Nanotechnology Now - Press Release: Toxic Product Recall Backlash Seen As Investors File Record 21 Resolutions on Wide Range of Chemical, Product Safety Concerns

Home > Press > Toxic Product Recall Backlash Seen As Investors File Record 21 Resolutions on Wide Range of Chemical, Product Safety Concerns

Abstract:
esolutions at Avon, Dow, Kroger, and Mattel Head To Votes; With Focus on BPA, PVC, Nanomaterials, Brominated Flame Retardants, 53 Companies Targeted by Concerned Shareholders in 2008 Is Up Sharply From 20 in 2007.

Toxic Product Recall Backlash Seen As Investors File Record 21 Resolutions on Wide Range of Chemical, Product Safety Concerns

Washington, DC | Posted on April 29th, 2008

In the wake of high profile toy and pet food recalls and growing public concern about chemicals in baby bottles, cosmetics, and other products, a record 21 resolutions on toxic chemicals and product safety have been introduced by corporate shareholders during the 2008 proxy season. This compares to just 13 such resolutions in 2007 and 12 in 2006.

The big jump in 2008 shareholder resolutions reveals only part of the picture; a record-high 53 corporations are the focus this year of either related shareholder resolutions (21 at 17 companies) or shareholder-corporate engagements outside of the formal proxy process (36 companies). By contrast, only 20 companies were the focus of such efforts in 2007 and 12 in 2006. The 2008 toxic chemicals/product safety resolutions address numerous chemicals of concern, including polyvinyl chloride (PVC) packaging and products, nanomaterials and other chemicals in cosmetics, PFOA used in manufacture of nonstick pans and other products, brominated flame retardants, and pesticides.

In the coming weeks, major shareholder resolutions on toxic chemical/product safety issues are coming to votes at annual meetings for Avon Products (May 1), Dow Chemical (May 15), Mattel (May 29), and Kroger (June 26).

The good news for investors is that the increased pressure is paying off: Over half of the 2008 resolutions (11 of 21) already have been withdrawn as a result of cooperation by companies who reported actions taken or planned, provided other information, or agreed to other actions outlined by concerned shareholders.

Richard A. Liroff, founder and executive director, Investor Environmental Health Network (IEHN), Falls Church, VA; "Investors and businesses are waking up to the fact today that the risks posed by unaddressed toxic chemicals and the failure to adequately address them can jeopardize a company's bottom line and long-term wealth of investors. The collapse of the retail market for polycarbonate baby and sport bottles containing the chemical BPA during the last three weeks vividly illustrates why companies and investors cannot avoid the threats posed by products that are unsafe due to toxic chemicals. This is a long-term strategic issue that goes far beyond short-term news headlines about lead in children's toys made in China."

Bennett Freeman, senior vice president, Social Research and Policy, Calvert Asset Management Company, Inc., Bethesda, MD, said: "Smart investors have learned to heed the risk of toxic chemicals in products; we know that product safety can be important for long-term shareholder value. Calvert first began advocating for healthier products in 2001 with an investor coalition that worked to reduce the amount of toxics in electronics, and to encourage computer companies to take back their electronic waste. This year, our shareholder resolution with Avon, which we have co-filed with Domini Investments, addresses our concerns about the risk of nanomaterials, even as we recognize that this new technology offers potential benefits to society. Calvert believes that shareholders, workers, and consumers -- and the companies that manufacture and sell these products -- can only benefit from our early attention to health and environmental risks from emerging technologies and potentially dangerous chemicals."

Commenting on the trend toward more shareholder focus on toxic chemical risks, Lynn R. Goldman, M.D., professor and chair, Interdepartmental Program in Applied Public Health, Johns Hopkins University, Baltimore, MD., said: "As a pediatrician and a public health professional, I am particularly concerned about the vulnerability of children -- from conception through adolescence -- to very small doses of chemicals that are found in products we use every day, and our vast state of ignorance about the risks of most chemicals on the market. Reducing or eliminating such exposures is a good precautionary step to promote healthy development and avoid costly medical problems now and in the future."

Already this year, pressure from shareholders has spurred Best Buy, JCPenney, Circuit City, and Costco to report to investors on phase outs of polyvinyl chloride (PVC) packaging and products. Colgate-Palmolive published a corporate policy addressing nanomaterials in products. Target and Pier 1 agreed to produce reports on corporate product safety policies and practices. Hasbro agreed to dialogue with stakeholders on sustainability issues, including PVC.

However, other companies have not yet addressed shareholder concerns and they face annual meeting votes:

-- At Avon Products a resolution filed by Calvert Asset Management Company, Inc. asks the company to disclose its policies governing use of nanomaterials in cosmetics and personal care products. Nanomaterials are a rapidly growing class of extremely small engineered substances whose safety and environmental hazards have not been well-studied. This resolution is similar to Calvert's resolution filed and withdrawn at Colgate-Palmolive.

-- At Dow Chemical Company a resolution filed by Trillium Asset Management cites scientific reports on links between the company's pesticides and asthma and asks for an independent scientific panel to report on this issue. The upcoming vote comes against a backdrop of concern about the role of "product defense" organizations and other industry-friendly science consultants in fostering scientific uncertainty -- and hence government inaction -- over toxic chemicals.

-- At Mattel, a resolution filed by stockholder Marie-Claude Hessler-Grisel asks the company to report on product safety and occupational health issues. A related resolution filed by the New York City Pension Funds was withdrawn when the company agreed to produce reports related to its supply chain and product safety.

-- At Kroger, a resolution filed by Catholic Healthcare West asks the company to address various toxic chemicals present in packaging and products, including PVC, BPA, and chemicals found in cosmetics and personal care products.

In a major vote on January 29, 2008, a sizeable 36.1 percent of shareholders supported the one toxic chemical resolution voted thus far this proxy season -- at medical device manufacturer Becton, Dickinson -- asking the company to address the anticipated regulation by the European Union of brominated flame retardants and other toxic chemicals in its products. The company had been slow to respond to a related resolution supported by 8.7 percent of shareholders in 2006.

Most of the resolutions on toxic chemicals and product safety have been filed by investment managers working collaboratively as the Investor Environmental Health Network (IEHN).

A running list of resolutions, their filers, and outcomes is available at iehn.org/resolutions.shareholder.php

In its April 2008 report, "Toxic Stock Syndrome: How Corporate Financial Reports Fail to Apprise Investors of the Risks of Product Recalls and Toxic Liabilities," IEHN recommended that companies be more forthcoming in describing the market risks they face due to toxic chemicals in their products, and urged the SEC to develop new guidance to encourage such greater transparency. The report is available at iehn.org/publications.reports.toxicstock.php.

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About Investor Environmental Health Network
The Investor Environmental Health Network (www.iehn.org) is a collaboration of investment managers encouraging companies to adopt "safer chemicals" policies for products, to enhance shareholder value. IEHN participants manage more than $41 billion in assets.

Investor Environmental Health Network, Falls Church, VA; Calvert Group

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