Methodology Change | SOLACTIVE CANDRIAM FACTORS SUSTAINABLE FAMILY | Effective Date 28/10/2019

Today, on the 18/10/2019, Solactive announces the following changes to the methodology of the following Indices (the ‘Affected Indices’):

The changes are intended to improve the way in which the objective pursued by each of the Indices is
represented. The objective is specified in the Index guideline as follows (the text in squared brackets
reflects the three Indices of the index family):
„The Index is intended to deliver exposure to equity securities of a selection of large and medium capitalized
[Japanese/EMU/European] companies meeting sustainable and responsible investing (“SRI”) criteria
developed by Candriam and weighted using a non-market capitalization methodology.”

Rationale for methodology change

The wording in the definition “Component Universe” in Section 4 of
the respective Index Guideline is replaced by the following wording:

Current Wording:
““Component Universe”
[…]
Companies ranked in the top 70% of the Eligible Universe (per sector) based on their Combined Macro and
Micro scores are then further reviewed to see if they violate the Controversial Activities criteria or the
United Nations Global Compact as detailed below or are deemed to be high risk:
o Controversial Activities:
▪ Armament: are involved in the production or sale of anti-personnel landmines, cluster
bombs, depleted uranium, and/or chemical/nuclear/biological weapons, regardless of the revenues involved and/or generate more than 3% of their turnover from the production or
the sale of conventional weapons

▪ Activities in oppressive regimes: large presence (Revenues > 1%) in highly oppressive regimes
▪ Adult content: Revenues > 5%
▪ Alcohol: Revenues > 10% without any responsible policy
▪ Animal Testing: Responsible policy of no legal requirement or breaches to legislation
▪ Gambling: Revenues > 5%
▪ Genetic modification: Revenues > 10%
▪ Nuclear: Revenues > 30%
▪ Tobacco: Revenues > 5%
[…]
Companies that are not excluded based on the preceding criteria form the basis of the Index (“Index
Components”).
The list of Index Components is available free of charge on Candriam’s website located at
http://indexiq.candriam.com.”

New Wording (additions compared to the current wording are presented in bold italics):
““Component Universe”
[…]
Companies ranked in the top 70% of the Eligible Universe (per sector) based on their Combined Macro and
Micro scores are then further reviewed to see if they violate the Controversial Activities criteria or the
United Nations Global Compact as detailed below or are deemed to be high risk:
o Controversial Activities:
▪ Armament: are involved in the production or sale of anti-personnel landmines, cluster
bombs, depleted uranium, and/or chemical/nuclear/biological weapons, regardless of the
revenues involved and/or generate more than 3% of their turnover from the production or
the sale of conventional weapons and/or generate more than 5% of their
sales/revenues from the production, manufacturing, trade, testing or maintenance of white phosphorous
▪ Activities in oppressive regimes: large presence (Revenues > 1%) in highly oppressive
regimes
▪ Adult content: Revenues > 5%

▪ Alcohol: Revenues > 10% without any responsible policy
▪ Animal Testing: Responsible policy of no legal requirement or breaches to legislation
▪ Gambling: Revenues > 5%
▪ Genetic modification: Revenues > 10%
▪ Nuclear: Revenues > 30%
▪ Tobacco: Revenues > 5%
▪ Thermal Coal: Revenues > 10%
▪ Unconventional Oil & Gas: Revenues > 10%
▪ Conventional Oil & Gas: Revenues based on natural gas or renewable energy < 40%
▪ Electricity Generation*: Carbon Intensity > 429 (GCO2/kWh)
▪ If carbon emission intensity data is not available:
o % power production based on coal >10%
o % power production based on oil & gas > 30%
o % power production based on nuclear sources > 30%
*In 2020, the following new threshold will be applicable: Carbon intensity > 408
(gCO2/kWh)
[…]
Companies that are not excluded based on the preceding criteria form the basis of the Index (“Index
Components”).
The list of Index Components is available free of charge on Candriam’s website located at
http://indexiq.candriam.com.”

Defined terms used in this announcement, but not defined herein, have the meaning assigned to them in the respective index guideline of the Affected Indices.