HISTORY OF WALDEN ASSET MANAGEMENT/SRI: Summer 2002
SOCIAL TOPICS (Archive): HISTORY OF WALDEN ASSET MANAGEMENT/SRI
Walden's Leadership Fosters Corporate Change
2002 Proxy Resolution Season
Published, Summer 2002
Companies, Progress, Results
Energy and the Environment
With mounting evidence of climate change and environmental degradation from conventional energy production and distribution, energy companies face rising pressure to adopt more sustainable polices and practices and to respect indigenous rights. Meanwhile research indicates that companies taking steps to address the risks associated with global climate change will benefit from enhanced shareholder value.
Walden co-led an investor coalition that sponsored a shareholder resolution asking London-based BPto assess the implications of drilling in environmentally sensitive areas, such as the Arctic National Wildlife Refuge (ANWR). Eleven percent of shareholders supported the resolution. At Occidental Petroleum, Walden's resolution seeking a report on global warming emissions got 18.9 percent of the vote, among the highest levels ever for its type. With the United Methodists, we are pressing Lehman Brothers to use its controlling investment in Peabody Energy to encourage that coal company to reduce its use of water from the Navajo Aquifer, a crucial source of economic and cultural livelihood for the Hopi and Navajo Nations.
Mercury pollution has a significantly adverse impact on public health. A known neurotoxin, mercury disrupts fetal and child brain development and permanently impairs mental abilities. The Environmental Protection Agency reports that combustion of medical wastes such as mercury thermometers is the fourth largest source of mercury pollution.
Walden helped convince JC Penney (Eckerd Drug Stores) and Kroger to phase out sales of mercury thermometers. This follows similar victories at CVS, Longs Drug Storesand other retail chains in 2001. Also, hospital chain HCA agreed to publicize its commitment to a phase-out to encourage others in the industry to follow suit. Partnering with Health Care Without Harm, Walden leads an investor campaign to curtail the use of mercury-containing medical devices, and has provided expert testimony to city and state legislatures seeking a ban.
Genetically Engineered (GE) Food
Scientific conclusions about the risks and benefits of GE foods are uncertain. Long term safety testing of GE products is inadequate and consumers overwhelmingly want to know if GE ingredients are in their food.
Yum! Brands(formerly Tricon Global Restaurants, parent of Taco Bell, Kentucky Fried Chicken, and Pizza Hut) agreed to continue our dialogue; to meet with scientific experts identified by Walden; and to develop a section on its public Web site expressing the company's position on GE food ingredients and encouraging readers to share their views with management.
Recycling Plastic Beverage Containers
Technology exists to reduce plastic waste by using at least 25 percent recycled content in plastic containers. Overall beverage container recovery rates have declined from 50 percent in 1994 to 35 percent in 1999. In "bottle bill" states, rates are 80 percent, but companies oppose such legislation.
Three of four plastic Coca-Cola bottles in North America contain 10 percent recycled content, up from one out of four bottles just one year earlier. PepsiCo is following Coke's lead, pledging a goal of 10 percent recycled content in its U.S. bottles by 2005. With assistance from the GrassRoots Recycling Network, Walden co-leads a large shareholder coalition seeking more recycled plastic content in bottles, along with a commitment to increase the beverage container recovery and recycling rate.
Diversity/Equal Employment Opportunity
Despite progress in hiring and promoting women and people of color, senior management teams remain largely white and male. Gay men and lesbians also continue to face significant discrimination at work. Increased inclusiveness and transparency on policies, practices, and results will help break glass ceilings and foster a workplace free of discrimination.
Bemis and FleetBoston Financial committed to public disclosure of detailed EEO information, prompting Walden and co-filers to withdraw resolutions requesting a diversity report at both firms. Approximately 33 percent of voting shareholders supported an EMC resolution on board diversity, co-led by Walden and the State of Connecticut. This sent a strong signal to EMC's all white, male board. Walden initiatives helped prompt Affiliated Computer Services and Teleflex to amend their policies to explicitly bar discrimination based on sexual orientation.
Global Labor Standards and Human Rights
Retailers face growing pressure to ensure that their factories or suppliers do not manufacture products under sweatshop conditions and do not use child or slave labor. Companies are urged to adopt International Labour Organization principles and to implement independent monitoring and reporting. Health and safety in the workplace, payment for overtime worked, and a living wage are part of this discussion.
Walden is leading a large investor coalition asking Federated Department Stores to consider Rugmark certification as a means to avoid carrying hand-woven rugs made illegally by children. Federated agreed to arrange and participate in a meeting between Tufenkian Company and Rugmark. Tufenkian supplies over 80 percent of Federated's carpets from Nepal. Rugmark already certifies 70 percent of all hand-made carpet production in Nepal. Hasbro Chairman Hassenfeld told us that the 7 percent vote for Walden's global labor standards resolution was "NOT a defeat," and pledged to keep working to improve conditions and meet with concerned investors.
Among the most basic tenets of good governance is that corporate boards should be composed of a majority of independent directors.
A non-binding shareholder proposal Walden co-led asking EMCto take steps to increase board independence passed! A resounding 56 percent of voting shareholders agreed that this is a priority for EMC. The company stated its intentions to add independent directors.
The information contained herein has been prepared from sources and data we believe to be reliable, but we make no guarantee as to its adequacy, accuracy, timeliness or completeness. We cannot and do not guarantee the suitability or profitability of any particular investment. No information herein is intended as an offer or solicitation of an offer to sell or buy, or as a sponsorship of any company, security, or fund. Neither Walden nor any of its contributors make any representations about the suitability of the information contained herein. Opinions expressed herein are subject to change without notice. The writings of authors do not necessarily represent the views of Walden Asset Management, its parent, or affiliated entities. There are certain risks involved with investing, including various risks depending on the type of investment vehicle being used.
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