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Domini Backs Oxfam's "Coffee Rescue Plan"

Investment Firm Sees Risks to Investors in the Global Coffee Crisis

New York, NY — Domini Social Investments LLC, manager of the Domini Social Equity Fund (NASDQ: DSEFX), today expressed its support for the Coffee Rescue Plan proposed by the international development organization Oxfam and other humanitarian and environmental organizations.
“The worldwide coffee industry is in crisis,” said Adam Kanzer, Domini’s Director of Shareholder Advocacy. “It is unsustainable for the coffee farmers, their families, and their communities. It is unsustainable for the fragile environments where coffee is grown. Despite the enormous profitability of this business for the world’s major coffee roasters, it may prove unsustainable for them as well, as they risk seeing short-term gains turn into long-term losses.
“Over the last three years,” Mr. Kanzer continued, “the price that coffee farmers receive for their harvest has fallen by almost 50%, to a 30-year low. According to Oxfam, the price for a pack of roast and ground coffee in the United States is nearly 4000% higher than the price paid to the Ugandan farmer for green coffee beans. A market that relies on such shocking inequities cannot be sustained.”

The Coffee Rescue Plan

Oxfam’s Coffee Rescue Plan, announced today with press conferences and demonstrations held around the world, calls on the world’s major coffee roasters — including Kraft Foods, Nestlé, Procter & Gamble, and Sara Lee — to increase the market for Fair Trade coffee, to bring the current oversupply of coffee back into line with demand, and to help ensure that coffee farmers earn a decent living. “The roasters are only one part of a wide-ranging and complex problem,” Mr. Kanzer said. “But they are an important part, and we would like to encourage them to become a part of the solution.
“As socially responsible investors, we seek out companies and industries that operate in a sustainable way: economically, socially, and environmentally,” Mr. Kanzer continued. “We believe that corporations that utilize socially and environmentally sustainable practices offer attractive long-term investment opportunities. These practices also lay the foundation for more just and sustainable economies. This is why Domini Social Investments is proud to join Oxfam and its allies in support of their Coffee Rescue Plan.”

Economic and Environmental Impact

The economic impact of today’s catastrophically low prices is wide-ranging. Farmers unable to pay school fees are withdrawing their children from school. Stores, banks, and other businesses in farming communities risk failure. Desperate farmers are abandoning coffee and turning to illegal but more profitable crops like coca, from which cocaine is manufactured. One hundred thousand coffee-growing families now live in poverty, and many face starvation. Nations that are dependent on coffee exports are suffering as well, as the drop in coffee revenues devastates healthcare and other social programs, such as the Ethiopian government’s efforts to fight AIDS.
The mass-production methods of coffee growing that have helped drive down prices also carry a severe environmental cost. Traditional shade-grown coffee is raised, often without the use of pesticides, under a canopy of trees that provide shelter for birds and other wildlife. When “sun-grown” coffee is produced on clear-cut industrial plantations, this vital habitat is destroyed.

The Risk to Investors

In a statement issued today, Domini argued that ”the major coffee roasters themselves may find that the trend toward industrial coffee production and the failure to pay a fair price for coffee — a price that allows coffee farmers to meet their costs of production as well as to provide for themselves and their families — will damage their own businesses, as the quality of coffee declines and farmers are driven from their land or turn to other livelihoods.
“These firms also bear significant risk to their brand names as consumers become more educated about the true costs of their morning cup of coffee, and turn to higher-quality, more sustainably produced brands. Investors ignore the substantial ramifications of this global crisis at their own risk.”

The Promise of Fair Trade

Socially responsible consumers and investors are helping to alleviate the impact of this crisis through their support of companies that offer farmers a fair price for their crop, including those that offer Fair Trade Certified coffee — about 85% of which is shade-grown and organic.
“The current crisis demands far-reaching, creative solutions,” said Mr. Kanzer. “We call upon the major coffee roasters and retailers to review their sourcing practices and consider the recommendations that Oxfam and others have proposed. We urge investors to review these issues with the management teams of corporations in their portfolios, and to demand more responsible practices.”
Domini Social Investments manages more than $1.5 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 (NASDQ: DSEFX), 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 (NASDQ: DSBFX) and an FDIC-insured money market account (in partnership with ShoreBank), both of which focus on community economic development.
Additional information on Domini Social Investments is available on the firm’s website, Domini’s 7th annual Proxy Voting Guidelines & Shareholder Activism booklet is also available free of charge by calling 1-800-225-3863.