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First Quarter 2008
Domini
Reaches Agreements on Forestry and Climate Change: Domini has made
corporate forestry practices a focus of our shareholder activism in recent
years because healthy forests play a crucial role in the fight against climate
change.
Of the twenty shareholder resolutions Domini filed for the 2008 proxy
season, six related to sustainable forestry and climate change. The electronics
seller Best Buy, the home
improvement retailers Home Depot and
Lowe’s, and the packaging
manufacturer MeadWestvaco reached
agreements with Domini in exchange for withdrawal of our resolutions.
Two other companies, International
Paper and the printing company RR
Donnelley, have not yet agreed to improve their forestry practices, so
shareholder resolutions will be voted on at their annual meetings this spring.
In response to Domini’s resolutions, Best Buy agreed to work with Domini to develop a sustainable paper
purchasing policy and MeadWestvaco agreed to study the feasibility of phasing
out the use of wood fiber not certified by the Forest Stewardship Council (FSC)
and to increase the use of recycled fiber. The FSC certifies that forest
products are harvested in a way that does not destroy habitat, pollute water,
displace indigenous people, or harm wildlife.
Home Depot and Lowe’s adopted sustainable forestry policies in 1999 and
2000, respectively. In our view, however, the companies have not provided
investors with sufficient information to evaluate their compliance with these
policies. We were pleased to withdraw our resolutions in exchange for
agreements from both companies to publish reports detailing their efforts to
implement these policies, including adherence to FSC standards.
Success
on Other Resolutions: Domini achieved success on a number of
shareholder resolutions on other topics, including the following successful
withdrawals:
·
Nucor, the country’s
second largest steel manufacturer, agreed to take additional steps to address
the problem of slave labor in Brazil.
·
American Express agreed to begin
annual public reporting of its political contributions, including certain
payments to trade associations.
·
J.C. Penney agreed to develop
a policy on the use of PVC plastic in products and packaging and begin
replacing PVC with safer, more sustainable materials.
Our resolution calling on Becton
Dickinson to phase out brominated flame retardants received a strong vote
of 36% at the company’s annual meeting, the highest vote ever received for a
shareholder resolution focused on toxics in consumer products.
Domini
Recognized for Proxy Voting Leadership: Domini’s leadership in proxy voting was
recently recognized by RiskMetrics Group, a leading proxy voting advisory
service and an influential voice on corporate governance. A new section of the
company’s website highlights the voting policies of Domini and other select
institutions.
Domini has published its voting guidelines regularly since 1992, and in
1999 became the first mutual fund manager in America to publicly disclose its
proxy votes. In 2001, Domini successfully petitioned the SEC for the rule that
now requires all mutual funds to publicly disclose their proxy voting policies
and actual votes.
2007 Highlights
As a shareholder in the Domini Funds, you make a difference
in the world. Listed below are some of the ways that you made a difference in
2007.
Sustainable Forestry:
After two years of filing resolutions and engaging in dialogue with
Kimberly-Clark over its forestry practices, in the second quarter of 2007 the
company issued a new policy expressing preference for fiber certified by the
Forest Stewardship Council. This sends an important signal to the marketplace from
a very significant purchaser of wood fiber.
Rights for Shareholders: Domini took an active role in opposing
ideas advanced by the Securities and Exchange Commission (SEC) that could have
restricted or eliminated the right of shareholders to file nonbinding resolutions.
Our two Action Alerts on the subject generated more than 2,000 responses.
Domini also submitted three comment letters, including one submitted on behalf
of 47 institutional investors and service providers from ten countries — all
signatories of the United Nations Principles for Responsible Investment —
representing approximately $1.4 trillion under management. Ultimately, the SEC
decided — at least for now — to continue allowing shareholders to place
important social, environmental, and governance issues onto corporate proxy
ballots.
First Shareholder Resolution in Europe: Together with trade unions
and employees of the British transportation company FirstGroup, Domini co-filed
its first shareholder resolution in Europe. The resolution addressed allegations
of anti-union activity at First-Group’s U.S. school bus subsidiary, First
Student. Domini’s participation was critical in allowing the unions to meet the
onerous British filing requirements.
Rights for Coffee Farmers: Despite its generally positive social
and environmental record, Starbucks refused for more than a year to acknowledge
the Ethiopian government’s ownership of the valuable naming rights for its
prime coffee-growing regions: Yirgacheffe, Sidamo, and Harar. Domini engaged
with Starbucks on this issue, beginning in August 2006, and helped enable representatives
of Oxfam and Ethiopian coffee farmers to ask questions at Starbucks’ annual
meeting. We were pleased that Starbucks agreed to sign a licensing agreement
acknowledging Ethiopia’s right to the names. According to Oxfam, this agreement
will improve the lives of poor farmers by helping them capture a greater part
of the retail price of the coffee they grow.
Current Corporate Engagement
(Current as of 5/15/2008)
Our shareholder advocacy work often proceeds in coalition
with other investors and organizations who share our concerns, including public
pension funds, foundations, unions, religious investors affiliated with the Interfaith Center on Corporate
Responsibility, nongovernmental organizations, and other social investment
firms. These coalitions are often powerfully effective in convincing corporate
management to make positive changes.
In the table below, where shareholder resolutions are
mentioned, Domini was the lead filer except where the name of the company
concerned is in italics.
HUMAN RIGHTS
Censorship and Surveillance
Company
|
Issue
|
Status
|
|
Cisco Systems
|
Censorship and
surveillance: Internet
|
Filed resolution
for third consecutive year. Resolution received a 36% vote.
|
|
Google,
Microsoft, France Telecom, TeliaSonera (Sweden), Vodafone (U.K.), Yahoo
|
Censorship and
surveillance: Internet/Telecom
|
Multi-stakeholder
group developing set of principles to protect freedom of expression and
privacy on the Internet and other communications technologies.
|
Darfur
Company
|
Issue
|
Status
|
|
Citigroup
|
Genocide in
Darfur
|
In coalition
with Amnesty International, Sudan Divestment Taskforce, Save Darfur Coalition
and other social investors, met with banks to encourage them to use their
leverage with their holdings and clients to address the situation in Darfur.
(Shareholder resolutions were filed with the banks by other investors.) In
response, Citigroup issued a public
statement describing its response to the crisis.
|
|
JPMorgan Chase
|
|
Merrill Lynch
|
Global Labor Standards
Company
|
Issue
|
Status
|
Apple
|
Global labor
standards (supply chain)
|
After initial
Domini resolution in 2004 and subsequent dialogue, company adopted code of
conduct and begin monitoring of its suppliers. Apple posted its first public
report on its labor standards efforts in 2006. Ongoing dialogue about
implementation.
|
|
McDonald’s and
Walt Disney
|
Final “Project
Kaleidoscope” report released on May 7, 2008. The project was a
multi-stakeholder collaborative effort to test a new approach to improving
working conditions in Chinese factories.
|
Xerox
|
Domini
resolution in 2007 achieved 9.1% vote in favor, enabling resubmission.
Current proposal is pending. The company’s statement in opposition to our
2007 proposal reported details of its supplier monitoring program for the
first time.
|
|
Cummins
|
Global labor standards: union relations
|
Domini
resolution addressing allegations of unfair labor practices at U.S.
distribution centers requested company to establish global policies to more
effectively protect freedom of association and collective bargaining rights.
Company added “collective bargaining” to its code. The proposal received a
16.42% vote. Ongoing dialogue.
|
|
FirstGroup plc (UK)
|
Domini co-filed
resolution that received 10% vote. Ongoing dialogue, including meeting in
London with CEO and chairman of the board, focused on union relations,
particularly at the company’s U.S. subsidiaries.
|
|
Coca-Cola
|
Human rights policies
|
Ongoing
dialogue.
|
|
Cooper Industries
|
Domini co-filed resolution in 2007: 12.4% vote in
favor, enabling resubmission.
|
|
Nucor
|
Slave labor and deforestation in Brazil
|
Domini filed shareholder resolution for 2008 proxy season; resolution
withdrawn when Nucor agreed to code of conduct prohibiting forced labor, and
to dialogue on Brazilian National Agreement to Eradicate Slavery.
|
|
Whirlpool
|
Letter to CEO on behalf of global coalition of
institutional investors; dialogue.
|
|
Arcelor-Mittal (Netherlands), Fiat (Italy), Honda
(Japan)
|
Domini co-signed
a letter to CEO
|
Poverty and Access to Capital
Company
|
Issue
|
Status
|
|
Procter &
Gamble
|
Fair Trade coffee
|
After Domini
resolution and an intensive dialogue, company agreed to begin marketing Fair
Trade certified coffee. Ongoing dialogue about implementation.
|
ENVIRONMENT
Climate Change
Company
|
Issue
|
Status
|
|
Anadarko
|
Climate change
|
Several years of
shareholder resolutions co-filed by Domini; 2007 resolution withdrawn after
company agreed to progress on climate change and carbon reporting. Ongoing dialogue.
|
|
Apache Energy
|
Ongoing dialogue
after a series of co-filed resolutions, including annual meetings with the
CEO.
|
|
Devon Energy
|
Ongoing dialogue
after withdrawal of Domini resolution. Devon began reporting its greenhouse
gas emissions data in February 2008.
|
|
EOG Resources
|
Company agreed
to climate change statement and disclosure of carbon emissions; Domini
resolution withdrawn.
|
|
Pulte
|
Resolution asking company to reduce
greenhouse gas emissions from the company’s products and operations received
22.9% vote.
|
|
Wells Fargo
|
Continuing
dialogue on company’s climate change risk analysis.
|
|
JPMorgan Chase
|
Implementation of environmental policies
|
Helped convince bank to hire first Director of
Environmental Affairs (2004), and to adopt comprehensive environmental policies,
focused on climate change (2005). Ongoing dialogue about implementation.
|
|
Best Buy
|
Sustainable forestry
|
Proposal
withdrawn when company agreed to work with Domini to develop a sustainable
paper purchasing policy.
|
|
Home Depot
|
Proposal
withdrawn when company agreed to publicly report on implementation of its
wood sourcing policies.
|
|
International Paper
|
Proposal
received 5.3% vote.
|
|
Kimberly-Clark
|
Ongoing dialogue
after 2007 Domini resolution achieved 8.1% of votes in favor. Company
completed feasibility study identifying opportunities for increased sourcing
of FSC-certified fiber and issued a new fiber procurement policy that
includes a stated preference for procuring FSC-certified fiber.
|
|
Limited Brands
|
In
2006, Domini’s engagement with the parent company of Victoria’s Secret
succeeded in bringing the company to the table to negotiate a sustainable
forestry policy with ForestEthics, a nonprofit that had been running a
visible campaign against the company. As a result, Limited and ForestEthics announced
that the company would use more paper certified by the FSC, increase the
recycled content of its paper, and reduce the use of paper in catalogs.
|
|
Lowe’s
|
Proposal
withdrawn in exchange for company agreement to produce sustainability report,
including information on its wood sourcing practices.
|
|
MeadWestvaco
|
Proposal
withdrawn in exchange for company agreement to assess the feasibility of
phasing out the sale of paper made from wood fiber that is not certified by
the Forest Stewardship Council (FSC)
|
|
Procter &
Gamble
|
Domini
resolution withdrawn after company agreed to report on its forestry practices
in 2007 sustainability report.
|
|
R.R. Donnelley
|
Shareholder
proposal asking company to examine its paper purchasing practices is pending.
|
|
Staples
|
Dialogue on
company’s sustainable paper purchasing policy.
|
Public Health
Company
|
Issue
|
Status
|
Avon
|
Report on nanomaterials
|
Proposal received 25% vote.
|
Colgate-Palmolive
|
Resolution
withdrawn; company agreed to post statement on company website.
|
Johnson & Johnson
|
Dialogue
|
|
Becton Dickinson
|
Toxic chemicals in products
|
Filed
shareholder resolution asking company to report on brominated flame
retardants (BFRs) and other toxic chemicals in company’s products that may be
banned from sale in the European Union; resolution received vote of 36.1%,
highest ever received for a toxics proposal.
|
|
J.C. Penney
|
Use of PVCs
|
Proposal
withdrawn when the company agreed to develop a policy on the use of PVC
plastic in products and packaging and begin replacing PVC with safer, more
sustainable materials.
|
|
Motorola
|
Wrote letter to
company about PVC packaging.
|
|
Target
|
Company
announced plans to begin reducing its use of PVC plastic.
|
|
Johnson Controls
|
Lead sourcing
|
Continuing
dialogue on sourcing of lead from Doe
Run Peru, where smelter has caused lead poisoning.
|
Other Environmental Initiatives
Company
|
Issue
|
Status
|
|
Coca-Cola
|
Recycling and water issues in India
|
2007 recycling
resolution withdrawn after company agreed to progress on recycling goals.
Ongoing dialogue regarding water disputes with local communities.
|
|
Dell Computer
|
Environmental performance
|
Ongoing
consultation
|
GOVERNANCE
Corporate Political Spending
Company
|
Issue
|
Status
|
American
Express
|
Disclosure of contributions, policies guiding political
spending
|
Proposal
withdrawn in exchange for the company’s agreement to begin annual public
reporting of its political contributions, including certain payments to trade
associations used for political purposes.
|
|
AT&T
(Previously engaged SBC, which acquired AT&T, and BellSouth, which was
acquired by AT&T)
|
Domini
resolution received 13.3% in 2007 and 32% in 2008 after receiving
support from RiskMetrics Group, a leading proxy voting advisory service. AT&T has
disclosed and enhanced its political giving policies in response to our
engagement. Prior to acquisition by AT&T, BellSouth agreed to disclose
its policy guiding political spending.
|
|
Hewlett-Packard
|
Company agreed
to annually report political contributions; 2007 resolution withdrawn.
|
Separation of Chair and CEO
Domini co-filed a proposal at TimeWarner that received a 43% vote.
Sustainability Reporting
Company
|
Issue
|
Status
|
AMR Corp
(American)
|
Sustainability reporting
|
Dialogue on expanding company’s environmental reporting.
|
JetBlue
|
Ongoing dialogue
after withdrawal of co-filed resolution asking company to produce a
sustainability report.
|
Southwest
|
Resolution asking for sustainability report pending.
|
|
Gap Inc.
|
Ongoing
dialogue. Domini is part of a working group that was responsible for pressing the company
to issue its first groundbreaking report, in 2004, on its efforts to address
working conditions at its suppliers’ factories around the world. Each year, we
have provided the company with guidance
and feedback on its corporate social responsibility reports. A statement from
the group has appeared in each of the company’s reports. The latest report
was issued in July 2007.
|
|
Illinois Tool Works
|
Ongoing dialogue
after withdrawal of co-filed resolution asking company to produce a
sustainability report.
|
