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Socially Responsible Investment Policy - Canada

Introduction
Application
Minimum policy standards

Introduction

The Canadian Socially Responsible Investment (SRI) Policy (the Policy) supports the Corporate Social Responsibility objectives of Standard Life group (the 'group').

The Canadian Operations expects the environmental and social policies and practices of companies in which it invests to meet internationally recognised standards or industry best practice standards, whichever are higher.

The Canadian Operations believes that a company run in the long-term interests of its shareholders should manage its relationships with its employees, suppliers and customers, and behave responsibly towards the environment and society as a whole. Companies that demonstrate a commitment to environmental and social responsibility are likely to enjoy comparative advantage in the long run. Increasingly, companies that fail to maintain adequate processes to manage these issues risk damage to their reputation and consequent negative effects on their brand and image that can directly affect their financial performance.

As an investor, the Canadian Operations has therefore issued a policy on Socially Responsible Investment (SRI) not only to improve the risk adjusted return on its investments because social, ethical and environmental issues can have an impact on financial performance but also to manage any potential damage to its own brand through the association with a company in which it invests. In addition, it believes that as a significant investor it has a responsibility to promote high standards at the companies in which it invests.

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Application

The Policy applies to all of the Canadian Invested Assets , as described below, except where specified:

1. Assets Beneficially Owned by the Canadian Operations
   
   - Non-Participating Assets that hold the assets supporting non-participating contract liabilities.
   
   - The Participating Assets hold the assets that support participating contract liabilities.
   
   - Capital Assets hold the surplus of the Canadian Operations.
   
   - Risk-pass-through Assets, which support the growing number of risk pass-through products, for the most part index-linked products. This Adopt Policy does not apply to these investment choices.
   
   
2. Portfolio Management Assets
   
   - The Portfolio Management Assets are assets, which are not beneficially owned and are managed by the Canadian Operations for the benefit of the client(s) for a fee including, without limitation, assets in segregated funds and mutual funds.

The Canadian Operations may also make available, in some instances, a full range of investment options from 3rd party investment managers. Its role in these circumstances is to provide a platform through which advisors and customers have access to a whole of market offering. This Policy does not apply to these investment choices.

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Minimum policy standards

Through its investment management agreements the Canadian Operations will strongly encourage its fund manager(s) comply with the following general principles:

• To take company policies and practices on environmental and social matters into consideration in the investment process.
  
  
• To improve where possible and practical shareholder value through constructive engagement on environmental and social issues with the companies in which they invest our funds.
  
  
• To contribute to the development of principles and standards of corporate social responsibility.
  
  
• To communicate the Canadian Operations' socially responsible investment principles, where possible and practical, to customers, intermediaries, and the companies in which they invest our funds.
  

Although the general principles will apply to all investments made which are covered by this Policy, it must be recognised that the same standards cannot be applied in every instance. The approach must also recognise differences in the nature of private investments on the one hand compared to investments in publicly traded companies, on the other. The application of this policy should therefore be sensitive to and appropriate for the specific nature of the investment being considered. Some asset classes, such as real estate property, offer different considerations for social responsibility, and this will be recognised in the way in which the principles are applied.

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