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Corporate Social Responsibility
News
4.04.2007 - 10:40am ET
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CSR News from:
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Investor Environmental Health Network
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Toxics in Your Portfolio?: Companies Facing Shareholder Resolutions on Chemical Risks in Products Jump From Just Three in '04-'05 to 17 in '06-'07
From Asthma to Teflon … From Cosmetics Safety to Pesticides … Concerns Mount About Chemical Risks; IEHN Unveils “Fiduciary Guide” as 2007 Proxy Season Heats Up.
(CSRwire) WASHINGTON, D.C. - April 4, 2007 - In the wake of costly litigation,
product sales bans, and reputational damage arising from asbestos, toxic
materials in cosmetics and toys, and Teflon-related chemicals, U.S.
investors are becoming increasingly wary of toxic chemical risks – in
products, in supply chains, and in their own portfolios. The number of
shareholder resolutions dealing with toxic product risks jumped from three
in 2004-2005 to 17 in 2006-2007, including 13 resolutions introduced for
the ‘07 proxy season at such leading U.S. corporations as Apple, CVS,
Dow, DuPont, Sears, and ServiceMaster.
In response, the Investor Environmental Health Network (IEHN), which
represents 20 investment organizations with $22 billion in assets under
management, today released the 52-page "Fiduciary Guide to Toxic Chemical
Risk." The guide for institutional investors examines the financial
dimensions of toxic chemical risk, including how to quantify such risk,
the theory behind the danger posed by toxic chemicals to the wealth of
shareholders, and a comprehensive set of action steps that can be taken by
investors to translate the long-term threats and opportunities associated
with toxic chemical issues into prudent portfolio stewardship.
The report is authored by Jane Ambachtsheer, Mercer Investment Consulting,
Jonas Kron, Attorney at Law, Richard Liroff, Investor Environmental Health
Network, Tim Little, Rose Foundation for Communities and the Environment,
and Rachel Massey, Global Development and Environment Institute.
The IEHN primer for institutional investors concludes: "Researchers are
increasingly detecting scores of these substances in human blood, breast
milk, and amniotic fluid, and scientists are increasingly recognizing the
particular vulnerability of fetuses and young children to them. These and
related findings are contributing to rising awareness that the strategic
choices businesses make about managing toxic chemicals in their products
can have major financial consequences. As DuPont has been discovering with
PFOA, a chemical used to produce Teflon and stain and grease repellants,
consumers and industrial customers may abandon product lines over toxicity
concerns. At the same time, liability litigation and government enforcement
actions may further undermine bottom lines and reputations."
Report co-author and Rose Foundation Executive Director Tim Little said:
"Companies' strategic choices have serious implications for government
pension funds. Our report estimates the combined annual costs of
environmentally related childhood asthma, cancers and neurobehavioral
disorders in California, Connecticut and New York States as on the order
of $15 billion dollars. Government employee pension funds, in particular,
should take heed and take action – the funds, state treasuries and fund
members are shouldering the resulting health care and special education
costs."
Richard Liroff, Ph.D., executive director, IEHN, said: "Poor corporate
management of toxic hazards can increase risks for investors. Regulatory
controls are tightening around the globe, not only in Europe but also in
US states such as California, and in developing markets such as Korea and
China. The failure to address safer materials is causing products to be
locked out of markets. By contrast, corporate efforts to minimize or
avoid exposures, or to offer safer alternatives, can benefit corporate
bottom lines and reward investors."
Craig Metrick, US lead for responsible investment at Mercer Investment
Consulting, said: "The good news for investors is that there are
constructive steps they can take immediately to mitigate the potential
risk posed by toxic chemicals in their portfolio. These steps we are
outlining include comprehensive directions that can help fiduciaries
understand the relationship between toxics and financial risk, and guide
their exploration of these issues with investment managers and
consultants."
The 2006 proxy season saw a flurry of positive corporate steps following
the filing of shareholder resolutions focusing on toxic chemical risks,
including:
- Whole Foods Markets announced that it would remove baby bottles
and other products that contain certain toxics from its shelves as part of
a new corporate policy initiative to reduce customers' exposure to
hormone-disrupting chemicals.
- Wal-Mart announced a new "preferred substances policy" that
incorporates a precautionary, hazards-based approach to chemicals
management, initially focusing on persistent bioaccumulative toxics and
carcinogens.
- ConAgra agreed to analyze and report on alternatives to PFOA in food
packaging.
- Becton, Dickinson agreed to survey its suppliers regarding brominated
flame retardants in its medical devices.
- Johnson & Johnson agreed to initiate a stakeholder dialogue with one
of the cosmetics industry's harshest critics, the Campaign for Safe
Cosmetics.
The full IEHN report is available online at http://fiduciary.investorenvironmentalhealthnetwork.org
and at www.iehn.org.
Experts expect the concerns about toxic chemical risks to continue apace
in the 2007 proxy season, with many key votes scheduled over the next few
weeks:
Apple. Shareholders are requesting a report on the feasibility of
adopting a policy to eliminate persistent bioaccumulative toxic chemicals,
including an expeditious timetable to end the use of all brominated flame
retardants and PVC plastics. Lead Filer: Trillium Asset Management.
Estimated voting date: April 30
- Bed, Bath, and Beyond. Shareholders are seeking a report
summarizing how products sold at Bed, Bath and Beyond might be affected by
safety concerns associated with PVC, PFOA, and cosmetics, and options for
management initiatives that can be taken in response to these public
policy challenges. Lead Filer: As You Sow Foundation. Estimated voting
date: June 29.
- CVS. Shareholders asked for a report on CVS policy on cosmetics
safety, including assessment of products that may be affected by new
public policies and growing consumer interest in safer cosmetics. Lead
Filer: Boston Common Asset Management. Outcome: Withdrawn following
company commitment to dialogue with investors on safer cosmetics
issues.
- Dow (asthma). Refiling of 2006 resolution that requests report
analyzing impact of Dow products on asthma and measures Dow is taking to
phase out or restrict such chemicals. Lead Filer: Trillium Asset
Management. Estimated voting date: May 10.
- DuPont (PFOA phase-out). Shareholders are asking the company to issue
a report evaluating the feasibility of an expeditious phase-out of the use
of PFOA and materials degrading to it, and the development and adoption of
safer substitutes. Lead Filer: Amalgamated Bank. Estimated voting date:
April 25.
- DuPont (PFOA expenditures). Shareholders are requesting a report on
funds expended by DuPont related to PFOA pollution, including, e.g.,
attorney and lobbying fees and site remediation costs. Lead Filer: United
Steelworkers Union. Estimated voting date: April 25.
- DuPont (chemical security). Shareholders are requesting the
independent directors of DuPont to report on the implications of a policy
for reducing harm from catastrophic chemical releases by reducing the use
and storage of extremely hazardous substances and taking other steps.
Lead Filer: Green Century Capital Management. Estimated voting date: April
25.
- Hasbro. Shareholders are asking for preparation of a sustainability
report. Resolution’s "whereas" clauses refer to PVC. Lead Filer: Camilla
Madden Charitable Trust. Estimated voting date: May 25.
- Mohawk Industries. Shareholders requested a report on the feasibility
of expeditious phase-out and substitution for PVC, PFOA, and chemicals
breaking down to PFOA. Lead Filer: United Methodist Church General Board
of Pension and Health Benefits. Outcome: Resolution withdrawn when company
shared its commitment to move away from the use of PVC and materials
containing or breaking down to PFOA with shareholders.
- Scotts Miracle-Gro. Shareholders requested a report on the
company’s expenditures during 1993-2005 on efforts to oppose local
policies to limit lawn care product use. Lead filer: Boston Common Asset
Management. Outcome: 9.3 percent of vote. In its opposition statement to
the resolution, the company reported it had spent less than $300,000 in
fiscal year 2006 to oppose local pesticide ordinances.
- Sears Holdings. Shareholders requested preparation of a
sustainability report. The filing letter to the company accompanying the
letter focused on PVC. Lead filer: Evangelical Lutheran Church in America.
Outcome: Resolution withdrawn based on consultations with company.
- ServiceMaster. Shareholders request a report on the feasibility of
discontinuing the use of synthetic pesticides at TruGreen Chemlawn,
instead substituting natural and non-toxic lawncare services. Lead filer:
Green Century Capital Management. Outcome: Estimated voting date May 8.
Note that ServiceMaster has announced its pending acquisition by a private
equity consortium led by Clayton, Dubilier, and Rice, Inc.
ABOUT IEHN
The Investor Environmental Health Network (www.iehn.org) is a collaboration of
investment managers encouraging companies to adopt "safer chemicals"
policies for cosmetics and other products. Members of the network are
concerned that companies will be locked out of markets and suffer
financial and reputational damage, if they don't systematically identify
and eliminate hazardous chemicals in their products.
ABOUT THE REPORT AUTHORS
Jane Ambachtsheer is a principal of Mercer Investment Consulting. She
leads Mercer's global Responsible Investing business, and consults to
investors in North America, Europe, and Australasia.
Richard A. Liroff is the founder and director of the Investor
Environmental Health Network and for many years served as a senior program
manager at World Wildlife Fund working on toxic chemical issues.
Tim Little is the executive director of The Rose Foundation for
Communities and the Environment and director of Rose’s Environmental
Fiduciary Project. He is co-author of a series of papers examining
environmental risk and the competitive advantages of incorporating
environmental performance factors into business and portfolio management
analysis. The Rose Foundation is the lead filer of a citizen petition to
the Securities Exchange Commission seeking new guidelines for
environmental risk disclosure that has been endorsed by institutional
investors collectively representing over $3 trillion. Visit www.rosefdn.org for
details and downloads of previous reports.
Jonas Kron is an attorney specializing in shareholder advocacy and
institutional investor fiduciary duties as they apply to environmental,
social and corporate governance issues.
Rachel Massey is a researcher at the Global Development and Environment
Institute at Tufts University, where she has helped to build a program in
Economics for Health and the Environment. Her recent work has included a
series of studies of the economic implications of the proposed new
European chemicals policy, REACH.
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