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Letter to TIAA-CREF

April 1, 2005

Herbert Allison

CEO and Chairman

TIAA-CREF

Dear Mr.Allison:

Because we are in a critical stage of discussions between TIAA-CREF and the Social Choice for Social Change (SCSC) campaign, I am writing you directly on behalf of our group rather than using the usual channel of communication. In a March 18 telephone conversation, Mr. Bert Scott described a few steps taken by TIAA-CREF regarding socially responsible investing. However, Mr. Scott’s status report did not address our concerns raised over the last few years and in our communications of February 14 and February 5 (see both messages below). On good faith, we essentially ended our lobbying efforts a year ago after TIAA-CREF promised to seriously address our concerns. However, we have continued to hear only promises and have seen few concrete results. For example, Mr. Scott told us to be patient and we would not be disappointed. He has also noted on more than one occasion that if what we want is “doable,” TIAA-CREF will find a way to make it happen. As noted below, what we seek is quite doable. Also, at the June 2004 annual meeting, you stated that TIAA-CREF would look for ways to incorporate community investment into the Social Choice Account (SCA). We have met our part of the “bargain” by refraining from more assertive tactics, but we have very little to show for it.

As noted in the correspondence below, our preference remains for a TIAA-CREF-sponsored resolution on the 2005 ballot that includes three components for the SCA: shareholder advocacy voting (and quiet diplomacy with portfolio companies); community investing (as commonly defined by the SRI industry); and social venture capital/private equity. It is not clear to us why this is no longer possible—why “the window of opportunity has closed” and we needed to wait for the 2006 ballot, as asserted by Mr. Scott in the March 18 conversation. It was months ago that we mutually acknowledged the need for such a resolution if community investing was to be incorporated into the SCA, and we offered to help with the necessary research. Mr. Scott has stated that TIAA-CREF is in “conceptual” agreement with this approach, and Mr. Evans said he would support a proxy resolution that would be mutually agreed upon by TIAA-CREF management and the SCSC campaign. We have pointed out that what we desire has been done by other SRI mutual funds and, thus, is both reasonable and feasible. However, a conference call in January between representatives of our group and TIAA-CREF vice presidents revealed that necessary background research had not been done that would allow for introducing such a resolution.

Given that the annual meeting is scheduled for July 19, there must be at least two months time left to draft a resolution, even considering the time needed for ballot preparation and distribution. We can provide sufficient background research for a proposal, with details of investment logistics to be handled later. We are also aware that approval of at least two shareholder introduced resolutions for 2005 is still under discussion. This suggests that in fact there is time for TIAA-CREF to introduce an additional resolution.

If you remain firm in your contention that a resolution is not possible for this year’s annual meeting, we see but one other option to avoid going public again with our concerns about SRI and TIAA-CREF’s failure to follow through on its stated commitments. Though it is decidedly not our preference, we would settle for a statement, in writing, from you on behalf of TIAA-CREF, that a TIAA-CREF sponsored resolution will be on the ballot for 2006 that includes community investing, shareholder advocacy voting and dialogue with companies, and social venture capital/private equity. (The second message below lays out our specific interests along those lines; we realize that some particular concerns about social venture capital/private equity must still be addressed.) This would give TIAA-CREF an entire year to work with us to prepare the resolution. We would additionally expect TIAA-CREF to start moving quickly, presumably after the new SCA manager is hired, to insure that background research is completed, the resolution is drafted, and planning for implementation begins. As plans progress, we will mutually address how best to handle specifics of the resolution in order to meet everyone's concerns. (Of course, we would also appreciate a good-faith effort to heighten TIAA-CREF’s social responsibility in other ways, such as incorporating standard SRI-field community investment into the TIAA Traditional Account and further integrating TIAA-CREF into the SRI community.)

If we do not hear a positive response from you within the next two weeks, we will interpret this as a lack of commitment on your part, and we will actively resume our campaign sometime in April. For by the 2006 annual meeting, over two years and three annual meetings will have transpired since we halted the campaign. If we do not see results by then, we must conclude that we were wrong to trust TIAA-CREF’s statements and cease our campaign in the first place. Note that I am speaking here on behalf of SCSC, not for the entire “Make TIAA-CREF Ethical” coalition we are a part of; though it is possible that we will seek to bring them and their participation on board if we must restart the campaign.

Sincerely,

Neil Wollman, Ph.D.
Co-Chair, Social Choice for Social Change
Senior Fellow, Peace Studies Institute
Professor of Psychology
Manchester College
CC. Bertram Scott, Scott Evans, Joann Mahoney

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(Letter to TIAA-CREF Vice President Bertram Scott from SCSC Representative, Feb. 14, 2005)
Bert:

Over a week has passed since you should have received the latest proposal focused on TIAA-CREF introducing a shareholder resolution to Social Choice Account (SCA) participants (below). Neil Wollman and the Social Choice for Social Change (SCSC) Coordinating Committee feel that they must restart their campaign unless certain concrete actions are taken by early April. They feel that they have lived up to their part of the “bargain” for nearly a year -- and have nothing to show for it. They can no longer comply with your admonition to “hang in there and they won’t be disappointed.” They are disappointed.

This is not necessarily a fait accompli. Their feelings are likely to change if they see progress on the proxy resolution outlined in my message of February 5, 2005. Establishing a concrete time table is the first step -- so they can be certain that the proxy will be submitted by TIAA-CREF and get onto the summer 2005 ballot.

They realize that of the three items proposed for inclusion in the resolution, only the proxy voting/quiet diplomacy and community investing (as commonly defined by the SRI industry) would begin being executed soon after a successful vote. They understand that more exploration would likely be needed before the social venture capital/private equity strategy can be clarified and hopefully implemented.

It’s been awhile since we talked about this, but another concrete step forward would be placing community investments (as defined by the SRI industry) into the TIAA Traditional Account. This could be done without calling attention to it through a shareholder vote. The SCSC would like to see up to one percent of the Account’s assets earmarked for community investing, as per the Social Investment Forum’s “One Percent in Community” campaign.

Another way to show concrete progress would be contacting, researching, and perhaps collaborating with outside groups who have experience with the more proactive SRI strategies being sought for the SCA. We have offered to help with this a number of times, and continue to stand by ready to assist.

Bert, I am sorry that this conversation has come to this point. Unfortunately, given what has (not) transpired over the last many months, I hope you don’t find it surprising.

So, the ball is clearly in your court now. If the direction of the relationship between TIAA-CREF and the SCSC moves back toward the “old” confrontational paradigm, I want you to know that I have enjoyed working with you and would look forward to collaborating with you again in the future, if you feel I can be of service.

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(Letter to TIAA-CREF Vice President Bertram Scott from SCSC Representative, Feb. 5, 2005)

Bert:

I have no doubt that you are a person who's word can be trusted. I trust that you "continue to work on things" in between conversations. I fully understand that you are busy and have many other important responsibilities, and that you cannot make the issues raised by Social Choice for Social Change top priorities at all times -- neither can I. We are not asking you to spend 100 percent of your time on these requests, only a little bit, but on a more regular basis.

Thank you again for arranging for the telephone meeting with Scott Evans on January 20, 2005. We felt it was a productive use of time in answering questions, providing education around community investing, and inspiring a somewhat different level of thinking on the part of Mr. Evans. It is unfortunate that we were not able to bring the call to closure and agree on next steps. If we could agree on a series of concrete next steps, it would continue to signal the attitude of "if it's doable, let's find a way to make it happen."

The primary cause of angst among SCSC participants is the lack of apparent progress. From the perspective of the group that I am representing, no concrete progress has been made since our meeting in New York on April 19, 2004. The lack of progress is wearing very thin.

I can assure you, once again, that what the SCSC is asking for is imminently doable. I realize though, as we discussed on January 20th, that it will require some changes internally -- community investing and double bottom line private equity investing requires a somewhat specialized mind-set and skill-set, which may not currently exist within TIAA-CREF. We continue to stand ready to provide professional assistance and referrals to experts in the field who might be willing to provide certain services for a reasonable fee.

In a brief conversation with Mr. Evans after our conference call was suddenly cut off on January 20th, we discussed the idea of putting a proxy resolution on the upcoming Social Choice Account ballot. He was very clear that he was not in a position to commit TIAA-CREF to anything, but did seem personally open to supporting a proxy resolution that would be mutually agreed-upon by TIAA-CREF management and the SCSC -- a resolution that would allow for the more proactive socially responsible investment strategies that SCSC is seeking to be implemented when the tactical issues have been resolved. The idea of waiting another year until such a resolution can be put on the next annual ballot has absolutely no appeal to the SCSC.

We suggest putting a proxy resolution on the upcoming 2005 Social Choice Account ballot. This proxy resolution could be submitted by the SCSC and supported by TIAA-CREF management and directors, or placed on the ballot by TIAA-CREF management directly. It would include the following points:

1- To adopt proxy voting guidelines consistent with the socially and environmentally responsible investment criteria used to create and maintain the KLD BMSI which forms the buy list for the equity portion of the SCA, and to engage in "quiet diplomacy" behind the scenes aimed at improving the behavior and impact of select companies in accordance with the same criteria.

2- To allow up to two percent of the total assets invested in the SCA to be invested in community development financial institutions and other investments which direct capital to communities in need where people and businesses do not have ready access to capital through conventional channels -- diversified across the various categories of community development investment opportunities as outlined in the PowerPoint presentation I sent you on January 20th (attached).

3- To allow up to three percent of the total assets invested in the SCA to be invested in double bottom line private equity (SRI venture capital) investments.

We understand that community investments and private equity investments (#2 and #3 above) would likely be considered illiquid investments and would fall under the existing prospectus language which allows for up to ten percent of the SCA portfolio to be invested in illiquid investments. We also know that many details around how to implement these new strategies are yet to be worked out, such as who will be responsible for the community investment and private equity portions of the portfolio, and a mechanism for pricing investments that fall under those allocations. We look forward to working with you on a successful implementation plan.

Understand that this resolution is a means to an end -- securing participant approval for the changes to the asset allocation strategy of the SCA as briefly described above. Neil Wollman and his colleagues within the SCSC do not feel a strong need to have their names or the name of their organization associated with this resolution. Indeed they would prefer that TIAA-CREF incorporate the resolution into the upcoming proxy ballot without reference to them, provided T-C states its support for the actions covered by the resolution.

However, they do feel a strong need to see some concrete progress, some commitment on the part of TIAA-CREF to move forward with a plan to incorporate these ideas into the management of the SCA.

We know that the deadline for submissions to the SCA ballot is approaching quickly. We will be happy to work on a first draft of such a resolution, knowing that it will need to be reviewed and polished by the lawyers. With your nod of approval, we should be able to get a rough draft back to you within a few days. We look forward to working with you in crafting proxy language agreeable to all parties concerned.

These requests are not only doable but proven by other socially responsible mutual funds and other investment pools which are not governed by the 40-Act over the years. We can provide expert assistance where needed. We believe that the move to incorporate more proactive socially responsible investment strategies with the SCA is not only fully consistent with TIAA-CREF's new market positioning statement, "For The Greater Good," but is in fact a way to demonstrate that this statement is more than just a marketing slogan.

Hoping to hear from you soon.