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Coherent Inc. Sustainability Report 2013

Shareholders request that Coherent issue a sustainability report describing the company’s environmental, social and governance (ESG) performance including greenhouse gas (GHG) reduction targets and goals. The report should be available on the company website by October 1, 2013, prepared at reasonable cost, omitting proprietary information.
We believe tracking and reporting on ESG business practices makes a company more responsive to a global business environment which is characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies: better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities in products and processes, develop company-wide communications, publicize innovative practices and receive feedback. 
Signatories to the Principles for Responsible Investment (PRI) represent over 1000 investors and asset owners who collectively hold over $32 trillion of assets under management. They integrate ESG factors into investment decision-making and require this information to analyze the risks and opportunities associated with existing and potential investments. Major firms such as BlackRock and T. Rowe Price are PRI signatories. Additionally, Bloomberg Investment Services provides ESG performance metrics that numerous investors utilize in investment decisions. 
Carbon Disclosure Project (CDP), representing over 550 institutional investors globally with more than $70 trillion in assets, has for years requested disclosure from companies on their climate change management programs. Over two thirds of the S&P 500 now report to CDP. Climate change is one of the most financially significant environmental issues, however, Coherent does not report on GHG management plans which may reflect Coherent’s lack of emissions abatement targets and goals.  
Corporate reporting on sustainability is on the rise globally. Over 80% of Global Fortune 250 companies produce sustainability reports. ( Furthermore, in 2011, there was a 46% increase in the number of organizations worldwide using the Global Reporting Initiative’s (GRI) Guidelines (G3) for their ESG reporting. ( Additionally, smaller companies are proactively adopting sustainability reporting to report on progress as they grow. For example, direct Coherent competitor Cubic Corporation publishes a meaningful sustainability report. 
Companies such as 3M, Apple, Cisco, Intel and Microsoft have requirements for suppliers that include the tracking and reporting of environmental and social considerations. Coherent customers may seek ESG performance information to use in their supplier selection programs.
Although Coherent has identified some commendable conservation goals on its website we believe these are too general. At present Coherent’s reporting does not address issues such as supply chain standards and monitoring, waste and water reduction targets of manufacturing processes and product-related environmental impacts, among others. Investors do not have access to evaluative data on how the company is managing these business factors or meeting goals. 
We recommend that the report include a company-wide review of policies, practices and metrics related to ESG performance using the GRI index and checklist as a reference. The GRI Guidelines are a globally accepted “gold standard” reporting framework enabling companies to expand reporting over time.