SHARE’s shareholder engagement activities for the second quarter of 2013. SHARE conducts focused and constructive 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 second quarter of 2013, SHARE corresponded with 21 companies on key ESG issues. Themes discussed included climate risk disclosure, fossil fuels financing, hydraulic fracturing and shale hydrocarbon development, toxics in consumer products and packaging, conflict-free mineral sourcing, child labour and the cotton supply chain, human rights, phosphate sourcing from the Western Sahara, responsible banking, sustainable coffee sourcing, executive compensation and sustainability reporting. Our dialogues on each of these themes are described in detail below.

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Hydraulic Fracturing – Shale Hydrocarbon Development

This quarter we sent a letter to Calfrac Well Services, a major provider of hydraulic fracturing and related services to the shale hydrocarbon industry, to follow up on past exchanges regarding the company’s environmental and social risk mitigation efforts and performance. The letter commends Calfrac for providing significantly more information on its environmental and social performance and risk mitigation efforts and commitments in its 2012 Annual Report and 2012 Annual Information Form, as we had discussed in past conversations with the company. It also requests additional data on a number of key areas that we hope to see Calfrac report in future years, including water use, fracturing fluids, greenhouse gas emissions and unintentional hydrocarbon or chemical releases and other environmental incidents. We hope that our questions will assist Calfrac in identifying key performance indicators that could be included in future company reports to satisfy the information needs of institutional investors interested in seeing Calfrac succeed over the long term.

SHARE communicated with Encana Corporation and asked the company to keep us apprised of its disclosure of data we have requested in the past, including on the company’s water use in hydraulic fracturing operations and measurable indicators against which analysts can measure performance and progress of Encana’s Responsible Products program. We also heard back from Talisman Energy Inc. regarding a joint investor letter we sent to the company in April on behalf of several clients and a number of U.S. and Canadian investors to inquire about the company’s plans to provide key quantitative performance data under its Shale Operating Principles. Talisman has indicated that it has received and will soon respond to our joint investor inquiry.

Toxics in Consumer Products and Packaging

Canadian Tire Corporation Ltd. provided information we had requested regarding the company’s efforts to eliminate certain toxics (PVC, phtahalates and heavy metals) from its brand name packaging and products. Among other things, the company provided information on its packaging materials guidelines for vendors and the processes the company has in place to screen products for substances that are currently regulated in Canada.

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Social

Conflict-Free Mineral Sourcing

On June 13, 2012, SHARE wrote to TELUS Corporation and four other telecommunications companies inquiring about each company’s approach to conflict-free procurement, especially as it relates to minerals extracted in the Democratic Republic of Congo (DRC). This quarter, we followed up with TELUS to request a response to our June 13, 2012 letter, since the company had promised to respond to our inquiry.

Cotton Supply Chain and Child Labour

SHARE sent a letter to Canadian Tire Corporation Ltd. asking for answers to questions that were not addressed in the company’s response to our initial inquiry regarding child labour in the cotton supply chain. SHARE is seeking information regarding the company’s policies and practices around cotton sourcing, particularly sourcing from Uzbekistan where the use of child labour is an entrenched practice in the annual cotton harvest. We have not yet received a response to our letter.

Human Rights

In the fourth quarter of 2012, we contacted many of Canada’s leading mining companies to seek feedback on SHARE’s consultation draft document entitled Investor Expectations on Human Rights Performance for Mining Companies. This report outlines what SHARE believes are the most pressing 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. This quarter, Goldcorp Inc. provided comments on the draft and to date, we have received responses from three leading Canadian mining companies as well as from an independent consultant.

SHARE also met with Goldcorp this quarter to discuss human rights-related issues throughout its global operations. During the meeting, SHARE strongly encouraged the company to publish an update on its progress implementing the recommendations contained it the independent Human Rights Assessment (HRA) of the Marlin Mine. The HRA was completed in May 2010 and the last update on progress from the company was issued in April 2011.

Decent Work – Occupational Health and Safety in Supply Chains

On behalf of our clients, SHARE sent a letter to Loblaw Companies Limited to express our clients’ support for Loblaw’s decision to become a signatory to the Bangladesh Accord for Fire and Building Safety (see Box 2), and request information about the company’s supply chain monitoring practices. The tragic collapse of the Rana Plaza apparel factory in Bangladesh has placed those retailers whose goods were sewn at the factory under intense scrutiny. Canadian retailer Loblaw was among those retailers.

Box 2: Investor Statement on Bangladesh Fire and Safety Accord

Canadian institutions collectively representing more than $44 billion in assets under management, recently released a joint statement in support of the Accord on Fire and Building Safety in Bangladesh. The tragic collapse of the Rana Plaza building in Savar, Bangladesh, which killed more than 1,100 garment workers and injured thousands more, has brought international attention to the failure of governments and industry to ensure the safety of workers in that country’s garment industry. The Rana Plaza disaster and the worldwide reaction that followed amply illustrates not only the importance of adhering to international standards that safeguard the lives and human rights of workers throughout a company’s supply chain, but also the considerable reputational, operational and legal risks to companies that fail to address these issues.

The Accord sets out a program of independent and transparent inspections, an informed and active role for workers and trade unions, health and safety training for workers and management personnel, effective health and safety committees, and the right of workers to file complaints and to refuse unsafe work. It is backed by time-bound remediation plans, effective dispute resolution procedures, and consequences for those that do not comply. The International Labour Organization is supporting the agreement and will play a role in its implementation, and the UN High Commissioner for Human Rights has endorsed it. The investor signatories of the statement are urging all apparel brands, retailers and manufacturers that source from Bangladesh to sign the Accord on Fire and Building Safety in Bangladesh and participate fully in its implementation. Loblaw Companies Limited, owner of Joe Fresh clothing brand, has signed the Accord.

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Responsible Banking

This quarter, SHARE sent initial inquiries to BMO and CIBC requesting information on steps they have taken to determine and meet the financial service needs of low-income and other financially underserved groups. In addition, we requested information on whether or not the banks broker lending products to alternative financial institutions through partnership or other third party channels. Responses were received this quarter from Scotiabank, RBC and TD to similar requests for information sent last quarter. Scotiabank provided information on how it adheres to basic banking regulations and its provision of low-cost basic banking accounts. RBC also provided information to SHARE on its Virtual Visa Debit product, its Skilled Immigrant Loan Program, and its partnership with ACCESS Community Capital Fund, which extends microloans and business support services to members of the Regent Park community in Toronto. TD provided further details on the TD Helps program, which provides in-branch and web-based advice to customers facing financial difficulties. In their communications, Scotiabank, RBC and TD also responded to our request for information on their exposure to high-risk lending, such as payday loans, by virtue of brokerage or other partnership arrangements with alternative financial institutions and how they manage the potential risks associated with financing or other relationships with alternative financial institutions.

Phosphate Sourcing from Western Sahara

This quarter, Potash Corporation of Saskatchewan Inc. provided a response to a letter regarding purchases of phosphate rock from a Moroccan government-owned company operating in the Non-Self-Governing Territory of the Western Sahara. The Western Sahara is occupied by Morocco, whose jurisdiction over the Territory is not recognized by Canada or most other members of the international community. SHARE wrote to Potash to ask whether the company had visited the area around the mine to assess its human rights implications, whether it considered inhabitants of the Western Sahara displaced by the Moroccan invasion to be stakeholders with an interest in the benefits of resource extraction, and whether it would consider undertaking an independent review of its human rights obligations regarding the purchase of phosphate rock from the Western Sahara. Potash has indicated that it is aware of the international controversy surrounding purchases of phosphate rock from the Western Sahara and devotes a section of its website to this topic. The company has further indicated that the information on its website will be updated during the next quarter. SHARE has requested a meeting with Potash to discuss the issue.

Sustainable Coffee Sourcing

This quarter, we continued our dialogue with Tim Hortons Inc. on behalf of Meritas SRI Funds regarding the company’s efforts and disclosure plans with respect to sustainable coffee sourcing and the Tim Hortons Coffee Partnership Program. We commended the company on its release of a new coffee blend made entirely of beans sourced from small-scale farms participating in its Coffee Partnership Program. In order to better understand this step and Tim Hortons’ sustainable coffee sourcing efforts, we requested specific information regarding the new blend, the Coffee Partnership Program, and Tim Hortons’ implementation of the Business Partner and Supplier Code (BPSCC) with respect to coffee suppliers, including future reporting plans. In its response, Tim Hortons indicated that the release of the new Partnership Blend is part of the company’s efforts to expand the Coffee Partnership Program, stressing that the Program is still primarily about helping small-scale farmers bring their product to market and not to supply coffee to Tim Hortons. We sent a follow-up email to Tim Hortons to encourage the company to consider the benefits of linking the Coffee Partnership Program to Tim Hortons’ coffee supply chain in order to make the Partnership Program a core business sustainability initiative. We also urged Tim Hortons to disclose as soon as feasible details on the minimum and absolute requirements for the 14 focus areas that are reportedly being used to verify coffee supplier compliance with Tim Hortons’ BPSCC.

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Corporate Governance

Executive Compensation

This quarter, SHARE wrote to Yamana Gold Inc. asking the company to reconsider its decision to present an advisory vote on executive compensation (say on pay) to its shareholders every three years and instead hold the vote annually. Yamana responded by stating they have received no negative responses to their decision to hold the vote every three years and that the company would consider the frequency of their say-on-pay vote for the 2014 shareholders meeting.

Sustainability Reporting

This quarter, we received a response from Husky Energy Inc. to a shareholder inquiry we sent to the company on November 22, 2012. Our inquiry asked about Husky’s plans to provide several specific social and environmental performance indicators (KPIs) in future Husky sustainability disclosures. Currently, the company’s sustainability reports fail to provide basic key performance indicators (KPIs) reported by Husky’s peers. In its response, Husky indicated that none of the KPIs we listed will be included in the company’s 2013 Sustainability report, which the company expects to release within the next two months. We encouraged Husky to make the necessary adjustments to align its reporting with that of its peers, and urged the company to consider including all KPIs we identified in our November letter in the next reporting cycle (2014). At Husky’s request, we sent the company a list of the most relevant KPIs that our institutional investor clients track in the oil and gas sector to assess companies’ environmental and social performance in that sector. Husky welcomed our recommendations and the list of KPIs we provided.

We also wrote to Loblaw Companies Limited to elicit a response from the company to our inquiry about its plans to include additional KPIs on its environmental and social performance in future Loblaw corporate social responsibility (CSR) reports. Given the recent tragic events at garment factories in Bangladesh and Loblaw’s efforts to address supply chain issues at its Joe Fresh garment brand, we expressed hope that the incident would prompt Loblaw to consider including additional relevant performance indicators from the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines in upcoming CSR reports, including relevant KPIs regarding the company’s garment procurement practices.

Shaw Communications Inc. responded to an inquiry SHARE sent this quarter about the company’s near-term plans to start producing sustainability reports with details on its “environmental management framework” and to answer the CDP surveys. In its response, the company indicated that while it has not yet answered a CDP survey it has been providing information to the CDP about its progress. Shaw has also indicated it is considering production of a sustainability report based on the GRI guidelines. We thanked Shaw for its response and encouraged the company to start reporting on measurable performance metrics for its Environmental Management Framework and to release a GRI-based sustainability report by 2015 to keep its shareholders apprised of its sustainability efforts and performance. We also encouraged Shaw to start responding to the CDP surveys in 2014, or 2015 at the latest.

Global Reporting Initiative (GRI) Releases New Sustainability Reporting Guidelines

The latest version of the GRI’s sustainability reporting guidelines, G4, was released in May. The G4 guidelines provide enhanced guidance for organizations to voluntarily report on their ESG performance and include new and updated disclosures on governance, greenhouse gas emissions, supply chain and other key issues. The guidelines put an emphasis on materiality and the need to focus the reporting process on topics that are material to a reporting company’s business and key stakeholders. According to the GRI, this means that “organizations and report users can concentrate on the sustainability impacts that matter, resulting in reports that are more strategic, more focused, more credible, and easier for stakeholders to navigate.” The new guidelines also eliminate the application levels (A, B and C) and replace them with a two-tiered system for expressing the degree to which an organization complies with the guidelines.

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Finally, we wrote to Shoppers Drug Mart Corporation to follow up on past exchanges regarding its sustainability efforts in the area of product safety and other key areas. We requested specific information regarding Shoppers’ efforts and future reporting plans in the areas of waste reduction and diversion, energy conservation and product safety. Among other things, we asked Shoppers whether, and if so when, it plans to provide a description of its overall strategy to deal with chemicals of concern in its products and packaging. Such a strategy could include adoption of a substitution policy whereby chemicals of concern are replaced with safer alternatives whenever possible. Shoppers has confirmed receipt of our letter and indicated it would be happy to address our questions after holding internal consultations with a number of key business leaders. The company has requested that we hold a conference call to discuss the issues we raised.

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Company Progress Summary

Company Topic Progress

ATCO Ltd. Climate Risk Disclosure u

Bank of Montreal Fossil Fuels Financing u

Bank of Montreal (BMO) Responsible Banking ☼

Bank of Nova Scotia Fossil Fuels Financing ☼

Bank of Nova Scotia Responsible Banking u

Calfrac Well Services Ltd. Hydraulic Fracturing ☼

Canadian Imperial Bank of Commerce Fossil Fuels Financing u

Canadian Imperial Bank of Commerce Responsible Banking ☼

Canadian Tire Corporation Ltd. Toxics and Consumer Packaging u

Canadian Tire Corporation Ltd. Child Labour in Cotton Supply Chain ☼

Encana Corporation Hydraulic Fracturing ☼

Goldcorp Inc. Human Rights – Consultative Draft Document u

Goldcorp Inc. Human Rights – Global Operations p

Husky Energy Inc. Sustainability Reporting u

Loblaw Companies Limited Sustainability Reporting ☼

Loblaw Companies Limited Occupational Health and Safety in Supply Chains ☼

Potash Corporation of Saskatchewan Inc. Phosphate Sourcing from Western Sahara u

Precision Drilling Corporation Climate Risk Disclosure q

Royal Bank of Canada Fossil Fuels Financing ☼

Royal Bank of Canada Responsible Banking u

Shaw Communications Inc. Sustainability Reporting u

Shoppers Drug Mart Corporation Sustainability Reporting (Toxics) ☼

Talisman Energy Inc. Shale Gas Extraction ☼

TELUS Corporation Conflict-free Mineral Sourcing ☼

Tim Hortons Inc. Sustainable Coffee Sourcing u

Toronto-Dominion Bank Responsible Banking u

Yamana Gold Inc. Advisory Vote on Executive Compensation q

       p Positive       u On Track/Neutral       q Negative/ No Response       ☼ Response Pending

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The Shareholder Association for Research and Education (SHARE) is a Canadian leader in responsible investment services, research and education for institutional investors.

We specialize in:

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