Working towards

a just world

for all

ASN Bank Issuepaper

Human rights

ASN Bank Issuepaper Human rights November 2011

ASN Bank Issuepaper Human rights

November 2011

2

This ASN Bank Issuepaper on

Human rights compromises the following sections:

A Introduction A.1 Description and importance of human rights A.2 ASN Bank and human rights

B Guiding principles B.1 Obligations of countries B.2 Corporate responsibilities B.3 Changing criteria

C Application of the sustainability policy

D Selection criteria for companies D.1 General human rights criteria for companies D.2 Equal treatment and non-discrimination D.3 Arms D.4 Corporate security D.5 Child labour D.6 Employees D.6.1 Forced labour D.6.2 Safe and healthy working conditions D.6.3 Living wage D.6.4 Trade unions/freedom of association D.7 Privacy and freedom of speech D.8 (Local) rule of law D.9 Local community and indigenous people D.10 Consumers

E Selection criteria for government bonds

F ASN Bank’s other activities

A Introduction

Human rights, climate change and biodiversity are the key focus areas of ASN Bank’s sustainability policy. Together they incorporate almost all issues that are important to all that ASN Bank does, including the selection of our investments. In making that selection, we always ask ourselves these three questions:

human rights: how do we affect people through our investments?

climate change: how do our investments contribute to climate protection?

biodiversity: how do we affect nature and the environment through our investments?

These concerns are interconnected by the concept of justice. This forms the foundation for the sustainability vision of ASN Bank.

A.1 Description and importance of human rights Human rights are universal values that apply every-where, always and to everyone, and in which human dignity, justice, freedom and equality are paramount. These values are enshrined in a great many internation-al treaties. Human rights are integral to being human and concern essential matters such as:

access to food, water, shelter and medical care; government protection of citizens and the protec-

tion of privacy; respectful treatment of employees and the local

community by companies; freedom to be yourself without being discriminated

against, freedom to express yourself, freedom of religion and freedom to be active politically and in society;

bodily integrity and protection against violence; protection of vulnerable groups such as children,

women and indigenous peoples; and issues such as access to education and a safe domestic environ-ment for children.

Regrettably, these rights are still violated in many parts of the world. Sometimes the violations occur on such a large scale, or are so grave, that they are referred to as ‘gross human rights abuses’. This applies, for example, to genocide and war crimes.

1 Such as the International Bill of Human Rights (the UDHR plus the International Covenant on Economic, Social and Cultural

Rights and the International Covenant on Civil and Political Rights) and specialised covenants such as the Convention on the

Rights of the Child.

3A.2 ASN Bank and human rightsOur guiding principle is to respect human rights. There-fore, we test our investments and our own operations against the criteria that are set out in this Issue Paper. In part these are general criteria. We additionally devote specific attention to rights that we may affect, be it positively or negatively. Examples of such rights include workers’ rights, equal treatment, arms and security, children’s rights and consumers’ rights.

Our core activities as a bank pertain to investing in countries through government bonds and in companies through loans, shares and bonds. By ‘companies’ we mean listed and non-listed businesses with a profit motive, as well as not-for-profit organisations and semi-government organisations. We also take account of human rights in our own operations, for example with respect to our own employees, customers and suppliers.

ASN Bank’s activities, investments and loans reflect the sustainable society that we aspire to in the long run. In that sustainable society, there is no child labour, companies respect the rights of employees, communi-ties and indigenous peoples, and no gross violations of human rights occur. In this Issue Paper, we set out con-crete criteria that we have formulated using concepts such as justice, freedom, equality and human dignity. Our investments are tested against these criteria.

The opinion of our customers is important here. They expect us to invest the money they entrust to us in a sustainable manner. It goes without saying that this

entails that we respect human rights. We do everything we can to fulfil this expectation, and in doing so we are regularly faced with dilemmas. In such cases we consult with customers, civil society organisations and compa-nies, and base our choices in part on their opinions.

B Guiding principles

We base our human rights criteria on the 1948 Universal Declaration of Human Rights (UDHR) and the interna-tional standards that ensue from it, directly or indi-rectly.1 We also refer here to the UN Guiding Principles (see box), which links these standards with the business sector. These principles are based on existing obliga-tions and common practice. They refer to various re-gional and global standards that have been laid down in resolutions and conventions. We consider these closely in the formulation and interpretation of our criteria.

By ‘human rights’ we mean all types of human rights: civil, political, economic, social and cultural rights and the rights of special and/or vulnerable groups such as children, women, minorities and indigenous peoples.

These international standards form the starting point for our policy. In addition, we take into account the opinions of our customers, civil society organisations and other experts. At relevant points in the text, there are footnotes indicating the standards and sources on which our human rights policy is based.

ASN Bank’s activities,

investments and loans

reflect the sustainable

society, that we aspire

to in the long run

Our customers expect us to

invest the money they entrust

to us in a sustainable manner

Countries must also create the conditions and take measures to make this possible.3

Countries’ specific responsibilities regarding business-related human rights violations are also formulated in the UN Guiding Principles: the ‘duty to protect’. This means that countries must provide for proper policy and effective rules to prevent human rights violations by companies. If such violations nevertheless occur, countries must ensure that victims can avail themselves of their rights.

B.1 Obligations of countries2

Pursuant to international human rights treaties, countries have an obligation to respect, protect and promote human rights. In concrete terms, this means that countries:

do not violate any human rights; must protect the human rights of all people who are

within their territory or jurisdiction; in addition they are also responsible for violations caused by private actors such as companies;

must give all people within their territory or juris-diction the opportunity to exercise their rights.

ASN Bank Issuepaper Human rights November 2011

4 Human rights and the business sector - the work by Ruggie

International law provides clear parameters for human

rights. International treaties impose obligations on coun-

tries and on citizens with respect to each other. The inter-

national obligations of companies for human rights are less

clear. To fill this gap, numerous initiatives, norms and princi-

ples have been developed for businesses, often on a volun-

tary basis. The United Nations has also been trying for some

years to describe the obligations of businesses with respect

to human rights more clearly.

A draft version of the UN Human Rights Norms for Business

was rejected due to, in particular, resistance from the pri-

vate sector. Following this, in July 2005, the American Pro-

fessor John Ruggie was appointed as the UN’s Special Rep-

resentative of the Secretary-General on the issue of human

rights and transnational corporations and other business en-

terprises. Ruggie was given the task of making recommen-

dations that would be supported by countries, companies

and civil society. In June 2008, he published his framework

Protect, Respect, Remedy. Subsequently, the UN granted

him a new mandate to put his framework into operation.

In June 2011, the UN Human Rights Council adopted the

Guiding principles on business & human rights. These con-

tain guidelines for countries and businesses. Countries are

under an obligation to protect human rights by means of, for

example, appropriate policy, effective regulations and ac-

cess to justice. Businesses have the responsibility of respect-

ing human rights. They have to prevent violations of human

rights. If they have an adverse impact on human rights, they

have to remedy this or compensate for it. In addition, the

principles deal with the responsibility of countries and com-

panies with regard to compensation: they must ensure that

victims of human rights violations can avail themselves of

their rights.

Professor Ruggie’s work and the associated international

developments were important reasons for ASN Bank to re-

view its human rights policy. In some places the principles

are explicitly stated in the text, mainly in paragraphs B.2, D

and D.1. We embrace Ruggie’s work and promote his work

among the businesses that we accept into our investment

universe. In doing so we must make choices to arrive at a

workable policy, however. We base such choices on those

criteria that best protect and enhance human rights.

The international debate about corporate responsibility for

human rights is still very much on-going, as is the debate on

the question to what extent countries are responsible for

the international activities of companies headquartered in

their country. We follow these discussions closely and refine

our criteria when and to the extent that we consider it rel-

evant to do so.

2 Throughout this Issue Paper we use the term ‘countries’ where also ‘states’ can be read. The latter term is formally more ap

propriate since the state is the acting power. However, for ease of reading we use the term ‘countries’.

3 With regard to the right to education, countries are obliged, for example, to ensure that children are genuinely able to go to

school. They do this by arranging for affordable schools within a reasonable distance, with qualified teachers, from which

children cannot be excluded on the grounds of their gender, religion or cultural background.

Policy and practiceWe find it important that companies pursue both good policy and good practice in the field of human rights, which is only possible if they know how they are per-forming in this field. We therefore consider it an asset if they have a proper procedure in place to identify any possible negative effects of their operations on human rights. Such a procedure may take the form of human rights due diligence, as described in the box. Compa-nies must also try to prevent human rights violations. An effective complaints procedure and compensation mechanism is important here.

Government bonds and risk countries

By means of government bonds, we invest in countries that

lead the way in the field of human rights. To select these

countries, we examine their performance as regards various

aspects, such as child labour, trade union freedom, forced

labour, discrimination, corruption and income distribution.

We also assess various environmental aspects. The countries

that pass the test enter our investment universe. You can

find them on our website. For more information, please refer

to ASN Bank’s Issue Paper on Government Bonds.

We invest in companies, for example via the ASN invest-

ment funds. We examine whether the companies are active

in a risk country and/or a risk sector. For information about

how this works in practice, please see Chapter D.

5We find it important that

companies pursue both

good policy and good practice

in the field of human rights,

which is only possible if they

know how they are performing

in this field

4 The definition of ‘company’: companies include listed and non-listed businesses with a profit motive as well as not-for-profit

organisations and semi-government organisations, etc. The demarcation of a company is particularly important to us. For

these purposes we apply the accounting principles: everything that must be included in the balance sheet belongs to a

company.

B.2 Corporate responsibilities4

Companies have the responsibility to respect human rights. They must make sure to avoid violating hu-man rights. And they must ensure that their products or services are not abused by other parties in human rights violations. If companies have an adverse impact on human rights in any way, they should remedy this or compensate for it..

Supply chain responsibilityCompanies can violate rights through their own actions or omissions, or through their responsibility for the actions of other parties. This concerns parties that are affiliated with the company such as business partners, parts of the ‘value chain’, and other parties that are directly connected with the operations, products or services. In practice, these are chiefly the suppliers and customers of a company.

ASN Bank Issuepaper Human rights November 2011

6 ‘Do no harm’: what Ruggie expects of companies

Companies must ensure that they respect all human rights

and do not violate human rights or indirectly contribute to

such violation. This applies to their own actions and those of

business relations that are directly associated with the op-

erations, services or products.

In this regard, Ruggie expects the following from compa-

nies:

- Policy

That they draw up a human rights policy that refers to

all human rights, that involves internal and/or external

experts, that is approved at the highest level, and that is

made public and implemented in operational procedures

and practices.

- Human rights due diligence (knowing and showing)

• Risk analysis: to identify real and potential risks and

their effects on human rights. This is a continuous pro-

cess, the effectiveness of which needs to be checked on

a regular basis.

• Actions: the company must act on the basis of the find-

ings and set up mechanisms to prevent and minimise

risks. It should take measures in the event of violations.

• Monitoring: the company should monitor whether its

measures are sufficiently effective.

• Reporting: transparency and communication with

relevant stakeholders regarding findings and measures.

- Other (preventative) measures

The company should, for example, put a complaints mecha-

nism in place for victims of human rights violations.

- Compensation

If human rights have been violated, the company should

take measures to compensate victims or to discontinue or

remedy the violation.

B.3 Changing criteriaSince we apply our human rights criteria in a very prac-tical manner, they need to be defined in far more con-crete terms than many of the international standards. We deal with specific themes, such as child labour, forced labour and working conditions. We also have absolute product criteria, as we exclude weapons, por-nography, tobacco and gambling. We assess how coun-tries perform generally in the field of human rights. In doing so we are guided by the relevant international standards to which we refer in the text or footnotes.

At the same time, it is not possible to draw up a com-prehensive list of ethical and sustainable criteria which our banking activities must meet. The reason for this is that our world is continually changing and is enor-mously complex. In practice, we are regularly faced with dilemmas for which our criteria do not provide an unequivocal solution. In such cases we might ask our customers and other stakeholders for their opinions, and incorporate these in our decision-making process.

C Application of the sustainability policy

We use our human rights criteria when examining the sustainability of companies and countries. On this basis we determine which companies and countries can be accepted into our investment universe. This is the pool of companies and countries in which we may invest. We also use the criteria to re-examine companies and countries that have already been accepted into our in-vestment universe. They furthermore provide guidance in our discussions with companies (dialogue or engage-ment) and in determining our voting policy.5

5 For more information, please visit www.asnbank.nl

We use our human rights

criteria when examining the

sustainability of companies

and countries

On the basis of our first examination of a company, we determine whether it meets our criteria and can be accepted into our investment universe. If a company is accepted, we test anew every three years whether it still meets our criteria. If prompted by circumstances we will bring the assessment forward, for example if controversial activities have come to light.

Our examination is a snapshot. The outcomes are dependent on the information that is available at that moment. Of course we do our utmost to obtain as much information as possible. We have in-house sustain-ability experts, and make use of detailed studies by specialised international agencies, information from the businesses themselves, and information from NGOs (local or otherwise), trade unions and local media.

Dialogue

Dialogue with companies (engagement) is an important

means of addressing sustainability as an issue. Through such

dialogue, we aim to make companies and institutions more

aware of their performance in the areas of the environment

and human rights and to improve this performance.

We conduct a dialogue in the following situations:

- Provisional acceptance

ASN Duurzaam Small & Midcapfonds invests in small and

medium-sized European companies. They fulfil our abso-

lute exclusion criteria. However, it is often the case that

they only partially fulfil our other sustainability criteria.

For example, they may be very environmentally friendly

but lack a human rights policy. We may still invest in such

a company, but they will have a probationary status for

three years.6 During this period we maintain close con-

tact. In this way we encourage the company to pursue a

business strategy of maximum sustainability. If a compa-

ny fails to show any improvement within three years, it is

henceforth excluded from our investment universe.

- Suspicion that a company no longer meets the criteria

Sometimes we suspect that a company in the investment

universe no longer meets our investment criteria. This can

emerge from the three-yearly review or from new infor-

mation received about the company. We then contact

the company and ask it to adjust its policy or to improve

the implementation of its policy. If the dialogue does not

achieve satisfactory results, we henceforth exclude the

company from our investment universe.

- Criteria not yet met

There are also situations in which we enter into a dialogue

with a business while it does not yet meet our criteria and

therefore cannot be approved for our universe. We hope

that such dialogue will cause the business to take meas-

ures so that it does meet the criteria. We often conduct

these dialogues with other investors, for example in the

context of PRI (Principles for Responsible Investment).

- By way of encouragement

People who are involved in companies, institutions and

projects very much appreciate being selected for invest-

ment. We therefore notify them accordingly, as much

as possible. We try to have regular contact with the

companies and institutions that we invest in so that they

may understand more clearly what we expect of them as

regards environmental and human rights performance.

- By voting

Finally, we communicate with companies by actively voting

at their General Shareholders’ Meetings and thus letting

them know what we think of their policy and what changes

we would like to see.

6 With effect from 2012, a period of three years will apply here.

As said, the human rights criteria apply to countries and companies. As they have different responsibilities for human rights, we apply two separate sets of criteria which are each split into absolute and relative criteria. The absolute criteria are conditions that all countries and companies in which we invest must fulfil. If that is not the case, then we do not accept them into our investment universe. For example, we do not invest in companies that are involved in any way in arms trade or production.The relative criteria indicate whether a country or com-pany belongs at the top of its group or sector.

Situations may occur in which a company or country does not meet a criterion to the letter, but does live up to it in practice. In the end we attach greater weight to

7

ASN Bank Issuepaper Human rights November 2011

8 what happens in practice.7 Guidelines also evolve, and new and better guidelines may emerge. Sometimes we draw up supplemental policy memoranda about topical themes that focus more closely on general policy or a sector, or that fill a (temporary) gap in the policy. Con-flict minerals in relation to the supply chain of electron-ics companies is one example (see below). We include these memoranda in our assessments.

The absolute criteria apply to all investments by ASN Bank and ASN investment funds. The relative criteria apply to ASN Duurzaam Aandelenfonds, ASN Duurzaam Obligatiefonds, ASN Duurzaam Mixfonds, ASN Milieu & Waterfonds, ASN Duurzaam Small & Midcapfonds and ASN Bank’s investments. The relative criteria are not applicable to ASN Groen-projectenfonds and ASN-Novib Mikrokredietfonds, as these two funds are subject to special regulations of the Dutch government. ASN Groenprojectenfonds is subject to the Green Project Regulations [Regeling Groenprojecten], while the Socio-Ethical Project Regu-lations [Regeling Sociaal-Ethische Projecten] apply to ASN-Novib Microkredietfonds.

D Selection criteria for companies

Our criteria for companies in the field of human rights are set out below. Per topic we briefly describe the situations and activities that can influence human rights in a negative way. This is followed by the assessment guidelines that companies need to comply with. We only approve companies that comply with the assess-ment guidelines. See the box below for information about how these criteria are applied in practice..

Our risk assessment

Before we analyse a company, we first assess whether it operates in risk or high-risk countries or sectors. This assessment

serves as basis for our analysis level. How does this work in practice?

We make a sector overview of the principal risks in the fields of human rights, biodiversity and climate change. We assign the

sector to a risk category. We then determine in what sector and in which type of risk country/countries the company operates.

If the company is active in a number of countries, we check whether these include risk or high-risk countries. The sector risk and

country risk together determine the analysis category.8 How do we define the various terms concerning risk?

Country risk

We distinguish between high-risk countries, risk countries and low-risk countries.

High-risk countries

Countries where gross violations of human rights occur: genocide and other crimes against humanity such as torture (on a

large scale) and war crimes; or where the risk of such violations is very high.

Risk countries

Countries where there is a high risk of other human rights violations and/or corruption.

Low-risk countries

All other countries, i.e. countries that we have not designated as high-risk countries or risk countries.

7 A company might, for example, continue to neglect to formulate its human rights policy while dealing very well with human

rights in practice.

8 The sector risk is a guide in determining the business risk. It follows that the analyst can assign the company a different risk

category than the sector in which the company is active, for example because a company is active in a number of sectors or,

conversely, takes part in a very limited number of sector activities.

9

Sector riskHighAverageLow

High-risk countriesAvoidFurther analysis

Further analysis

Risk countriesFurther analysisFurther analysisFurther analysis

Low-risk countriesNormal assessmentNormal assessmentNormal assessment

In accordance with the International Finance Corporation (IFC)’s categories, we classify sectors as follows9:

High sector risk:

The chance is very high that the sector has an adverse impact on human rights, biodiversity and climate change, and that this

impact is irreversible and/or unprecedented.10 This category includes sectors such as oil and gas, mining and infrastructure.

Average sector risk:

There is a real chance that the sector has an adverse impact on human rights, biodiversity and climate change, and that this

impact is irreversible and/or unprecedented.11 This includes sectors such as clothing, software, IT and retail products.

Low sector risk or positive impact:

The possibility that the sector has an adverse impact on human rights, biodiversity and climate change is small, or the sector

is making a positive contribution in this area.12

9 http://www.ifc.org/ifcext/disclosure.nsf/Content/Project_Categories

10 This is designated by the IFC as category A: ‘projects expected to have significant adverse social and/or environmental im -

pacts that are diverse, irreversible, or unprecedented’.

11 This is designated by the IFC as category B: ‘projects expected to have limited adverse social and/or environmental impacts

that can be readily addressed through mitigation measures’.

12 This is designated by the IFC as category C: ‘projects expected to have minimal or no adverse impacts, including certain finan-

cial intermediary projects’.

Sector risk + presence in risk countries = analysis level

We determine the assessment level on the basis of the country risk of the countries in which the company is active and the sector

risk:

Analysis categories

We distinguish between three analysis categories: ‘avoid’, ‘further analysis’ and ‘normal assessment’. What do these entail?

Avoid

We avoid investments in companies that operate in high-risk countries and high-risk sectors, except if the company:

- supplies essential humanitarian services or products as its primary activity, thus contributing to human rights in that country

(supplying, for example, medical provisions, homes or education), and

- can guarantee that it is not directly or indirectly involved in serious human rights violations by a country, and

- can guarantee that its activities are in conformity with all our other sustainability criteria.

Further analysis

This analysis must answer the following question: can the company sufficiently guarantee that its activities meet all our cri-

teria in countries where the rules for human rights and the enforcement of these rules are not sufficiently provided for? This

is possible if it has formulated an effective policy and monitors the implementation of this policy. With regard to high-risk

We determine which countries belong to which categories on an annual basis. Our assessment includes the risk that certain vio-

lations will take place in a country. For this purpose we check, for example, the score on Transparency International’s Corruption

Perception Index. This procedure is detailed in the policy memorandum ‘Risk Countries’.

Sector risk

Country risk

ASN Bank Issuepaper Human rights November 2011

10 countries, we also assess whether the company is involved in serious human rights violations by the country, for example if it

supplies products or services that contribute to such violations or from which a totalitarian or corrupt regime profits.13

Normal assessment

This assessment answers the question whether the company’s activities comply with local laws and regulations. To determine

this we investigate whether there are any controversies regarding human rights that are in conflict with the local laws and

regulations. In some cases we also expect specific policy from a company in this category, for example if it is known that, in

a certain low-risk country, the chance of a specific human rights violation is very high. The violation of trade union rights in

the US is an example of this. If national and international laws differ, we find it important that the company adheres to the

standard that provides the best protection for the individuals or group of people concerned.

Analysis categories and applicable criteria

In each section of this Issue Paper, we specify per analysis category the criteria we apply.

What we expect from companies and how we assess them is set out below, per criterion. This concerns crite-ria with respect to the following areas:

D.1 General human rights criteria for companiesD.2 Equal treatment and non-discriminationD.3 ArmsD.4 Corporate securityD.5 Child labourD.6 EmployeesD.6.1 Forced labour D.6.2 Healthy and safe working conditions D.6.3 Living wageD.6.4 Trade unions/freedom of association D.7 Privacy and freedom of speech D.8 (Local) rule of lawD.9 Local community and indigenous peopleD.10 Consumers

D.1 General human rights criteria for companiesWe select companies that respect human rights, and which are not involved in human rights violations by third parties. Formulated negatively: we exclude companies if they do not respect fundamental human rights. This could be because they themselves violate human rights, or because business relations or other organisations connected to their operations, products or services violate human rights. Examples here would include tolerating such violations, contributing to them directly or indirectly, facilitating them or stimulating them intentionally or unintentionally. Business rela-

tions are organisations that are connected with the activities or the production process of a company and that the company can exert influence on.

Depending on the analysis category (see the box ‘Our risk assessment’), we have various expectations of the company. For each category we specify the applicable criteria. We also expect companies to have a policy in place for their supply chains in risk countries. If the risk of po-tential human rights violations (serious or otherwise) is high, they have to take appropriate measures through-out the entire supply chain.

We select companies that

respect human rights, and

which are not involved in

human rights violations by

third parties

13 Assessment mainly takes place with the help of input from reliable parties and/or information about controversies.

Serious controversies

When is a particular case a ‘serious controversy’? We deter-

mine this by means of several questions. Are human rights

being violated? What is the scope of the violations? Are they

occurring consistently or on a large scale? Are they deliber-

ately perpetrated or tolerated? What is the nature of the

violation? What is the company’s response?

We consider the violation of human rights proven if parties

that we deem reliable demonstrate this to be the case. In ac-

tual practice, our assessment is based on multiple sources.

We also often consult the company itself. We expect the

company to show a cooperative and transparent attitude.

If there are acute malpractices or controversies in the area of human rights, the company must take action. The malpractices must be resolved or their effects minimised. They are also expected to take measures to avoid any repetition.

If national and international law differ, we adhere to the provisions that provide the best protection for in-dividuals. There may be legal, cultural or social reasons that make it difficult for a company to comply with international law in certain countries. In such cases, we expect the company to devote every possible effort to respecting human rights and to act in the spirit of international standards. In these cases we assess the seriousness of any deviation from international stand-ards and the extent to which the deviation is necessary.

The relative criteria indicate the level of ambition. They apply to all companies, irrespective of the countries in which they are active. We value companies positively if

We consider the violation of

human rights proven if

parties that we deem

reliable demonstrate this to

be the case

14 See the box in Section B.2 of this Issue Paper.

they actively protect and promote human rights. This area is still evolving, however. Few companies have fully implemented their human rights policy in their operations and their relationships with third parties, such as suppliers. Not many companies perform risk analyses either, or continually monitor whether the policy is actually executed and what effect it has. In practice companies usually perform audits, meaning that they periodically measure whether the conditions are being met.

We like to see companies set themselves apart in a positive sense by acting as a trailblazer; for example by performing ‘human rights due diligence’ and be-ing transparent about their findings and measures.14 Another aspect still developing is the treatment of victims of the companies’ violations. For example: does the company have a complaints procedure? And a procedure for remedying or compensating for the consequences of human rights violations?

The extent to which companies can meet the relative criteria ranges from ‘not’ to ‘completely’. We select those companies that demonstrate the best perform-ance for the relative criteria in their sector. We intend to promote the work of former UN Special Repre-sentative Ruggie among the companies included in our investment universe.

11

We like to see companies

set themselves apart in a

positive sense by acting as

a trailblazer

rights violations by the state, for example by sup-plying products or services that contribute to such violations or from which a totalitarian or corrupt regime benefits.18

The following criteria apply to all three analysis catego-ries (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ For legal, cultural or social reasons, it can some-

times be difficult for a company to comply with international law in certain countries. In such cases, we expect the company to devote every possible effort to respecting human rights and to act in the spirit of international standards, and we assess the seriousness of any deviation from international standards and the extent to which the deviation is necessary.

→ There are no serious or consistent controversies in the area of human rights.

→ If an occasional incident occurs, the company immediately takes adequate measures.

Relative criteria:The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → Risk analysis: the company conducts a risk analysis

of the real and potential risks and their effects on human rights and repeats this analysis regularly.

→ Operating processes: the company implements its policy and the results of the risk analysis in its in-ternal operating processes, for example in codes of conduct and contracts.

We ascertain whether the

company has formulated

policy in the area of human

rights

Absolute criteria: The following criterion applies to the analysis category ‘avoid’: → We can only approve a company if it supplies

essential humanitarian services or products and/or is not involved either directly or indirectly in serious human rights violations by a country; it must also meet the other criteria.

The following criteria apply to the analysis category ‘further analysis’: → We ascertain whether the company has formulated

policy in the area of human rights that refers to recognised human rights treaties15; or have signed up to leading initiatives16; and to what extent it has declared its policy applicable to all of its activities and in every country in which it operates.

→ If a company has suppliers in high risk or risk coun-tries and/or risk sectors, we check whether they have a supply chain policy geared towards prevent-ing human rights violations and violations of the fundamental labour standards of the International Labour Organisation (ILO)17.

→ In the case of high-risk countries, we also assess whether the business is involved in serious human

ASN Bank Issuepaper Human rights November 2011

15 The human rights defined in the Universal Declaration of Human Rights and the international human rights standards based

on it, such as the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and

Cultural Rights; and/or the UN Guiding Principles on Business and Human Rights.

16 Such as the UN Global Impact, GRI or relevant sector initiatives. A company can also endorse the OECD Guidelines.

17 The fundamental labour standards of the ILO are: trade union freedom (ILO Conventions Nos. 87 and 98), no forced labour

(ILO Conventions Nos. 29 and 105), no child labour (ILO Conventions Nos. 138 and 182) and no discrimination (ILO Conven-

tions Nos. 100 and 111).

18 Assessment mainly takes place with the help of input from reliable parties and/or information about controversies.

Conflict minerals

For the manufacture of its products, the electronics industry

depends on (noble) minerals such as tin, tantalum (such as

coltan) and cobalt. The risk exists that the mining of these

minerals not only adversely effects the environment, but

also reslults in social malpractices. In some countries there

is even the risk that the mining and trade in (noble) minerals

serve to finance armed conflict. In such cases we use the term

‘conflict minerals’. When selecting electronics companies

for the ASN investment universe, we investigate whether

the companies have a supply chain policy for conflict mine-

rals, how they pursue this policy in practice, and whether

they have signed up to leading initiatives in this field.

12

19 UDHR Articles 1, 2 and 23; International Covenant on Civil and Political Rights, Articles 2(1) and 26; ECHR Article 14; Interna-

tional Convention on the Elimination of All Forms of Racial Discrimination (1965); the UN Women’s Convention; ILO Conven-

tion No. 100 regarding equal remuneration (1951); ILO Convention No. 111 regarding discrimination in employment and

occupation (1958); ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977);

Global Compact principles 1 and 6; GRI (Performance Indicators HR4, LA13 and LA14; OECD Guidelines (Guideline V.1.e).

20 If a company describes specific forms of discrimination, we expect such description to be as complete as possible. In this res-

pect, our preference is that they refer to discrimination on the basis of gender, race, nationality, religion, political views,

social origin (in accordance with the ILO), but also to other forms of discrimination such as age, disability, sexual orientation

and health, for example discrimination against employees with HIV/AIDS.

→ Suppliers: the company discusses human rights standards with suppliers and joint ventures, and records these standards on paper (in contracts, for example).

→ Monitoring: the company permits internal and external monitoring and/or verification of the extent to which it follows its own policy or - in the case of normal assessment - the national legislation, and of the effect of any measures taken as a result of the risk analysis.

→ Transparency and reporting: the company is transparent about its practice and performance in the field of human rights, in accordance with its policy or - in the case of normal assessment - in ac-cordance with national legislation; it reports on its performance and on any measures it may have taken as a result of the risk analysis.

→ Dialogue: the company consults with the local community, trade unions and NGOs and engages in dialogue with them..

→ Complaints procedure: the company has a com-plaints procedure for employees and other (possi-ble) victims of any violations..

→ Compensation/redress: if violations have occurred, the company has a procedure in line with national legislation and international standards to remedy the consequences for victims if possible, and/or to compensate them if such remedy is not possible or only in part. The company confers with victims regarding suitable measures.

D.2 Equal treatment and non-discrimination19

We expect companies in our investment universe to interact respectfully with their employees (including those employed on a flexible basis), suppliers, custom-ers, local residents and other stakeholders. We expect them to refrain from discrimination, on any grounds whatsoever, and to treat people equally in equal circumstances. By way of exception, specific measures

The company is also responsible

for creating a working

environment in which no

discrimination occurs

may be taken for vulnerable or disadvantaged groups in order to alleviate or eliminate a situation of inequal-ity. This is also referred to as positive action or ‘special measures’.

For employees this means, for example, equal treat-ment in the selection and recruitment of new person-nel, remuneration, fringe benefits, promotion, training, pension and dismissal. The company is also responsible for creating a working environment in which no dis-crimination occurs.

Activities:This criterion concerns, in particular, the policy for employees of the company itself and its suppliers. It can also apply to other stakeholders such as customers. There is an increased risk in countries where certain forms of discrimination are prevalent, such as discrimi-nation on the basis of disease (HIV/AIDS), gender, caste, descent, disability and sexual orientation.

Absolute criteria: The following criterion applies to the analysis catego-ries ‘avoid’ and ‘further analysis’: → The company excludes all forms of discrimination.20

The company has formulated policy regarding non-discrimination and equal treatment.

The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no serious or structural controversies in

13

the area of discrimination or equal treatment.→ If an occasional incident occurs, the company im-

mediately takes adequate measures.

Relative criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → If the company is active in countries where certain

forms of discrimination are prevalent, it takes spe-cial measures accordingly. It describes such form/forms of discrimination separately in its policy. This also applies if it has suppliers in such countries.

→ The company ensures that its policy and activities do not have discriminatory consequences, whether deliberate or not.

→ The company assumes responsibility for creating a working environment in which no discrimination occurs, and takes measures when employees dis-criminate against each other.

→ The company takes special measures to protect vulnerable groups, and also makes special provision for specific groups such as occupationally disabled people and pregnant women.

D.3 Arms21

ASN Bank does not invest in the arms industry. This is not required under human rights treaties, but is a crite-rion that we adopt by choice. We realise that weapons are important for peace missions, and that the police, for example, sometimes need weapons to prevent crime and to maintain law and order. But arms are also a source of great misery. Because they are easily avail-able, they contribute significantly to the outbreak and continuation of armed conflicts. The devastating con-sequences of the use of arms are sufficiently familiar to all.

That is why we do not invest in companies engaged in or benefiting from war or armed conflict, or that are

active in the manufacture of or trade in arms. We can-not and will not reconcile ourselves with the idea that the arms industry benefits from having (more) armed conflicts. Consequently, this means that we also refrain from every form of funding or investing in companies that are active in the development, manufacture, distribution of or trade in arms. By ‘arms’ we mean all types of conventional weapons, ammunition, weapon parts, supporting technologies and associated exper-tise. For a precise definition of the term ‘arms’ we use the Common Military List of the European Union. This list contains a wide-ranging summary of weapons, parts and chemicals, as well as software.

What is our position in this respect regarding the production of dual-use products? These are products or technologies that not only have a civilian applica-tion but that can also be essential in the development and production of arms. Examples include navigation electronics, avionics and certain chemicals. We judge dual-use products on a case-by-case basis. Using the EU list of dual-use products, we determine whether a product is a dual-use product.22 Subsequently, we as-sess the extent to which the dual-use product has been developed mainly for the arms industry, or to what extent it is applied in armaments. Depending on this as-sessment, we determine whether the product or service falls under our arms criterion..

As we do not want to invest in the arms industry in any way, we only apply absolute assessment guidelines in this context.

ASN Bank Issuepaper Human rights November 2011

21 For the description of arms and their components we rely on the Common Military List of the European Union. This list is revie-

wed annually. We furthermore heed the following: the UN Convention against Torture and Other Cruel, Inhuman or Degrading

Treatment or Punishment (1975); the Rome Statute of the International Criminal Court (1998); the Convention on Certain Con-

ventional Weapons (1980); the Convention on Cluster Munitions, 2008; the Nuclear Non-proliferation Treaty,1970; the Biolo-

gical and Toxin Weapons Convention, 1975; the Chemical Weapons Convention, 1997; the Mine Ban Treaty, 1997. The most

important treaty is still under development and is expected to be adopted by the UN in 2012: the Arms Trade Treaty.

22 The EU list of dual-use products is contained in Annex I of Council Regulation (EC) No. 428/2009 (regarding the control of

exports, transfer, brokering and transit of dual-use items).

14 ASN Bank does not invest in

the arms industry

23 UDHR Article 3; Article 6 Covenant on Civil and Political Rights (right to life, liberty and security of person); the UN Basic Prin-

ciples on the Use of Force and Firearms by Law Enforcement Officials (1990); GRI (Performance Indicator: HR8); the Voluntary

Principles on Security and Human Rights.

24 ILO Convention No. 138 and Recommendation No. 146 concerning the Minimum Age of Fifteen Years (1973); ILO Convention

No. 182 and ILO Recommendation No. 190 concerning the Worst Forms of Child Labour; UN Convention on the Rights of the

Child (1989); UN Global Compact (Principle 5); GRI (Performance Indicator: HR 6): OECD Guidelines (Guideline V.1.c).

25 ILO Convention No. 182 concerning the Worst Forms of Child Labour (1999).

Activities: Manufacture of weapons and parts that are essential for weapons. This criterion is relevant to manufactur-ers of engines and industrial machinery, the chemical, ICT and electronics sectors, shipbuilders, the aviation industry, metal companies and energy system suppli-ers, among others.

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ The company is not active in any way in the deve- lopment, manufacture and distribution of or trade in weapons according to the EU list. → The company is not active in any way in the deve- lopment, manufacture and distribution of or trade

in dual-use products according to the EU list. This concerns products that are mainly developed for the arms industry as well as products that are mainly used in the arms industry.

→ In the event that a company’s product unexpectedly proves essential to the manufacture of weaponry, the company will take adequate measures to pre-vent this.

D.4 Corporate security23

We do not invest in companies that maintain security in a manner that violates human rights. It is irrelevant here whether the security is managed by the company’s own personnel, contracted companies or local authorities. This also includes all actions of the company’s security staff, even if these fall beyond the scope of the term ‘security maintenance’, such as action against protest-ing local residents.

We expect companies to make clear arrangements with their security staff to prevent violence and to ensure that they never use excessive violence. We also expect them to never use violence or intimidation to prevent or end demonstrations by citizens, employees or trade unions.

Activities:This criterion is particularly relevant for companies with large premises or with valuable products, resources or materials. It is also relevant for companies that operate in countries with a lot of criminal activity and where corporate security is a common concern. Companies in countries with a weak or ineffective government are at an increased risk.

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no examples of excessive violence or in-

timidation by the company’s or lead suppliers’ security staff.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

D.5 Child labour24

According to the ILO, the minimum age at which chil-dren may start work is fifteen years. In poor countries, exceptions may be allowed for 14-year-old children on economic grounds. Children below the age of eighteen may never perform work that is counted among the worst forms of child labour: slavery, work as a child soldier after forced recruitment, and work in the pros-titution and pornographic industries. The worst forms of child labour also include using children for illicit activities and other practices harming children. This is described in the ILO Convention concerning the Worst Forms of Child Labour.25

According to the ILO, the

minimum age at which

children may start work is

fifteen years

15

ASN Bank solely invests in companies that protect children against exploitation. We are referring here to companies that do not use or benefit from any form of child labour. Accordingly, we exclude companies if they or their suppliers use child labour. That is why we have formulated absolute criteria only.

Activities:This criterion is important for activities that require lit-tle education and skill, such as agriculture, mining and industry (factory work), and for activities in countries where child labour is prevalent.26

Absolute criteria: The following criterion applies to the analysis catego-ries ‘avoid’ and ‘further analysis’: → The company’s policy states that it does not and will

not use child labour according to the ILO definition. The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no instances of child labour at the com-

pany itself or at its suppliers. → If an occasional incident occurs, the company im-

mediately takes adequate measures.

D.6 EmployeesEmployees’ rights are regulated in many ILO conven-tions and recommendations. We therefore base the

interpretation of our criteria in respect of employees on these ILO standards. Where employees are concerned, ASN Bank specifically focuses on the following work-ers’ rights:

no forced labour; healthy and safe working conditions; a living wage; trade unions/freedom of association.

We will explain for each workers’ right which risks are involved and which criteria we apply. We have already separately discussed child labour as well as non-dis-crimination and equal treatment. These two issues have been identified by the ILO as fundamental workers’ rights, along with freedom from forced labour and freedom of association.

D.6.1 Forced labour27

ASN Bank excludes companies that use forced labour either directly or through their suppliers. Forced labour is work that is performed involuntarily, under threat of punishment. At companies, this mainly involves com-pulsory overtime, human trafficking, debt bondage and bonded labour.

Involuntary overtime entails that a company locks up an employee in the workplace or threatens to withhold his pay, to use physical force or to fire him if the employee refuses to work the overtime as instructed.28

We exclude companies if they or their suppliers use forced labour. That is why we have formulated absolute criteria only.

Activities:There is an increased risk of forced labour if a com-pany or supplier hires staff (including temporary staff)

ASN Bank Issuepaper Human rights November 2011

26 The US Department of Labor has compiled a list of countries and product groups where child labour and forced labour are

prevalent. Although there is some discussion about the way the list was created, it is a relevant indicator of the likelihood that

child labour exists in a particular case (http://www.dol.gov/ilab/programs/ocft/pdf/2010TVPRA.pdf and http://www.dol.

gov/ILAB/programs/ocft/tvpra.htm).

27 ILO Convention No. 105 concerning the Abolition of Forced Labour (1957) and ILO Convention No. 29 concerning Forced or

Compulsory Labour (1930). Also based on: UDHR (Article 4); Covenant on Civil and Political Rights (Article 8); the International

Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (1990); UN Global Compact

(Principle 4); GRI (Performance Indicator: HR7); OECD Guidelines (Guideline V.1.d).

28 There are also other forms of forced labour. For example, withholding documents such as an identity card or passport may be

used to retain migrant workers in particular. This is not permitted. The company must be particularly alert if it hires flexible

staff through intermediaries such as staffing agencies.

ASN Bank solely invests

in companies that protect

children against

exploitation

16

through intermediaries from countries where human trafficking is prevalent, possibly in combination with debt bondage. Forms of slavery exist in South Asia, Latin America and many African countries, while in Europe human trafficking is very common. The US De-partment of Labor has published a list of countries and product groups where child labour and forced labour are prevalent.29

Absolute criteria: The following criterion applies to the analysis catego-ries ‘avoid’ and ‘further analysis’: → The company states in its policy that it does not and

will not use forced labour.The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no instances of forced labour at the com-

pany or its suppliers. → If an occasional incident occurs, the company im

mediately takes adequate measures.

D.6.2 Healthy and safe working conditions30

ASN Bank only invests in companies that offer safe and healthy working conditions and are not involved in any way in sexual exploitation or the production of pornography.

In order to create safe and healthy working conditions, companies take all measures necessary to protect em-ployees (including flexible staff) against work-related risks and foreseeable dangers in the workplace. For ex-ample: protection against exposure to toxic substances and radiation, protective clothing, training in the use of dangerous, heavy machinery, and an emergency plan for calamities and accidents. This also includes health & safety policy such as protective measures for people who perform heavy physical work, and facilities such as a clean toilet, clean drinking water and adequate venti-

lation. The measures that a company must take depend on its activities and location. Companies must take additional measures for vulnerable employees, such as occupationally disabled people and pregnant women who, for example, work with substances that may harm the unborn child.

A safe and healthy working environment also means that companies protect their employees against harassment, violence and threats in the workplace of a physical, sexual or psychological nature, and that they counter such conduct.

Sexual exploitation

The term ‘sexual exploitation’ is not defined by interna-

tional law.31 This is due in part to the variety of views on sex

and sexuality and on what is permissible. For example, the

Dutch prostitution policy is inconceivable in countries such

as Sweden, which assumes that prostitution involves sexual

exploitation by definition.

In our analysis we define ‘sexual exploitation’ as follows:

sexual exploitation exists if sexual acts are performed invol-

untarily. Involuntariness exists in the event of, for example,

force, intimidation, deception, abuse of a dominant posi-

tion or direct or indirect punishment. This often occurs in

combination with human trafficking and/or (debt) bondage.

Sexual exploitation can occur in many different forms.

As the sex industry presents an increased risk of sexual ex-

ploitation, ASN Bank does not invest in:

- prostitution or companies benefiting from prostitution;

- pornography production.

29 http://www.dol.gov/ilab/programs/ocft/pdf/2010TVPRA.pdf and http://www.dol.gov/ILAB/programs/ocft/tvpra.htm.

30 Based on: right to health (UDHR Article 25 and International Covenant on Economic, Social and Cultural Rights Article 7); ILO

Convention No. 155 concerning Occupational Safety and Health (1981); ILO Convention No. 120 concerning Hygiene (1964)

and a range of specialised ILO Conventions, including Nos. 115 (radiation protection), 119 (guarding of machinery), 127

(maximum weight), 136 (benzene), 139 (occupational cancer), 148 (working environment - air pollution, noise and vibration),

162 (asbestos), 167 (safety and health in construction), 170 (chemicals), 174 (prevention of major industrial accidents), 176

(safety and health in mines); GRI (Performance Indicators LA6 up to and including LA9); OECD Guidelines (Guideline V.4.c).

31 However, there are relevant international standards for children and women: the International Convention on the Rights of

the Child (Article 34) and the UN Women’s Rights Convention offer children and women protection against (sexual) exploita-

tion.

17

We exclude companies that do not offer safe and healthy working conditions. This has been laid down in the absolute criteria. Because we like to see compa-nies go the extra mile – in a positive sense – as regards healthy and safe working conditions, we have also included a relative criterion.

Activities:Companies run the greatest health and safety risks if they employ heavy physical labour and work with haz-ardous substances and radiation. This criterion is also relevant to countries where violence, intimidation and sexual harassment in the workplace are prevalent. The European Agency for Safety and Health at Work has specified the risks for the various sectors.32

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no instances of serious violations of em-

ployees’ safety and health conditions at the com-pany or at suppliers.

→ The company does not tolerate any form of harass-ment, violence and threats in the workplace of a physical, sexual or psychological nature.

→ The company is not involved in sexual exploitation in any way and is not involved in prostitution and/or pornography production.

→ If an occasional incident occurs, the company im-mediately takes adequate measures. In any event, it has a complaints procedure. Further, it records the number of occupational accidents and the measures that were taken.

Relative criteria:The following criterion applies to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ The company takes additional measures to pro-

mote the health and safety of its employees. Exam-ples include setting up an HIV/AIDS programme for

employees and their families in areas where HIV/AIDS is prevalent, and general health programmes. It is important here that the company takes on a long-term commitment and properly investigates its employees’ needs. In addition, it is recommended that the company seeks to collaborate with experts or specialist organisations and local authorities.

D.6.3 Living wage33

According to the ILO, a living wage is ‘the level of wages sufficient to meet the basic living needs of an average-sized family in a particular economy’. The ILO does not define those basic living needs. On the basis of human rights, the following should in any event be considered basic living needs: sufficient food, clothing, housing, education and healthcare.

In many countries, the (statutory) minimum wage is below a living wage. As a result, many families cannot meet their basic living needs. This can lead to excessive overtime and child labour. We give the company a posi-tive rating if it offers its employees a living wage.34

Activities:There is an increased risk in countries with much po-verty and/or major wage inequality, as well as in sectors that employ many low-educated and temporary person-nel, mainly in the supply chain.

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → There are no examples of serious malpractices in the

ASN Bank Issuepaper Human rights November 2011

32 http://osha.europa.eu/nl/sector

33 Based on UDHR (Article 25); International Covenant on Economic, Social and Cultural Rights (Article 7); ILO Conventions Nos.

131 (minimum wage) and 117 (social policy); ILO Tripartite Declaration of Principles concerning Multinational Enterprises

(Article 34); OECD Guidelines (Guideline V.4.b).

34 With regard to this the company can contact local or international trade unions and non-governmental organisations. An

example in Asia is the Asian Floor Wage Alliance (http://www.asiafloorwage.org/).

18 Companies must take

additional measures for

vulnerable employees

remuneration of employees and temporary person-nel, both at the company and at suppliers.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

Relative criteriaThe following criterion applies to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → The company’s basic principle is a ‘living wage’,

with the company verifying to what extent its em-ployees can actually live on their wages.

D.6.4 Trade unions/freedom of association35

Freedom of association is one of the fundamental rights of employees. This right is laid down in international and national laws and regulations. Freedom of asso-ciation includes employees’ right to organise and to establish trade unions, and their right to collective bar-gaining on employment conditions. In many countries, freedom of association is not self-evident. The freedom of association and the right to free bar-gaining are of a fundamental nature. We therefore ex-pect companies to pursue social policies that are based on the internationally endorsed employment standards laid down in the ILO Conventions.

We expect companies operating in countries where trade union rights are not safeguarded to take specific steps to ensure that employees can exercise their right to association and collective bargaining. This applies to their own employees and those in their supply chain. We expect companies not to constrain employees’ rights but to enable them to exercise those rights.

Activities:In risk and high-risk countries, the fundamental work-ers’ rights of trade union members are the most vulner-able. Yet there are certain countries that we designate as low-risk countries that have ratified none or only one of the relevant ILO Conventions. Here there is a greater risk of trade union rights not being respected.37

Violations of trade union rights

The following violations of trade union rights occur

frequently:

- Protection contracts and ghost unions. These are

contracts and unions chosen by the employer, not by the

employees.36

- Trade unions controlled by the state, for example in

China.

- Exclusion clauses providing that companies may not

employ workers who are not a member of the chosen

union.

- The employer prefers one trade union over another.

- Employees do not have access to information about trade

union registration and to collective bargaining agree-

ments.

- Anti-union discrimination exposing employees to intimi-

dation and threats.

- Circulation of black lists of employees who are active

trade union members.

Fundamental trade union workers’ rights are most vulner-

able in risk countries and high-risk countries. The following

highly serious violations occur in such countries:

- Murder of trade union workers.

- Trade union members are imprisoned and their demon-

strations are broken up; security troops or others torture

them and they often receive long prison sentences.

- Employees are dismissed for trying to set up a trade

union.

35 Based on: UDHR (Article 23); Covenant on Civil and Political Rights (Article 22); ILO Conventions Nos. 87 (freedom of associa-

tion and protection of the right to organise) and 98 (right to organise and collective bargaining); UN Global Compact (Princi-

ple 3); GRI (Performance Indicator HR 5); OECD Guidelines (Guidelines V.1.a&b).

36 In Mexico, for example, many companies have so-called ghost unions – paper unions that do not represent the employees –

and trade unions that are controlled entirely by the company (source: FNV Mondiaal).

37 For example in the United States, where many violations of trade union rights occur. The most recent ratifications of the

Conventions are available on the ILO website: http://www.ilo.org/ilolex/english/docs/declworld.htm.

19

Absolute criteria: The following criteria apply to the analysis categories ‘avoid’ and ‘further analysis’:→ The company has laid down in its policy that it re-

spects trade union rights, preferably as defined by the ILO.

→ The company creates a structure safeguarding em-ployees’ rights to association and to collective bargaining, for example by means of employee consultations.

→ We expect companies with suppliers in risk coun-tries and countries with little freedom of associa-tion to draw up a supply chain policy.

The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ There are no instances of serious malpractices with

regard to trade unions/ freedom of association in relation to employees and temporary staff at the company or at suppliers.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

D.7 Privacy and freedom of speech38

We expect companies in our investment universe to treat employees’ and customers’ privacy with respect and to observe due care when handling the informa-tion and personal data in their possession. We expect them to respect the freedom of speech of employees, customers and others. It is sometimes possible to limit the right to freedom of speech, but only to protect the rights of others or ‘for the common good’: national security, public order and safety, public health or good morals. Moreover, such limitations are subject to

strict requirements.39 Similarly, governments may only infringe on people’s privacy under strict conditions.40 Even in these cases, we expect the company to carefully weigh the infringement of privacy or freedom of speech versus the goal that it serves.41 If national and interna-tional laws differ, we expect the company to adhere to the standard that provides the best protection for individuals or the group of people that are or may be affected.

In addition, we expect companies to refrain from actively cooperating in censorship (restricted access to information) by the government. This is particularly the case in countries with widespread censorship. We expect companies to be aware of these risks and to try

38 Based on: freedom of speech (UDHR: Article 19; and International Covenant on Civil and Political Rights: Article 19) and right

to privacy (International Covenant on Civil and Political Rights: Article 17).

39 They must be provided for by law, serve a legitimate purpose, be necessary and be proportionate to the goal.

40 The following conditions are often mentioned: 1) There must a statutory basis. 2) There must be a clear interest for the safety

of the entire population. 3) Individuals must have optimum access to data collected by the government. 4) Data may only

be made available to those who have a direct statutory interest in that; once that interest no longer exists, the data must

be destroyed. 5) Individuals have the right to demand from the government an explanation of the reasons and ways in which

the government has violated their privacy (www.amnesty.nl).

41 This is not always easy. For example, in the event of a request from the government, a company must make a distinction between

legitimate requests (e.g. the fight against terrorism, screening against child pornography images) and illegitimate requests

(e.g. for political purposes). Even with legitimate requests, there may be a conflict between individual rights and the common

good. It is also possible that the company must weigh the company’s interest (such as price-sensitive information) and the per-

sonal right to freedom of speech (the right to make certain information public). This is a weighing of legitimate and illegitimate

restrictions. For example, the ‘company’s interest’ may not be invoked to prevent employees from exposing malpractices.

We expect companies in our

investment universe to treat

employees’ and customers’

privacy with respect and

to observe due care when

handling the information

and personal data in their

posession

ASN Bank Issuepaper Human rights November 2011

20

to avoid them, preferably by means of supplementary policy.

Activities: An increased risk exists for companies that have personal data or can easily obtain access to such data. These include companies in the telecommunications, IT and software sectors, and companies such as laborato-ries, insurers and banks that have medical information and other personal data. Media (television, newspapers, internet, etc.), IT and software companies are key in the access to informa-tion and the freedom of speech. Conversely, they run an increased risk of censorship, government restrictions regarding the access to information, and infringements on the freedom of speech.

Absolute criteria: The following criteria apply to all three analysis cat-egories (‘avoid’, ‘further analysis’ and ‘normal assess-ment’): → The company respects the privacy of its employees,

customers and any other stakeholders. There are no serious or structural controversies with regard to privacy.

→ The company does not actively cooperate in censor-ship and respects the freedom of speech of employ-ees, customers and others. There are no serious or structural controversies in the area of freedom of speech or in terms of censorship.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

Relative criteria:The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → The company has laid down in its policy that it re-

spects the privacy of its employees, customers and any other stakeholders.

→ The company has laid down in its policy that it respects the freedom of speech and that it does not cooperate with censorship.

→ The company has a system or a point of contact where employees or other stakeholders can report malpractices anonymously.

→ The company has programmes to promote and/or encourage the local community’s access to informa-tion and/or the Internet.

D.8 (Local) rule of law42

We expect companies in our investment universe to be respectful towards the society in which they, their subsidiaries and their suppliers operate. This means that they show respect for the local rule of law and do not violate national laws, for example. Also, they must not engage in transactions and activities that, in our view, abuse the lack of proper tax legislation and its en-forcement. This applies particularly to poorer countries where governments have insufficient funds, knowledge and capacity to combat abuse. We do not lend our assistance to such activities, in whatever country, and recommend customers to do the same. We also expect companies to not engage in corruption. If national laws or customs conflict with international standards in this regard, we expect companies to adhere to the highest standard.

Activities:(Large) financial transactions, large infrastructure projects, global companies that receive much work from public authorities.

42 Based on: UN Convention against Corruption (2003); the OECD Guidelines (Guidelines I.2; II.6; III; VII; X; XI); UN Global Com-

pact (Principle 10); GRI (Performance Indicators SO1 up to and including SO8). All these areas are also often strongly regu-

lated in laws and regulations at the international, European and national levels.

In addition, we expect

companies to refrain from

actively cooperating in

censorship (restricted access to

information) by the government

21

We also expect companies

to not engage in corruption

22 Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’): → The company respects the local rule of law. There

are no reports of the company consistently violating local laws or being involved in fraud or corruption.

→ The company adheres to its own and/or sector-specific codes of conduct. There are no reports of the company consistently violating these.

→ The company also does not encourage others to violate local laws and its own and/or sector-specific codes of conduct.

→ If national laws or customs conflict with internatio-nal standards, the company adheres to the highest standard.

→ As far as is known, the company does not lobby for activities that violate our human rights criteria.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

Relative criteria:The following criterion applies to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):

→ The company is transparent about the monies it pays to public authorities.

D.9 Local community and indigenous people43

Companies can have a major – positive and negative – impact on local communities and indigenous people. In serious cases, their activities can have a devastating effect on health or living conditions, or increase po-verty, for example because they acquire land, use water, dump waste and emit (hazardous) fumes. To the extent that companies’ impact on their surroundings concerns climate change and biodiversity, we refer to the ASN Bank Climate Change and Biodiversity Issue Papers. In this Issue Paper, we only discuss the impact on human beings.

Respect for local society concerns the impact of busi-ness operations on a branch’s immediate surroundings, as well as on other locations and future operations. It also includes the use of local (indigenous) knowledge, for example.

We expect companies to treat local communities and indigenous people with respect and to not exploit them. For example, when acquiring land, companies must ensure that the local population is not simply removed from the land. If people are to be expelled, it must be done with respect for the people in accordance with the aforementioned international standards.44

Based on customary law, indigenous peoples can claim land rights even if they do not have any statutory prop-erty rights recognised by the state.

Companies can also positively contribute to local com-munities and indigenous people, for example by giving the population access to clean water or enabling it to participate in HIV/AIDS programmes. It is important for the company to ensure that such facilities will continue

43 Based on Article 17 UDHR concerning property rights, and Article 25 UDHR concerning the standard of living (including living

environment); the UN Declaration on the Rights of Indigenous Peoples (2007); IFC Standard 5: Land Acquisition and Involun-

tary Resettlement (suggestions for land acquisition and possible resettlement of the indigenous population); ILO Convention

169 (indigenous and tribal peoples); GRI (Performance Indicator HR9).

44 As above. And regarding indigenous peoples: Article 10 of the UN Declaration on the Rights of Indigenous Peoples concern-

ing the principle of free prior informed consent. Indigenous peoples may not be forcefully removed from their lands or ter-

ritories. Resettlement may not take place without the free prior informed consent of the indigenous peoples involved and

only after just and fair compensation has been agreed and, if possible, they are offered the possibility to return.

ASN Bank Issuepaper Human rights November 2011

Respect for local society

concerns the impact of

business operations on a

branch’s immediate

surroundings, as well as

on other locations and

future operations

45 Based on the OECD Guidelines (Guideline VIII); GRI (Performance Indicators of Product Responsibility PR1 up to and including

PR9 and FS16); UN Guidelines for Consumer Protection. Consumer protection and product safety are strongly regulated in

laws and regulations at the international and European levels and in low-risk countries at the national level.

46 One example in the pharmaceutical industry is the availability of good medicines in economically less developed countries.

We base our analysis on the Access to Medicine Index, among other things.

47 The EU sets clear rules for many products in this respect. In the Netherlands, this is monitored by the Netherlands Food and

Consumer Product Safety Authority (http://www.vwa.nl/) and the Dutch Advertising Code Authority (http://www.reclame

code.nl/).

to exist if it ceases its operations. Also, it must confer with the local authorities and community to determine their needs and should work with them in setting up those facilities.

Activiteiten:Increased risk in countries where indigenous peoples live, as well as with major infrastructure projects and major projects for generating renewable energy. Activities requiring a lot of (new) land or water, such as agriculture. Risk sectors: building companies and en-gineering firms, transportation, sectors whose supply chain includes mining and agriculture, the pharmaceuti-cal industry (with regard to medicinal knowledge of the indigenous people), soft drinks and beer manufacturers (water consumption).

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ The company respects the local community and

treats the indigenous people with respect. No serious malpractices are known on this point.

→ There are no reports of serious malpractices affecting the local community as a result of water con-sumption or the emission of fumes and waste pro-ducts by the company. This mainly concerns access to safe drinking water and food and the popula-tion’s health.

→ The company respects indigenous peoples’ intellec-tual property of artistic expressions or knowledge of medicinal plants. No serious malpractices are known on this point.

→ If an occasional incident occurs, the company imme-diately takes adequate measures.

Relative criteria: The following criterion applies to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ The company makes a positive contribution to the

local community and indigenous people, in consul-tation and in collaboration with the local authorities and community.

D.10 Consumers45

Companies are responsible towards the end users of their products and services: consumers or customers. This mainly concerns consumers’ safety and health46 but also includes providing information about the products and their responsible use, especially if a product can harm people’s health, such as alcohol and medicines. Companies must tailor this information to their specific target groups, for example elderly people or children. It may also include marketing and advertising cam-paigns47.

We expect companies to

treat local communities and

indigenous people with

respect and to not exploit

them

The company makes a

positive contribution to

the local community and

indigenous people

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Gambling48

We define gambling mainly as short-odds games. In this type

of game, bets and gains or losses follow each other in quick

succession. Examples include fruit machines, casino games,

bingo, scratch cards and horse betting. In our definition,

gambling does not include the long-odds games such as lot-

teries and competitions, with long periods between bets

and gains or losses. As these hardly involve any real excite-

ment, they are not considered very risky. With short-odds

games, however, there is a strong inducement to wager a

bet time and again. The nature of the award structure makes

these games risky: the player does not win anything for a

long time, sometimes wins a small amount and very rarely

wins a large sum of money. This paves the way to a gambling

addiction.

Activities: Mainly the production and sale of consumer goods. This primarily involves sectors that supply consumer products like food, electronics, medicines, cosmetics and cleaning products.

Absolute criteria: The following criteria apply to all analysis categories (‘avoid’, ‘further analysis’ and ‘normal assessment’):→ The company does not manufacture tobacco pro-

ducts or derive the greater part of its total turn-over from the sale, distribution or trade of these products.

→ The company does not produce and/or operate any short-odds games. In this category, we also include companies that develop and produce short-odds games or operate casinos.49

→ There are no reports of any serious malpractices caused by the company’s products in respect of consumer safety or health.

→ The company provides honest and clear information about its products and any associated risks. No seri-ous malpractices are known in this regard.

→ If an occasional incident occurs, the company im-mediately takes adequate measures.

E Selection criteria for government bonds

Guiding principle for countriesASN Bank invests in countries through government bonds. We only invest in the government bonds of coun-tries that respect, protect and promote the Universal Declaration of Human Rights. These are countries that score well on internationally recognised human rights indices. We assess countries on their policies and results in the field of human rights. We examine their perform-ance in areas such as child labour, trade unions/freedom of association, forced labour, discrimination, corruption and income distribution. We also assess their perform-ance in respect of climate change and biodiversity.We base our opinion on measurements by renowned (research) agencies.50 Only countries that perform bet-ter than average are eligible for investment in govern-ment bonds. These countries are listed on our website. We discuss the selection of countries in more detail in the ASN Bank Issue Paper on Government Bonds. This document outlines the human rights criteria we use in that selection.

We exclude countries if they are responsible for gross human rights abuses, or for serious violations of the rights included in the Universal Declaration of Human Rights and the international human rights standards derived from it.

Countries where gross human rights abuses occur are often also condemned by the UN Security Council or the UN Human Rights Council, or human rights-based EU sanctions have been imposed on them. This group often includes weak governance zones, countries in which the government is unable or unwilling to assume its responsibilities.51

48 Source: Stichting AGOG (http://www.agog.nl/).

49 See the box entitled ‘Gambling’ for a definition.

50 Examples include the Transparency International country lists regarding corruption and UNDP’s Human Development Index.

51 Definitions according to the OECD.

We assess countries on their

policies and results in the

field of human rights

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ASN Bank Issuepaper Human rights November 2011

Absolute criteria:We exclude countries where the following serious violations of international law occur or where there is a major risk of:

torture; genocide; crimes against humanity; war crimes.

Relative criteria: The country respects, protects and promotes the Uni-versal Declaration of Human Rights. It is one of the bet-ter performing countries on internationally recognised human rights indices.52

F ASN Bank’s other activities

ASN Bank’s human rights policy applies not only to our investments, but also to our own business operations. We apply the assessment categories described in Sec-tion B to ourselves. This indicates that we, as a Dutch bank with a Dutch customer base, fall within the ‘nor-mal assessment’ category. We respect local laws and regulations and avoid controversies in respect of human rights. We report on these issues every year in our an-nual report and to various (international) organisations such as the UN Global Compact and GRI. We also like to take it a step further. In that effort we focus on the following areas:

customers; staff; suppliers; social environment.

CustomersWe owe our existence to our customers and to our sustainability mission. We therefore greatly value customers’ opinions. We try to be easily accessible to them and as transparent as possible. We view customer satisfaction as an important indicator of the quality of our services and survey this regularly. Apart from the statutory customer acceptance requirements, we do not impose any unnecessary limitations or conditions on our customers (non-discrimination). The design of

52 Such as the aforementioned indices, for example the Transparency International country lists regarding corruption and

UNDP’s Human Development Index. For more information, please refer to ASN Bank’s Issue Paper on Government Bonds.

53 The definition of these standards can be found in instruments such as the UN Convention against Torture and the Rome

Statute of the International Criminal Court. To be clear: the Rome Statute enables the prosecution of individuals, not of

states. We therefore only use this convention for the description of the definitions. The Rome Statute only applies to some of

the crimes if these are committed in the context of an attack aimed at civilians. We use the definitions of the crimes, irrespec-

tive of whether there is such an attack.

Gross human rights abuses

A gross human rights abuse means that standards are contra-

vened which may not be contravened in any circumstance,

not even in a situation of war or an emergency. We thus do

not use the terms ‘on a large scale’ or ‘consistently’. After

all, violations in this category of human rights are always a

‘gross abuse’ of human rights. Such abuses always result in

immediate exclusion.53

Such crimes include the following:

Torture.

Genocide.

Crimes against humanity.

These include acts committed as part of a widespread or

systematic attack on civilians, such as homicide, extermi-

nation, slavery, human trafficking, deportation or invol-

untary transport of people, death sentence, imprison-

ment and other serious deprivation of physical freedom in

violation of fundamental rules of international law.

War crimes.

These are torture, mutilation, corporal punishments, ta-

king hostages, acts of terrorism, genocide, deportation,

‘violations of human dignity’ (including rape and forced

prostitution), pillaging and summary executions. An act is

a war crime if it occurs in times of war and contravenes the

Geneva Convention. We also consider this to include the

use of child soldiers.

25

This policy applies also to

our own business operations

our products is such that they are clear and understand-able. We have a clear complaints procedure, which can be found on our website.

StaffASN Bank’s human resources policy is based on that of SNS REAAL. We fall under SNS REAAL’s Collective Labour Agreement, which offers good primary and sec-ondary benefits that comply with the market standard. The SNS REAAL Works Council also represents the ASN Bank employees. An employee satisfaction survey is conducted every year. We foster ASN staff’s commit-ment to the issue of human rights by means of training courses, among other things.

SuppliersWe assess all suppliers on the basis of our supplier poli-cy. The social or environmental impact of the numerous products we purchase is highly varied, which is why we have classified all products in terms of three categories: high priority, average priority, and low priority. We assess all products in terms of sustainability criteria; which criteria we apply depends on the priority as-signed to the products, as indicated in the table below.

Social environmentWe promote the respect and protection of human rights not only through our investment policy, but also in other ways, such as:

By formulating positions – always after careful consideration – in discussions on human rights.

By supporting – on behalf of our customers, through the ASN Foundation and as a sponsor – projects that contribute to our four sustainability issues: for fair trade, against child labour, for renewable energy and against the arms industry. All four of these is-sues relate to human rights.

Through partnerships with NGOs that share our hu-man rights vision.

By encouraging people to take action and involving them in our activities concerning human rights, for example through our partners and the website voordewereldvanmorgen.nl (‘for the world of to-morrow’), our online platform for people who take sustainability to heart.

CategoryA: High priority

B: Average priority

C: Low priority

Assessment of suppliersComprisesProducts that we purchase in large quantities and that involve a high risk or are easy to produce sus-tainably, such as bank cardsProducts that have a large purchasing volume but without high risks or sustainability problems, such as IT services, postal deliveryProducts representing small quantities, low cost of purchase or low risks, such as office supplies

PolicyWe examine these products on the basis of our sustainability criteriaCompanies must sign our sustain-ability declaration.

Basic assessment

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ASN Bank Issuepaper Human rights November 2011

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