working for sustainability State Street Corporation 2006 Corporate Social Responsibility Report About this Report This annual report covers the global activities and perform- In striving to make our reporting more transparent, we are ance of State Street Corporation relative to corporate social guided by the Global Reporting Initiative criteria. This report is based responsibility (CSR) for calendar year 2006. State Street is a on Version 3.0 of the GRI guidelines, as well as supplemental financial holding company organized under the laws of the reporting guidelines for the financial services sector. Wherever Commonwealth of Massachusetts. We are a publicly held company; possible, data for at least two years are included; in some cases, our common stock is listed on the New York and Boston stock 2006 and 2005 data are not comparable because of improved data exchanges under the ticker symbol STT. We conduct business collection for 2006. principally through our wholly owned subsidiary, State Street Bank No global management information system is in place for and Trust Company, a Massachusetts-chartered bank. corporate social responsibility. Our Community Affairs Division is the State Street is a leading provider of financial services to “champion” for improved CSR reporting and spearheads the institutional investors. Our customers include some of the world’s information-gathering effort, soliciting input and information from all largest mutual and collective investment funds, corporate and levels of the Corporation around the world. While we have made public retirement plans, insurance companies, foundations, every effort to respond to all GRI guidelines, in some cases a lack endowments, and other investment pools. Our investment servicing of relevant data, regulatory restrictions or competitive or legal capabilities include fund accounting; fund administration; custody; considerations has precluded us from doing so. Responsibility for securities finance; investment manager and hedge fund manager the reliability and accuracy of the information provided rests with operations outsourcing; recordkeeping; performance, risk and the business units that generate it. No independent audit of the compliance analytics; and transfer agency services. report was conducted. State Street Global Advisors, our investment management We engaged with Ceres and a team of external stakeholders arm, is the world’s largest manager of institutional assets and offers to review this 2006 CSR report. Ceres is a network of investors, active and passive, including enhanced, investment strategies that environmentalists and other public interest groups that works with capitalize on technological and intellectual innovation. State Street companies and investors to address sustainability challenges. Global Markets, our research and trading arm, provides specialized Companies that are part of the Ceres network agree to work with a investment performance, risk and compliance analytics and trading stakeholder team selected by the Ceres Corporate Accountability in foreign exchange, equity, fixed-income, derivative and money- office. The Ceres stakeholder team is an independent group of indi- market financial instruments to enhance and preserve portfolio viduals drawn primarily from the Ceres coalition and represents a values. We are a global company that operates in 26 countries range of constituencies that have expertise in environmental, social serving customers in more than 100 markets. and governance issues. In reviewing this report, the team consid- Recent Acquisition: In December 2005, State Street ered whether we adequately reported on our sustainability acquired UniverseSoft Technology in Hangzhou, China, and performance and key impacts, including goals, targets, systems, established a new technology center dedicated to information data and initiatives. Through this review process, the Ceres technology application development and maintenance. stakeholder team provided extensive feedback, which was considered in the preparation of the final version of this report. For Structure and Content of the Report more information on State Street’s CSR initiatives or reporting, In addition to an introductory section that contains contact Richard Pearl at [email protected]. statements from the Chairman and CEO and the Director of Community Affairs, the report has five main sections. “Protecting Our Values* Shareholder Value” describes how we ensure the safety of our We are a global, culturally diverse company with a proud investors’ assets and serve our shareholders. “How We Conduct Our heritage of commitment to our customers, employees, shareholders, Global Business” focuses on our customers and suppliers. “How strategic partners and society. We Protect the Environment” describes the environmental impact of • We understand that we succeed only when our our daily operations, as well as the indirect impacts of our invest- customers succeed. ment management business and philanthropic activities. “How We • We strive to achieve a consistent level of excellence Create a Positive Work Environment” reports on the value we place in everything we do. on our employees and on the ways we strive to be an employer of • We operate with absolute integrity. choice. “How We Serve Our Communities” describes our active • We manage our company to achieve long-term growth. engagement with the communities where we do business. • We respect the dignity of every employee and believe that our differences make us strong. • We actively engage with our communities around the world, both as a partner and as a leader. *Developed in 2001, translated into French, German, Chinese, Spanish and Japanese, and distributed to our employees worldwide. 2006 Corporate Social Responsibility Report What is sustainability? Corporate sustainability expands the traditional model of success as corporate growth and maximum profitability to also include societal goals such as environmental protection, social justice and equity, and economic development. It recognizes the interests of all stakeholders, direct and indirect. A socially responsible company aims at development that meets the needs of present generations without compromising the ability of future generations to meet their needs.(1) (1) World Commission on Environment and Development, United Nations. 2 State Street Corporation future 2006 Corporate Social Responsibility Report 3 State Street’s annual Corporate Social Responsibility Report describes the broad spectrum of activities that contribute to our business success and demonstrate our commitment to sustainability. State Street has long reported on philanthropic activities. Since 2004, we have used Global Reporting Initiative (GRI) criteria to increase transparency through more comprehensive reporting of existing practices and new initiatives beyond our philanthropic endeavors. In this report, you will read messages from our chairman and chief executive officer, as well as our director of Community Affairs, on the current and future outlook for corporate social responsibility at State Street. 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. In short, you will read about how we interact with all of our stakeholders and why we think sustainability is important to our long-term success. Each year, our information-gathering and reporting ability improves. This year’s report responds to more GRI criteria than ever before. It also includes input and feedback from a stakeholder group, which we believe enhances its quality and readability. Our goal is to give you an accurate picture of where we are today and where we hope to be in the future as a good corporate citizen. 4 State Street Corporation Sustainability Snapshot State Street Sustainability Snapshot 2006 2005 % Change Shareholder Value Operating basis income from continuing operations per diluted share(1) $ 3.46 $ 2.82 up 23% Conducting Our Global Business Total operating-basis revenue (billions) $ 6.36 $ 5.52 up 15% United States (billions) $ 3.62 N/A Europe (billions) $ 1.81 N/A Asia/Pacific (billions) $ .67 N/A Canada (billions) $ .26 N/A Non-US revenue 43% 39% Income from continuing operations $ 1.1 billion $ 945 million Number of countries with State Street offices 26 26 Number of customers worldwide 3,000 3,000 Assets under custody (trillions) $ 11.9 $ 10.1 Assets under management (trillions) $ 1.7 $ 1.4 Socially responsible investment strategies Assets under management (billions) $ 84.3 $ 99.6 Number of customers 145 150 Number of accounts 209 200 Total spending with suppliers and third parties (billions) $ 2.3 N/A Expenditures to minority- and women- owned suppliers (millions) $ 41 $ 44 Preserving the Environment Target for 2010 2006 2005 (for Massachusetts only) Electricity consumption (KWH) - 113,724,602 - Gas consumption (therms) - 440,997 - Oil consumption (gals.) - 156,043 - Fossil fuel burned -5% - - Greenhouse gas emissions from operations (tons) -5% 4,278 3,614(2) Water consumption (cu.ft.) - 4,421,927 N/A Paper recycled (tons) 5% 662 412 Reclaimed IT equipment (pieces) 3,894 6,200 (1) Excluding tax adjustments. (2) Includes three fewer offices than 2006 CO2 emissions totals. Comparable 2006 emissions are 4,090 tons. 2006 Corporate Social Responsibility Report 5 State Street Sustainability Snapshot 2006 2005