Trillium Asset Management Corporation (”Trillium”) is acutely aware that there is a long and troubled history of companies underestimating the likelihood of severe financial threats - Enron, the subprime lending crisis, and asbestos liabilities are three recent examples. All too often we have seen that these momentous issues were looming for many years and eventually resulted in catastrophic consequences for investors. In light of the significant concerns raised by the impacts of climate risk and the long-term effects of toxic chemicals on our health and the environment, Trillium is very mindful of the future liabilities that may await investors over the horizon. Unfortunately, even though companies are often aware of the real possibility of these problems causing economic hardship to the companies, investors are kept in the dark through the accounting rules.

In July, the Federal Accounting Standards Board (”FASB”), which effectively establishes corporate accounting standards, invited comments on proposed rules that would require disclosure of all liabilities except those that meet certain narrow exceptions. In doing so, FASB took a positive step towards incorporating long term environmental and social factors into financial statements - a fundamental goal of the socially responsible investment (”SRI”) movement.

With the Social Investment Forum, the Investor Environmental Health Network and a number of other SRI firms, Trillium seized this opportunity to support the improvements and strongly encouraged FASB to go even further. Below is our comment letter. We are cautiously optimistic that FASB will take the right steps and will post any developments as this process moves forward.

***

July 22, 2008

Financial Accounting Standards Board

401 Merritt 7

PO Box 5116

Norwalk, Connecticut 06856-5116

Re: Comment on Exposure Draft - Disclosure of Certain Loss Contingencies

Amending FAS 5 - File Reference No. 1600-100

Dear Mr. Golden,

Trillium Asset Management Corporation (”Trillium”) welcomes this opportunity to provide the Financial Accounting Standards Board (”FASB”) with our comments on the FAS 5 Exposure Draft. As an investment management company with one billion dollars of assets under management we feel strongly that it is critical to have accurate and complete information about liabilities in financial statements. Furthermore, we are guided by a belief that active investing can offer good returns to the investor, while also promoting social and economic justice. As fiduciaries with twenty-five years experience in integrating environmental and social factors into investment and management decisions, we believe this information is of the utmost importance.

Generally speaking, Trillium supports the direction in which FASB is proceeding and agrees with the finding that the current statement on disclosure of loss contingencies fails to “provide adequate information to assist users of financial statements in assessing the likelihood, timing, and amount of future cash flows associated with loss contingencies” (FAS 5 Exposure Draft, Summary, p. v). The changes proposed by the FAS 5 exposure draft Accounting for Contingencies to address this issue represent an important step in providing all investors with improved disclosures.

While we are pleased with this important step and supportive of the progress it represents, there are a few points of concern that we would like to take this opportunity to raise briefly. In particular, Trillium is concerned with how the draft treats severe long-term risks. At FAS 5 Exposure Draft paragraph 6, the draft only requires disclosure of severe financial threats that a company deems remotely probable if the issue is expected to be resolved within a year. As a long-term investor we are acutely aware that there is a long and troubled history of companies underestimating the likelihood of severe financial threats - Enron, the subprime lending crisis, and asbestos liabilities are three recent examples. All too often we have seen that these momentous issues were looming for many years and eventually resulted in catastrophic consequences for investors. For these reasons, we believe FAS 5 should require companies to disclose all known severe threats whether or not they are expected to be resolved within a year. Recognizing the need to ensure that disclosures are made in a cost-effective manner, Trillium would like to suggest that “remotely probable” risks that are not expected to be resolved within one year be described in a narrative form, but would not need to be quantified other than to specify that they may be severe.

Finally, Trillium believes that in an effort to improve investor access to reliable information, FASB should also do the following:

l Implement the proposed draft language that would require disclosure of all loss contingencies except those that meet certain narrow criteria (FAS 5 Exposure Draft para. A12).

l Implement the proposed draft language that would require a reporting company to quantify the maximum potential loss in circumstances where it cannot estimate the likely loss (FAS 5 Exposure Draft para. 7a).

l In light of the significant concerns raised by the impacts of climate risk, Trillium believes that FASB should expand the scope of both the expanded population of required disclosures, as well as the maximum loss disclosure requirement to include asset impairments. These loss contingencies should be disclosed using the same standards as loss liabilities.

l To the extent possible, limit the use of the “prejudicial” information nondisclosure exemption to the quantification requirement. Trillium believes that this exception should be used rarely. Trillium also believes FASB should retain the proposed requirement that filers must in any event quantify their liabilities even if other information does qualify for the prejudicial exemption (FAS 5 Exposure Draft para. 11).

Thank you for considering our comments.

Sincerely,

Cheryl I. Smith, Ph.D., CFA

Executive Vice President

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Do shifts in tax rates influence the financial markets? It is difficult to say. A Federal Reserve research study found that the Bush tax cuts did not raise stock market values.[1] Conversely, we cannot definitively predict that increases in tax rates will depress stock market values. Also, the market is very forward looking — the recent market declines may have already incorporated the risk of future tax rate changes. Most of the uncertainty about the election will be priced into the market prior to November, and some of that may already have happened.

Senator Obama has called for letting the Bush tax cuts expire, and is considering raising the capital gains tax rate as high as 28% for households with annual income of over $250,000. Senator McCain initially opposed the Bush tax cuts, but is now on record for making them permanent. A Democratic Congress would be unlikely to go along with that.

Senator Obama’s tax plan emphasizes fairness, with an eye toward narrowing the income disparities that have emerged in the American economy. Thus, tax increases are likely to be focused on the wealthiest 3-5% of households. Investment tax policy is only one piece of this multi-faceted fiscal puzzle.

There is some possibility that an Obama administration, aligned with a Democratic Congress, would raise investment tax rates as early as 2009. For those investors considering the timing of realized capital gains, it is highly unlikely that investment tax rates will be lowered, and rates might rise relatively soon. Investors may find it prudent to take more gains in 2008, especially since the recent market declines may allow for some partially offsetting realized losses. On the other hand, depending on one’s circumstances deferring taxes into the future could make sense, even if the tax rate is going to be higher. As always, before making any decisions with material tax consequences investors should consult with their accountant or tax attorney.

The bottom line is that investment tax rates are likely to be going up by 2011, and possibly sooner, but the market impact is uncertain. Tax rates are generally higher under Democratic administrations, but so is economic growth, so statistically the stock market has gained more on average under Democratic presidents.

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For more information about Jonas, see his full biography here.

In his new position with Trillium, Jonas will be focusing on environmental issues, shareholder rights and Trillium’s most recent spin-off organization, Open MIC. Jonas will be engaging corporations in dialogues, coordinating with other socially responsible investors, filing shareholder proposals, addressing public policy debates and promoting our perspective in the media.

Jonas is a 1997 graduate of Vermont Law School where he earned his law degree and a Masters in the Study of Environmental Law. He earned his B.A. with honors in Political Science from the University of Vermont.

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Resolution No. 10 Concerning Human Rights Policies

May 20, 2008

Good morning, Mr. Chairman, Board of Directors & my fellow shareholders. I am presenting this proposal on behalf of Trillium Asset Management Corporation, the Calvert Group, Amnesty International and the General Board of Pensions and Health Benefits of the United Methodist Church. [The proposal received 7.5% support from fellow shareholders.]

Resolution No. 10 calls for a report to shareowners discussing how our investment policies address or could address human rights issues, with a view toward adding appropriate policies and procedures to apply when a company in which we are invested is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.

As you know, the massacres perpetuated in Darfur by the Sudanese government - which the current Administration has labeled a genocide — were the catalyst for this proposal. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civilians in the region have been displaced.

Much of the revenue fueling this conflict is generated by Sudan’s oil industry. With little capital or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.

In 2007, working with organizations that have expertise on the conflict in Sudan, we and other investors began to approach companies in our portfolio with known relationships to these four oil companies. Our request to JP Morgan Chase and other prominent Wall Street firms is that you engage with these companies. Use any influence you have to encourage them to press the Sudanese government to accept the deployment of UN peacekeeping forces. It will mean something to these companies to hear you, as one of their investors and a potential or actual investment banking services provider.

Many of their responses we’ve received from companies we’ve engaged is encouraging. Morgan Stanley has written to companies of concern to express their clients’ concern about Darfur, and empowered its internal “franchise committee” to consider human rights matters when reviewing deals. Citigroup has stated its support for UN Security Council Resolution 1769 calling for the deployment of a peacekeeping force. Merrill Lynch and T. Rowe Price have agreed to review human rights organizations’ corporate profiles in their research processes, and Merrill will consider offering Sudan-free investment products.

JP Morgan Chase has taken this proposal very seriously. We are grateful for the careful attention and consideration that it has been given, and we have been assured that our dialogue with senior management will continue beyond today. Because of the urgency of the crisis in Sudan, however, it is deeply disappointing that JPMC has not taken any measure comparable to those of other firms. Your new statement on human rights is extremely vague in terms of providing guidance on how this company will respond to the situation in Sudan and others like it. In our discussions, we will encourage you to take leadership by sending a clear signal to the global community that JP Morgan Chase will not finance or profit from, directly or indirectly, business activities that violate human rights in the Sudan or elsewhere. Accordingly, we call on shareholders present here today to vote their shares in favor of this proposal, as a strong signal to management that a strong policy is warranted.

Report on How Investment Policies Address Human Rights Issues - JPMorgan Chase & Co.

HUMAN RIGHTS AND OUR INVESTMENT PORTFOLIO

WHEREAS

The issue of Human Rights increasingly impacts investors and companies alike. Company reputations are affected by both direct and indirect involvement in human rights violations. Operating in countries with clear patterns of these violations, such as Sudan and Burma, may heighten reputational and financial risk. Furthermore, companies can face similar risks when they or their suppliers are found to be using forced labor, discriminating against employees, or committing other such abuses.

Proponents believe that institutional investors, including asset management firms such as JPMorgan Chase & Co., bear fiduciary and moral responsibilities as owners of stock in companies that may be connected to human rights violations. Thus we are encouraging the Corporation to report on policies and guidelines that address these issues. This report and guidelines can address how the Corporation as a shareholder can most effectively respond to these human rights issues, including strategies for shareowner engagement with the companies and/or divestment of such stock as appropriate.

RESOLVED

Shareowners request that the Board of Directors authorize and prepare a report to shareowners which discusses how our investment policies address or could address human rights issues, at reasonable cost and excluding proprietary information, by October 2008.

Such a report should review the current investment policies of the Corporation with a view toward adding appropriate policies and procedures to apply when a company in which we are invested, or its subsidiaries or affiliates, is identified as contributing to human rights violations through their businesses or operations in a country with a clear pattern of mass atrocities or genocide.

Supporting Statement

Proponents believe one example, clearly demonstrating the need for this report, concerns the ongoing atrocities in Sudan, and how certain types of foreign investment contribute to the conflict.

Sudan’s western region, Darfur, continues to experience human rights abuses on an unimaginable scale, including systematic and widespread murder, torture, rape, abduction, looting and forced displacement. Since February 2003, hundreds of thousands of civilians have been killed by both deliberate and indiscriminate attacks, and 2.5 million civilians in the region have been displaced.

Much of the revenue fueling this conflict is generated by Sudan’s oil industry. Rather than funding social development, the majority of the revenue is funneled into military expenditures.

With little capital or expertise to efficiently extract its own oil, Sudan relies almost entirely on foreign companies for both. The oil industry in Sudan is dominated by four foreign companies: China National Petroleum Corporation, Petronas of Malaysia, Oil and Natural Gas Corporation of India, and Sinopec of China.

Over 20 US states and 50 colleges have adopted Sudan investment policies, including engagement, screening and divestment, regarding these and other foreign companies operating in certain sectors in Sudan. A 1997 presidential executive order generally bars American companies and citizens from conducting business in Sudan. In 2007, President Bush reinforced that executive order.

Proponents believe that JPMorgan Chase & Co., as an investor, has a responsibility to address this internationally condemned conflict in the Sudan.

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Dear Friends:
I can barely read the news from Burma any more.

In today’s Reuters’ story, the United Nations estimates that up to nearly 2 million people have had their lives ripped apart by Cyclone Nargis. The UN reports that “the number of deaths could range from 63,290 to 101,682, and 220,000 people are reported to be missing.”

The cyclone was the first disaster. The second - and worse - disaster is the Burmese military junta’s playing power politics with the aid provided by the international community. That why when I hear that 220,000 are missing, I fully expect that the junta will just let them die.

And you are still not seeing the full extent of the destruction and death. Why? Because the military regime is working hard to keep journalists - and even humanitarian aid workers - out of the country.

That is not even the worst of it. Incredibly, the junta used its troops and security personnel - this very weekend - to hold a rigged “referendum” on its constitution that would perpetuate its military rule. Any other government would have had the compassion to delay a vote and deploy its forces to help the victims of the disaster.

There comes a time when you have to draw a line in the sand. We must not let Burma’s generals cross the line this time.

Many friends have asked me how they can help the victims of Cyclone Nargis in Burma. I urge you to contribute through the U.S. Campaign for Burma.

The U.S. Campaign for Burma is accepting donations that will be passed through 100% to organizations working effectively in Burma.
First of all, the U.S Campaign for Burma is providing monetary assistance for a number of exceptional Burmese organizations working inside the country. I cannot be more specific for risk of jeopardizing their work and their lives. They are providing assistance directly to those people who have lost their homes and livelihoods.

Secondly, the U.S. Campaign for Burma is helping to organize effective pressure to force the Burmese junta to allow aid into the country without conditions. We have already helped organized demonstrations and set up an email campaign to put pressure on UN Secretary-General Ban Ki-moon and the UN Security Council to take effective action. You can take part through our website action.

Please give generously to the U.S. Campaign for Burma. You can specify exactly how much you donate to Cyclone Nargis relief work and how much you donate to fuel our crucial campaign of pressure on the Burma’s generals. We need to do both to help the Burmese people.
Please go to our website now. Give money, take action, and sign up for news and action alerts at: http://uscampaignforburma.org

And please do not hesitate to circulate this letter to all your friends.

I cannot put into words how sad and angry I am personally. Hundreds of thousands of people in Burma are running out of water, food, and medicine. But the junta will not allow the international community to help.
I appreciate all of your support and please keep the people of Burma in your hearts and minds.

Simon Billenness
Co-chair of the Board of Directors
U.S. Campaign for Burma
simon@uscampaignforburma.org

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Juneau, AK - Earthjustice welcomes protection for polar bears under the Endangered Species Act, but calls on the government to put the brakes on oil and gas activities in polar bear habitat.

“The Arctic is melting and polar bears are feeling the heat,” said Earthjustice attorney Clayton Jernigan. “We need a timeout on further oil activity in the Polar Bear Seas until we all understand what measures are necessary to protect the polar bears, other wildlife and people that live in this rapidly transforming ecosystem.”

Among other steps, the Fish and Wildlife Service must now designate critical habitat for the bears and create a recovery plan. Other federal agencies are now required to work together with Fish and Wildlife Service to closely scrutinize oil and gas activities that could harm polar bears or their habitat.

“It remains to be seen how much this belated listing decision will improve protections for polar bears and their rapidly shrinking habitat,” explained Jernigan. “There is reason for concern, as this listing comes amidst the lame-duck administration’s rush to sell-off pristine Arctic Ocean waters off northern Alaska to the oil industry and approve seismic blasting and drilling in those seas.”

The Bush administration announced that polar bears would be listed as “threatened” under the Endangered Species Act. The administration, however, is employing a loophole called a 4(d) rule that appears calculated to limit protections for the ice bears and their shrinking sea-ice habitat in areas where oil and gas development is planned or proceeding. Essentially the administration has signaled that it will extend the bears no greater protection from oil and gas development than they previously had under the Marine Mammal Protection Act.

“By listing the bear as threatened, instead of endangered, and adopting weaker protections for polar bears and their habitat, the administration is attempting to make it easier for oil and gas development to proceed on a fast track in prime polar bear habitat,” said Jernigan. “Earthjustice will continue to work hard to protect polar bears and their habitat.”

Earthjustice is currently involved in three separate legal actions aimed at protecting polar bears and their remaining habitat in the Polar Bear Seas. In the first lawsuit, a federal court of appeals has put a preliminary halt to hastily approved exploratory drilling in areas of the Beaufort Sea where an oil spill could lead to mass polar bear fatalities, according to government scientists. In the second lawsuit, Earthjustice represents environmental groups and Alaska Natives who are challenging the Bush administration’s sale of oil and gas leases in the Chukchi Sea. The third lawsuit challenges regulations issued under the Marine Mammal Protection Act that allow the oil companies to harass or “take” polar bears they might encounter in the course of their work in the Beaufort Sea region.

The Bush administration announced in January that it would delay its decision to list the polar bear and then pressed forward with its sale of oil and gas leases over vast swaths of prime polar bear habitat in the Chukchi Sea. As a result, the FWS did not determine, under the Endangered Species Act, whether opening this pristine area to oil and gas development will push the polar bear even further towards the brink of extinction. The unfortunate delay in this listing prompted multiple Congressional committee hearings to investigate whether development was given precedence over the continued survival of polar bears. Several bills calling for a time out from oil and gas development in the Polar Bear Seas are currently working their way through Congress.

Earthjustice will continue efforts to ensure that oil development in the Alaskan Arctic does not leave polar bears with no place left to call home.

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The Beaufort and Chukchi Seas are the two seas north of Alaska that make up the Polar Bear Seas of the Arctic Ocean.

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Enhanced Analytics Initiative (EAI) was the winner of the Bavaria Award for Impact, and Bainbridge Graduate Institute (BGI) won the Bavaria Award for Innovation.

Read the full press release here

View the video of the event (presented in 3 parts):

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Jump to video highlights: View Comptroller Thomspon’s comments here Opening remarks Defining “open” and “closed” Access to media and civil rights The industry’s take Net neutrality and wireless (Part 1) and Net neutrality and wireless (Part 2) Wall Street’s take Hot topics in the coming year

For more clips, visit http://www.openmic.org/workgroup

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Statement to be submitted at BP annual meeting today in London

Contacts: Shelley Alpern, Trillium Asset Management Corporation
(617) 292-8026, x 248

Lauren Compere, Boston Common Asset Management
(617) 720-5557

April 17, 2008 (Boston) - A group of American and British investors released a statement today expressing disappointment at BP’s (NYSE: BP) investment in the Canadian tar sands, calling the move a “disturbing step backwards.” A representative from the Ecumenical Council for Corporate Responsibility intends the statement at BP’s annual stockholder meeting, which is taking place today at ExCeL London in London Docklands at 11:30 a.m. GMT. The investor group includes Trillium Asset Management Corporation (”Trillium”), Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, the Ecumenical Council for Corporate Responsibility, Rathbone Greenbank Investments, Newground Investments, Pax World, Northstar Asset Management, Sierra Club Funds and Green Century Capital Management.

In December 2007, BP announced its entry into the tar sands business via two joint ventures with Husky Energy of Canada (Toronto: HSE.TO) with a total joint investment of $3 billion. Husky brings its “Sunrise” oil sand project to an upstream partnership, and BP will contribute a refinery based in Toledo, OH. The first output is expected to commence in 2012, and build to 200,000 barrels per day within a decade.

Citing the heavy environmental footprint of the tar sands, which have caused Canada to fall behind in meeting its Kyoto Protocol commitments, the statement also raises questions about BP’s long term business strategy. “We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and question whether this may undermine [BP’s] future competitiveness…..We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader to be offset by the harsh environmental impacts unleashed by tar sands development.”

The life-cycle environmental impacts of tar sands-derived oil, or bitumen, compare poorly to that of conventionally derived fossil fuel. Extracting and refining bitumen produces nearly triple the greenhouse gas emissions (GHGs) of traditional oil extraction and requires 2-5 barrels of fresh water for every barrel extracted. The reliance on the Athabasca River as a source of fresh water, along with the fragmentation of natural habitats, is endangering numerous species of bird and mammal. In addition, the province of Alberta is struggling to cope with the stresses that rapid development has placed on its social and physical infrastructure.

The statement also notes the investors’ skepticism that today’s “best practices” methodologies for extracting tar sands will be adequate enough to protect the environment. “We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign.” It quotes a report from Canada’s independent Pembina Institute that concludes, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” * Using SAGD does not lower carbon emissions.

ConocoPhillips (NYSE: COP) and Chevron (NYSE: CVX) are facing shareholder proposals this spring calling for public reporting on the environmental and social impacts of the companies’ tar sands development. Those proposals have been filed by Trillium and Green Century Capital Management, respectively.

“We had understood from BP that the company would not participate in the tar sands due to their high carbon footprint, and therefore this came as a big surprise and disappointment,” said Shelley Alpern, vice president of Trillium, a Boston-based investment firm. “This should simply be a no-go area for BP. We expect better the company that aspires to go beyond petroleum.”

The growing backlash against tar sands is spreading beyond Canadian environmental groups to include and other international non-governmental organizations and even the US government. Last year’s US energy bill included a provision that banned the federal government from purchasing any fuels whose life-cycle GHG emissions exceed those of conventional fossil fuels.

“For over 12 years, we have held BP up as a ‘best-in-class’ integrated oil company when we were not able to invest in their U.S. counterparts due to poor environmental and human rights records. In recent years though given the range of concerns that we have had to raise with BP from safety management to corporate governance, it has been much more difficult to back up this claim. Their involvement in tar sands is just the last in a series of disappointments on their sustainability approach,” stated Lauren Compere, Director of Shareholder Advocacy at Boston Common Asset Management.

At the stockholder meeting, a representative of the shareholder group intends to question BP’s leadership on its plans to reduce or offset greenhouse gas emissions from the Sunrise project; what assurances the company can provide that best practices will be applied to the project; how BP will engage in public-private efforts to protect the Canadian boreal forest; and how the company is assessing the risks to reputation, health and safety posed by the tar sands.

# # # #

Joint Statement on BP’s Entry into the Canadian Tar Sands

April 17, 2008

The following investors wish to go on record at this shareholder meeting concerning BP’s entry into the Alberta tar sands: Trillium, Boston Common Asset Management, MMA Praxis Mutual Funds, Christian Brothers Investment Services, Green Century Capital Management…..

We are long-term investors in BP. From our perspective, BP has been an attractive investment in no small part because of its pursuit of environmental and social sustainability, its robust stakeholder engagement programs, and its development of solar, wind and biofuels businesses. For this reason, we are deeply disappointed by BP’s entry into the Canadian oil sands.

On a comparative basis, oil sands development offers some of the worst life-cycle environmental impacts of any fossil fuel, emitting emits nearly triple the GHG emissions of traditional oil extraction; using 2-5 barrels of fresh water for every barrel of oil extracted; and endangering numerous species of birds and mammals. Canada has fallen behind in its Kyoto commitments due to oil sands development. Even if managed superbly, the oversized environmental footprint of the tar sands is unavoidable.

We are not reassured by the fact that BP’s tar sands investments will rely on the method known as Steam Assisted Gravity Drainage, which is touted in some quarters as the greener way to develop tar sands. SAGD may be less destructive than open pit mining, but is by no means benign. According to Canada’s independent Pembina Institute, “there will be more long-term deforestation from SAGD development than if the entire mineable oil sands region is completely cleared. The ecological effects will be many times greater still, because the SAGD disturbances will be dispersed across a vast region.” *

We believe that this is a disturbing step backwards for BP, whose very logo and tag line, “Beyond Petroleum” communicate the highest aspirations. Prior to BP’s announcement in December, we had understood that our company would not pursue tar sands development due to the heavy carbon footprint of both the operations and the end-product. We fear the implication that BP is retreating from an excellent strategic position designed to exploit the long term shift away from high-carbon fuel sources, and we question whether this may undermine our future competitiveness. We do not wish to see the benefits of BP’s leadership as a renewable energy innovator and market leader being offset by the harsh environmental impacts unleashed by tar sands development.

We respectfully request answers to the following questions:

Ø How will BP reduce or offset the greenhouse gas emissions from the Sunrise project?

Ø What assurances can BP provide that best practices will be applied to the project?

Ø How will BP engage in public-private efforts to protect the Canadian boreal forest in the aggregate?

Ø And what risks to reputation, health and safety does BP anticipate if it fails to address these issues related to the tar sands?

We have found BP to be quite responsive to our concerns in the past and invite you to dialogue with us on these issues. Thank you.

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The investment ecosystem has reached a tipping point and the interest in responsible, sustainable investing is surging. Asset owners with over $10 trillion have signed up to the UN Principles for Responsible Investment. The Investor Network on Climate Risk now has over $5 trillion behind it. The leading investment consultant to Foundations will now provide Mission Related Investing services. More corporations are institutionalizing sustainability concepts into their organizations and business education is inching away from the blinkered study of money making toward imagining socially positive enterprises with multiple bottom lines. A recent online survey by Cone Inc. found that 79 percent of full-time workers under the age of 25 want to work for a company that cares about how it affects or contrib­utes to society.

As the new players under this growing sustainability tent get to work, they will eventually pose the most fundamental of questions: what is the objective of investing? By custom, and at times by regulation, the answer has been: maximize risk-adjusted financial returns. With this narrow, short-term view, environmental and social considerations have been deemed in conflict with maximizing wealth. Yet, can we really thrive while ignoring the explicit bottom lines of environmental sustainability and social justice?

The easy-to-grab, low-hanging fruit in sustainable investing is being harvested with a single-bottom-line approach. Activities that reduce the use of fossil fuels enhance the financial bottom line. With $100 oil, the obvious win-win activity is energy ef­ficiency. Wal-Mart has gone all-in for a definition of sustainability focused primarily on reducing energy use by the company, its suppliers and its customers. This is a wonderful development, but only the first of many toward a truly sustainable economy and financial system.

Here at Trillium Asset Management Corporation we are im­proving our own sustainability performance through an inspiring grassroots effort initiated by our newly formed Green Team. The Greens recently sat us down, vegetarian pizza in hand, as we watched the clever, concise and internet-delivered Story of Stuff. In 20 minutes the narrator, Annie Leon­ard, illustrates the social and environmental damage our current straight-line production system generates, from extraction to production, distribution to consumption and, finally, disposal to landfill. She ends with a vision of an alternative production sys­tem that is circular as opposed to linear, that recycles as opposed to exploits and that is cognizant at every juncture of the human impact of the material economy.

This kind of deep sustainability thinking prompts a recasting of the most fundamental investment questions. As investors and capitalists, we embrace investing for financial return. The evolved fiduciary question becomes: what is the best risk-adjusted, long-term financial return we can generate that is sustainable and restorative from both a human and planetary perspective? Going down this essential path means acknowledging that many legal investments are neither moral nor sustainable, damaging the soul as well as the environment and risky in the long run. Truly sus­tainable investing expands the definition of wealth generation, risk and return, illuminating the complex tradeoffs we all face as individuals and institutions.

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According to Coal Moratorium Now! and the Rainforest Ac­tion Network (RAN), fifty-nine coal plants (of more than 150 proposed between 2000 and 2006) were cancelled or shelved in 2007. Carbon emissions played a role in at least 15 cancel­lations, and coal plants disappeared entirely from some utili­ties’ long-range plans due to increasing regulatory scrutiny of long-range integrated resource plans. In some states, regulators are starting to favor utility-scale renewables over coal. Inter­estingly, more plants have been abandoned by their sponsors than rejected outright by regulators, courts or local authorities. Rising construction costs, insufficient financing or lack of sub­sidies and even lower demand estimates were contributing fac­tors along with climate change.

At Trillium Asset Management Corporation, it’s always been our policy not to invest in mining companies, and we try to avoid holding electric power companies that favor coal over cleaner sources of energy. But fortunately our hands are not tied when it comes to advocacy. As my colleague Lauren McLean writes about in this issue (see p. 10), we’ve used our voice at Alliant Energy to promote greater development of energy efficiency incentives. We’re also on Bank of America’s case. The Ceres member has received a lot of praise for being the first bank to adopt an “intensity” (reduction per unit) GHG target for its energy and utility lending portfolio; its goal is to realize a 7 percent decrease by 2008 from a 2004 benchmark. It is on its way to meeting that goal. So what’s wrong with this picture? It’s simple. Reductions per unit are all well and good, unless overall (”absolute”) emissions are going up - as Bank of America’s did by 11 percent between 2005 and 2007.

The company has refused to answer shareholders’ questions as to why this is. Could it have something to do with RAN’s re­search identifying the Bank as one of the top financiers of coal power plants? We’re starting to wonder if the kudos Bank of America is getting for its intensity reduction goals isn’t a little like patting a dieter on the back for reducing calories per meal even as he eats so many meals that he’s put on 11 percent more pounds since 2005.

This metaphorical epiphany was one of the motives behind our shareholder resolution calling on the Bank to embrace a moratorium on financing coal-fired power plants and coal min­ing by means of mountain top removal (MTR). A moratorium on building new coal plants is a radical idea that’s increasingly supported by non-radicals, such as the U.S. public. Seventy-five percent of American adults would support a five-year morato­rium on new coal plants if funding for renewable alternatives was increased and efficiency standards were tightened.¹

Mountain top removal is a double whammy on the climate front. The method clear-cuts forests and blasts away mountain tops to extract coal. The rubble is dumped in the valleys below, filling streams and destroying water resources. Between 1992 and 2012, the US Environmental Protection Agency estimates that MTR will have destroyed approximately 7 percent of Ap­palachian forests in coal mining regions studied.

Over 110 coal-fired electrical generating plants and synfuels plants are currently under construction or in the planning pro­cess. In addition to bearing their share of ethical responsibility for the disaster that is coal, those that finance it assume addi­tional financial risk due to rising construction costs for coal plants and the eventual attachment of a price tag for emitting carbon (which Bank of America recently estimated at $20-$40 a ton in the absence of federal regulation).

Coal enthusiasts insist that capturing and storing car­bon underground will solve the GHG problem, but as a new report from the Interfaith Center on Corporate Responsi­bility observes, these technologies are untested at actual plant-scale sizes.²

Bank of America successfully petitioned the Securities and Exchange Commission to exclude our proposal from the proxy ballot. However, Citigroup’s shareholders will vote on a similar resolution filed by Boston Common Asset Management. Vote Yes on Proposal 9. Coal is a bad investment.

Notes

1. “A Post Fossi-Fuel America: Are Americans Ready to Make the Shift?” opinion survey conducted by Opinion Research Corporation, October 18, 2007.

2. ICCR and Synapse Energy Economics, Inc., The Risks Of Investing In New Coal-Fired Generating Facilities, p. 29.

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So what’s a shareholder to do, in this day and age of climate change, when a company in your portfolio is arguing to a utili­ties commission that their predicted power demand requires them to build a coal-fired power plant to meet it? Since a request to turn down the heat in an Iowa winter probably wouldn’t go very far, we took a more productive approach: we filed a shareholder reso­lution asking Alliant Energy to report on their efforts to curb future demand through incentives to increase energy efficiency for their customers.

Last May, a Standard & Poors report indicated that energy efficiency is likely to emerge as a major part of the solu­tion to climate change, and warned that “utilities may be affected, if revenues and profits decline with consumption,” unless policies are changed to provide incentives for utilities to reduce consumption of electricity. “Decoupling” revenues and profits from consumption (making a utility volume-insensitive) has emerged as one of the more effective ways to reduce carbon emissions, and as more states consider the option, we wanted to be sure that a company whose returns make a difference to our clients was working on the same issue where they do business.

Our concern included the impact upon shareholder value that could be brought about from the reputation risks associat­ed with their proposal to build a 630 megawatt coal-fired power plant in Iowa that would emit several million tons of carbon dioxide a year. No one across the political spectrum doubts that carbon trading and other kinds of carbon constraints are increasingly imminent, meaning that cost estimates for a plant like this can easily rise as carbon starts to trade. We hoped to see a serious commitment to efficiency as a solution to reduc­ing demand, and thereby reducing carbon linked risks, be taken by the company. Through our negotiations around our resolutions, we think we’ve gotten closer.

Working with Ceres, we were pleased to agree to withdraw our shareholder resolution when Alliant agreed to publish a report on their energy efficiency efforts. They were willing to talk with us at some length, and made available many of their experts on policy, efficiency and demand projections to answer our ques­tions. Alliant management was clear that they’d rather work with us than against our resolution, and agreed to honor our request to publish a report to shed some light on their plans to mitigate demand as a method to build shareholder value.

Of course, it’s too soon to con­clude, “problem solved.” Citizens in Iowa dispute Alliant’s demand projec­tions, which the company has agreed to explain in this report. We’re starting to see coal-fired plants cancelled in places like Kansas, Nevada and even the fossil-fuel loving Idaho because of the mounting carbon costs and concerted citizen efforts to stop them. We’d like to see Alli­ant and other utilities take more proactive steps to curb their demand in the near term, and to propose more renewable en­ergy projects for the demand that just won’t go away. Because let’s face it - not every mom wants to wear hats and sweaters at home in the winter just to keep the thermostat hovering at 60 degrees.

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Mercy Loan Fund (MLF), along with its parent organi­zation Mercy Housing, Inc. (MHI), works to create a more humane world where poverty is alleviated, communities are healthy and all people can develop their full potential.

MLF provides capital to community-based affordable hous­ing developers with financing needs that are unmet through traditional financial institutions. MLF’s loans are used to develop, finance and operate affordable, program-enriched housing for families, seniors and people with special needs who lack the economic resources to access quality, safe, hous­ing opportunities.

History

In 1981, the Sisters of Mercy of Omaha found that a lack of adequate housing was the root cause of many of the health and education problems they saw in their community. With an ini­tial investment of $500,000, they founded MHI in Nebraska.

The Sisters began by acquiring properties that were at risk of being sold at market rate. They renovated the properties and leased them to low-income people. The Sisters realized that they wanted to provide services and programs that would help residents stabilize their lives and thrive in the community.

MLF was founded in 1985 to provide financing for non-prof­it organizations, enabling them to develop affordable housing in their communities. MLF finances the development of single- and multi-family homes for rental and homeownership.

Programs / Impact

MHI, with support from MLF, has developed more than 19,100 affordable homes, both rental and single family, serving more than 58,000 people in 31 states, on any given day. An ad­ditional 8,153 homes are in the pre-development, construction or concept phase.

MHI employs over 1,160 people nationwide providing property management and on-site resident programs including computer centers, arts programs, health classes, financial edu­cation programs, employment initiatives and homeownership seminars that are funded through grants and donations.

MLF loans have ranged from $25,000 to $2.1 million, with an average term of 3.5 years. Some examples include:

• Lines of credit to affordable homeownership programs, used to purchase and rehabilitate single-family homes for sale;
• A predevelopment loan to assist with acquisition and rehabilitation of a single-room occupancy apartment building for people who are single, disabled or living with HIV/AIDS;
• A gap loan to a residents’ cooperative to purchase a 150-space mobile home park for seniors; and,
• A loan to help a tenants’ association purchase and convert a 15-unit rental property into a cooperative.

Client Population

The median annual income of families at MHI is $18,892. The median annual income of seniors is $12,106; and the median income of special needs residents is $9,167. All residents have household incomes below 80 percent area median income.

Seventy-eight percent of residents are families, 14 percent are seniors, 8 percent are people with special needs, includ­ing people with HIV/AIDS, formerly homeless, and people with physical and mental impairments. Currently, 58 percent of those served by MLF’s loans are ethnic minorities and 61 percent are female

Investing with MLF

On behalf of our clients, Trillium Asset Management Cor­poration (”Trillium”) made its first investment with MLF in 1990. Trillium, at a client’s request, will make investments in MLF of at least $5,000 for a term of not less than two years.

MLF is a registered with the Treasury Department as a Com­munity Development Financial Institution and is a member of Opportunity Finance Network.

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Applied Materials has made a long-term strategic decision to become a force in solar power equipment, and has used acquisitions to penetrate the business. Most recently, Applied paid approximately $475 million to purchase HCT Shaping, a privately held Swiss manufacturer of wire saws used to slice silicon wafers. Applied’s efforts were rewarded in March when it won a multi-year $1.9 billion contract to supply equipment for multiple solar panel factories overseas.

Applied has a strong environmental management system and comprehensive reporting. It has detailed disclosure of greenhouse gas emissions, having reduced emissions 50 percent normalized to revenues from 2002 to 2004. AMAT is developing an Environmental Value Systems Analysis with the University of California, Berkeley to assess the environmental costs of owning and operating semiconductor fabrication tools with the goal of establishing market value for cost-saving eco-efficient product design and operation. Between 2002 and 2004, it cut hazardous waste by 43 percent and increased recycling of non-hazardous waste by 25 percent. A variety of products are used to significantly reduce greenhouse gases for clients including Remote Clean, a Plasma Exhaust Gas Abatement System, and a vacuum pump that reduces energy usage by 75 percent.

Applied Materials

3050 Bowers Avenue
PO Box 58039
Santa Clara, CA 95052-8039
Phone: 408-727-5555
www.appliedmaterials.com

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Chipotle is a well-executed concept and great growth-stock story. The company has consistently beaten consensus earnings estimates since going public and over the last five years revenues have grown between 30 and 55 percent. Strong growth across all of Chipotle’s markets is driven by expansion and increasing same store sales in what is considered a very challenging economic backdrop for restaurants.

Chipotle is a sustainability leader in the restaurant industry. The company serves more naturally raised meat per year than any other restaurant in the United States. All of Chipotle’s restaurants serve naturally raised pork, 85 percent serve naturally raised chicken, and over 50 percent serve naturally raised beef. No meat is purchased from factory farms and farms are visited to ensure high quality. Today 25 percent of beans are organic and the company is increasing that percentage as greater supply becomes available. The company donates money to the Land Institute, which conducts sustainable agriculture research. The sour cream and cheese contain no synthetic growth hormone.

Chipotle also uses many elements of sustainable architecture in its restaurants including recycled content in 60 to 90 percent of their interiors, low VOC paints, tank-less water heaters, low-E windows and energy efficient lighting. Chipotle is currently testing a recycling system in 25 stores, which will be rolled out to all stores once the design is satisfactory.

Chipotle Mexican Grill, Inc.

1543 Wazee Street

Suite 200

Denver, CO 80202-1442

United States - Phone: 303-595-4000

www.chipotle.com

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