On Your Behalf - September Report

Hurricane Katrina Renews Shareholder Concerns Regarding Issues of Global Warming

The General Board engages corporations on issues of social, governance and environmental concern. While the devastation to human lives and property left in the wake of Hurricane Katrina is likely attributable to the random events of nature, some scientists have opined that risk factors associated with global warming could influence similar environmental events for future generations. The General Board has long been concerned with these risk factors and has been actively involved in several organizations created to address the issue.

For example, the General Board is a member of Ceres, a coalition of institutional investors and environmental organizations, which recently published a report titled, "Availability and Affordability of Insurance Under Climate Change: A Growing Challenge for the U.S., " that highlights losses attributable to a variety of weather related events including hurricanes and crop damage due to drought. In addition, the General Board is also one of 155 investors challenging U.S. corporations to address risk factors attributable to global warming. These investors sent letters to several corporations requesting that they develop strategies to address greenhouse gas emissions and to report their actions to the Carbon Disclosure Project (CDP). CDP was established five years ago to compile data necessary for investors to discern the corporate leaders and laggards in response to climate change. The most recent CDP report can be found at www.cdproject.net.

During this year's proxy season, four of the General Board's 23 shareholder resolutions address global warming issues. The four resolutions were directed to Anadarko Petroleum, Apache, Corning and Dow Chemical. Each of these companies responded to our resolution by inviting representatives of the General Board to meet and discuss their respective plans of action. They agreed to begin reporting or enhance existing reports on action taken to address climate risks.

In addition to issues regarding global warming and the environment, the General Board initiated several other successful shareholder advocacy efforts during the 2005 proxy season, including:

• Requesting a sustainability report from Best Buy. The company responded by hiring someone to undertake this reporting responsibility. The preliminary report is expected by February 2006 and we anticipate providing input into the developmental process and final document.
• Serving as a member of Nike's multi-stakeholder report review committee to assist in the development of the company's 2004 Corporate Responsibility Report that was published in April 2005.
• Filing resolutions with Long's Drugs and Bed, Bath and Beyond calling on the annual election of officers. The resolutions received 66% and 67% shareholder support respectively and the companies have agreed to reevaluate their governance practices.
• Filing a resolution with Textron requesting the separation of the chairman of the board and chief executive officer positions. The resolution received 51.3% of the vote.
• Requesting that Whole Foods label their genetically modified foods. While our proposal received only 6.7% shareholder support, the company has adopted a new policy of labeling these products.

The General Board is committed to promoting the Social Principles by closely monitoring companies in which it invests on behalf of its participants. We believe that actively engaging companies through dialogue and other advocacy efforts will ultimately contribute to better corporate governance and a more secure future for our participants and future generations.