SOCIAL TOPICS: INTERNATIONAL SOCIALLY RESPONSIVE INVESTING

Published, Spring 2001

       Engaging in a meaningful exchange with companies on social and environmental concerns is indeed an accomplishment when it comes to international shareholder advocacy. At Walden, the increasing rate and depth of response to our inquiries provides ample encouragement that our voice is being heard. Using well-honed domestic shareholder advocacy tools of proxy voting, dialogue, and shareholder resolutions, U.S. investors can help raise the corporate responsibility bar internationally. Below are examples of this work.

       Walden wrote recently to Repsol YPF SA, a major Spanish oil company, to express concern about the company’s oil exploration and production in Ecuador. Concerned that Repsol’s Amazon operations are harmful to the environment and to the Huaorani, an indigenous people, we asked the company about its policies vis-a-vis relationships with the Huaorani and other indigenous peoples and its commitment to preserving environmentally fragile ecosystems. The company responded that it works closely with the Huaorani, meeting with groups monthly, and has provided employment opportunities and a community development program, as well as funding and resources under a plan for emergencies. Repsol said its environmental protection measures include 1) obtaining ISO 14001 certification, which commits them to random verification checks, and 2) developing an environmental management plan for each project.

       Rio Tinto Plc, one of the world’s largest mining companies, has been a target since 1998 of a global corporate campaign led by the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) regarding its labor and environmental practices. Last May, over 20% of Rio Tinto’s shareholders voted in favor of resolutions asking it to adopt a corporate code of conduct for labor issues and to improve its board independence. Rio Tinto is in few Walden portfolios due to the large negative impact mining has on the environment. However, Walden has written to the company, encouraging management to make an agreement with the ICEM regarding its labor practices code and to resolve all outstanding labor disputes. Walden also asked the company to continue to expand the number of non-executive directors on its board. Rio Tinto responded that due to its progress on labor relations, the ICEM has agreed to not initiate another shareholder resolution with the company for 2001. Rio Tinto also responded meaningfully to our concerns about its board independence.

       Walden will continue to monitor each company.