2003 Company Dialogue

12.9.03

Portfolio 21 Investments files a shareholder resolution with Bristol-Myers Squibb

We are deeply concerned about how public policy in healthcare is increasingly influenced by those with large monetary resources, specifically the pharmaceutical companies. The pressures of corporate competition encourage the development of public and private strategies to maximize the near-term benefits to corporations while putting many of the risks and costs of their activities off on others. One form of this influence by corporations is political contributions. To address this, Portfolio 21 Investments co-filed a resolution asking that Bristol-Myers Squibb adopt a policy to annually report its corporate resources devoted to supporting political entities or candidates on both state and federal levels.

11.19.03

Comments to the SEC regarding greater democracy in the corporate elections process

Portfolio 21 Investments submitted comments to the SEC regarding the proposed rule on shareholder proxy access and the ability of investors to nominate candidates for corporate boards. We urged the SEC to support greater democracy in the corporate elections process, to vigorously support investors' rights to nominate legitimate candidates for company boards, and to do so through the company's proxy statement. The three-year wave of corporate scandals and the continued excesses of executive pay only highlight the flaws in allowing incumbent boards to hand-pick director candidates. Allowing the owners of companies to have a realistic say in the membership of the board is one of the best ways to curb the excesses and reduce the conflicts of interest that lead to corporate corruption.

10.31.03

Dialogue with Whole Foods regarding labeling Genetically Engineered foods

The issue of genetically engineered (GE) foods is one of increasing concern as increased usage of these crops is leading to increased cross-contamination. We joined a group of concerned shareholders in a dialogue with Whole Foods, a leader in the natural and organic food industry, regarding issues associated with labeling GE foods. Essentially, we are asking Whole Foods to clearly label their GE free products and to take an active role in educating consumers regarding the risks of GE agriculture. Whole Foods notes that labeling continues to be a challenge because there are many unknowns, the US government's guidance is very poor, and, at this point, there continues to be no validated testing method. As a result, the company has made the decision not to put anything on its in-house labels referencing GMOs. Instead the company's approach is to put more emphasis and promotion on the “organic” label (which by definition means not sourced from genetically engineered ingredients at the seed level). However, our feedback to the company was that this doesn't help protect the broader non-GE market and actually has a negative effect on the organic market due to cross contamination. Our point is, in order to ensure delineation between GE and non GE crops, consumers need to be able to give preference to GE free foods, and this can only be done if they are provided with the necessary information - so labeling is imperative. We believe that Whole Foods has a market opportunity to offer both organic and clearly labeled non-GE foods. We will be continuing this dialogue with the company.

10.28.03

Letter to Senator Gordon Smith urging support of action on Global Warming

Portfolio 21 Investments wrote to Senator Gordon Smith urging him to support the McCain Lieberman Climate Stewardship Act (S. 139). We believe this is an extremely important and urgent issue as risks and liabilities associated with greenhouse gas emissions have significant financial, reputational and operational ramifications for businesses. Some in the legal community are suggesting that companies failing to adopt climate change policies may face liabilities similar to what we have witnessed in the tobacco industry. As Americans, we are responsible for a significant amount of greenhouse gas emissions and it is imperative that we take steps to address this. The Climate Stewardship Act will enable us to do this, as the legislation represents a balanced, market-based strategy that combines reasonable limits on global warming pollution with an emissions trading mechanism that has already proven highly successful at lowering costs under the acid rain program.

9.25.03

PVC Dialogue with Baxter

On behalf of Portfolio 21 shareholders, Portfolio 21 Investments continues to engage Baxter on the issue of PVC in company products. Through a shareholder dialogue involving other socially and environmentally concerned investors and the environmental group Health Care Without Harm, we are encouraging the company to demonstrate clear leadership to phase out PVC. While the company does offer some PVC-free products, is seeing growth in these products, and continues to develop other non-PVC substitutes, the development and approval process is slow. We encourage Baxter to make every effort to speed this process and to be a vocal leader globally in the replacement of PVC with alternatives, as we believe there is growing demand for non-PVC products due to health and environmental concerns.

9.24.03

Supporting International Right to Know legislation

Joining a coalition of socially responsible investors, Portfolio 21 Investments wrote to Members of Congress in support of "International Right to Know" legislation. This legislation would require businesses incorporated in the United States or listed on U.S. stock exchanges to report to the public their environmental, human rights, and labor rights practices abroad. For socially and environmentally responsible investors disclosure of corporate information is central to our ability to make sound investment decisions. Yet all too often, critical social and environmental data is missing from companies' international operations, constraining the ability of shareholders to make reasonable investment decisions about companies operating internationally. For more information on the International Right to Know Campaign visit http://www.righttoknowday.net.

9.16.03

Letters to Interface, Plug Power, Wainwright Bank and Whole Foods requesting companies to put auditor ratification to shareholder vote

As part of a broad campaign by the socially responsible investment community Portfolio 21 wrote to US based companies in the fund that currently do not put auditor ratification on the proxy ballot for shareholder vote. We believe that given recent corporate governance scandals a company should no longer assume the selection of auditors is a routine matter best left to the Audit Committee to decide with no opportunity for input from owners. Investors are concerned about auditor selection due to issues such as potential conflicts of interest and auditor independence. As a result, we have requested these companies to not only submit auditor ratification to shareholder vote, but also to report on fees paid to auditors for the different services provided. It is our policy, at Portfolio 21, to vote only for auditors that are completely independent, and do not provide any services to the company in question other than audit related services.

9.9.03

Portfolio 21 comments on SEC-proposed rule re: communications between shareholders and corporate directors

Portfolio 21 Investments fully supports the SEC's recommendations that Nominating Committees disclose when they receive nominations from security holders, as well as the procedures for nominating candidates for the Board. We also provided the following comments and recommendations to the SEC: Portfolio 21 Investments supports detailed disclosures regarding the qualifications of, and criteria for, Board candidates, including those suggested by investors. Additionally, we strongly recommend additional disclosures regarding how the Nominating Committee takes the issue of Board diversity into account when considering candidates for the proxy ballot, and a description of how each candidate meets independence requirements outlined by the stock exchange listing reforms. We further support Boards reporting back to investors a summary of shareholder-Director communications. We would also like to see a summary report in the proxy statement of Director attendance at Board meetings. We believe it will be the combination of greater transparency and greater investor access to the proxy for Board nominations that will strengthen shareholder democracy, and Board accountability with it.

8.21.03

Portfolio 21 supports expensing options and opposes Senate Bill 979

Senate Bill 979, the Broad-Based Stock Option Plan Transparency Act would block FASB's decision to expense options, thereby allowing greedy executives to continue to cash out on millions of dollars of unexpensed stock options. This loophole in financial accounting can inflate company earnings, reduce corporate taxes, and mislead investors. As a result, Portfolio 21 Investments is encouraging Oregon Senators and Representatives to oppose this bill, and support the Leviin-McCain bill (SB 182, “Ending the Double Standard for Stock Options Act”), which would prevent a company from claiming a stock option expense on its tax return unless the company also includes that expense on its books.

6.5.03

Portfolio 21 Investments encourages HP to support the NEPSI Advanced Recovery Fee model

Recognizing HP's leadership in supporting proposed California Extended Producer Responsibility legislation, and the company's leadership in recognizing its responsibilities for products at the end of their useful lives, Portfolio 21 Investments encourages HP to support the development of a nationwide system and associated infrastructure that is efficient and effective in dealing with all e-waste generated within the US. While HP supports other proposed options for dealing with e-waste, Portfolio 21 strongly encourages HP to reconsider its position on the advanced recovery fee (ARF) model. The ARF approach would a) provide (financially) for the development of efficient infrastructure (system design, implementation, administration, collection, transportation, consolidation and sorting), b) allow manufacturers the flexibility to collect their own brand products (and a proportional payment from the ARF pool) from regional distribution centers (a concept HP is a strong proponent for), thus providing an incentive for design for environment and disassembly, and c) ensure proper treatment for orphan and historical e-waste. Portfolio 21 believes the ARF model offers the most efficient approach to national e-waste management.

6.4.03

Portfolio 21 Investments endorses the GrassRoots Recycling Network's EPR guidelines

Extended Producer Responsibility, or EPR, describes policies and practices requiring product brand-owners to take full physical or financial responsibility for the life-cycle impacts of their products, from product design to end-of-life product management. This concept includes ‘producer take-back' systems. EPR shifts the costs of waste from taxpayers to brand owners and producers and creates a powerful economic incentive to design waste out of the system and substantially reduce the use of toxic materials. Portfolio 21 Investments endorses the GrassRoots Recycling Network's EPR principles and will encourage companies held in Portfolio 21 to use these principles as a guide for company strategy and policy development.

4.12.03

Legislation enacted to weaken organic food standards is repealed

On April 12, 2003, Senator Patrick Leahy's Organic Restoration Act was passed, effectively repealing section 771 of the 2003 omnibus appropriations bill. Section 771 provided a livestock-feed exemption, removing the requirement of 100% organic feed for any meat, poultry, eggs or dairy products carrying the organic label. In early March PPortfolio 21 Investments wrote to Oregon Senators Wyden and Smith and Congressman Blumenauer, encouraging support for the Organic Restoration Act. We are pleased this act was passed, as repealing section 771 protects the integrity of the “organic” label and encourages continued growth of organic agricultural production in the United States .

4.8.03

Portfolio 21 urges UBS to decline funding the large dam and smelter project in Iceland

If built, the Kárahnjúkar project will consist of nine dams, three reservoirs, a series of tunnels and river diversions, and a 690 megawatt power plant. It is only the first in a series of large new dam projects in Iceland 's highlands that are supposed to power new aluminum smelters. This project will destroy unique environmental treasures on Iceland's Eastern Highlands - the second largest remaining wilderness area in Western Europe . Beyond the environmental risks associated with this project the reputational risk to potential funders is significant as NGOs are closely monitoring this project and campaigning, with good cause, against it. We urged UBS not to provide any funds for the large Kárahnjúkar dam and aluminum smelter project in Iceland due to the nature and controversy of the project and the fact that doing so would bring enormous risks to UBS and compromise the company's leadership position and integrity on environmental issues.

4.7.03

Portfolio 21 Investments asks UBS to place Vice Chairman Mr. Gramm on leave until all criminal and civil investigations into Enron's wrongdoing are complete

Portfolio 21 Investments wrote to UBS with concerned regarding the recent appointment of former U.S. senator Phil Gramm as a Vice Chairman of UBS. Mr. Gramm has professional and personal connections to Enron that have disgraced his reputation. We believe that UBS' association with Gramm seriously undermines UBS' professed commitment to corporate responsibility. As shareholders we urged UBS to renew its commitment to corporate integrity by removing Mr. Gramm from his position as Vice Chairman, at least until he is cleared of any involvement in Enron's transgressions. Even if he is cleared of these charges, we expressed our skepticism that a man with his legislative record would be a wise choice for UBS' executive team.

4.3.03

Letter to Office of Management and Budget (OMB) and the SEC in support of recently announced proxy voting reporting requirements

Portfolio 21 Investments submitted comments in response to the OMB's request for information related to the Paperwork Reduction Act of 1995, and the cost and burdens of compliance with SEC Final Rule 30b1-4, concerning proxy voting guidelines and vote disclosures. Essentially, we have not found disclosing our proxy voting record to be costly or burdensome. We support the recommendations set forth by the SEC staff and commissioners in their final rule, and believe they do not burden fund companies or investors with excessive costs or staff labor. We strongly believe that the benefits of transparency and disclosure to individual shareholders far outweigh the minimal direct and indirect costs of the rule.

3.10.03

Letters to elected officials in support of the Organic Restoration Act

The USDA organic standards, implemented in October 2002, required organic producers of meat, eggs and dairy products to use only organic feed. On February 13, 2003, a livestock-feed exemption was passed as part of the omnibus appropriations bill, and this was then signed into law, removing the requirement of 100% organic feed for any meat, poultry, eggs or dairy products carrying the organic label. The Organic Restoration Act will repeal Section 771of the Omnibus Appropriations Bill and will protect the integrity of the “organic” label and will encourage continued growth of organic agricultural production in the United States, one of the bright prospects for U.S. agriculture overall. Passing the Organic Restoration Act is in the interest of consumers, organic farmers, investors and the environment. Portfolio 21 Investments wrote to Oregon Senators Wyden and Smith, and Congressman Blumenauer, encouraging support for the Act. NOTE: Whole Foods and Horizon Organic were also vocal in their support of the Organic Restoration Act. Senator Smith did co-sponsor this bill.

1.24.03

IBM Resolution withdrawn

Based on an ongoing dialogue with IBM and a commitment by the company to produce a comprehensive corporate responsibility report in 2003, Portfolio 21 Investments and the coalition of concerned investors withdrew our resolution calling on IBM to produce a report based on the GRI guidelines. IBM has indicated that the GRI guidelines were closely consulted when the company developed the outline for its upcoming report, although the company will not be seeking to produce a report “in accordance with” the GRI guidelines. We will continue to engage the company on this issue. [See Shareholder activism dated 11/7/02].