Letter from
Joseph (Jay) L. Hooley,
Chairman, President and
Chief Executive Officer

At State Street, we understand that to be a global force and a local citizen, we must consider our decisions' widespread effects on our environments and our communities. Corporate responsibility continues to be a priority in all of the countries where we operate, and I am proud that despite an extremely challenging business climate in 2011, State Street remained focused on delivering long-term value to all of our stakeholders.

Throughout the year, we continued to deliver innovative solutions to clients through our multiyear business transformation program. Corporate responsibility plays a role in this program, which was built to transform both our own operating model, as well as the technology we develop for our clients. In our investment management business we launched a green bond investment strategy to give investors a way to direct fixed income investments to climate solutions. Our trading business, meanwhile, executed our first environmental currency portfolio transaction on our own behalf. In addition to continuing to integrate environmental factors into our business products and services, we also made significant progress in our own ES efforts. We have already exceeded two of the four multiyear goals we set for reduction of waste, water and carbon emissions, and are working to set more aggressive goals beginning in 2012. Also, several of our flagship buildings globally achieved ISO 14001 certification, which we are currently pursuing for our headquarters in Boston.

Our commitment to corporate responsibility has also been recognized in the industry. Notably, our corporate responsibility efforts were honored for the first time by the STOXX Global ESG Leaders Index Series. State Street was the only US-based financial services firm added to all four of the indices and for the second consecutive year, we were named to the Carbon Disclosure Project's S&P 500 Leadership Index, a listing that recognizes both performance and commitment to transparent environmental reporting.

Perhaps most impressive is the dedication our employees have demonstrated to corporate responsibility. During 2011, State Street employees volunteered more than 85,000 hours with nonprofit organizations, which resulted in $1.85 million in savings to our charitable partners. Also, as part of our first annual Global Giving Campaign, one of our largest citizenship initiatives, employees and the State Street Foundation made $3.5 million in employee gifts and matching proceeds toward partner organizations. I am pleased to see such active community outreach by our employees, as well as to support the causes that mean the most to them.

There is no doubt that 2011 was a challenging year. During these times of changing market conditions, we made important business decisions to help us maintain our strong industry position, but we never lost sight of our company’s values — “Stronger Together,” “Always Finding Better Ways” and “Global Force, Local Citizen.”

As we face new challenges and opportunities, corporate responsibility will remain a business imperative for State Street.

signiature Joseph (Jay) L. Hooley

Letter from
Patrick Centanni
Chair of the Executive Committee
on Corporate Responsibility

There is no doubt that corporate responsibility is growing in importance in every industry throughout the world. It’s evidenced by how effectively companies engage their employees, in addition to ensuring they make a lasting impact on the world around them. It has been particularly noticeable in areas where there has been a push for greater focus on values as we continue to recover from a crippling global financial crisis.

The Executive Corporate Responsibility Committee at State Street hears this call loud and clear. Everything we’ve set out to accomplish is motivated by a sense of responsibility to do what is right for our constituents and society as a whole. When we formed the committee in late 2010, our intent was to further elevate the visibility of our corporate responsibility efforts and be accountable to those at the highest levels of the organization. Ever since, our focus has been to establish a structure that helps us keep on top of global trends, connect the various parts of the company, and take advantage of our employees’ and clients’ considerable knowledge and interest in ESG issues.

In 2011, we met with our board of directors to express our deep interest in increasing engagement around corporate responsibility in geographies where we operate that traditionally have been less involved. We feel it’s very important to tap into our human capital and nourish it to create synergy across the entire organization — generation after generation. The purpose of this type of engagement is to inspire business collaboration in each of our offices around the world.

The social media trend is also driving us to engage our stakeholders in this way. Increasingly, organizations are looking beyond ESG factors in the way they do business. Economic factors, such as the products they offer, are moving to the fore. To keep ahead of this trend, we create capabilities to help our clients achieve their goal of becoming more sustainable.

As an example, in 2011 we developed a mobile application for the iPad, called SpringboardSM, to provide our clients with real-time access to essential portfolio and risk exposure data. We also partnered with F&C Investments in the UK to become the first custodian to offer F&C's ESG Reporting Service to clients. In addition, we launched a green bond strategy, purchased renewable energy credits and carbon offsets, and published the company's first ES dashboard for employees to view corporate environmental performance. Moving forward, we anticipate more cross-organization collaboration on ESG opportunities in products and services.

Much of the committee’s work in 2011 centered on framing key ESG issues and opportunities and approving our 2012 ES action plan and three-year strategic plan. We're going to continue our momentum and focus on making progress in several areas, including expanding ES efforts through certification and evaluation of carbon neutrality and the United Nations Global Compact, as well as pursuing ways to involve our employees in more ESG opportunities. In addition, we will revisit our environmental goals to penetrate more evenly and deeply into all the regions where we operate.

signiature Patrick Centanni

Q&A with
George A. Russell
Executive Vice President,
Director of Corporate Citizenship,
President of the State Street Foundation

George Russell is an executive vice president and the director of Corporate Citizenship, as well as the president of the State Street Foundation. He leads a global team that spearheads the important task of increasing the company’s involvement in community-related issues at every level of the organization. He spoke with us about the evolving role of corporate citizenship at State Street and its successes over the past year.

Q. Looking back on 2011, what do you view as the biggest accomplishment for State Street Corporate Citizenship?

A. I’d say our new Global Giving Campaign is at the top of the list. For years, State Street has held an annual campaign in North America to raise money for organizations that support the underserved in our communities. This was the first time we ever engaged in a global campaign. And, State Street is the only global company to launch a campaign of this scale and nature. What’s also unique is that the campaign, which ran from October 1 to November 11, brought together nearly 30,000 employees to make a substantial impact on a single issue — education.

Q. Why focus on education?

A. With this campaign, we were looking to harness the passion and focus of our employees as an organization to create an even bigger impact on both local and global communities. In a company-wide survey, our employees chose to focus on education, which will continue to drive the campaign for the next two years. I believe we can unite around education because it affects each of us in personal ways. Whether our employees’ particular interests are in the area of addressing poverty or another social need, or developing job skills, education is critical and will make a difference no matter where you are in the world.

Q. How did you do — what were the campaign results?

A. Our employees contributed $1.3 million in gifts and volunteered 7,500 hours with our campaign partners. When I think about the startling fact that education accounts for only 2 percent of all humanitarian aid, I am proud of our contribution and our decision to focus on this issue. What’s also impressive is that, considering we’d previously only offered these types of campaigns in North America, employees in the Europe, Middle East and Africa (EMEA) region contributed more volunteer hours in this campaign than North America, and those in Asia Pacific contributed more money proportionally. Clearly, the momentum has begun.

Q. What successes can you point to for the State Street Foundation?

A. We are thrilled to report that we are beginning to build metrics around the impact we’re making through the Foundation. To know where we stand, to be able to measure our impact, is the way to be best in class. Specifically, these metrics will help us to ensure that the grants we award to nonprofit organizations around the globe are helping us improve the lives of the disadvantaged though workforce development and education.

Q. How has Corporate Citizenship evolved over the past year?

A. As State Street continues to gain new business more rapidly outside the US, we are making our corporate citizenship efforts more global in scope. Through the Foundation, we’re building on the amount of social investing outside the US, and allocating funds to our staff in the regions so they can award grants to organizations they think are important. As we expand our reach in the Asia-Pacific region, for example, we assigned a senior manager from Corporate Citizenship in Boston to Hong Kong to help facilitate this effort over the next two years. We’ve even established an international executive corporate citizenship advisory council to ensure our leadership is supporting our endeavors globally.

Q. What’s on the horizon for 2012?

A. We’re always taking steps to further align our strategy with our corporate value to be a “Global Force, Local Citizen.” For 2012, we’re specifically working toward refining some areas and building on the momentum of 2011. As examples, we’re launching an online grant application in the US that will streamline the application process, as well as implementing a new rolling deadline to enable charities to apply based on their fiscal calendar. Charities will also begin using the Impact Framework and metrics to report back to the Foundation on the impact they’ve made. These improvements will allow us not only to be a more strategic grantmaker, but one that truly makes a greater impact on our communities, particularly in our focus area of education and workforce development.