Weapons Screening ESG Pioneer Vigeo Eiris, a Moodys Affiliate, is a - - PowerPoint PPT Presentation

Weapons Screening

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Vision

To catalyse the global shift to a sustainable and responsible financial system.

Mission

To equip market participants with the ESG insight they need to manage risks and better address their social and environmental impact.

Our Solutions

Assessments Data Research Benchmarks Analytics

Vigeo Eiris, a Moody’s Affiliate, is a global provider of environmental, social and governance solutions serving the investor and issuer communities.

ESG Pioneer

Key Figures

30+ years of experience

Present in 12 countries

300 team members

Strictly Confidential

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Your Needs

 Integrate weapons exclusion into investment processes to ensure alignment with your own investment approach or to meet the mandates of your clients.  Manage and mitigate reputational risks.  Report on the exposure of your portfolio to weapons.  Engage with weapons companies in your portfolio.

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Our Solution

Flexible and granular. Clients set their thresholds and parameters. All listed companies and select bond issuers globally – over 50,000+ companies from all regions Evidence-based research based entirely on objective, verifiable

• pen source data.

Data spreadsheets Quality certified research methods and processes In-house specialist research team Public sources

10 types of weapon screened across the full supply chain; from munitions, to weapons platforms, key parts and services to general parts and services Portfolio reporting Monthly updates of the data to integrate corporate actions and shareholding changes. Annual update of all data.

Our product provides in depth and up to date assessments on weapons involvement. With comprehensive content and coverage, our experts are here to support a rigorous screening of your investments.

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Product Overview

Cluster Munitions Anti Personnel Landmines Nuclear Weapons Biological Weapons Chemical Weapons Blinding Laser Weapons Incendiary Weapons Non Detectable Fragments Depleted Uranium Weapons White Phosphorous Weapons Full Weapons Systems [Munitions] Full Weapons Systems [Platforms] Key Parts or Services General Parts or Services Shareholders Clear Evidence of involvement Some Evidence of involvement Not Relevant/Additional Commentary

Weapons Involvement Scope

Assessments

10 types of weapon covered, 5 types of involvement examined and 3 assessments provided.

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Process Overview

Screening Peer Review Company Engagement Delivery

Companies are assessed using a rigorous data mining and research process driven by an in house team of experts. Their research is supported by company engagement to ensure the accuracy and credibility of the assessment.

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Deliverables & Delivery

VE DataLab Excel Dataset FTP API

Profiles (for each issuers) and datasets can be downloaded from the VE Datalab or delivered to clients via multiple channels.

www.vigeo-eiris.com

OUR OFFICES: New York . Brussels . Casablanca . Hong-Kong . London . Milan . Paris . Rabat . Santiago de Chile . Tokyo OUR PARTNERS: Hanover . Jerusalem . Mexico City . Rio de Janeiro . Zaragoza

Contacts:

Maila Beniera

Head of Specialised Research

T : +33 1 55 82 32 93

maila.beneira@vigeo-eiris.com Vigeo Eiris Les Mercuriales 40 rue Jean Jaurès 93170 Bagnolet, France

Nicolo Scarpat

Weapons Specialist T : +32 2 206 11 18 nicolo.scarpat@vigeo-eiris.com Vigeo Eiris Rue du Progrès 333 / B7 1030 Bruxelles Belgique

Zain Hussain

Weapons Specialist T : +32 2 206 67 97 zain.hussain@vigeo-eiris.com Vigeo Eiris Rue du Progrès 333 / B7 1030 Bruxelles Belgique

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Appendices

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Full Weapons Systems

1.Company who designs, develops, produces, or acts as the primary contractor of a weapon system, such as:

• warheads, rockets, etc
• warships, combat vehicles, bomber aircraft
• rocket launchers and other CW-designated delivery systems
• 2. Company who owns at least 50% equity shareholding in a another

company involved in (1) – majority shareholding [as a majority shareholder, the company has control over the operations and management of the consolidated subsidiary]

• 3. Shareholders - entities which own 0.1 to 49.99% equity shares in

weapons-involved companies

Key Parts or Services

Company who designs, develops, or produce a bespoke and essential component of a controversial weapon system. This includes:

• Structural parts and primary subsystems – eg. airframes, wings,

fuses, propulsion systems, guidance systems, fire control systems, and other that are subsystems of a whole weapon system/platform

• Engines of a warship
• Systems of C5ISR – command, control, communication, computer,

and countermeasures, intelligence, surveillance, and reconnaissance

• Sustainment and modernisation services specific to controversial

weapons platforms. This includes repair, upgrade, overhaul, and

• ther similar services, designed to enhance the functioning or

prolong the lifespan of a weapon system or its key components

• Combat training and simulation, weapons testing services, etc

Appendix 1 - Definitions

Minor parts or Services

Company who designs, develops, or produce a general component of a controversial weapons system. This includes:

• Secondary subsystems – e.g. components of subsystems, such as

electro-mechanical components [eg valves, switches, circuits and cables of a nuclear warhead’s guidance systems.

• IT-related systems or services supplied to state agencies

specifically tasked to operate and manage a controversial weapons system [eg US Strategic Command USTRATCOM, HM Naval base Clyde]

• ‘essential’ is meant indispensable to, or a precondition for, the

functioning of a weapon system or military operation.

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Appendix 2 - Definitions

Assessment Criteria

Clear Evidence

This grading applies when the involvement is: 1. Confirmed by the company [through its SEC filings, Annual Reports, Company presentations, Defence exhibits] 2. Confirmed by the government’s defence organisation [DoD publications, reports or database of any government agency e.g. U.S. Congressional Research, India’s DRDO, UK MoD white papers] 3. Confirmed by multi-lateral defence organisations/groups, NATO, OSCE 4. Confirmed by actual defence contracts indicated in credible and verifiable defence contracting websites 5. When 1 – 4 are not available, at least 2 primary third party sources [see list of credible primary third party sources]

Some Evidence

This grading applies when the involvement is: 1. Confirmed by at least 3 secondary sources [see list of secondary sources], or a combination of 1 primary and at least 2 secondary sources. 2. When a company is involved as part of the industry design and development team of a weapon that is currently in

• peration, in service or stockpiled, but there is no clear evidence of the company’s ongoing sustainment or parts

replacement. 3. Within 3-10 years after the last weapons contract has ended, but no clear evidence of new weapons contract and the company is not part of the design and development team, but still has the capability to develop the same system

Not relevant

1. A not relevant grade is provided when: 2. The company manufactures components or provide services to any controversial weapons but are not within the scope of the VE definition. 3. Involvement is not verified by any of the identified primary or secondary third party sources, but allegations exist 4. When a company is involved as part of the industry design and development team of a weapon that has been decommissioned – expired involvement 5. 10 years after the last weapons contract has ended, but no clear evidence of new weapons contract and the company is not part of the design and development team. 6. If the company has publicly declared that it ceased production of the CW system and the claim is verifiable through credible third party sources

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Appendix 3 - Tiered Sources

Titre de la présentation

Primary Sources Secondary Sources

Established and globally recognised news sources, academic thinktanks specialising in disarmaments and non proliferation Established and globally recognised aerospace and defense specialised websites 1. IHS Janes, The Diplomat, Reuters, other international online news-channels eg BBC, CNN 2. Federation of American Scientists, Centre for Non-proliferation Studies, Royal United Services Institute, Project Alpha – KCL, Arms Control, Nuclear Threat Initiative, The Landmines and Cluster Munition Monitor 1. Army Technology 2. Defense News 3. Naval Technology 4. Others in the same level of credibility and market acceptability

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Appendix 4 – Example Manufacturer Analysis

Sources

• Larsen & Toubro's company website, accessed 03/09/2019
• Larsen & Toubro's 2018-2019 Annual Report, p. 223
• Bulletin of Defence Research & Development Organization, Technology Focus. “Armament Technologies”, Vol. 14 No. 6,

2006 Dec

Assessment

• Anti-personnel landmines
• Delivery Platform
• Clear Evidence

Context

• India has not signed the Convention on Cluster Munitions.
• India has no legislation forbidding investments in Cluster Munitions.

Larsen & Toubro

Detail:

• Larsen & Toubro manufactures the Pinaka Multi barrel rocket launcher (MBRL), a multiple rocket launcher which can fire 12

214mm rockets carrying various warheads. The Pinaka was developed by the Defense Research and Development Organization (DRDO) of India’s Ministry of Defense in partnership with Larsen and Toubro and Tata Power SED, while the rockets are produced by Indian Ordnance Factories.

• The DRDO confirms that a warhead containing antipersonnel minelets has been developed for Pinaka rockets. The Pinaka

is currently in serial production, with the latest contract awarded in November 2016. In addition, the Indian Army announced in April 2017 its plan for an additional eight units of the Pinaka.

• Larsen & Toubro's 2018-2019 Annual Report disclosed that it delivered various weapons systems within the fiscal year,

including the Pinaka MLRS.

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Appendix 5 - Example Shareholder Analysis Blackrock

Full Weapons System [Munitions]

National Presto Industries 11.2%

Full Weapons System [Munitions]

Hanwha 1.2%

Full Weapons System [Platform]

Boeing 4.46%

Full Weapons System [Platform]

Tata Power 1.06%

Key Parts or Services

Lockheed Martin 4.63%

Key Parts or Services

Safran 2.58%

Relevant Shareholdings Associated Involvements

Title of Document Weapons Screening – [Marketing Presentation] Legal Disclaimer

• Vigeo Eiris provides its clients with information and/or analyses or opinion on factual, quantitative or statistical, managerial, economic, financial,

governance, social, or technical data, in relation to companies, brands, products or services, assessed individually or with respect to sectors, regions, stakeholders or specific themes.

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aforementioned information, analyses and/or opinion to its clients. Although Vigeo Eiris ensures that it only uses publicly available information, the agency cannot guarantee its accuracy or completeness.

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Vigeo Eiris, its executive officers, or its employees. These elements do not represent in any way a guarantee, or reference of legal, moral, philosophical, ethical or religious nature, supporting or opposing any investment or divestment decision, or any standpoint or opinion expressed in favour of, or against companies, products, services, sectors or regions directly or indirectly mentioned in Vigeo Eiris’ deliverables. Our deliverables are not, and should not, be considered as a form of financial advice or recommendation. No investment or divestment decision should be attributed to the information or opinion provided by Vigeo Eiris. Our products and services must only be considered as one of the many elements related to the financial decision making process.

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financial, or legal) derived from the interpretation of its information, analyses, opinion, scores, and indicators. The terms of use of our products and services and their impacts stem from the sole responsibility of their users.

Author Reviewers Release / summary of changes Version Validated by Date Maila Beniera Keeran Gwilliam-Beeharee Initial Release V0 Keeran Gwilliam-Beeharee 07/02/2020