SOCIAL TOPICS (Archive): HISTORY OF WALDEN ASSET MANAGEMENT/SRI

Published, Spring 2002

       By Heidi Soumerai

       With the 2002 proxy resolution season in full swing, this year will be every bit as comprehensive and successful as 2001. Walden filed 33 resolutions on a wide range of environmental, social, and corporate governance issues, and is a lead proponent in dialogue and negotiations with 16 companies. (See Walden's 2002 Shareholder Resolutions in Spring 2002 issue of Values.)

       But Walden does not measure success by simply counting resolutions. They are but one of several tools that Walden uses to influence company decision-makers, and usually are pursued as a last resort. Our ultimate purpose is to help improve corporate practices on a variety of issues that our clients care about. Many of Walden's significant breakthroughs result from dialogues and shareholder resolutions that never make it to the proxy ballots because companies commit to new policies or practices. Already this season there are many such victories. (See Making an Impact: Fostering Corporate Social Responsibility in Spring 2002 issue of Values.)

New in 2002

       Walden is co-filing resolutions on two new issues this year. The first addresses international drug access at major pharmaceutical companies. Specifically, the resolution calls for Bristol-Myers Squibb to develop and implement a policy to provide affordable drugs for the treatment and prevention of HIV/AIDS, tuberculosis (TB) and malaria in afflicted African nations. The HIV/AIDS epidemic is a global emergency of epic proportions. By the end of 2000, sub-Saharan Africa accounted for approximately 75 percent of the 36.1 million people worldwide living with HIV/AIDS. TB is the world's leading infectious killer, causing 2 million deaths each year, while malaria claims more than 1 million lives annually. Building on our recent dialogues and experience addressing drug access issues, Walden joins religious investors in seeking greater industry leadership on this life and death issue.

       The second new resolution, led by the Calvert Group, asks technology leader Dell to adopt a policy and implement practices of comprehensive producer responsibility. In effect, we are requesting a commitment to minimizing environmental impacts of products during their entire life cycle - manufacture, use, and end-of-life. The manufacture of a typical computer workstation requires hundreds of hazardous chemicals, and the vast majority of computers are not recycled. The National Safety Council estimated that 40 million computers became obsolete in 2001 alone.

EMC is a major focus…and frustration

       Walden is a leader of a broad coalition of 20 institutional investors raising three separate issues at EMC via proxy resolutions: board independence, board diversity, and in-person annual general meetings. Ironically, while EMC has never taken the time to respond meaningfully to most requests for dialogue over the last two years, the company buried us in hundreds of pages of legal challenges to the SEC in its attempt to omit the resolutions. EMC argues that the resolution seeking greater diversity by gender and race (EMC has an all white, male board) is moot because "the Directors do have diverse backgrounds. …[They] range in age from 43 to 71 and previously held or continue to hold positions at various businesses across a number of industries." This response would seem to indicate that EMC does not "get it."

       Similarly, EMC makes empty claims of mootness with regard to the other resolutions. The recent dual resignations of former EMC executive and chairman Richard Egan and his spouse for Egan to assume his post as U.S. ambassador to Ireland did affect the ratio of the independent vs. dependent board members. Despite the appointment of a new independent director, however, EMC's existing board structure still does not pass muster under many institutional investors' definition of sound corporate governance. The company also declares moot the third resolution, asking EMC to adopt a policy committing to in-person annual meetings of shareholders, because EMC currently holds such meetings. No matter that EMC lobbied actively for a change in Massachusetts law that would allow Internet-only meetings.

       We are optimistic that the SEC will see these and other EMC arguments for what they are - absurd attempts to deny shareholders their right to raise serious corporate governance and social policy concerns through the proxy process.

Heidi Soumerai is director of Walden's social research group. She also co-chairs our Social Planning & Policy Committee.