|Shareholder Network Launched to Curtail Toxics in Products|
May 4th, 2006
NEW YORK - Seventeen investing organizations collectively representing more than $22 billion in assets under management have issued a joint statement calling for other financial professionals and investors to join with them in supporting shareholder resolutions seeking better disclosure regarding the risks of toxics in products, and better corporate strategies for moving to safer alternatives when they are available.
The investors assert that while they are accustomed to taking risks, many of the risks associated with toxic materials in products are unnecessary and harmful.
The number and variety of shareholder resolutions at corporate annual meetings this spring demonstrates an unprecedented level of investor engagement and concern regarding the financial risks to share value posed by toxic chemicals in products, say the investors. Companies being asked to address the role of toxics in their products include CVS Corp., ServiceMaster/ChemLawn, Whole Foods Market, Dow Chemical and DuPont.
"Unfortunately the corporate community has been largely failing to respond to emerging science showing health and environmental risks of an array of chemicals in products. Companies are not moving to safer alternatives quickly enough," states Lauren Compere, Director of Shareholder Advocacy at Boston Common Asset Management, LLC.
Adds Karen Shapiro, Shareholder Advocacy Associate with Domini Social Investments, LLC, whose resolution on concerns related to cosmetics ingredients is up for a vote at today's Avon shareholder meeting, "As long-term investors, we are concerned that companies that fail to adopt safer chemical policies risk losing public trust, brand reputation, and market share. We want to see our companies becoming more responsive and responsible."
Consumer awareness is growing regarding the presence of toxics in products such as cosmetics, lawn care products, and food packaging. As consumers become more aware, the market for products is changing and, according to the investors, companies will need to make the shift as well or risk losing out to competitors who are marketing products containing safer materials.
At the April 26 shareholder meeting, DuPont shareholders voted regarding whether to require a report setting forth options for the company to quickly eliminate the use and production of PFOA. PFOA is a controversial chemical used in making grease and stain repellent products that coat carpets, textiles and fast-food wrappers, and in the production of Teflon cookware. The chemical has been targeted by scientific experts and regulators due to its persistence in the environment and potential health effects including cancer, liver damage, and birth defects.
At the DuPont meeting, a preliminary report indicated that 27.3% of shareholders voted in favor of the resolution – one of the highest shows of support on an environmental resolution. The DuPont stock price drop of more than 20% during 2005, as well as the presence of competitors offering non-PFOA alternatives, may have helped to create this groundswell of support.
Upcoming resolutions include:
• Avon (Thursday, May 4): Should Avon provide more information on policies regarding use of safer substitutes for known or suspected toxic chemicals?
• ServiceMaster, parent company of ChemLawn (Friday May 5): Should ServiceMaster assess the feasibility of its ChemLawn subsidiary shifting to nontoxic lawn treatment strategies?
• Dow Chemical (Thursday May 11): Should Dow Chemical publish a report analyzing links between its pesticide products and asthma, and develop a strategy for phasing out the use of those chemicals?
• CVS Corporation (Thursday May 11): Should CVS develop strategies for ensuring safer materials in cosmetics products sold in its stores, including private label cosmetics as well as cosmetics produced by other companies?
Dr. Vesela Veleva, Social Research Analyst at Citizens Advisers, Inc. stated, “There is good reason to be concerned about toxic chemicals in cosmetics; we believe companies like CVS need to be more proactive to ensure the products they are selling to the general public are safe.” Andrew Shalit, Director of Shareholder Advocacy at Green Century Capital Management, Inc. which filed the resolution at ServiceMaster, adds, “ServiceMaster should be positioning itself to take advantage of increasing public interest in less toxic alternatives, as well as avoiding potential liabilities from and regulatory restrictions due to its use of toxic lawn chemicals.”
Shareholder safer chemicals resolutions have already produced positive responses from several targeted companies. Becton, Dickinson, which was unable to tell investors which of its products contained brominated flame retardants that have been banned by some governments and by some corporate purchasing programs, has begun surveying its suppliers about the chemicals. Whole Foods Market has removed baby bottles from its shelves containing two chemicals, Bisphenol-A and phthalates. Whole Foods Market has also stated a goal of helping its customers avoid “endocrine-active materials” (sometimes referred to as hormone disrupting chemicals) in products and packages where functional alternatives exist. A resolution at Johnson & Johnson was withdrawn when the company agreed to increase public disclosures on its cosmetics safety policies and to meet with safer cosmetics activists such as the Campaign for Safe Cosmetics.
According to the statement issued by the investors, it is insufficient to judge companies’ environmental practices by just measuring their emissions, waste sites, and penalties. Instead they propose that companies be benchmarked for their progress in adopting safer chemicals policies and practices to reduce customer exposures to toxic chemicals in products.