Responsible Investing

April 18, 2002

New York, NY – Domini Social Investments, manager of the Domini Social Equity Fund (NASDAQ: DSEFX), the nation's oldest and largest socially responsible index fund, announced today that it has filed nine shareholder resolutions for the 2002 proxy season and is engaged in ten separate dialogues with companies on a range of social and environmental issues.
 
"Responsible investing requires responsible ownership," said Amy Domini, Founder and a Managing Principal of Domini Social Investments. "By filing shareholder proposals on social and environmental issues, and through constructive dialogue with companies, we are helping to make corporations more accountable to their stockholders, employees, communities and the environment."
 
Several of Domini's 2002 shareholder initiatives involve the sweatshop issue, on which the firm has been active for a number of years. In addition to filing shareholder resolutions with The Gap (NYSE: GPS) and Sears, Roebuck (NYSE: S) this season, Domini is also engaged in dialogue with The Walt Disney Co. (NYSE: DIS), McDonald's (NYSE: MCD) and Nordstrom (NYSE: JWN) regarding international labor standards. Domini's resolution with The Gap (NYSE: GPS) was withdrawn when the company agreed to work with Domini and other concerned investors to explore the development of assessment methods for benchmarking and reporting vendor compliance activities and progress. Also as a result of dialogues, McDonald's has produced its first public report on its vendor standards compliance program, and Nordstrom recently announced that it would be adding "freedom of association" to its global code of conduct.
 
Domini's 2002 shareholder activism initiatives also focus on environmental issues. Domini's two-year dialogue with Merrill Lynch (NYSE: MER) about the social and environmental impacts of Merrill's investments showed signs of progress when Merrill's CEO & Chairman cited China's Three Gorges Dam at the recent World Economic Forum Summit in New York. "One important goal of our dialogue has been realized - our concerns about the disastrous impacts of this dam have been raised to the highest levels of the firm," said Adam Kanzer, Director of Shareholder Advocacy at Domini Social Investments. Domini also initiated a dialogue with Procter & Gamble (NYSE: PG) asking the company to refrain from using old growth timber and to set goals for using recycled content in popular paper products such as Bounty paper towels and Charmin bath tissue.
 
Domini was a co-filer this year on resolutions calling on The Coca-Cola Company (NYSE: KO) to report on progress in meeting beverage container recycling goals, and on Pepsi Co. (NYSE: PEP) to adopt a comprehensive recycling policy. Coca-Cola has agreed to increase the recycled content in its plastic bottles and participated in a project, along with recycling companies, environmental organizations and government agencies, to comprehensively evaluate recycling opportunities throughout the beverage container value chain. Pepsi recently followed Coca-Cola's lead by announcing that it would begin including recycled content in its plastic bottles sold in the United States.
 
Domini is also working to encourage corporations to improve the way they treat their employees. For the second consecutive year, Domini is asking AT&T (NYSE: T) to revise its employee pension plan so as not to discriminate against longer-term employees. Domini also co-sponsored a resolution with Emerson (NYSE: EMR) for the second consecutive year, asking it to adopt a written policy barring discrimination based on sexual orientation. The Emerson resolution received 10.2% of the shareholder vote at the company's annual meeting on February 5, ensuring the right to return to Emerson for a third year with this issue.
 
Domini also co-filed a resolution with Cooper Industries (NYSE: CBE) to issue annual sustainability reports; with Household International (NYSE: HI) asking it to link executive pay to progress on eliminating predatory lending practices; and with Johnson & Johnson (NYSE: JNJ), concerning the firm's global code of conduct. This resolution was withdrawn after the firm committed to a dialogue with proponents. The Cooper Industries resolution received a very strong 21.85% vote at their annual meeting on April 5. Management has agreed to meet with proponents.
 
In addition to filing shareholder resolutions and initiating dialogues with companies, Domini has been extremely active on shareholder disclosure issues of late. Three years ago, the firm became the first mutual fund manager in America to publish its proxy votes. Last December, Domini filed a Petition for Rulemaking with the Securities and Exchange Commission (SEC), urging adoption of a rule requiring all mutual funds to publicly disclose their proxy votes. The firm also recently revised its Proxy Voting Guidelines to emphasize greater corporate transparency on auditor independence and other issues.
 
"We think mutual fund shareholders have a right to know how their shares are voted on important issues of corporate governance and social and environmental responsibility," says Ms. Domini. "In light of revelations about corporate practices at Enron and other companies, where small groups of management insiders seemed more interested in self-enrichment than in benefiting shareholders, we think shareholder vigilance and increased corporate transparency are more important than ever."
 
Domini Social Investments manages more than $1.8 billion in assets for individual and institutional investors seeking to create positive change by integrating social and environmental values into their investment decisions. Its flagship fund, the Domini Social Equity Fund, was the first socially and environmentally screened index fund and is the nation's largest socially responsible index fund. The Fund includes companies with positive records in community involvement, the environment, diversity and employee relations, and excludes companies deriving significant revenues from alcohol, tobacco, gambling, nuclear power and weapons contracting. In addition to the Domini Social Equity Fund, the company also offers the Domini Social Bond Fund (NASDAQ: DSBFX) and an FDIC-insured money market account (in partnership with ShoreBank), both of which focus on community economic development.
 
Domini is working with a number of concerned investor groups and non-governmental organizations on its 2002 shareholder initiatives, including the As You Sow Foundation, Friends of the Earth, the Interfaith Center on Corporate Responsibility, the International Rivers Network, the National Wildlife Federation, the Pride Foundation, Walden Asset Management, and a number of large institutional investors, including the General Board of Pension and Health Benefits of the United Methodist Church.
 
For additional information on Domini's shareholder activism and proxy voting initiatives, information on the Domini Funds, or a free copy of the firm's 44 page Proxy Voting Guidelines & Shareholder Activism booklet, call (800) 762-6814, or visit the firm's web site www.domini.com.

March 22, 2002

Over the past several days we have received requests from concerned shareholders for information about ourHewlett Packard – Compaq merger vote. After a careful reevaluation of the various issues involved, Domini Social Investments reversed its prior position, and voted against this merger.

This was an extremely difficult decision to make. Both Hewlett Packard and Compaq pass our social and environmental screens and are included in the Domini Social Equity Fund's portfolio. Although aspects of the deal impressed us, in the end we decided that the merger was problematic for both financial and social reasons.

In general, we approach mergers with caution, as they are often made at the expense of employees, communities and shareholders. In this case, we did not find financial reasons substantial enough to overcome these social concerns.

We greatly value input from our shareholders. If you have any further questions, please send us an email or call us at 1-800-582-6757.

March 21, 2002

New York, NY – Domini Social Investments, manager of the Domini Social Equity Fund (NASDAQ: DSEFX), announced today the publication of its seventh annual Proxy Voting Guidelines and Shareholder Activism booklet.  Three years ago, the firm became the first mutual fund company in America to publish the actual votes it casts for each company in its portfolios.   Most of the nation's mutual funds do not publish proxy-voting guidelines or disclose how they vote on particular issues at annual shareholder meetings.
 
 "We think mutual fund shareholders have a right to know how we intend to vote their shares on important issues of corporate governance and social and environmental responsibility," said Amy Domini, Founder and a Managing Principal of Domini Social Investments.  "In light of the Enron fiasco, we think increased disclosure and transparency are more important than ever."
 
Domini's Proxy Voting Guidelines describe the firm's voting policy on more than 95 types of corporate resolutions ranging from environmental reporting to executive compensation to labor relations at home and abroad.  The firm updates the Guidelines on an annual basis to address emerging issues.  The 2002 Guidelines include new proxy-voting policies aimed at supporting auditor independence, curbing executive compensation and requiring in-person annual shareholder meetings.  Some companies have attempted to replace in-person shareholder meetings with online meetings, a practice that Domini believes would diminish shareholder influence and reduce accountability on the part of corporate managers.  In addition, Domini has adopted new proxy-voting policies supporting the issuance of corporate sustainability reports and the phasing out of mercury-containing devices.
 
Several revisions to this year's Guidelines concern issues that arose during the Enron scandal:
 
Domini revised the Guidelines to provide that it will vote "No" on corporate resolutions proposing the appointment of auditors who are not sufficiently "independent," in order to avoid conflicts of interest such as those that arose in the Enron-Andersen relationship.
 
"The Enron-Andersen scandal clearly demonstrates that conflicts can arise when accounting firms provide collateral consulting services to the companies they audit," said Ms. Domini. "We know these conflicts of interest can be disastrous for shareholders, employees and the public.  Henceforth, we will vote our proxies against all proposals to appoint auditors who are not sufficiently independent. We will also support shareholder resolutions requesting that these functions be performed by separate firms."
 
Domini also revised its Guidelines to provide that it will support resolutions tying executive compensation, and specifically stock options, to corporate performance.  "Shareholders need to take action to prevent future Enrons, where corporate managers enriched themselves while Enron's employees and other shareholders saw their shares plummet," continued Ms. Domini.  "Tying management stock options to corporate performance is one way to accomplish this, and we intend to support such efforts."
 
Finally, Domini tightened its guidelines regarding independence on corporate Boards of Directors as well.  Domini will now withhold its support for board slates that do not consist of a majority of independent directors, and will oppose the nomination of company insiders to key committees, such as the audit and nominating committees.  Domini has had a long-standing policy of opposing board slates that do not include women or people of color.
 
Domini's Proxy Voting Guidelines & Shareholder Activism booklet is distributed free of charge and is posted on the firm's website (www.domini.com).  The booklet also contains a historical overview of the firm's shareholder activism program, detailing how Domini has leveraged its shares to influence corporations to improve their social and environmental performance. The firm has filed more than 60 shareholder resolutions with more than 30 corporations over the past nine years. Visitors to the web site can also choose any of the 400 companies in the Domini Social Equity Fund's portfolio, see a brief description of the issue being voted on, and view Domini's vote. The web site is updated periodically as proxy materials for each company become available. The firm's policy is to post its votes approximately two weeks prior to each company's annual meeting.
 
Domini Social Investments manages more than $1.9 billion in assets for individual and institutional investors seeking to create positive change by integrating social and environmental values into their investment decisions.  Its flagship fund, the Domini Social Equity Fund, was the first socially and environmentally screened index fund and is the nation's largest socially responsible index fund.  The Fund includes companies with positive records in community involvement, the environment, diversity and employee relations, and excludes companies deriving significant revenues from alcohol, tobacco, gambling, nuclear power and weapons contracting.  In addition to the Domini Social Equity Fund, the company also offers the Domini Social Bond Fund (NASDAQ: DSBFX) and the Domini Money Market Account, an FDIC-insured money market account (in partnership with ShoreBank), both of which focus on community economic development.
 
Investors seeking additional information on the Fund, or a free copy of the firm's 44 page Proxy Voting Guidelines & Shareholder Activism booklet, may call 1-800- 762-6814, or visit the firm's web site (www.domini.com).  The Guidelines were developed in cooperation with Domini Social Investments' social research providers at KLD Research & Analtyics, Inc. (KLD) of Boston, Massachusetts, with assistance from the Interfaith Center on Corporate Responsibility.

August 27, 2000

Amy Domini

From The New Social Policy Agenda in Asia, Proceedings of the Manila Social Forum, A joint publication of the Asian Development Bank and The World Bank, August 2000.

The Asian financial crisis resulted in a substantial increase in poverty and worsening of social development in the region. However, this affected the social responsibility of international business very little. Justice and sustainability are not much spoken of on Wall Street today. But they should be, for it is Wall Street, and its global counterparts that are fueling the economic engine of the world - corporations. The entrepreneurs on Wall Street frequently forget that corporations are not the work of acts of God. They were created by humans as an efficient means of providing ourselves with food, clothing, shelter, health care, communication, and comforts.

Companies provide us with desired goods and services, but they do not exist in a vacuum. They must therefore be encouraged to act in a manner that is socially and ethically responsible to the various stakeholders they interact with. An effective means of such encouragement is active shareholder participation. Socially responsible investment, by creating information on stakeholders impact, has the potential to continually assist in this encouragement. In the United States, the mutual fund is the primary instrument of the socially responsible investment industry. The mutual funds that serve socially responsible investors are committed to integrating into their products the following three processes: screened investment, advocacy and education, and community development investments.

Making Social Investments Possible

Screened Investment

At Domini Social Investments our social screening process grew out of both essentially faith-based standards and stakeholders impact analysis. We eliminate alcohol, tobacco, gambling and weapons. Additionally, an early environmental movement led to the screening out of nuclear power. But the exciting work begins as we evaluate each corporation in six basic areas: product safety and usefulness, employment practices, diversity initiatives, community initiatives, non-US impact and the environment. We collect and analyze data, sort companies that seem to be above average in positive social impact and select a portfolio that meets our requirements.

Advocacy and Education

The mutual funds serving socially responsible investors file and vote shareholder resolutions, organize letter-writing campaigns, publish articles on our web site, and enter into direct dialogue with the management of the companies in which we hold stock. Direct dialogue is particularly useful as a way of dealing with a tough new emerging issue such as the one we in the United States call the sweatshop issue. Whereas in the South African debate corporations owned the factories in South Africa, today many corporations do not own the factories in which their products are made. For example, Walt Disney World makes a decision as to where to source their T-shirts based on the best price they can get. At least historically, it has not viewed it as its role to care about the circumstances that made those T-shirts available at that price. Shareholder advocacy has advanced issues ranging from sweatshops to the environment and even chief executive officer pay.

Community Development Investments

For certain segments of society, capitalism has not brought prosperity. Community development investments have emerged as a means of addressing the needs of these constituencies. These investments are generally in the form of loans to, or deposits at, community-based financial institutions. Funds serving the responsible investor support community development financial institutions. Community economic development has a relatively concrete and immediate impact. Low-income housing is built, a business providing entry-level jobs and healthcare benefits is supported, a cooperatively owned endeavor finances its expansion. Community development investments are particularly interesting as we move into a more complex global environment.

Conclusion

With the revenues of global corporations running at levels far in excess of those enjoyed by most of the planet's nations, it has now become impossible to address issues of environmental sustainability and basic human dignity unless corporations enthusiastically endorse these goals. While corporate management teams may be made up of individuals who are personally committed to a better tomorrow, the bifurcation of finance and society has led to a belief on the part of management teams that they are going to be held accountable only for generating high current earnings and that practically any cost for these earnings is acceptable. Socially responsible investors will impact this dangerous perception significantly. By becoming an important ownership base with a new message, we will allow management teams to do what no doubt they would prefer to do: provide solid returns within the standards of improving the future for all. The underlying goal of socially responsible investors is to assist in the creation of a just and sustainable economic system. While we do not argue that such a system is going to come about solely through the efforts of investors, we feel it would be highly unlikely to come about without investors taking a prominent and socially responsible role.

 

August 16, 2000

Amy Domini

From The New Social Policy Agenda in Asia, Proceedings of the Manila Social Forum, A joint publication of the Asian Development Bank and The World Bank, August 2000.

Introduction

The Asian financial crisis resulted in a substantial increase in poverty and worsening of social development in the region. However, this affected the social responsibility of international business very little. Justice and sustainability are not much spoken of on Wall Street today. But they should be, for it is Wall Street, and its global counterparts that are fueling the economic engine of the world - corporations. The entrepreneurs on Wall Street frequently forget that corporations are not the work of acts of God. They were created by humans as an efficient means of providing ourselves with food, clothing, shelter, health care, communication, and comforts.

Companies provide us with desired goods and services, but they do not exist in a vacuum. They must therefore be encouraged to act in a manner that is socially and ethically responsible to the various stakeholders they interact with. An effective means of such encouragement is active shareholder participation. Socially responsible investment, by creating information on stakeholders impact, has the potential to continually assist in this encouragement. In the United States, the mutual fund is the primary instrument of the socially responsible investment industry. The mutual funds that serve socially responsible investors are committed to integrating into their products the following three processes: screened investment, advocacy and education, and community development investments.

Making Social Investments Possible

Screened Investment

At Domini Social Investments our social screening process grew out of both essentially faith-based standards and stakeholders impact analysis. We eliminate alcohol, tobacco, gambling and weapons. Additionally, an early environmental movement led to the screening out of nuclear power. But the exciting work begins as we evaluate each corporation in six basic areas: product safety and usefulness, employment practices, diversity initiatives, community initiatives, non-US impact and the environment. We collect and analyze data, sort companies that seem to be above average in positive social impact and select a portfolio that meets our requirements.

Advocacy and Education

The mutual funds serving socially responsible investors file and vote shareholder resolutions, organize letter-writing campaigns, publish articles on our web site, and enter into direct dialogue with the management of the companies in which we hold stock. Direct dialogue is particularly useful as a way of dealing with a tough new emerging issue such as the one we in the United States call the sweatshop issue. Whereas in the South African debate corporations owned the factories in South Africa, today many corporations do not own the factories in which their products are made. For example, Walt Disney World makes a decision as to where to source their T-shirts based on the best price they can get. At least historically, it has not viewed it as its role to care about the circumstances that made those T-shirts available at that price. Shareholder advocacy has advanced issues ranging from sweatshops to the environment and even chief executive officer pay.

Community Development Investments

For certain segments of society, capitalism has not brought prosperity. Community development investments have emerged as a means of addressing the needs of these constituencies. These investments are generally in the form of loans to, or deposits at, community-based financial institutions. Funds serving the responsible investor support community development financial institutions. Community economic development has a relatively concrete and immediate impact. Low-income housing is built, a business providing entry-level jobs and healthcare benefits is supported, a cooperatively owned endeavor finances its expansion. Community development investments are particularly interesting as we move into a more complex global environment.

Conclusion

With the revenues of global corporations running at levels far in excess of those enjoyed by most of the planet's nations, it has now become impossible to address issues of environmental sustainability and basic human dignity unless corporations enthusiastically endorse these goals. While corporate management teams may be made up of individuals who are personally committed to a better tomorrow, the bifurcation of finance and society has led to a belief on the part of management teams that they are going to be held accountable only for generating high current earnings and that practically any cost for these earnings is acceptable. Socially responsible investors will impact this dangerous perception significantly. By becoming an important ownership base with a new message, we will allow management teams to do what no doubt they would prefer to do: provide solid returns within the standards of improving the future for all. The underlying goal of socially responsible investors is to assist in the creation of a just and sustainable economic system. While we do not argue that such a system is going to come about solely through the efforts of investors, we feel it would be highly unlikely to come about without investors taking a prominent and socially responsible role.

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