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First Quarter 2009
Predatory Credit Card Practices. The credit card industry has
come under increasing fire. “Americans know that they have a responsibility to
live within their means and pay what they owe,” President Obama said in a May 9
radio address. “But they also have a right to not get ripped off by the sudden
rate hikes, unfair penalties and hidden fees that have become all too common to
our credit card industry.”
Calling for new legislation, Obama continued, “You shouldn’t
have to fear that any new credit card is going to come with strings attached,
nor should you need a magnifying glass and a reference book to read a credit
card application.”
Credit cards have increasingly been viewed as the enemy, as
banks hurt by the ongoing credit crisis turn to their customers as a captive
audience from which they can extract profits. In addition to charging excessive
penalty fees and interest rates, some banks have begun increasing the fees they
charge to their best customers. Critics argue that these practices are actually
designed to keep customers in debt: a strategy that harms the long-term
interests of the banks, their shareholders, their customers, and the economy
itself.
Yet credit cards offer important benefits. Entrepreneurs
with little or no collateral can use them to finance the startup of a small
business. Young consumers can use them to build up a credit history so they can
qualify for a mortgage in the future.
As Senator Christopher Dodd (D-CT) said in May, “We like
credit cards — they are valuable vehicles for many people. It’s when these
vehicles are being abused by the card issuers at the expense of the consumers
that we must step in and change the rules.”
In 2008, Domini joined MMA Praxis in a campaign to address a
variety of predatory credit card practices that we believe are locking
consumers in a deepening cycle of debt. We filed resolutions asking the boards
of Bank of America and American Express to assess the extent
to which they engage in abusive or predatory practices.
Domini’s resolution with Bank of America gained a vote of
more than 33% at the company’s annual meeting on April 29 — one of the most
closely watched annual meetings of the year. Among other suggestions, we called
on Bank of America to put an immediate end to non-default repricing of existing
balances, the practice of raising interest rates on customers that have not
been delinquent in their payments. We were pleased to be able to withdraw our
proposal at American Express after productive discussions with the company.
Child Labor in Uzbekistan
During the quarter, Domini participated in a conference call
with the CEO of the Dubai Multi Commodities Centre to discuss the Centre’s
recent agreement to trade Uzbek cotton and to express our concerns regarding
forced child labor in that country. The Centre is an entity of the government
of Dubai, with a mandate to develop Dubai as a global commodity trading center.
We were pleased with the conversation and look forward to continuing the
dialogue.
New and Continuing
Dialogues
During the fourth quarter, we met with 12 companies,
including the following:
- American Express (predatory credit
card practices)
- Cisco Systems and Citigroup (human rights)
- Cummins (union relations)
- Dell (recycling)
- Goldman Sachs (political
contributions)
- JPMorgan Chase (human rights and
the environment)
- Kraft Foods (nanotechnology)
- Southwest Airlines (sustainability
reporting)
Public Policy
During March, Domini’s General Counsel participated in a
meeting organized by the Social Investment Forum (SIF) with SEC Commissioner
Luis Aguilar to discuss Domini and the Social Investment Forum’s public policy
goals, including corporate social and environmental disclosure.
2008 Highlights
As a shareholder in the Domini Funds, you make a difference
in the world. Listed below are some of the ways that you made a difference in
2008.
Global Network Initiative: Around the
world, Internet and communications technology companies face requests from governments
to censor and remove information, and to provide information on their users. In
2008, Domini helped to launch the Global Network Initiative, a
multi-stakeholder group that opposes government censorship and threats to
privacy worldwide. The group includes Google, Microsoft, Yahoo, and a
range of human rights and academic organizations.
Sustainable Forestry: Of the twenty shareholder resolutions Domini
filed for the 2008 proxy season, six related to sustainable forestry and
climate change. Best Buy agreed to
work with Domini to develop a sustainable paper purchasing policy and the
packaging manufacturer MeadWestvaco
agreed to study the feasibility of phasing out the use of wood fiber not
certified by the Forest Stewardship Council and to increase its use of recycled
fiber.
Project Kaleidoscope: Domini helped to produce the final report of
Project Kaleidoscope, a multi-year collaborative effort, which included McDonald’s and the Walt Disney Company. The Project’s Working Group developed and
successfully field-tested a new approach to achieving long-term improvements in
factory working conditions. The project was field-tested at 10 contractor
factories in southern China that produce goods for McDonald's restaurants and
Disney licensees.
Child Labor in Uzbekistan: In 2007, the International Labor Rights
Forum brought to our attention the annual forced mobilization of children in
Uzbekistan to harvest cotton. In 2008, Domini helped lead a group of investors
that sent letters to more than 100 corporations around the world, prompting
them to start tracing the source of their cotton purchases. The group’s efforts
included meetings with the U.S. State Department and letters to Uzbek President
Karimov, the Secretary General of the International Labor Organization, and
Secretary of State Condoleezza Rice.
Investing and Genocide: In September 2008, Domini briefed the
Congressional Human Rights Caucus on what investors can do to address genocide
and other crimes against humanity.
