Rejected Companies

Portfolio 21 seeks to educate and motivate companies to improve their environmental performance.

By informing companies when they fail our selection process, and providing specific reasons why they were not included in Portfolio 21, we hope to bring environmental performance to their attention. Many companies do not understand the impending ecological crisis, let alone have plans to address this challenge. We believe investors can play an important role in raising awareness of environmental concerns. Following is a sample of the companies that have failed to meet Portfolio 21's company evaluation criteria during the last 12 months.

Securities mentioned are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk.

REJECTED COMPANIES
Date Company Comments
6.10 Sino Forest Corporation Sino Forest operates tree plantations and manufactures wood products in China. While Sino has earned Forest Stewardship Council certification on some of its plantation lands, this represents just over 1% of the company's total plantation operations. This minuscule percentage of land with certification does not indicate leadership in this area. In addition, the company lacks transparency around its supply chain guidelines for imported logs.
5.10 Qualcomm Qualcomm is a wireless telecommunications research and development company. It is also the largest fabless chip supplier in the world. However, Qualcomm provides no information on the environmental requirements or standards for its supply chain. On numerous occasions, Portfolio 21 has requested information about the company's supply chain initiatives, including the company's plans to track and report on the manufacturing impacts for its suppliers. The company has not responded to our requests.
5.10 Maxim Integrated Products Maxim Integrated Products designs, develops, and manufactures a broad range of linear (analog) and mixed signal integrated circuits. Maxim manufactures the majority of its own silicon wafers, a process that requires significant water, chemical, and energy inputs. Although Maxim's manufacturing facilities maintain ISO 14001 certification for environmental management; the company fails to report its water or energy usage, wastewater management, or initiatives to reduce the output of perfluorocarbons and other volatile organic compounds. Maxim is compliant with the European Union directive on hazardous substances known as RoHS, however, the company does sell lead package types outside of the European Union.
4.10 Masco Corporation Masco manufactures and sells home improvement and building products such as faucets, kitchen and bath cabinets, and hardware products. The company published a Corporate Sustainability Report in 2006 but has not published a new report since that time. If new information becomes available, Portfolio 21 will re-evaluate the company's initiatives.
4.10 Veeco Instruments Veeco Instruments designs and manufactures solutions for LED & Solar Process Equipment, Data Storage Process Equipment, and Metrology. The majority of Veeco's revenues are derived from the manufacturing and sale of LED & Solar Process Equipment, which can provide environmental benefits during the use phase. However, the manufacturing of this equipment requires substantial manufacturing inputs like other electronic goods and semicondustors. Unfortunately, Veeco provides little information on measures taken to minimize the impact of its products. The company is not transparent and was unwilling to engage during Portfolio 21's evaluation process.
4.10 JDA Software JDA software provides software solutions that address supply chain management, business process, analytic application, and e-commerce in the retail industry. When evaluating a software company, Portfolio 21 assesses the potential environmental benefits associated with the use of the product. With the exception of JDA's transportation and logistics management software solutions, the environmental benefits are limited as the company's software primarily allows its customers to capture demand and provide product immediately. Additionally, JDA discloses no environmental accounting and does not appear to have initiatives in place to reduce the company's direct environmental footprint.
4.10 Amazon.com As an internet retailer, Amazon.com has eliminated the need for retail space, which consequently reduces the company's need for energy to heat and light stores. Instead, one of the most significant direct environmental impacts for online retailers is the energy required to power their data centers. Amazon.com makes no mention of its efforts to minimize the energy required to power its data centers. Amazon.com, does not engage with environmental surveys, such as the Carbon Disclosure Project, nor does it appear that the company has made any efforts to measure its companywide carbon dioxide emissions.
2.10 Andritz Andritz produces technically sophisticated machinery and plants for hydropower, pulp and paper, steel and other specialized industries. Andritz manufactures products and technologies for the generation of low carbon energy solutions. The company is committed to improving the energy efficiency of existing technologies. However, Andritz has not fully implemented an environmental management system and does not publish its environmental key performance indicators. Andritz lags sector peers in environmental performance.
2.10 3i Group 3i Group is a private equity company based in London that has investments across the globe and within many sectors, including healthcare, infrastructure, financial services, oil & gas, and media. The company has some initiatives and policies to minimize the environmental risk of its investments, yet its efforts are not comprehensive enough to support the growth of ecologically beneficial sectors or products.
1.10 All America Latina Logistica All America Latina Logistica (ALL) is a rail-based Brazilian transportation company that transports agricultural commodities and industrial products. In an ecologically constrained world, Portfolio 21 recognizes the business opportunities within the rail sector and sees leaders addressing the fuel efficiency of rail fleets and implementing initiatives to reduce greenhouse gas emissions through capital expenditures. ALL fails to demonstrate an aggressive fleet renewal program and has yet to publicly report its emissions or set reduction goals.
12.09 Amgen Amgen is a biotechnology-based human therapeutics company. As is the case with many biopharmaceutical companies, Portfolio 21 assumes Amgen utilizes both mammalian and microbial cells such as recombinant E. coli or yeast cultures. Scientific research has concluded that mammalian cells are environmentally benign; however, microbial cells do have the ability to replicate and therefore should be sterilized before disposal. Amgen failed to respond to numerous inquiries regarding its use and disposal of microbial cells.
12.09 Banco Santander Brasil Banco Santander Brasil has business divisions in retail banking, wholesale banking, asset management, and insurance. The company has above average environmental reporting, including trend data on all major key performance indicators. However, it lacks a comprehensive internal risk analysis system to manage the environmental and social impacts of its corporate lending and/or project financing.
12.09 PUMA PUMA sporting goods and accessories are sold in over 120 countries. While PUMA has implemented some environmental initiatives that demonstrate leadership, the company fails to recognize the importance of environmental life-cycle analysis and has not set supplier initiatives associated with the impact of leather production and tanning. In addition, the company does not have a comprehensive greenhouse gas policy and only has reduction targets associated with a portion of its operations.
12.09 ESCO ESCO serves customers across the utility, industrial, and commercial sectors with its engineered products. The company's Utility Solutions division offers hardware and software that supports advanced metering and demand response capabilities. While Portfolio 21 is attracted to this aspect of the business, ESCO's other business divisions fail to offer ecologically beneficial products or services. In addition, the company demonstrated a lack of transparency and unwillingness to engage in dialogue.
12.09 Chipotle Mexican Grill Chipotle Mexican Grill owns and operates over 800 fast service restaurants specializing in Mexican foods. While the company has implemented several initiatives that demonstrate a level of commitment to higher quality foods, it failed to respond to numerous inquiries regarding its use of genetically modified foods.
12.09 J.M. Smucker J.M. Smucker manufactures and markets food products that include fruit spreads, peanut butter, shortening and oils, and coffee. According to Portfolio 21's biotechnology policy, if a company is not directly involved in genetic engineering, but sells products containing genetically modified organisms (GMOs), we will evaluate the company's activities and policies regarding biotechnology. J.M. Smucker does not have a public position on the use of GMOs. In addition, it does not disclose plans for increasing procurement of organic ingredients. The company fails to comply with Portfolio 21's biotechnology policy.
11.09 Campbell Soup Campbell Soup is a household name in food products in the United States, where the company derives close to 3/4 of its revenues. According to the company's corporate social responsibility report, its use of genetically modified ingredients is limited primarily soybeans, canola, and corn sourced in North America. Although it is not known what percentage of the company's raw materials ingredients are genetically engineered; Campbell's has shown lack of leadership is seeking alternatives and has refused to label products in the U.S.
11.09 Halma Halma is a UK company specializing in the production of electronic, safety, and environmental technologies. Portfolio 21 believes that in a world of increasing ecological constraints, environmental control technologies and services will likely see an upsurge in demand. However, after numerous failed attempts at dialogue with the company it is unclear what percent of the company's revenues are derived from environmental products. Without such data it is difficult to gauge how ecological constraints will affect Halma's future opportunities and/or risks.
10.09 BorgWarner Recognizing the need for fuel efficient vehicles, BorgWarner provides automakers with engine and drivetrain solutions for improved fuel economy. Outside of its products/services and R&D initiatives, however, BorgWarner demonstrates little environmental leadership. The company did not respond to numerous inquiries regarding its environmental initiatives and future plans.
10.09 McCormick & Company McCormick & Company manufactures food products, including seasoning mixes, herbs and spices, food coloring and easy-to-cook meals. According to Portfolio 21's biotechnology policy, if a company is not directly involved in genetic engineering, but sells products containing genetically modified organisms (GMOs), we will evaluate the company's activities and policies regarding biotechnology. McCormick & Company does not have a public position on the use of GMOs but follows local laws where it sells its products. In addition it does not appear to engage in activities advocating for labeling laws internationally. The company fails to comply with Portfolio 21's biotechnology policy.
8.09 Covidien Covidien is a global healthcare products company that derives the majority of its revenues from its medical devices division. Despite several case studies that highlight the company's initiatives to improve the eco-efficiency of its manufacturing processes and facilities, Covidien provides no information on its efforts to minimize the environmental impacts of its products through life-cycle analysis, material restrictions, and/or end-of-life take-back programs. In addition, Covidien has not set clear targets across all of its environmental key performance indicators and does not appear to be monitoring the annual progress on its direct environmental indicators.
8.09 Toyota Motor Corporation Toyota's primary business is the manufacture of vehicles and parts. The company was the first to mass-produce a hybrid vehicle and has announced plans to install hybrid technology across its entire product line by 2030. The company also hopes to begin mass-production of plug-in hybrid vehicles in 2012. Despite the company's significant achievement in this area, Toyota, largely through its membership in the Alliance of Automobile Manufacturers, has a history of fighting environmental legislation aimed at reducing the impact of emissions from gasoline and diesel vehicles. These actions demonstrate an inconsistency that is difficult to reconcile with the rest of the company's business model.
7.09 Equinix Equinix provides global data center services primarily comprised of colocation, interconnection, and managed information technology infrastructure services. Portfolio 21 believes energy efficient data centers will be in demand in a digital world with diminishing natural resources, particularly as the cost of energy increases. While Equinix has made some progress in improving energy efficiency at some of its data centers, the company does not disclose the power usage effectiveness for any of its centers, nor has it made commitments to build data centers with green building standards.
7.09 Autonomy Autonomy develops and distributes software products used in automating the management, processing and delivery of unstructured information sources. Despite the company's relatively minimal direct environmental impact, Autonomy discloses extremely limited information on environmental metrics. It provides metrics on the carbon dioxide per million dollars in revenue for its headquarters in Cambridge, UK only. More important, however, is the fact that while Autonomy's products increase human efficiency and improve the way in which we interact with information and computers, Autonomy's software provides few, if any, ecological benefits.
7.09 AGL Energy AGL Energy is an Australian energy company that sells electricity and natural gas to more than 3 million residential, small business, and commercial customers. When compared to Australia's overall generation mix, which is approximately 90% from coal, AGL's installed capacity shows a diverse energy mix that is relatively light on coal. However, AGL has a significant (32.5%) ownership interest in the Great Energy Alliance Corporation and an associated ownership of the Loy Yang coal mine (the largest producing open cut brown coal mine in the southern hemisphere). The risks associated with these coal investments supersede the company's positive attributes.
7.09 Benesse Corporation Benesse Corporation is a diversified consumer services company based in Japan. The company's business activities include education, language learning, and nursing care operations. The company incorporates some environmental topics into its education materials for school-aged children, however, the company's communications lack sufficient information to know if it is a meaningful curriculum. In addition, the company provides inadequate communication on its environmental activities and initiatives to determine the depth of its commitment to environmental sustainability.
7.09 Calgon Carbon Calgon Carbon a provider of services and products for purifying water and air, primarily using activated carbon. A large proportion of Calgon Carbon's products and services provide environmental benefits and may experience an increase in demand as a result of increasing ecological limitations. Despite this fact, Calgon Carbon's business is dependent on coal. The company sources its coal mainly from mines in the Appalachian mountains, a region known for the mountain-top removal of coal. In addition, Calgon Carbon's processes require significant energy inputs. The company also does not have supplier guidelines in place, does not disclose its energy use and/or emission metrics, and has been cited by the Environmental Protection Agency for significant violations.