Our goal is to provide our shareholders with integrity-driven returns through investments in responsible companies. Calvert's commitment to Corporate Responsibility Matters is embodied in the five pillars below, each of which contributes to healthy companies, strong markets, and sound investments.

1. Striving for Integrity-Driven Investments
For Calvert, integrity-driven performance means seeking out companies with sound business practices - companies that align the interests of management and shareholders, minimize their environmental impacts, provide safe products, and engage in fair labor practices. We believe that our investment process, which integrates analysis of corporate responsibility and financial performance, will lead to lower risk and better long-term performance. 

Calvert and Investment Performance
Review performance for Calvert's funds. 

The Case for Corporate Responsibility and Integrity
Over the past several years, high-profile implosions of companies such as Enron, WorldCom, and Qwest resulted in large part due to a lack of a sense of responsibility on the part of management to anyone other than themselves. Now, companies in the mutual fund industry are facing accusations that they have placed corporate profits or personal gain before their responsibilities to shareholders. These scandals highlight the need for integrity and corporate responsibility to be central elements of day-to-day business. We at Calvert seek to invest in integrity-driven companies, and we fully attempt to make integrity a part of our daily operations. 

Corporate responsibility is driven by management and boards of directors. Many external voices encourage corporate responsibility and integrity-shareowners, NGOs, communities, and government-but corporate managers and boards must embrace a culture of responsibility and integrity themselves. Calvert searches for integrity-driven companies by using corporate responsibility criteria in our investment process. We seek to ascertain the extent to which companies have internalized their sense of collective responsibility to society. 

Calvert's Corporate Responsibility Criteria
Calvert evaluates business practices, ethics, and corporate governance. Our belief is that corporations should be governed in transparent ways that align the interests of management, shareholders, customers, and society. Calvert also assesses corporate responsibility practices in the following areas:

1. Workplace
2. Product Safety and Impact
3. Environment
4. International Operations and Human Rights
5. Indigenous Peoples' Rights
6. Community Relations

Calvert's Internal Corporate Responsibility Efforts
Calvert is concerned about the allegations of market timing and late trading in the mutual fund industry. Calvert also seeks to provide a safe and healthy work environment for its employees, minimize its environmental impact, provide responsible products, respect human rights, promote indigenous peoples' rights, and be a good community citizen. Calvert has been the recipient of numerous awards, such as the "2003 UNEP FI Royal Award for Sustainability," "100 Best Companies in America for Working Mothers," and "Montgomery County Work/Life Alliance." 

Calvert has a comprehensive recycling program which has avoided:

• The destruction of 7871 trees
• 277,801 pounds of air pollution
• 3,241,000 gallons of water usage
• 1,898,300 kwh of electricity usage
• 15,276 cubic yards of landfill waste

2. Encouraging Open and Honest Reporting 

Non-disclosure allows companies to hide debts and liabilities that all investors have a right to know about.

Through our investment selection process, shareholder advocacy, and participation in public policy debates, Calvert actively seeks to encourage companies to report all "material" information--not just financial information.

See Calvert's Corporate Governance Issue Brief. Recent examples of Calvert's efforts to encourage open and honest reporting include:

• Calvert has advocated increasing reporting requirements for social and environmental issues, including several public policy initiatives, such as the International Right to Know Campaign, which are described in more detail in Pillar Five: Promoting Sound Business Practices and Public Policies.
• Calvert requested that Pfizer publish its Ethics Policy for Clinical Trials on its Web site, which the company recently did.
• Calvert filed a shareholder resolution with TriQuint Semiconductor, Inc. requesting that the company produce an Environment, Health, and Safety Report. The resolution received a vote of support of 31.52% at the Annual General Meeting in May. In December, TriQuint added a new section on its website devoted to environment, health, and safety--publicly disclosing this critical information for the first time.
• Calvert is an active participant in the Carbon Disclosure Project, which seeks to encourage companies to disclose greenhouse gas emissions and risk exposure to global warming. 
• Calvert is encouraging computer manufacturers to develop and report on goals to increase recycling of computers. 

Some examples of Calvert's efforts to internalize open and honest reporting include:

• Many of Calvert's shareholders are interested in knowing exactly which companies are in the Calvert funds they own. Calvert goes beyond regulatory requirements of disclosure and updates the full holdings of each fund on a monthly basis. 
• Calvert, along with other SRI mutual fund companies, actively campaigned for the SEC to require that mutual funds disclose their proxy votes.
• Calvert publishes all of its proxy votes here. For information on Calvert's Proxy Voting Guidelines, click here. Calvert actively encourages its peers to incorporate corporate responsibility matters into their Proxy Voting Guidelines.
• Calvert has also created a task force that will produce Calvert's first Sustainability Report, to be released in 2004. 

Calvert engages companies in several ways: dialogue, letter writing, and through shareholder resolutions. Calvert has engaged and continues to engage companies to improve overall sustainability reporting as well as the following topics: 

• Levels of executive compensation
• Diversity policies and data
• Privacy policies and practices
• Environmental performance, including climate change risks
• Human clinical and animal testing policies

3. Building Boards That Look Like America

One-half the people in the USA are women: One-quarter are minorities. Corporate boardrooms across the country, however, consist of only 10% women and 8.8% minorities. We believe that companies with boards that better reflect the backgrounds of their employees and customers are better positioned for sustainable long-term success.

New developments may help make America's boardrooms more inclusive. New board rules require New York Stock Exchange-listed companies to have a majority of independent directors and key committees composed exclusively of independent directors. The rules create an unprecedented opportunity to increase the number of women and minorities in the boardroom.

Calvert is launching a host of initiatives aimed at improving diversity of corporate boardrooms. 

Calvert is working to build boards that look like America in the following ways:

• Calvert encourages companies to commit to increasing board diversity by adopting Calvert's Model Corporate Governance and Nominating Committee Charter Language on Board Diversity. Two companies, Web MD and Patterson Dental, have agreed to include key portions of Calvert's charter language on board diversity in their own governance committee charters. The Connecticut State Treasurer's Office was the first to endorse the Calvert model language on board diversity. Denise L. Nappier, Treasurer and principal fiduciary of the $17 billion Connecticut Retirement Plans and Trust Funds, recently sent out Calvert's model language to Connecticut's largest 100 companies, encouraging adoption.
• In 2005, Calvert filed resolutions with a dozen companies requesting board diversification. 

4. Championing Engaged Shareownership

We at Calvert believe in financial markets and in capitalism, but we also believe that for the system to work, shareholders have to know what they own and exercise or delegate their responsibilities as owners. Calvert encourages mutual fund investors to know what companies they own, to be aware of how their proxy votes are cast, and to participate as shareowners in the governance of the companies whose shares they own.

Calvert champions engaged shareownership in the following ways:

• Calvert recently wrote to the SEC encouraging equal access to the corporate ballot for purposes of nominating independent directors to represent their interests.  
• Calvert was one of the first mutual fund companies in America to voluntarily disclose our proxy votes as well as the Proxy Voting Guidelines we follow in deciding how to vote our shareholders' proxies. The Guidelines were recently revised to integrate corporate governance and corporate social responsibility into what Calvert calls a "sustainable governance" model we are recommending to other mutual fund companies. 
• Through Calvert's Know What You OwnŽ Tool, Calvert encourages Web site users to discover whether their mutual funds are invested in companies with good environmental records, exemplary board diversity, safe products, and more. The Tool also enables users to discover which companies do not meet Calvert's Corporate Governance Guidelines for investment.

Also, engaged shareownership means dialoguing with corporations on key issues and encouraging change. Calvert is continuously engaged in numerous dialogues on issues of corporate responsibility, which often culminate in shareholder resolutions being filed with companies. Calvert filed approximately 30 shareholder resolutions in the 2005 proxy season. 

5. Promoting sound business practices and public policies
Calvert is concerned about questionable business practices, such as when a company reincorporates its headquarters offshore for tax purposes, engages in anticompetitive practices, and gives lavish pay packages to executives. In some cases, additional regulation is needed for reform. When these cases intersect with Calvert's interests as investors, we seek to inform policymakers of our position on key issues. In instances when regulation is either unforeseen or infeasible, Calvert works with NGOs, trade associations, and companies to encourage sector-wide changes in business practices.

Examples of the ways in which Calvert promotes sound business practices and public policies include:

• Calvert has advocated increasing reporting requirements for social and environmental issues, including the following public policy initiatives:
  • Recently, Calvert led a coalition effort to encourage Congress to consider International Right to Know (IRTK) legislation, which would require U.S. businesses operating abroad to report on their social and environmental impacts internationally, as well as domestically. 
  • Calvert supports California Right to Know (CRTK) legislation, a state-level initiative similar to IRTK legislation. As part of this advocacy effort, we presented the business case for increased corporate social transparency to the key California state officials at a recent legislative briefing, explaining why better disclosure leads to better financial performance. 
  • Calvert also advocates better disclosure for international companies. We provided comment to the U.K. Government's OFR Working Group, which has written a Consultation Document on Materiality that aims to define social and environmental disclosure requirements for U.K. companies. We support the Document's linking of good governance to increased transparency, and look forward to the Group's final recommendations. 
• Calvert, together with Transparency International, has written to 95 companies asking them to develop and implement policies to eliminate corruption and bribery. 
• Calvert initiated a request that the Environmental Protection Agency increase disclosure of environmental data available on its Web site. 
• Calvert works with civil society institutions, regulatory bodies, and companies through partnerships, lobbying, and engagement in order to promote strong markets, healthy companies, and better regulations. For example, in 2001, Calvert's CEO was invited to join the United Nations Global Compact as a founding member of its Advisory Council. In addition, Calvert is an active member of the UNEP FI Asset Management Working Group.