Morningstar Advisor - June/July 2009 - 36

Spotlight information that’s available to the public at large because we think that the company needs to be transparent about these practices not just to Calvert, but to all its stakeholders. We push public transparency, because it leads to accountability. Donge: We also rely on the nonprofits on the ground—civil society—that are watching these companies and feel the impacts of the companies’ operations. These third parties, the press, are really important intermediaries for us. Augustine: It’s been interesting to see companies become much more proactive about engaging stakeholders. Just last week, I was on a call with Timberland TBL, and the call was focused on what the company’s doing in climate change. The CEO facilitated the call for an hour and a half. They opened it up not only to SRIs, but also to interested stakeholders. They do their public reporting now through JustMeans, which is an open public platform. They are really reaching out. They’re using Twitter and other social networking vehicles to get feedback from a wide range of stakeholders. Jones: Have you found that there is a into account the confluence of factors that are happening right now—an aging workforce in the U.S., a huge increase of women and minorities in the workforce, over the next 30 years minorities are projected to be the majority in the workforce—we see that if companies are going to succeed in managing that new workforce they need to embrace diversity now and put practices and programs in place to reap the benefits that that provides. Jones: How do you determine which firms prohibitive or negative screen. You’re engaging to see if things can be improved. A topic that’s received criticism is the efficacy of proxy voting. Usually, management gets its way. Do you view proxy voting as an effective source for shareholder activism? Augustine: We are active voters of the proxies. get covered from your side of things? Will investment personnel come to you guys and say we’d like you to initiate more research in this kind of an area? Augustine: Calvert Social Index CSXAX is based on the 1,000 largest companies on the New York Stock Exchange and part of Nasdaq. We apply our social screens against the companies in that universe and then determine whether or not they are eligible for investment. Any company that falls within those 1,000 is a company that we look at from a sustainable perspective. Donge: We as sustainable analysts want the Calvert, for many years, has disclosed the way that we vote on our proxies on our Web site. We believe that investors should vote their proxies in a way that they think is responsible. When shareholder resolutions first started in the social or sustainable space, it was very uncommon to get a vote more than 10% in our favor on any issue. What’s interesting now is that votes are 30%, 40%, and 50% in favor of the environmental, social, or governance proposals. Shareholders are getting much more knowledgeable and seeing proxies as a vehicle to exercise their power. They’re realizing that they’re owners of a corporation and that with their votes come power in how the corporation is run. But I also want to say that the majority of our advocacy is not focused around filing a shareholder resolution. We engage companies not to file resolutions, but because we think that an issue is important at the company. We often end up filing a resolution if we feel like the dialogue has reached a standstill, but that’s not where we start. We start with engaging the company. Donge: The proxy fight has changed so much connection for companies between following SRI practices and superior financial performance? Augustine: We are investors. When we ask companies to do something, we do it because we think it will make a difference in their bottom line in the long term. We think that environmental, social, and governance issues are issues of risk management, and that by managing them well, a company is going to be better positioned to tackle the challenges that are coming in the future, whether that’s through product development, better managing their environmental impacts, or diversity. investable universe to be as large as possible, because what that means is that every company is striving toward some path of sustainability. We’re always looking for companies to open that dialogue with. Advocacy has become a prominent feature of SRI. It’s our way of engaging with a company. For Calvert, advocacy is really important because we need to have that dialogue to gauge companies’ responsiveness. It’s a way to measure how successful a company is in sustainability. We don’t open a dialogue with a company solely because an investment manager is looking to buy the company. We keep the relationship with the investment managers very separate. When a company does not meet our Calvert screens, the portfolio managers have to work around that. Jones: The issue of advocacy and engagement There is a growing body of research, for example, showing that diversity is good for a company’s bottom line. When you take with a company is interesting because it’s not a in the past decade. When we filed our first greenhouse gas emissions resolution, we were still explaining to companies what a greenhouse gas emission was. Today, there are 70 investors with $7 trillion of investment that join us in this discussion on greenhouse gas emissions. It’s called the Investor Network on Climate Risk. The proxy fight is no longer just one investor versus one company. It’s about coalitions; it’s about investors together understanding what the broad implications of risk are. SRI is no longer that niche investor who sits as an activist. 36 Morningstar Advisor June/July 2009

Morningstar Advisor - June/July 2009

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2009

Morningstar Advisr - June/July 2009
Contents
New on MorningstarAdvisor.com
Letter from the Editor
Contributors
Is SRI a Relevant Investment Strategy?
A Head for Numbers
Building a Business on SRI
Investment Briefs
The Liquidity Premium
Navigating the SRI Patchwork
Profit and Progress
How the Fed Contributes to Crises
Holding Steady
Appleseed Adds Value to SRI Formula
Four Picks for the Present
Long-Term Investors Can Find Value among Industrials
Higher Yields, Hold the Risk
Bargains in U.S. Industrials
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks
Most Popular Variable Annuities
New at Morningstar
Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Morningstar Advisr - June/July 2009
Morningstar Advisor - June/July 2009 - Cover2
Morningstar Advisor - June/July 2009 - Contents
Morningstar Advisor - June/July 2009 - 2
Morningstar Advisor - June/July 2009 - 3
Morningstar Advisor - June/July 2009 - New on MorningstarAdvisor.com
Morningstar Advisor - June/July 2009 - 5
Morningstar Advisor - June/July 2009 - 6
Morningstar Advisor - June/July 2009 - Letter from the Editor
Morningstar Advisor - June/July 2009 - Contributors
Morningstar Advisor - June/July 2009 - 9
Morningstar Advisor - June/July 2009 - Is SRI a Relevant Investment Strategy?
Morningstar Advisor - June/July 2009 - 11
Morningstar Advisor - June/July 2009 - A Head for Numbers
Morningstar Advisor - June/July 2009 - 13
Morningstar Advisor - June/July 2009 - 14
Morningstar Advisor - June/July 2009 - Building a Business on SRI
Morningstar Advisor - June/July 2009 - 16
Morningstar Advisor - June/July 2009 - 17
Morningstar Advisor - June/July 2009 - Investment Briefs
Morningstar Advisor - June/July 2009 - 19
Morningstar Advisor - June/July 2009 - 20
Morningstar Advisor - June/July 2009 - 21
Morningstar Advisor - June/July 2009 - 22
Morningstar Advisor - June/July 2009 - The Liquidity Premium
Morningstar Advisor - June/July 2009 - 24
Morningstar Advisor - June/July 2009 - 25
Morningstar Advisor - June/July 2009 - 26
Morningstar Advisor - June/July 2009 - 27
Morningstar Advisor - June/July 2009 - 28
Morningstar Advisor - June/July 2009 - 29
Morningstar Advisor - June/July 2009 - Navigating the SRI Patchwork
Morningstar Advisor - June/July 2009 - 31
Morningstar Advisor - June/July 2009 - 32
Morningstar Advisor - June/July 2009 - 33
Morningstar Advisor - June/July 2009 - 34
Morningstar Advisor - June/July 2009 - Profit and Progress
Morningstar Advisor - June/July 2009 - 36
Morningstar Advisor - June/July 2009 - 37
Morningstar Advisor - June/July 2009 - 38
Morningstar Advisor - June/July 2009 - 39
Morningstar Advisor - June/July 2009 - How the Fed Contributes to Crises
Morningstar Advisor - June/July 2009 - 41
Morningstar Advisor - June/July 2009 - 42
Morningstar Advisor - June/July 2009 - 43
Morningstar Advisor - June/July 2009 - 44
Morningstar Advisor - June/July 2009 - 45
Morningstar Advisor - June/July 2009 - 46
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Holding Steady
Morningstar Advisor - June/July 2009 - 49
Morningstar Advisor - June/July 2009 - 50
Morningstar Advisor - June/July 2009 - 51
Morningstar Advisor - June/July 2009 - Appleseed Adds Value to SRI Formula
Morningstar Advisor - June/July 2009 - 53
Morningstar Advisor - June/July 2009 - 54
Morningstar Advisor - June/July 2009 - 55
Morningstar Advisor - June/July 2009 - Four Picks for the Present
Morningstar Advisor - June/July 2009 - 57
Morningstar Advisor - June/July 2009 - Long-Term Investors Can Find Value among Industrials
Morningstar Advisor - June/July 2009 - 59
Morningstar Advisor - June/July 2009 - 60
Morningstar Advisor - June/July 2009 - 61
Morningstar Advisor - June/July 2009 - Higher Yields, Hold the Risk
Morningstar Advisor - June/July 2009 - 63
Morningstar Advisor - June/July 2009 - Bargains in U.S. Industrials
Morningstar Advisor - June/July 2009 - 65
Morningstar Advisor - June/July 2009 - Mutual Fund Analyst Picks
Morningstar Advisor - June/July 2009 - 67
Morningstar Advisor - June/July 2009 - 68
Morningstar Advisor - June/July 2009 - 69
Morningstar Advisor - June/July 2009 - 50 Most Popular Equity ETFs
Morningstar Advisor - June/July 2009 - 71
Morningstar Advisor - June/July 2009 - Undervalued Stocks
Morningstar Advisor - June/July 2009 - 73
Morningstar Advisor - June/July 2009 - 74
Morningstar Advisor - June/July 2009 - 75
Morningstar Advisor - June/July 2009 - Most Popular Variable Annuities
Morningstar Advisor - June/July 2009 - 77
Morningstar Advisor - June/July 2009 - 78
Morningstar Advisor - June/July 2009 - New at Morningstar
Morningstar Advisor - June/July 2009 - Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - Cover3
Morningstar Advisor - June/July 2009 - Cover4
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