State Street Resolution

Proxy Voting

State Street Corporation is a respected leader in the financial services industry and State Street Global Advisors (SSgA) has a long track record of responsive service to investment management clients.

State Street publishes an annual Corporate Social Responsibility (CSR) Report, describing a broad spectrum of policies and programs addressing sustainability concerns. “Simply put, corporate social responsibility is good for business,” asserts the 2007 CSR Report.

The 2006 CSR report states “You will read about how we protect shareholder value through corporate governance; conduct our global business by collaborating with customers and strategic partners; preserve the environment; create a positive work environment for our employees; and serve our communities...and why we think sustainability is important to our long-term success.”

Furthermore, since 1986 SSgA has offered socially screened portfolios for clients. By 2007, according to the CSR Report, SSgA was managing $80 billion in assets incorporating environmental, social and governance factors.

As part of its fiduciary duty, State Street is responsible for voting proxies of companies in which it holds stock on behalf of clients. However, its proxy voting record seems to ignore State Street’s proclaimed environmental commitment and stated position regarding the impact of key environmental factors on shareholder value. A thoughtful fiduciary must carefully review the economic rationale for all proxy initiatives.

To the best of our knowledge, SSgA uniformly votes against all shareholder resolutions on social, environmental and climate change matters, backing management recommendations even when major proxy advisory services, such as RiskMetrics, support such resolutions with a clear, economic rationale.  

For example, increasingly investors around the world acknowledge the potential for climate change to affect long-term business success. Pension funds, investment management firms and other investors with over $50 trillion in assets under management support the Carbon Disclosure Project, an organization calling on companies to disclose their greenhouse gas emissions and reduction plans.

In 2008, over 50 resolutions were filed at companies facing a potential, significant business impact from climate change. Many of the resolutions simply asked for more disclosure, noting that thousands of companies globally report on their carbon emissions and steps they are taking to reduce them. State Street voted against such resolutions, in contrast to investment firms such as Goldman Sachs, Schwab and Lazard who supported some of them.

Ironically, State Street reports its own greenhouse gas emissions in its CSR Reports and further describes the company’s active role in addressing climate change.

We are disappointed that State Street’s proxy voting record does not reflect the company’s own commitment to climate change, as well as other social and environmental factors with the potential to impact long term shareholder value.

RESOLVED, Shareholders request the Board to initiate a review of SSgA’s Proxy Voting Policies, taking into account State Street’s own corporate responsibility and environmental positions and the fiduciary and economic case for the shareholder resolutions presented.  The review should consider updating State Street policies. The results of the review, conducted at reasonable cost and excluding proprietary information, should be reported to investors by October 2010.