CONTENTS EdEvidence Newsletter

January 2008

Investors Engage Companies by Phone, Letter, and Shareholder Resolutions

Shareholder resolutions are just the tip of the iceberg of investors' engagements with companies, so counting the number of resolutions only partly gauges an issue's importance for concerned investors. For example, thus far this proxy season investors have filed a shareholder resolution on the use of polyvinyl chloride (PVC) in products and packaging at Circuit City. But letters inquiring about PVC policies have been sent to many more companies, continuing IEHN's emphasis on PVC from past proxy seasons.

Corporate replies provide insight into market dynamics, revealing which companies are phasing out chemicals, even when they don't advertise this, and which are not. The latest round of PVC letters revealed, for instance, that Nokia has virtually completed its phase-out of PVC packaging, and described Logitech's progress in doing so. Replies to letters can lay the groundwork for a resolution or constructive dialogue in lieu of one. Even when resolutions are filed, they may be withdrawn for dialogue, as in 2007's withdrawal of a resolution at Sears that led to Sears' recent announcement of a PVC phaseout policy.

Thus far in the 2008 proxy season, investors have filed 15 resolutions, on such topics as toy safety, nanomaterials in cosmetics, pesticides' link to asthma, and use of brominated flame retardants in products. The City of New York's employee pension funds, in collaboration with the State of Connecticut's pension fund and other investors, has filed five product safety resolutions at Home Depot, JC Penney, Mattel, Target, and Wal-Mart. In addition, investors have sent letters to approximately 50 companies on a range of issues. Following on the heels of a resolution at Whole Foods Market that prompted the company to pull baby products containing the chemical Bisphenol-A from its shelves, investors have contacted more than a dozen food processors and baby bottle manufacturers inquiring about their policies and practices regarding Bisphenol-A.