Over time, Walden has built strong relationships with many of the companies we hold in client portfolios. With certain companies this has enabled us to move away from filing shareholder resolutions, and to hold productive meetings instead. These meetings give us the opportunity to hear about developments in company policies and practices, congratulate accomplishments, talk openly about challenges, and encourage the setting of new goals.

At a meeting with Intel in August, the company reiterated its commitment to diversity, reduction of toxic chemical releases, and strong reporting practices. Walden continues to follow up with the company on its community relations and the environmental impacts of its chip fabrication facilities. We have also begun to focus our attention on labor conditions within its supply chain, and have found the company responsive to our request for a more in-depth conversation on this topic.

Hewlett Packard met with Walden and other concerned investors to review its 2004 Corporate Sustainability Report. There has been very positive public response to the summer-long free electronics’ recycling program that Hewlett Packard developed in partnership with Office Depot. Hewlett Packard has committed to increase recycling of its computer equipment by 500 million pounds over the next few years. This would require an increase of 9 percent per year. Walden is also looking at the company’s supply chain practices. One of only a handful of companies involved in United Nations’ Global Compact, the company is seeking to work with others in the industry on supplier standards.

Dell has kept Walden updated on its continued efforts to increase computer equipment recycling. Dell plans to boost its equipment recycling by 50 percent in 2005. We are strongly encouraging the company to develop transparent reporting on these measures and to set recycling goals relative to sales. IBM has not yet committed to a recycling goal. Walden is encouraging technology companies to adopt more specific goals and common metrics that will permit evaluation of recycling success over time and enable comparisons among peers.

Johnson & Johnson is evaluating Walden’s concerns regarding the recyclability of its packaging. Polyvinyl chloride (PVC) packaging has a national recycling rate far lower than that of the other plastic packaging materials commonly used for personal care products. Moreover, one PVC bottle can contaminate a load of 100,000 otherwise recyclable plastic bottles.

Staples has provided in-depth answers to Walden’s questions on a range of topics. Staples has a number of admirable programs in place to respond to environmental, supplier, and equal opportunity challenges. Examples include its purchasing and promotion of products containing post-consumer recycled materials, encouraging electronics recycling, and purchasing 10 percent of its U.S. power from renewable energy sources. The company has also recently adopted a Supplier Code of Conduct. With the code, a third party audits each factory that produces Staples brand products. The company has affirmed its commitment to continuous improvement, a key aspect in any corporate responsibility program.

Staples, Sigma-Aldrich, and Waters have demonstrated transparency by providing their Equal Employment Opportunity (EEO) data at Walden’s request. Despite progress in hiring and promoting women and people of color, senior management teams remain largely white and male at most companies. Access to EEO data increases company accountability, and allows Walden to assess company progress over time and to compare companies within industry sectors.

At a meeting with ExxonMobil, Walden continued to emphasize the need to revise the company’s public policies on climate change and to amend its non-discrimination policy to explicitly include sexual orientation. Despite its good work and active engagement on other topics, such as its response to the HIV/AIDS pandemic, ExxonMobil has long been resistant to change on these issues. Barring any new developments, Walden plans to file shareholder resolutions on climate change and non-discrimination policy again this year.

Although Walden does not currently hold securities of the World Bank, this summer we hosted a workshop of social investment professionals with bank representatives to identify and discuss the concerns about and goals of this global financial institution. Topics included corruption, lending policies, community involvement, and participation in extractive industries. The Bank provided in-depth information on case studies of the Chad-Cameroon pipeline project and the Bulgaria Environmental Remediation Pilot. Far from being a "dog and pony show," many of the World Bank staff members at the workshop had never before spoken with investors.

In other company news, 13 companies held in many client portfolios are well represented on Fortune’s 50 Best Companies for Minorities list, published in its June 28 edition this year. These are: McDonald’s (#1), Fannie Mae (#2), PepsiCo (#7), SBC Communications (#12), Colgate Palmolive (#16), Applied Materials (#21), United Parcel Service (#23), BellSouth (#25), Coca-Cola (#26), Avon Products (#28), Procter & Gamble (#45), Merck (#48) and Bank of America (#50). McDonald’s earned the top spot for the highest minority retention rate and for a purchasing program in which half of its vendors are minorities. Runner up Fannie Mae gets noticed for shattering barriers to advancement, with 15 minorities among its 50 best compensated employees.

Companies held in many client portfolios are also represented on Working Mother magazine’s 100 Best Companies for Working Mothers list, published fall 2004. IBM, Johnson & Johnson and Wachovia made the top ten. Other companies with mother-friendly programs include: Bank of America, BP America, Cisco, Colgate-Palmolive, Fannie Mae, Hewlett Packard, Intel Corporation, MBNA America, Merck, Microsoft, Northern Trust, Novartis, Pfizer, Procter & Gamble, and Wells Fargo.

—M. Benton