Holding Corporations Accountableto People and the EnvironmentLarge oil corporations are reporting record-breaking profits, often amounting to billions ofdollars each quarter. Yet this profit comes at enormous cost: local economies ruined, fragileecosystems damaged, and ancient cultures lost forever. In spite of the cost, oil companies arespeeding up the development of increasingly fragile ecosystems, such as the Arctic, that arealready feeling the brunt of global warming.

We’re working side-by-side with community members around the Pacific Rim to hold govern-ments and corporate giants like Shell accountable for the damage they’re causing. We litigatein courtrooms alongside indigenous groups. We travel with engineers as they trudge alongmuddy pipeline routes to document construction violations. We strategize with fishermenabout how to promote sustainable economies while protecting both their livelihoods and theenvironment.

Not only are we building coalitions with a broad range of allies, we’re facilitating connectionsacross the globe. For example, we’re bringing the stories of Shell’s broken promises in theRussian Far East to Alaska Native communities, increasing pressure on corporations to actresponsibly from the ground up. And we’re connecting scientists in Russia with Europeancourts and international lending institutions to pressure corporations from the top down.

At home in California, we’re garnering support for our work and the work of our partners.Environmentalists, labor unions, community leaders, and policy-makers are speaking outagainst new fossil fuels and advocating for clean energy and community health. We’re sharingthe stories of grassroots environmental groups, like those in China, that are wading throughmangroves and bringing school children on field trips to raise awareness on environmentalissues. By magnifying local voices both at home and abroad, Pacific Environment and ourpartners are able to achieve fantastic victories!

Annual Report 2006-2007

PACIFIC ENVIRONMENTwww.pacificenvironment.org

Protecting wild places Empowering local communities Building global partnerships

Dear Friends,The last year has seen tremendous growth and achievement forPacific Environment. Our newer Alaska, China, and CaliforniaPrograms are truly blossoming after laying fundamental ground-work over the past few years. We’ve also seen the fruition ofyears of informing the public, educating banks, and document-ing violations as Sakhalin-II has become an international exam-ple of how not to build an oil and gas project.

As we move forward, we are overcoming challenges to support-ing our partners as political and resource extraction pressurespresent new obstacles to our work on the ground. Furthermore,oil companies, driven by record-breaking profits, are aggressive-ly pushing into more remote and pristine regions of the world.

With the support of our community, Pacific Environment willcontinue to take on these large challenges and successfully workto protect the Pacific Rim’s wildlife and wild places. Thank youfor your support. Our victories are truly a product of your com-mitment to our mission!

Sincerely,David GordonExecutive Director

2 Annual Report 2006-2007

Alaska ProgramOur Alaska Program works with remote and indige-nous communities to protect Alaska’s rich marineecosystems. Over the last year, the Alaska Programsuccessfully engaged fishermen, oil spill experts, andArctic whalers in the fight against opening BristolBay and the Arctic Ocean to oil and gas explorationand drilling. We brought the stories of communitymembers from Sakhalin Island to Alaska, exposingthe negative environmental and social impacts causedby Shell and other companies around the world.With our partners, we elicited national scrutiny onthe government’s plan to lease the Arctic for drilling,began our campaign to stop Shell’s plan to drill in theBeaufort Sea, and worked to increase protections forright whale, polar bear, and walrus habitat. Pacific

Environment also helpedlaunch the Shipping SafetyPartnership and served on ajoint federal and state effortto prevent oil spills andimprove spill response plansin the Aleutian Islands.

CaliforniaProgramOver the past year, theCalifornia Programincreased pressure on thestate to keep its cleanenergy promise and listen

to the concerns of local communities. OurCalifornia Program engaged community membersacross the West Coast in the battle against liquefiednatural gas (LNG), turning out thousands of com-munity members to town hall meetings, state com-missioner meetings, and days of action. Workingwith the coalition members of Ratepayers forAffordable Clean Energy (RACE), we elevated thedebate over LNG. Now newspapers, governmentofficials, and community members are questioningthe need for LNG in California as well as challeng-ing the myth of ‘clean LNG.’ Working with ourpartners in the RACE Coalition, we’ve successfullyblocked three damaging LNG proposals based onsafety and public health concerns, possible viola-tions of California’s new greenhouse gas laws, andunproven need. Now we are turning to promotingfaster development of renewable energy sources.

Responsible Finance CampaignComplementing the grassroots work of our partners,our Responsible Finance Campaign applies pressure onthe international financial institutions that fund poten-tially devastating oil and gas megaprojects. Our workon Sakhalin Island culminated in a remarkable turn ofevents in fall 2006. The Russian government haltedconstruction on Sakhalin-II—the world’s largest oil andgas project—citing environmental violations. Evenmore surprisingly, Shell sold the controlling share of theproject to Russia’s state gas company, Gazprom. Thetakeover by Gazprom transformed the project into anexample of what not to do for oil and gas companies.We also strengthened transparency standards in hostcountry agreements to allow communities to learn whatis included in the fine print of back-room deals madebetween governments and transnational companies.

Finally, we were thrilled whenour Sakhalin campaign wasrecognized by our peers with a“BENNY” award as one of thebest corporate campaigns ofthe year!

Russia ProgramOur Russia Program con-tinued its groundbreakingefforts to support one ofthe most vibrant environ-mental movements around

the world. Despite facing a new Russian lawrestricting non-profit activities and a bureaucracyhostile to civil society, Pacific Environment and ourpartners continued to gain impressive victories. Wefinalized a victory re-routing the Siberia-PacificPipeline away from Lake Baikal and endangeredAmur leopard habitat. We assessed and publicizedenvironmental risks from the pipeline’s new routeas well as highlighted threats from another pro-posed gas pipeline to China through the Altai’sUkok Plateau—a UNESCO World Heritage Site.To support our colleagues in Kamchatka, we pro-moted a sustainable salmon economy and madesure that Canadian and Korean oil companies wereaware of local opposition to seismic testing inside aprotected wetland in Kamchatka. Meanwhile, ourgrants program sent over $500,000 to supportdozens of Russian organizations.

Annual Report 2006-2007 3

China ProgramPacific Environment’s China Program supportson-the-ground responses to China’s plethora ofenvironmental problems while networkinggroups together to strengthen China’s emerg-ing environmental movement. Over the past

year, we have battled water pollution and illegal trade in coral, shark,and other threatened species through our direct support of grassrootsorganizations. Our small grants program, launched just a year ago, start-ed with $50,000 granted to 12 groups, and we secured funding to dou-ble the amount of grants in the next year. We held a water pollutionconference, allowing environmental leaders from throughout China toshare their experiences and develop effective strategies. We prepared alegal handbook explaining citizen rights to serve communities facingsevere environmental crises. Finally, we leveraged coverage in TIME,Asia Geographic, Radio Free Asia, and elsewhere to raise awareness ofthe civil response to China’s environmental crisis.

Pacific Environment protectsthe living environment of

the Pacific Rim by promotinggrassroots activism,

strengthening communities,and reforming

international policies.

FOUNDATION, CORPORATE AND GOVERNMENT SUPPORT:Alaska Conservation FoundationAnnenberg FoundationAnonymousCommunity Foundation Silicon ValleyCorporate Ethics International Earth Share of CaliforniaFord FoundationFoundation for Russian AmericanEconomic CooperationGive Something BackGlobal Greengrants FundCisco Systems employee matching giftsGoldman Environmental FoundationRichard and Rhoda Goldman FundGrassroots FoundationI Do FoundationLawrence FoundationL.P. Brown FoundationMarisla FoundationMcKenzie River Gathering FundGordon and Betty Moore FoundationCharles Stewart Mott FoundationNational Endowment for DemocracyOak FoundationThe Ocean FoundationOpen Society InstituteOpen World Leadership InstituteThe Pew Charitable TrustsRevenue Watch InstituteRockefeller Brothers FundSigrid Rausing TrustThe California EndowmentThe Laurie FoundationTiffany & Co. FoundationTrust for Mutual UnderstandingUnited Way of the Bay AreaWallace Genetic FoundationWallace Global FundWeeden FoundationWestWind FoundationWorld Wildlife Fund

INDIVIDUAL SUPPORTERS:Michele AffronteDeborah and Michael AionaLupe AnguianoAnonymousElani AquinoRobert A. AronsonVincent AuDominic BaciMarjorie and Harley BalzerSandra BardosPhil and Carla BerryMichael BoomMichael BowersAmanda BradfordPatricia BradfordJames BryantHelena BrykarzBarbara BundyThomas CarlinoMark CaseyHank CauleyKwong ChangDebbie ChapmanJeremy ChapmanBJ ChisholmIone ClagettRobert CohenRobert ColeSandra and Michael ColemanDenise CollaBrigitta CookJohn CourtneyFred and Ruth CoxStephen CroliusJames DavisBetty and Mike DiFrancoLou Anna DenisonJustin DenneyLynne Dewhurst McBurneyMichael DimartinoClifford DiverSimon DrummondKate DunhamJane EdsallJudith EmbryTom Eng

Lois EpsteinShauna Farr-JonesFlavio FefermanGordon FiresteinMichael Fischer and Jane RogersDavid and Natalie FisherMortimer FleishhackerStephen FowlerHerrick FoxSonja FranetaChris and Julie FranklinAnn GamblingHoward GarrettKeith GaylerEric GerberMark M. GieseJay GillBecca and Kurt GisclairLarry and Shirley GodwinThomas Gold and Lucy HarrisMichael GoldsteinRobert GoodlandDavid and Lysbeth GordonGillian GordonIngrid GordonJoan GorrellPerry Gottesfeld and Amy BrooksGottesfeldHugh GrahamJames E. GrahamWilliam GrantLeanne GrossmanFrancois and Corinna GuimbretièreJoan and David HaddenAlan Harper and Carol BairdRandy HayesMatt HeavnerMelinda Herrold and Nick MenziesElaine HerzogDonald HeynemanKathleen HigginsNathan and Alicia HirschDenis HonigsKaren HoyDavid Hunter and Margaret BowmanNina JablonskiCasey JacksonAustin and Jacqueline JamisonCheryl JohnsonJason JonesRyan JonesCynthia JosaymaAvi KaganRon KaganSusan KaganLarry KaneJosh KantorStuart KaplanCarol KatzoffRoberta KayeCelina KelloggChris KloseEliza KloseCarl and Marilyn KocherSteven KohlJennifer KrillLinda KropThomas KrouseMadison LairdEric LarsenEdwin LeeMary LelloucheJon LeoEve LevineCheri LiChien-Ya LinDoug LinneyKristi LittletonJieying LiuEmma LoftusLisa and Rob LourieMarc LovellMonica LukeLoretta Lynch and John DavisXiongbin MaFran MacyEdward and Jocelyne MainlandKatharine MaroneyViki MaxwellOlga McAllister

Shawn and Nora McGrathChanda MeekMimi MeffertBarbara MeislinDr. Ray and Anja MillerEileen Mitro and Joel LevineCelina Moore and Erik EsselstynCharles Moore and Brennan Van DykeDavid and Nancy MooreViola MooreOctavia MorganPaul MossEugene MurphyMichael and Mary MurphyDoug Murray and Peggy BlumenthalNana MurugesanMichael and Heather O'HeaneyNancy OliverGail Osherenko and Oran YoungDavid ParadiseWalter ParhamWalt ParkerSunil ParthasarathyJosh PerfettoLisa PerfettoMichele PerraultRuth PickeringChris PikeKaren PletnikoffWelling PopeTed ProdromovTheodore RaabCarmen RamirezMichael RobinElodia RomanMurray RosenbluthHeather RosmarinJoy RoyMike RubyDianne SaffordEric SchaferStephen SchleimerPeter SchweinsbergKingston and Liz Schwerer DuffieDavid ScudderJennifer ShaferPatricia ShieldsPat ShieldsDan SilverAlison SinclairPeter SlatteryGreg and Robin SmithToni SmithSuzanne SpeckmanRay and Lauren SteeleMary StraussRichard SzeliskiAmelia TaberSteve TaberStephanie and Chris TebbuttBill Terry and Gloria RomanAlan TracyJudith TracyLisa TracyNancy TracyCecilia Trost and Richard JepsenE.T. Van PoperingRosa VeneziaCarole VeseckyJames WalkerKathleen WattersGary WaxmonskyCarl WeidertJenny WeitzmanMary WellsEleanor B WentzHarriet WentzDavid WimpfheimerHumphrey WouSusan and Masatoshi YamanakaRoy YoungLinda YoungXiao-Dan YuAnna ZalikLee and Peggy ZeiglerDrake ZimmermanKen ZimmermanMatt ZimmermanMichael Zwirn

EXPENSES:Program Services $1,562,718Support: Management and General $161,915Support: Development $78,994TOTAL $1,803,627

SUPPORT AND REVENUE:Grants $1,974,002Contributions $106,932Interest Income $39,859Gains (Losses) on Investments $707Program Service Fees $941TOTAL $2,122,441

311 California St., Suite 650 • San Francisco, CA 94104 • 415-399-8850 • info@pacificenvironment.org

2006-2007 FINANCIAL STATEMENTSTATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

David GordonExecutive Director

Lauren Allan-VailRussia Program Associate

Galina AngarovaRussia Program Associate

Rory CoxCalifornia Program Director

Sibyl DiverSenior Russia ProgramAssociate

Mazie Fitzgerald Assistant to the ExecutiveDirector

Robert Hurst Development andCommunications Director

Misha JonesRussia Program Specialist

Sarah KaganDevelopment andCommunications Associate

Meerim KylychbekovaRussia Program Associate

Leah LanderOperations Manager

Doug NorlenPolicy Director

Daniela Salaverry China Program Co-Director

Whit Sheard Alaska Program Director

Wen BoChina Program Co-Director

Leah ZimmermanRussia Program Director

Deborah ChapmanBoard Chair

Stephen FowlerSecretary-Treasurer

Phillip Berry

Helena Brykarz

Hank Cauley

BJ Chisholm

Keith Gayler

Thomas Gold*

Karen Hoy

Eliza Klose

Loretta Lynch

Narayanan Murugesan*

Walt Parker

Sunil Parthasarathy

Josh Perfetto

Lisa Tracy

Mary Wells*

Board of Directors

GRANTS

CONTRIBUTIONS

INTEREST INCOME

GAINS (LOSSES) ON

PROGRAM SERVICE FEES

PROGRAM SERVICES

SUPPORT: MANAGEMENT AND GENERAL

SUPPORT: DEVELOPMENT

Staff

Many thanks to the staff who left Pacific Environmentin the last year for other pursuits:

Jennifer Castner

Amy Metzendorf

Sara Moore

Michael O’Heaney

* Term ended in 2007.