We have seen many instances of corporate fraud and scandal.

Poor governance has threatened our financial system. The names - Enron, Tyco, WorldCom - have become synonymous with corporate dishonesty, opportunism and greed. The financial markets have been destabilized and depressed and investor trust has been eroded. We believe that companies with the best governance, environmental, and social standards are best positioned for success in the long term.

One key is transparency.  We believe companies that disclose not only financial information, but also relevant environmental and social information, are better investment candidates.  There are a number of reasons for this.  For example, benchmarking helps companies to manage risk, thus enhancing long-term value by preventing environmental, social, or corporate governance issues from developing into long-term problems. Disclosure also helps to create a cohesive and robust corporate culture, and promotes a healthy sense of accountability and transparency among company employees. Sustainability reporting has helped many companies understand how much money is spent simply managing production waste, or dealing with costly litigation or regulation-and that alone can yield substantial cost savings. For other companies, knowing the dimensions of social and environmental performance can help to build positive reputations, which over the long-term will contribute to increased brand value, market share, and customer loyalty.

This process involves assessment of corporate governance, ethics, and business practices, monitoring numerous aspects of corporate governance, including board independence and diversity, executive compensation, and stakeholder consultation. We seek to avoid investing in companies that have poor compliance records with respect to bribery and corruption, as well as companies that have poor governance ratings combined with illegal or questionable activities such as fraud or insider loans. We will not invest in companies whose corporate governance and business practices compromise the interests of shareholders. In order to determine which companies meet our stringent standards for corporate social responsibility, we rely on publicly available information, including data voluntarily disclosed by each company.