When considering investments in publicly traded food and beverage companies, a major focus for Trillium is on companies participating in the natural and organic space. Not only are these companies leaders in the health and wellness trend, their approach to raw material sourcing (agricultural commodities) is inherently more sustainable. We have also gravitated toward traditional food companies that are addressing the impacts of climate change in their raw material supply chain. With greater consumer awareness of the purity of food (no additives or GMOs), growing expectation with regard to the transparency of how and where our food is grown, as well as the environmental and social impacts of food production, these companies also benefit from strong relationships with their supplier base and a deeper knowledge of how ingredients travel from farm to fork…

You can read more here.

Alaska Native Tribes, Jewelers, Investors and Conservation Groups Applaud EPA for Next Major Step in Protecting the World’s Largest Wild Salmon Fishery from Pebble Mine

July 18, 2014 // Washington, D.C.: An unusual group of Alaska Native leaders, commercial fishermen, investors, jewelers and conservation organizations applauded the Environmental Protection Agency’s (EPA) release today of its Proposed Determination – a detailed plan for restricting mine waste disposal from the proposed Pebble Mine in Alaska’s Bristol Bay watershed. The EPA has authority under Section 404(c) of the Clean Water Act to restrict mine waste disposal that will harm important fisheries. Alaska’s Bristol Bay supports the largest and most productive wild salmon fishery in the world, supplying half of the world’s supply of wild sockeye salmon and generating 14,000 annual jobs and over $450 million in annual revenue.

“It’s been a long time coming. We’re happy to see the EPA complete the next major step in protecting the Bristol Bay salmon fishery.” said Luki Akelkok, chairman of Nunamta Aulukestai, an association of ten Bristol Bay Native Tribes and Native Village Corporations. “Our culture and economy depend on the long-term health of these salmon runs.”

“As a jeweler whose business depends on precious metals, and therefore mining, we have nevertheless long opposed the development of new mines that threaten areas of high ecological and cultural value,” said Michael J. Kowalski, Chairman and CEO, Tiffany & Co. He continued, “We applaud the EPA for taking this vital next step under the Clean Water Act to safeguard Bristol Bay and the communities and fishery it supports.”

Alaska Native Tribes and commercial fishermen petitioned the EPA in 2010, asking the agency to use its power under Section 404(c) of the Clean Water Act to protect the fishery by restricting harmful mine waste disposal. There is broad support for this approach. Of the 890,000 public comments received by the EPA on its study of mining’s potential impacts on the famed fishery, 98% of Bristol Bay comments, 85% of Alaska comments, and 73% of national comments support EPA action to protect Bristol Bay.

“We asked the EPA to step in to protect our fishery from the Pebble Mine because the State of Alaska wasn’t listening to us,” said Kim Williams, executive director of Nunamta Aulukestai. “The future of our people and 14,000 jobs are at risk. We’re glad the EPA is doing its job.”

“Our nation’s most prolific salmon fishery is one step closer to being protected from toxic mine waste,” said Jennifer Krill, executive director of Earthworks, a national conservation group. “We’ll be looking at the details closely, and participating in the hearings, and encourage everyone else to do so.”

The EPA completed a study of the potential impacts to the salmon fishery from developing the proposed Pebble Mine in January 2014, which found that it would likely result in significant and irreversible harm to the salmon and the people and industries that rely on them.

The steps in the Clean Water Act Section 404(c) review process are:

Step 1 – Consultation period with U.S. Army Corps of Engineers and owners of the site.

Step 2 – Publication of Proposed Determination, including proposed prohibitions or restrictions on mining the Pebble deposit, initiated today.

Step 3 – Review of public comments and development of Recommended Determination by EPA Regional Administrator to Assistant Administrator for Water at EPA Headquarters in Washington, DC.

Step 4 – Second consultation period with the Army Corps and site owners and development of Final Determination by Assistant Administrator for Water, including any final prohibitions or restrictions on mining the Pebble deposit.

“We are pleased to see the EPA take this important step towards both regulatory certainty and protection for a vital natural resource,” said Jonas Kron, senior vice president at Trillium Asset Management. “Investors understand that this science based approach provides for a predictable and stable investment environment that supports sustainable economic development.”

Over 100 jewelers have expressed support for protecting the Bristol Bay watershed. In a recent letter, 29 investors, representing billions in assets, expressed support for the EPA 404(c) process as a responsible approach when considering large-scale mineral development. Commercial fishermen, churches, restaurants, supermarkets, chefs, and other diverse interests have also expressed support for EPA 404(c) action.

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For more information:

Bonnie Gestring, Earthworks, 406-549-7361, bgestring@earthworksaction.org

Kim Williams, Nunamta Aulukestai, 907-843-0875, nunamtaexdir@gmail.com

This release was originally published by Earthworks, which is solely responsible for its content.

FedEx Increasingly Embroiled in Ongoing Controversy over “Redskins” Name

July 16, 2014: Last week, FedEx won approval from the Securities and Exchange Commission for its effort to remove a shareholder proposal focused on the ongoing controversy over the “Redskins” name from its upcoming annual proxy. Investors filed a shareholder proposal in April with FedEx Corporation (NYSE:FDX) asking the company to “respond to reputational damage from its association with the Washington D.C. NFL franchise team” and its name controversy. FedEx possesses the naming rights to the team’s stadium, FedExField, in Landover, Maryland through 2026.

Investors are now urging FedEx to do the right thing and permit shareholders to raise the issue in the company proxy and at the FedEx Annual Shareowner’s Meeting on September 29, 2014 in Memphis, Tennessee.

The team name, “Redskins”, is a dehumanizing label that characterizes people by skin color. The term has long-standing hateful and offensive connotations.

The Oneida Trust of the Oneida Tribe of Indians of Wisconsin is the lead filer of the proposal, with Mashantucket (Western) Pequot Tribe Endowment Trust, Mercy Investment Services, and Calvert Investments serving as co-filers, along with support and assistance from Boston Common Asset Management, Walden Asset Management and Trillium Asset Management.

Investors fully support today’s statement from Councilman Brandon Stevens of the Oneida Tribe:

“We regret that FedEx is censoring our effort to promote an open and productive discussion amongst FedEx shareholders on this critically important issue,” said Councilman Brandon Stevens of the Oneida Tribe. “It is not too late for FedEx and CEO Fred Smith to do the right thing. They should demonstrate their commitment to diversity and respect for Native American culture and tradition by taking a stand against this racist team name and at the very least allow the proposal to move forward. This issue is not going away – FedEx and Mr. Smith will still have to face shareholder action from the floor of the annual meeting in September.”

“We firmly believe investors are entitled to debate this issue in the proxy and the FedEx board and management should not shy away from addressing the reputational risks linked to its sponsorship of the Washington NFL team franchise. Perceptions that FedEx is supporting disparaging and racist language must be addressed,” said Jonas D. Kron, Senior Vice President, Director of Shareholder Advocacy at Trillium Asset Management, LLC. “Trying to suppress discussion will not be productive.”

Two hundred civil rights organizations, including the NAACP and every single national American Indian organization, have condemned the name. Even national voices as disparate as President Obama, U.S. Senator Harry Reid, and Washington Post columnist Charles Krauthammer have weighed in against the team name. Sportswriters and newspapers have also chosen to stop the use of the name. For example, NBC’s Bob Costas of Sunday Night Football, Sports Illustrated’s Peter King and USA Today’s Christine Brennan all publicly concluded the team name is a racial slur.

The Washington, D.C. City Council in November 2013 unanimously approved a resolution condemning the name. In May, 50 U.S. Senators sent letters to NFL Commissioner Roger Goodell urging him to push for a name change as “The NFL can no longer ignore this and perpetuate the use of this name as anything but what it is: a racial slur.”

FedEx has an opportunity to demonstrate leadership as a team sponsor and to examine its involvement in supporting racial stereotypes,” said Reed Montague, Sustainability Analyst at Calvert Investments. “Without clear disclosure on how the company plans to address the issue, it will continue to face heightened reputational risk.

With its corporate name on FedExField, the company continues to be associated with the controversial team name. Newspapers and media outlets use FedEx in stories, articles and headlines related to the Washington team. Last week, the Native Voice Network launched a national campaign to boycott FedEx.

“There is growing consensus that the team should not use a symbol that offends Native Americans. If FedEx truly believes that its name is ‘synonymous with integrity and reliability,’ and that its ‘reputation is an important strategic asset,’ FedEx must take steps to ‘protect and enhance it.’  If not, the FedEx Code of Business Conduct and Ethics is meaningless. ‘FedEx’ is associated with racial controversy as we illustrate by the diversity and variety of statements and organizations listed in our shareholder resolution. It is an issue of justice and compassion.  Past experience tells us that pressure for change will build, so why not move now,” said Sister Valerie Heinonen, o.s.u., Mercy Investment Services, Inc.

“We encourage FedEx to fully appreciate the emotional violence that racist stereotypes do to Native youth, including the current disparaging name of the Washington D.C. NFL football organization,” said Steven Heim, Managing Director, Boston Common Asset Management, LLC. “We urge FedEx to end its financial ties until the racist name is changed or distance its association with such disparagement.”

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For more information:

Jonas D. Kron, Trillium Asset Management, LLC jkron@trilliuminvest.com, 503-894-7551

Melinda Lovins, Calvert Investments, Inc., melinda.lovins@calvert.com, 301-657-7089

Sister Valerie Heinonen, o.s.u., Mercy Investment Services, Inc., vheinonen@sistersofmercy.org, 212-674-2542 and 631-363-2422 x2048

Steven Heim, Boston Common Asset Management, LLC, sheim@bostoncommonasset.com, 617-785-9527

July 15, 2014: The Sustainability Group of Loring, Wolcott & Coolidge and Trillium Asset Management commend Home Depot for taking concrete action to protect bees and other pollinators by reducing the use of neonicotinoids (neonics). Home Depot recently announced that by the fourth quarter of 2014, it will require suppliers to label all plants treated with neonics, and will work with suppliers to eliminate neonics in plant production. In addition, the company is also providing its customers with a list of neonic-free alternatives for home application.

Home Depot’s announcement comes in the wake of the National Resources Defense Council petition to the EPA requesting it withdraw its approval of neonics in light of evidence that they harm bees and other pollinators. Neonics have rapidly become the most widely used group of insecticides globally, with a marketshare of 25%.

Investors continue to engage a number of companies exposed to risks related to declining pollinator populations. Last fall, a consortium of investors led by Trillium Asset Management and The Sustainability Group approached 19 companies including home improvement and food retailers, and food producers. Home Depot proved one of only three companies willing to take definitive action.

We commend Home Depot for its leadership on this crucial issue.

So far in 2014, we have been broadly right on the level of valuation, and somewhat too optimistic about the strength of the economy.

The second quarter of 2014 brought welcome relief to U.S. investors. Large capitalization stocks, as measured by the S&P 500, returned 5.05% for the quarter, bringing the year to date return to 7.03%. Small and mid-sized stocks, as measured by the S&P 1000, returned a still-respectable 3.65%, while the Barclays Government/Credit Bond Index returned 1.23%. Stock returns strengthened through the quarter, with May and June results substantially better than April’s…

You can download Trillium’s complete Market Commentary for the second quarter of 2014 here.

When considering investments in publicly traded food and beverage companies, a major focus for Trillium has been on companies participating in the natural and organic space. Not only are these companies leaders in the health and wellness trend, their approach to raw material sourcing (agricultural commodities) is inherently more sustainable. We have also gravitated toward traditional food companies that are addressing the impacts of climate change in their raw material supply chain. With greater consumer awareness of the purity of food (no additives or GMOs), growing expectation with regard to the transparency of how and where our food is grown, as well as the environmental and social impacts of food production, these companies also benefit from strong relationships with their supplier base and a deeper knowledge of how ingredients travel from farm to fork.

Agriculture is responsible for 70% of global water withdrawal and 80 to 90% of water consumption. While most food companies have programs to improve the water efficiency of their direct operations, there is limited attention to water usage at the raw-material level. Unlike other sectors that withdraw more water than they consume, agriculture consumes most of the water that they withdraw. As a result, agriculture participates in increasing water scarcity globally and is, by far, the sector that is and will be the most affected by water stress going forward. Negative impacts will include higher prices, operational disruptions and potentially, a scarce supply of key ingredients. Industry leaders are already tackling water use at the supplier level and are working with farms on efficient irrigation and sustainable agriculture methods.

There is an increased trend of using third-party standards such as Rainforest Alliance, Fair Trade, and Fair Food Program Standards as a way of addressing social and environmental concerns and promoting responsible sourcing of key commodities. Companies are being asked to disclose human and labor rights standards and to track performance in their agricultural supply chain. This is critical because, in developing countries, three out of four people depend on agriculture for their livelihoods. Standard setting to date has focused on coffee, chocolate, palm oil, seafood, and beef/dairy. Companies that fail to address shoppers’ and other key stakeholders expectations on responsible procurement and production of food face the risk of consumer backlash and loss of their competitive advantage.

The availability of agricultural commodities in large quantities at an affordable price is threatened by resource depletion and land degradation with the lack of traceability — a significant obstacle to sustainable sourcing.

Below are a few examples of food companies that we are holding in our clients’ portfolios in the second quarter of 2014:

As the largest publicly traded wholesale distributor to the natural and organic foods industry, United Natural Foods (NASDAQ: UNFI) is a strong supporter of sustainable agriculture and organics and has led campaigns to push for labeling food containing GMOs. The company has a strong corporate social responsibility policy, implements numerous programs to green its own operations, and offers a broad range of organic products.

Unilever’s (NYSE: UL) reporting on ESG issues is strong and the company is relatively transparent. Its sustainability report is in accordance with the GRI G3 Guidelines and is externally verified. The company’s water and carbon emissions intensity are both well below the industry average and the company has programs in place to further reduce water use and greenhouse gas (GHG) emissions. The Company launched its Sustainable Living Plan in 2010 with a goal to double the size of its business while reducing its overall environmental impact across its entire value chain. Unilever set a goal to sustainably source 100% of its agricultural raw materials—representing one-half of its total raw materials—by 2020. At the end of 2013, the company was nearly halfway toward its goal. By the end of 2014, the Company expects all the palm oil it buys (roughly 3% of the world’s volume) to be traceable to sources known to meet sustainability standards. The Company engaged with 500,000 smallholder farmers in 2013 to improve their livelihoods and supports small-scale distributors (door-to-door) in poor rural communities, providing training and a means to be self-sufficient.

Working with farmers to provide tools, training, and materials to help families combat the “thin months” of food scarcity, Keurig Green Mountain (NASDAQ: GMCR) has very strong environmental programs and works with coffee growers to promote sustainable growing practices including managing water resources. The company offers a range of Organic and Fair Trade certified products and was the world’s largest purchaser of Fair Trade certified coffee in 2013, purchasing 56.8 million pounds. In addition, the Company has achieved energy reduction goals and has a set of vendor expectations that include supplier environmental responsibilities.

Sustainable values have been part of Annie’s (NYSE: BNNY) culture since its inception. The Company released its third sustainability report in FY 2013 despite having just gone public in 2012. In 2013, organic products represented 86% of Annie’s sales, and the Company is working with the Non-GMO Project to verify that all its products are GMO-free. The Company supports a more sustainable food system through agricultural scholarships, grants, charitable donations, and employee volunteer hours. Annie’s is committed to measuring and reporting its energy use and GHG emissions and is working to reduce them at all levels. The Company has also partnered with non-profit organizations including Native Energy and Climate Counts that are working to shift industry toward renewable energy use and get us on a path to climate stabilization.

Given the tremendous environmental impact that agricultural and food companies have, food system advocacy has been a mainstay of Trillium’s shareholder activism for decades.

Agriculture contributes to, and is directly impacted by, climate change through deforestation and the use of fossil fuels to fertilize and harvest. As socially responsible investors, we are also concerned with human rights, animal welfare, and strengthening sustainable agricultural supply chains. Below are some highlights of Trillium’s corporate engagement in the area of agricultural and food systems:

Animal Welfare

More than 20 years ago, Trillium was the first investment firm to file a shareholder proposal on the issue of farm animal welfare. Working with Animal Rights International, we helped persuade McDonald’s* to adopt a first-ever policy regarding the humane treatment of farm animals.

In 2006, responding to documented evidence of animal abuse at pharmaceutical companies’ animal research subcontractors, we participated in a campaign urging drug companies to extend their animal welfare policies to all subcontracted laboratories. We filed a proposal urging Eli Lilly* to take steps to improve its animal welfare standards and extend its policies to all subcontracted animal research facilities. In 2009, we successfully withdrew a sustainability reporting resolution at Darden Restaurants in exchange for an agreement to disclose seafood sustainability initiatives as well as animal welfare policies and practices in its supply chain.

Coffee

Trillium’s 2012 and 2013 shareholder proposal at J.M. Smucker on the sustainability of its coffee supply chain led the company to commit to certified coffee purchases representing 10% of its total retail purchases by 2016. Smucker’s also agreed to partner with experts on agronomy training, organizational development, and climate change adaptation strategies to improve farming conditions, yields, and small-scale coffee-farming family incomes.

Fisheries

Following Trillium and Green Century Capital Management’s engagement with Costco, the company updated its seafood sustainability policy in 2013. Costco also announced that it has depleted all inventories of “red list” species, and is moving closer to requiring all its farmed salmon suppliers to adhere to the Salmon Aquaculture Dialogue standards: a set of standards developed by a multi-stakeholder group of non-governmental organizations, academics, and representatives from indigenous communities.

For a number of years, Trillium has engaged policymakers to protect the wild salmon runs of Bristol Bay Alaska. These runs — the largest sockeye salmon runs in the world — are threatened by Pebble Mine, the proposed large-scale mining project. Our advocacy at the EPA and the White House has contributed to the significant advancement of strong protections for this priceless resource.

Genetically Modified Organisms

For more than a decade, shareholder advocates and consumers have played a key role in the nationwide campaign to label GMO food. In 2002, Trillium became the first investment firm to file a shareholder proposal on this issue with Whole Foods Market. After engaging in several dialogues and filing a second shareholder proposal with the company in 2005, Whole Foods agreed to label all store-brand products. In May 2014, Whole Foods took a further step in announcing that it will require GMO labels on all products sold in its stores by 2018.

Land Grabs

As the demand for sugar cane increases, there is concern over large-scale land grabs in developing countries that evict traditional farmers through coercion or fraud. Trillium and Oxfam engaged PepsiCo by filing a shareholder proposal on this issue. Subsequent to a dialogue with management, the company adopted a zero-tolerance policy for illegal land acquisitions in its supply chain. PepsiCo has committed to adhere to the principle of Free Prior and Informed Consent across its operations, including suppliers, and will disclose the top three countries and suppliers of its cane sugar, palm oil, and soy. In exchange for these commitments, we withdrew our shareholder proposal.

Palm Oil

Palm oil, which is used in hundreds of products and foods, is a significant source of greenhouse gas emissions due to the conversion of swamp forests into palm tree plantations. Our shareholder proposal at Yum Brands*, asking it to address its use of palm oil, received a noteworthy 37% in 2012. Following a dialogue and securing firm commitments regarding its move away from unsustainable palm oil, we successfully withdrew the proposal.

In our ongoing engagement with companies concerning responsible sourcing of key raw commodities, we met with J.M. Smucker and General Mills to discuss policies it can adopt to ensure its purchases of palm oil are coming from responsible sources, including a no-deforestation commitment to mitigate company reputational risk. We are pleased that, following our engagement with General Mills, the company substantially strengthened its palm oil commitments.

Pesticides/Bees

Honeybees are the most economically important pollinators in our food supply chain, but are in double-digit decline. Working with investor partners at the Sustainability Group, we engaged 19 companies on this issue and have met with others to discuss the steps their managements are taking to mitigate the risks of bee-toxic pesticides (known as neonicotinoids) to pollinator dependent fruits and vegetables in its supply chain. We also met with Home Depot and Lowe’s to discuss how each is managing the risks of these chemicals that are also found in insecticides and plants sold in its garden stores. We will continue to engage companies on this issue. To date, Whole Foods has taken a leadership position within the food industry to both educate consumers and take discernible steps to reduce bees’ exposure to harmful pesticides.

Sustainability Reporting

Investors increasingly find that sustainability reporting allows companies to gain strategic value from existing sustainability efforts and identify emerging ESG risks and opportunities. Sustainability reporting with meaningful information and metrics also allows investors to understand a company’s progress relative to its goals. In keeping with this philosophy, we filed a shareholder proposal at Panera Bread and Chipotle Mexican Grill asking each company to issue an annual sustainability report.

*In addition to engaging with our core portfolio companies, Trillium also conducts advocacy on selected companies (identified with an “*”) that are not in our core portfolios but are held as legacy positions in client portfolios. These are companies that may not meet our minimum social and environmental criteria, but that we still seek to improve. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable.

Editor’s Note: This article was published in the summer 2014 issue of Trillium’s quarterly newsletter, Investing For a Better World.

Since 1987, the Global Fund for Women (GFW) has been a leader in advancing women’s human rights around the world. It is a truly global, publicly supported, women’s fund.

In the early 1980s few foundations, governments, or multilateral agencies were willing to invest directly in locally led, community-based, overseas women’s rights organizations. Those that did made contributions to large international NGOs that administered programs where women were seen only as beneficiaries, not leaders of change. GFW’s founders made a conscious decision to listen and learn from women working in their own communities. They recognized that women were best positioned to identify and implement solutions to the challenges affecting them and their communities, and they understood the biggest barrier to addressing those challenges: little or no access to money.

GFW then started its work providing women with the financial resources needed to catalyze or advance their vision for change.

As a 501(c)(3) non-profit foundation, we have granted more than $110 million to groups working across 175 countries in five regions—Asia and the Pacific, Middle East and North Africa, Europe and Central Asia, Latin America and the Caribbean, and Sub-Saharan Africa. Last year, GFW engaged researchers from Stanford University to assess the impact of its first 25 years. The assessment confirmed our belief that the groups receiving support have made a significant difference in the lives of women and girls, including securing new laws in 25 countries that criminalize gender-based violence and give protection to more than one billion women and girls.

GFW works to achieve a just, equitable, and sustainable world in which women and girls have resources, voice, choice, and opportunities to realize their human rights.

To effect real change on the most pressing issues facing women and girls, GFW supports women’s efforts to end violence against women, secure sexual and reproductive rights and health, and build women’s economic and political empowerment. In addition, we support organizations that use education, technology, and leadership to achieve progress and momentum within those three impact areas.

It is challenging to only be able to fund a quarter of the 2,000 worthy requests we receive each year. We genuinely rely on our grantmaking philosophy: to provide flexible funding, select groups using a rights-based approach to their work, create trusting relationships with our grant partners, and support greater connection and engagement between women’s groups to strengthen women’s movements. At the core of this philosophy is our founding president, Anne Firth Murray’s, belief that “The way we do our work is more important than what we do.”

Our organization has also adopted an investment policy that is directly in line with the philosophy of our work and our organizational values. To prevent a conflict with these values, we seek to invest in companies whose policies we support and avoid investment in companies whose behavior we consider reprehensible.

We avoid companies that are deriving revenue from products that we see as harmful to the rights of women and girls, in particular their health and freedom from violence. Our secondary avoidance screen enables us to avoid investing in companies that have business practices that we do not believe uphold the dignity and rights of female workers and consumers.

Our supportive investment screens include investing in alternative energy and companies that believe in a high quality of products and services, research, being of service to the economically disadvantaged, and fostering a sense of community and respect in the workplace. Our proactive social investment includes shareholder activism on issues that reflect our values.

GFW celebrates and upholds giving as an act of social change because our donors participate as women’s rights activists within the wider global movement for freedom, nondiscrimination, security, equality, and justice for women. This approach acknowledges that each one of us has a unique, significant role to play in bringing about a more compassionate, just, and healthy world.

Visit www.globalfundforwomen.org for more information.

Editor’s Note: This article was published in the summer 2014 issue of Trillium’s quarterly newsletter, Investing For a Better World.

The Summer 2014 issue of Trillium’s quarterly newsletter, Investing For a Better World, is now available to download.

Articles include:

• Dear Reader (Matt Patsky’s column)
• Trillium’s Approach to Investing in Publicly Traded Agriculture and Food Companies
• Global Fund for Women: Giving and Investing in Line with Our Values
• Trillium’s 2013-2014 Corporate Engagement Highlights
• Sustainability Reporting Proposal at Chipotle Receives More Than 30% of Vote

Trillium Asset Management is a signatory of the United Nations-supported Principles for Responsible Investment (PRI) Initiative, which is an international network of investors working together to put the Principles for Responsible Investment into practice. Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices.

The report framework helps build a common language and industry standard for reporting responsible investment activities. Its primary objective is to enable signatory transparency on Responsible Investing activities and facilitate dialogue between investors and their clients, beneficiaries and other stakeholders.

Trillium’s 2013 – 2014 UNPRI report can be found here.

During the 2013–2014 proxy season, Trillium Asset Management filed more than two dozen shareholder proposals with publicly traded U.S. companies and engaged with scores more through direct outreach, sign-on letters and in-person meetings.

Our corporate engagement addressed a wide range of issues including climate change, board diversity, workplace discrimination, political and lobbying spending, privacy and data security as well as indigenous rights.

You can find an annotated list of the shareholders that we filed during the proxy season here.

Earlier this week a ruling from the U.S. Patent and Trademark office revoked six trademarks belonging to the Washington, DC football team calling the name ‘disparaging’.

A coalition of investors, including Trillium, has also recently announced a shareholder proposal with FedEx Corporation (NYSE:FDX) asking the company to “respond to reputational damage from its association with the Washington D.C. NFL franchise team” and its name controversy.

Erik Brady, of USA Today Sports, writes:

“…The filing represents a new battleground in the fight over the Washington club’s controversial team name — sponsors. FedEx owns the naming rights at the suburban Maryland stadium where the Washington team plays.

Jonas D. Kron, senior vice president, director of shareholder advocacy at Trillium Asset Management, told USA TODAY Sports that the firms have been working on similar proposals since 2009. He said FedEx opposes having the proposal placed on the proxy for its annual meeting in September.

‘One of the ways in which an issue can be kept off the proxy is if the company can demonstrate that it is, quote, not a significant policy issue,’ Kron said. ‘So they have argued that this controversy isn’t big enough. … Friday we will be submitting our response to the Securities and Exchange Commission and then the SEC makes the determination. If the SEC permits it, which I am cautiously optimistic they will do, it will go on the proxy and be voted on by company shareholders.’”

You can read the entire article here.

FedEx Increasingly Embroiled in Ongoing Controversy over “Redskins” Name

JUNE 19, 2014 // BOSTON, MA: Investors filed a shareholder proposal with FedEx Corporation (NYSE:FDX) asking the company to “respond to reputational damage from its association with the Washington D.C. NFL franchise team” and its name controversy. FedEx possesses the naming rights to the team’s stadium, FedExField, in Landover, MD through 2026.

This announcement adds to the escalating crisis for the Washington D.C. NFL team in the wake of the United States Patent and Trademark Office decision on Wednesday to cancel the team’s trademark, calling the team’s name “disparaging to Native Americans.”

The team name, “Redskins”, is a dehumanizing label that characterizes people by skin color. The term has long-standing hateful and offensive connotations.

The Oneida Trust of the Oneida Tribe of Indians of Wisconsin is the lead filer of the proposal, with Mercy Investment Services, and Calvert Investments serving as co-filers, along with support and assistance from Boston Common Asset Management, Walden Asset Management and Trillium Asset Management.

“As investors, we believe that the FedEx board and management must address the reputational risks linked to its sponsorship of the Washington NFL team franchise. Each time a game is broadcast or the team name mentioned, the company is perceived as supporting disparaging and racist language, said Jonas D. Kron, Senior Vice President, Director of Shareholder Advocacy at Trillium Asset Management, LLC. “Concern over the team name has grown over the past eighteen months, with heightened calls to change it.”

Two hundred civil rights organizations, including the NAACP and every single national American Indian organization, have condemned the name. Even national voices as disparate as President Obama, U.S. Senator Harry Reid, and Washington Post columnist Charles Krauthammer have weighed in against the team name. Sportswriters and newspapers have also chosen to stop the use of the name. For example, NBC’s Bob Costas of Sunday Night Football, Sports Illustrated’s Peter King and USA Today’s Christine Brennan all publicly concluded the team name is a racial slur.

The Washington, D.C. City Council in November 2013 unanimously approved a resolution condemning the name. In May, 50 U.S. Senators sent letters to NFL Commissioner Roger Goodell urging him to push for a name change as “The NFL can no longer ignore this and perpetuate the use of this name as anything but what it is: a racial slur.”

“As times change, so must our language.  Given the historic and present connotations of the name, turning real people into caricatures and mascots or insulting a portion of our population with an offensive name is no longer acceptable in this day and age,” said Reed Montague, Sustainability Analyst at Calvert Investments.  ”We strongly encourage FedEx to address and examine its role in perpetuating and supporting such stereotypes.”

With its corporate name on FedExField, the company continues to be associated with the controversial team name. Newspapers and media outlets use FedEx in stories, articles and headlines related to the Washington team.

“There is growing consensus that there is no reason for the team to continue to use a logo with a symbol that is contemptuous and condescending toward Native Americans. FedEx has a responsibility to do more and to respond to the ongoing reputational damage generated by this controversy, reminiscent of Aunt Jemima, black face and other racist uses of African American people and heritage. The issue isn’t going away—nor should it”, said Sister Valerie Heinonen, o.s.u., Mercy Investment Services, Inc.

“We encourage FedEx to fully appreciate the emotional violence that racist stereotypes do to Native youth, including the current disparaging name of the Washington D.C. NFL football organization,” said Steven Heim, Managing Director, Boston Common Asset Management, LLC. “We urge FedEx to end its financial ties until the racist name is changed or distance its association with such disparagement.”

Currently, FedEx is seeking to censor its shareholders by asking the U.S. Securities and Exchange Commission for permission to exclude the shareholder proposal from its 2014 proxy statement. FedEx wrongly argues that this is not a significant issue for investors to consider at the company’s annual meeting in September 2014.

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About Boston Common Asset Management

Boston Common Asset Management specializes in sustainable and responsible global equity strategies. It seeks long-term capital appreciation by investing in diversified portfolios of high quality stocks. Through rigorous analysis of financial, environmental, social, and governance (ESG) factors we identify innovative, attractively valued companies for investment. On behalf of its shareholders, Boston Common urges portfolio companies to improve transparency, accountability, and manage for the long term. The firm manages US, International and Global portfolios for institutions and individuals through separate accounts, commingled and mutual funds. http://bostoncommonasset.com

About Calvert Investments

Calvert Investments is a leading investment management company using sustainability as a platform to create value for investors. Serving financial advisors and their clients, retirement plans and insurance carriers, and institutional investors, the company offers a broad array of equity, bond, and asset allocation strategies, featuring integrated environmental, social, and governance (ESG) research and corporate engagement. Strategies are available through mutual funds, sub-advisory services, and separate account management. Founded in 1976 and headquartered in Bethesda, Maryland, Calvert Investments had more than $13 billion in assets under management as of April 30, 2014. www.Calvert.com

About Mercy Investment Services

Mercy Investment Services, the socially responsible asset management program for the Sisters of Mercy and its ministries, works for systemic change in the areas of non-violence, racism, environment, concern for women, and immigration. www.mercyinvestmentservices.org

About Trillium Asset Management

Trillium Asset Management, LLC is the oldest investment advisor exclusively focused on sustainable and responsible investing (SRI). With approximately $1.5 billion in assets under management we believe that environmental, social, and governance (ESG) factors play an integral role in the investment process, which can lower portfolio risk and help identify the best-managed companies. For investors seeking ethical and mission-related investing strategies, Trillium is a leader in shareholder advocacy and public policy work. Our goal is to deliver both impact and performance to our private and institutional investors. http://www.trilliuminvest.com

For more information:

Jonas D. Kron, Trillium Asset Management, LLC jkron@trilliuminvest.com, 503-894-7551

Melinda Lovins, Calvert Investments, Inc., melinda.lovins@calvert.com, 301-657-7089

Sister Valerie Heinonen, o.s.u., Mercy Investment Services, Inc., vheinonen@sistersofmercy.org, 212-674-2542

Steven Heim, Boston Common Asset Management, LLC, sheim@bostoncommonasset.com, 617-785-9527

During the 2013-2014 proxy season, Trillium filed more than two dozen shareholder proposals with publicly traded U.S. companies and engaged with scores more through direct outreach, sign-on letters and in-person meetings.

Our corporate engagement addressed a wide range of issues including climate change, board diversity, workplace discrimination, political and lobbying spending, privacy and data security as well as indigenous rights.

You can read about some of the highlights here.

By Susan Baker and Randy Rice

Trillium Asset Management believes that diversity, inclusive of gender and race, is an essential component of sound governance and a critical attribute to a well-functioning organization. We strive to achieve diversity at all levels and seek to invest in companies that are doing the same—from the mail room to the board room. Using tools including shareholder dialogue and advocacy, our founder, Joan Bavaria, helped establish and promote the concept of using stock ownership to improve corporate outcomes on the environment, human rights, workplace diversity, and other areas.

Many of America’s largest corporations have programs in place to recruit and retain women and racial/ethnic minorities for managerial and leadership positions. But are these programs achieving desired outcomes? Are investors and other stakeholders receiving sufficient information about these programs to assess whether a company is meeting its goals and mitigating workplace risks, including the legal and financial risks resulting from allegations of discrimination?

In 1991, President George H.W. Bush appointed the bipartisan Glass Ceiling Commission to identify the “artificial barriers based on attitudinal or organizational bias” that have blocked the advancement of minorities and women as well as to identify the successful practices and policies that had led to the advancement of minority men and all women into decision-making positions in the private sector. In 1995, the commission published its report, which found that 95 to 97% of senior managers—vice presidents and above—were men. It also found that 97% of male top executives were white and that in 1994 only two CEOs of Fortune 1000 companies were women.[1]

Soon after the Glass Ceiling report was released, Trillium began filing shareholder proposals as part of a coalition of investors asking companies to publicly disclose their federal EEO-1 (Equal Employment Opportunity Commission) data. Most employers with at least 15 employees are required to count employees by job category and then by ethnicity, race, and gender and to submit the information to both the EEOC and the Department of Labor. The federal government itself reports on this information in aggregate, but does not disclose nor require public disclosure of company-specific information.

Disclosure of a comprehensive numeric breakdown of a company’s workforce gives investors information to better evaluate the financial risks, we argued in our initial proposal to Home Depot in 1998 soon after it settled a discrimination lawsuit representing greater than 20% of its quarterly earnings. After filing this proposal for three years and garnering more than 10% support each year, investors reached an agreement with management, and Home Depot began disclosing comprehensive EEO data to investors upon request. Victory, however, was short-lived when without explanation the company stopped making this information available. In 2005, Trillium and several investor partners refiled the proposal. The average annual voter support of the refiled proposal jumped to 27%, but the company did not change its position on disclosure. At the same time, investors were reaching agreements on EE0 -1 disclosure at some of the largest US companies including American Express, IBM, Merck, Hewlett Packard, Walmart, and Intel.

Notably, in 2013, Home Depot responded to the shareholder proposal by releasing the percent change in woman and minority hires over a 12-year period. This marked a move toward transparency that investors had not seen in a decade, but it still was not a substitute for EEO-1 disclosure. In early March 2013, Home Depot published an 18-page Diversity & Inclusion Report describing impressive qualitative aspects of Home Depot’s diversity programs. The report did not, however, measure the effectiveness of these programs (for example disclosure of the impacts of its activities, such as visiting 250 diversity-focused career fairs) or the company’s progress relative to its goals.

When Trillium was engaging with Intel in 2009, Rosalind L. Hudnell, currently vice president of human resources at Intel, cited EEO data as “one method that can be utilized to support the decisions and programs that we institute around diversity….Transparency allows all within the organization to understand issues around EEO and diversity.  [We] are a large employer and employees (and some managers) are limited to their own organization, culture, and environment and are unable to see overall representation and/or representation trends.  Having this information available to all provides the big picture and provides our employees with the understanding of why we proactively undertake programs with the goal of becoming a leader in diversity….Lastly, we are a culture that values transparency; transparency allows us to be demonstrative in our sustained commitment to our values.”

Trillium continues to engage companies on this issue because we believe companies that are accountable to the public on equal employment opportunity are most likely to be companies making rapid progress toward achieving their goals. Over the last two years, Trillium has expanded its advocacy to include diversity in the board room. A diverse work force is more likely to anticipate and respond effectively to changes in the marketplace, while director diversity and, specifically, board gender diversity improves board quality and more.

A 2012 study by Miriam Shwartz-Ziv[2] concluded that boards with three or more women directors were roughly twice as likely to request further information and to take an initiative, leading to higher return on equity and net profit margins compared to peer companies. And a 2012 report by Credit Suisse found that, over a six year period, companies with greater gender diversity exhibited less volatility in earnings and had better financial performance. Yet, in 2013, it was reported that women held only 16.9% of U.S. corporate board seats at Fortune 500 companies, marking no significant year-over-year change for the eighth consecutive year. In addition, nearly 10% of the Fortune 500 had no women on their board, and women of color held only 3.3% of all board seats. [3] These numbers are more striking when you consider that nearly six out of 10 current college graduates are women.

In 2012, Trillium began engaging portfolio companies with all-male boards and those lagging its peers on diversity. Our firm filed eight shareholder proposals asking companies to “publicly commit [themselves] to a policy of board inclusiveness to ensure that women are routinely sought as part of every board search the company undertakes.”

Following successful dialogues, all eight companies agreed to amend their governance documents to include a clear definition of diversity, inclusive of gender and race, and to make diversity an intentional part of board nominee search criteria. Trillium withdrew the proposals after receiving commitments to revise corporate charter documents and schedule substantive meetings to discuss how revisions could be effectively implemented.

A number of companies where we filed have since elected women to their boards. Zimmer Holdings added a second woman to its board in December 2012; Cree, Inc. elected it first female board member in December 2013; Hartford Financial elected its second woman in May 2013 and added a third woman to its board in January 2014. Working with The Thirty Percent Coalition, a national organization of business leaders, women’s organizations, and institutional investors—of which Trillium is a member and board member—we have been able to assist several companies with strategies to expand the talent pool from which board nominees have traditionally been drawn.

Trillium, as well as members of the Interfaith Center on Corporate Responsibility and city and state pension funds, have continued to ask companies to institutionalize a commitment to board diversity inclusive of gender, race, and ethnicity, and to affirm publicly their commitment to equal employment opportunity with transparent EEO-1 data reporting.

The federal Glass Ceiling Commission’s report remains relevant today in that “public disclosure of diversity data—especially data on the most senior positions—is an effective incentive to develop and maintain innovative, effective programs to break the glass ceiling barriers.” Diversity is a bottom-line issue affecting competitiveness and market share. Board and workplace diversity, we believe, should be a top priority of every company’s efforts to deliver long-term value to its shareholders.

Susan Baker recently joined the board of the Thirty Percent Coalition, a national group of institutional investors, corporate leaders, and women’s groups working toward increased gender diversity in the public company boardroom.

Editor’s Note:  This article originally appeared in the Spring 2014 issue of Trillium’s newsletter, Investing For a Better World.

Trillium’s Small/Mid Cap (SMID) portfolio was launched in 2001 and invests in small and mid-capitalization companies across economic sectors that also meet Trillium’s sustainability criteria. As of March 31, 2014, the strategy has over $100 million in assets.

The SMID investment strategy team, led by Laura McGonagle, CFA, seeks to find stocks with superior earnings growth prospects that are available at a reasonable price. Prior to joining Trillium in 2001, Laura was a sell-side equity analyst focusing on consumers’ growing awareness of the impact of nutrition, environment, and lifestyle choices on their well-being.

Investing For a Better World’s editor, Randy Rice, recently sat down with Laura and Jonas Kron, Trillium’s Director of Shareholder Advocacy, to talk about the strategy and how it approaches Environmental, Social and Governance (ESG) issues:

Randy Rice: What are the qualities in a Small / Mid Cap (SMID) portfolio that might be attractive to investors?

Laura McGonagle: A SMID portfolio may be interesting for investors who are looking for exposure to equities down the market capitalization spectrum. Some investors look for pure small capitalization (cap) exposure, but Trillium’s product is a blend of small and mid cap companies.

Our SMID product is benchmarked to the S&P 1000. In this portfolio, we will only initiate positions in companies with a market capitalization below $10 billion.

RR: Is there a particular time when investors should look for SMID exposure?

LM: While there are times when SMID companies can over or under perform versus large cap companies, historically, over the past 10 years, the S&P 1000 has performed significantly better than the S&P 500. I believe there is room for small/mid cap exposure in a client’s asset allocation at any time; the magnitude of that exposure will depend on a client’s financial needs and risk tolerance.

There is a tendency for SMID names to do better during more stable economic times. Investors are more willing to take risks when they are feeling better about the economic environment. Smaller companies tend to have less diversified product lines, customer base, and end markets, so they can have a more volatile performance. When investors are more cautious, they tend to gravitate toward bigger, more stable companies, especially consumer staples or healthcare names, which sell more needs-based products and services. Over the long term, however, SMID companies on average have done better than large cap companies.

Given that our investment process is fairly low turnover, we occasionally allow holdings to run up above this level if we continue to like the company’s story.

Trillium has held Whole Foods (NASDAQ: WFM) off and on in the SMID portfolio since the early days of the strategy. Whole Foods has benefited from the increased attention in the natural and organic foods space, especially recently as there has been much more everyday awareness about what is in foods, including artificial flavors, colors, chemicals, and preservatives. This awareness is increasing across the income spectrum. Whole Foods is a good example of buying a stock while a company is a small/mid cap and holding it as the market cap grows, trimming the position back over the years, but remaining involved as healthy eating remains a solid, secular trend. However, as the company’s market cap held steady in the high teens (billions) we could no longer justify holding it in the portfolio. We exited the position in mid-2013 and are playing the healthy living trend in other ways (i.e., United Natural Foods—a natural/organic food distributor).

Middleby (NASDAQ: MIDD) is a stock we have owned for close to a decade. They are a smaller player in the food service and equipment market. Management has done a great job working with both independent restaurants and chains, creating innovative products that save its customers time, labor, and energy. Middleby’s first product was a pizza oven that was quicker than those then on the market and more energy efficient. Over the years, the company has become a serial acquirer, buying smaller industry peers. Middleby recently purchased Viking Range, which gives them an entrance into the residential market. The company is known for being a strong partner with their customers, helping clients expand their menus and offerings while working within the restaurant’s existing footprint. The company has dozens of Energy Star products, and it has good employee relations, with a 98% employee retention rate. They also produce a sustainability report, which is currently more qualitative than quantitative as compared to its larger competitors, but it is an important step. At a $5.8 billion market cap, Middleby is now a solidly mid-cap stock.

RR: How does the SMID portfolio vary from Trillium’s other core equity strategies? How do you feel about the current economic environment for your product?

LM: Aside from having a lower average market cap, the SMID product has a narrower universe of stocks to choose from than our other strategies. While there are more small/mid cap public companies in existence than large cap companies, Trillium is working from an internal buy list of stocks that has been vetted by our analysts on both a fundamental and ESG basis. As such, of the roughly 200 names on our list, only about half will be eligible for the SMID product. And Trillium’s SMID portfolio tends to hold fewer positions so it is slightly more concentrated.

SMID stocks also tend to have more of a domestic (U.S.) business focus, which at times such as now, when there is fiscal uncertainty in many of the global markets, can be positioned to outperform. Many large cap companies have international revenue exposure—even if they are based in the U.S. and in a domestic benchmark. SMID companies are also attractive because currently there is a lot of cash that it sitting on the sidelines, increasing the possibility for acquisition for these companies. As we continue through 2014, we expect the SMID portfolio to remain well positioned for a continuing U.S. economic recovery, and will look to continue to take profits from positions that have worked and reinvest in attractively priced companies with superior growth characteristics.

RR: Jonas, how does Trillium integrate shareholder advocacy into the investment process?

Jonas Kron: Internally, our advocacy and research teams meet on a weekly basis to share information and analysis. Advocacy information sharing is a standard part of all the stages in Trillium’s research process. Whether it’s conducting a sector review, exploring a potential new company for portfolios, or assessing macro-trends, insights brought by the shareholder advocacy team are integrated into the investment process.

RR: Are ESG issues different in a small company?

JK: When engaging with smaller companies, investor expectations need to be a bit different, as these companies may not have the internal resources to produce sustainability reports or provide good and complete information to share with investors on the impact of their ESG practices. That doesn’t mean that they shouldn’t be responsible to provide that information, but that we may have to move more slowly. That said, many small companies are able to provide a purer focus on ESG issues in the products they produce, such as Annie’s (a natural food company) or Cree (a maker of LED bulbs).

RR: Does corporate engagement with SMID companies differ from engagement with larger companies?

JK: In a smaller company, there is a greater chance that investors will meet with senior management or a member of the board of directors and bring our concerns directly to the decision-makers.

RR: Is there a “typical” corporate engagement for a small cap company?

JK: The short answer is “no.” Each company has its own particular characteristics and issues, so the engagements must take that into consideration. Our communications can range from asking simple questions to clarify our understanding of policies, to engaging in long- term, in-depth dialogue involving multiple stakeholders. Over the course of any given year, Trillium will host companies in our corporate offices to discuss their ESG performance records. We will also attend annual stockholder meetings,; participate in stock analysts’ days, or visit company headquarters or facilities.

RR: Can you talk about some recent engagements Trillium has had with companies in our SMID portfolio?

JK: We recently had meetings and discussions with Cree (NASDAQ: CREE) about board diversity issues because the company’s board was all men. There is strong evidence that diversity is an important factor in a well-run company that performs better financially. Our engagement began with a shareholder proposal asking the company to make a commitment to diversity on the board level. We were able to share these concerns directly with the lead independent director of Cree, who was also the chair of the board’s nominating committee, and he agreed with us. Subsequently, the company made changes to its governance structure to ensure that women would be considered in board nominations, and just weeks later, the company announced that they were bringing its first woman onto its board.

Last year, Trillium also had a series of discussions with Valmont Industries (NYSE: VMI), which manufactures efficient irrigation equipment for farmers. Even though we like the company’s environmental story, the company didn’t have any meaningful sustainability reporting, or any information about its greenhouse gas emissions related to their manufacturing. Trillium filed a shareholder proposal that resulted in the company making a commitment to set baseline data for its metal coating division, which is the most greenhouse gas intensive part of its business. Doing so is a good first step for the company to begin to manage their greenhouse gas emissions. Once a company establishes a baseline, they can begin to set targets to reduce their emissions in a meaningful way.

RR: For individual investors is there an easy first step to begin this type of engagement?

JK: The very minimum shareholder engagement that all investors should participate in is voting proxy ballots. Proxy issues range from the approval of boards of directors to shareholder proposals on social and environmental issues like those we file every year. Sadly, too many investment managers and traditional mutual funds have failed to thoughtfully vote their clients’ proxies, either by not voting at all or always voting exclusively with managements’ recommended positions. Trillium not only votes proxies on our clients’ behalf, we publish those votes on our website.

Editor’s Note: This article originally appeared in the Spring 2014 issue of Trillium’s newsletter, Investing For a Better World.

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Investments in smaller companies generally carry greater risk than is customarily associated with larger companies for various reasons, such as narrower markets, limited financial resources, and less liquid stock.

The views expressed are those of the authors and Trillium Asset Management, LLC as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the authors on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold, or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.

Our company’s brand identity and value are strongly linked with health and wellness.

A 2013 study by an accredited and independent lab, Eurofins, commissioned by Glaucus Research, alleged that ten of the 11 Celestial Seasoning teas in this study showed pesticide residue levels exceeding federally defined tolerance levels, or pesticides that did not have regulatory guidance.

In response, the company commissioned its own test from a different laboratory that allegedly showed no levels of pesticide residues above regulatory guidelines.  The company explained these results on its website, but did not disclose the actual test it had commissioned.  We asked our company to disclose the test report in 2013, but our company has not complied.

According to the USDA’s Economic Research Service and Nutrition Business Journal, U.S. organic food sales grew to $28 billion in 2012, up 11 percent over 2011.  This growth indicates strong consumer interest and demand for reduced pesticide use.

Many other companies are leading the way in pesticide use reduction.  For example, Sysco Corporation, which supplies Wendy’s and other restaurant providers, has established an Integrated Pest Management (IPM) Program that in its first three years reduced pesticide use by nearly 900,000 pounds. Sysco’s program requires its suppliers to prepare IPM programs and employs third party auditors.

Numerous studies have defined pesticide exposure as a growing public health concern.  Pesticides impose a heavy burden on farmworkers, adjacent communities, and the environment. In turn, a reduction in pesticide use can lessen these burdens and production costs. Reduced pesticide use and reduced worker exposure to pesticides can also yield reputational benefits.

RESOLVED:

Shareholders request that within one year a committee of independent directors of the board publish a comprehensive report to shareholders discussing how the company is addressing pesticide use reduction in its supply chain, at reasonable expense and omitting proprietary information.

SUPPORTING STATEMENT:

While the company has the discretion to determine the precise content of the report, we believe the following information would be useful to shareholders: full disclosure of the results from the independent lab report commissioned by Hain Celestial in response to the Eurofins report; identifying procedures for testing non-organic teas and other products for pesticide residues; key performance indicators related to procedural change in pesticide use and exposure; outline of programs and initiatives entered throughout the supply chain, including technical assistance, incentives, or other positive encouragement provided to growers to reduce the toxicity and amounts of pesticides used; and substantive information regarding the company’s Health Teas, Healthy Planet certification program, which is described on the company’s website only briefly.

Jeremy joined Trillium in May 2014 as a research analyst. Prior to Trillium, he was a senior investment analyst at FM Global where he was responsible for conducting fundamental research in the consumer discretionary, internet, media and telecom sectors, a position he held since 2004.  Before joining FM Global, he was assistant vice president, research analyst on the US Strategic Investment Team at Baring Asset Management where he analyzed large cap and small cap equities. Prior to joining Barings, he worked in investment operations at Pell Rudman Trust Company and State Street Corporation. Jeremy is a Chartered Financial Analyst charterholder and a member of the CFA Institute and the Boston Security Analysts Society. He serves on the BSAS’s career development committee and has been a volunteer student mentor as part of CFA Institute’s global research challenge since 2008. He holds a B.S. in Applied Economics from Plymouth State University and received both his M.B.A and M.S. in Finance from Boston College.

This spring, the company took its shareholder concerns seriously, and followed in the footsteps of over a hundred companies by deciding to issue meaningful disclosures.

We believe that Hess reached this decision because disclosure is now seen as good corporate governance by so many of its shareholders. It is a prudent, cost effective and responsible way to minimize unnecessary risks and to maintain sound discipline and controls on spending decisions.

May 2014: Shareholders sent a strong message to the management of Chipotle Mexican Grill (NYSE: CMG) on May 15, with roughly one in three votes cast in favor of a request for a sustainability report. The proposal received a 31.3% vote, representing $3.5 billion.

The shareholder proposal, filed by Trillium Asset Management LLC and Domini Social Investments, as co-filer, requested the Board of Directors to:

issue an annual sustainability report describing the company’s short- and long-term responses to ESG-related issues. The report should include objective quantitative indicators and goals relating to each issue where feasible, be prepared at a reasonable cost, omit proprietary information, and be made available to shareholders by October 2014.

Shareholders also registered strong discontent with Chipotle’s executive compensation package, with 77% opposing the plan through a non-binding ‘say on pay’ proposal.

“Chipotle peers including Starbucks, Dunkin Brands and McDonald’s are identifying relevant ESG factors and addressing them through sustainability reports. Chipotle’s reluctance to devote resources to evaluate ESG risks and opportunities is shortsighted in light of results of our sustainability reporting proposal and the overwhelming rejection of outsized pay packages,” said Susan Baker of Trillium. Knowing that some of its largest shareholders are not happy with the Board’s governance practices this is an opportune time for management to show strategic leadership and raise the level of disclosure on its sustainability performance,” Baker continued.   

“Chipotle has branded itself as a “greener” restaurant chain, with a creative, high profile ad campaign targeting industrial agriculture. Sustainability is clearly a core aspect of the Chipotle brand. Unfortunately, the company is reluctant to share meaningful data with its investors on these efforts, exposing itself to charges of “greenwashing.” Investors should not have to base investment decisions on clever advertising. We expect more from a company of Chipotle’s size and impact,” said Adam Kanzer, Managing Director & General Counsel of. “Sustainability reporting can help companies and investors understand and manage the short, medium and long-term risks and opportunities presented by a range of issues, from climate change to worker health and safety.”

According to the Governance & Accountability Institute, as of May 2012, more than one-half, or 53% of all S&P 500 companies have issued a sustainability report. Sustainability performance has been linked to good financial performance. A literature review by Deutsche Bank in 2012 found that 89% of the studies demonstrated that companies with high ESG ratings also show market-based outperformance.

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For more information:

Adam Kanzer – Domini Social Investments, akanzer@domini.com, 212-217-1027

Randy Rice – Trillium Asset Management, rrice@trilliuminvest.com, 617-515-6889