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INVESTORS SHOW UNPRECEDENTED CONCERN REGARDING FINANCIAL RISKS FROM TOXIC CHEMICALS IN PRODUCTS
May 4, 2006
New York. Corporations that are household names are being asked to address the role of toxics in their products, including, among others, Avon, CVS Corporation, ServiceMaster/ChemLawn, Whole Foods Market, Dow Chemical and DuPont. 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.
Seventeen investing organizations collectively representing more than $22 billion in assets under management issued a joint statement today 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.
“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 percent 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 nearly 30 percent during the course of 2005, as well as the presence of competitors offering non-PFOA alternatives, may have helped to create this groundswell of support.
A rundown of some of the upcoming resolutions includes:
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 today, 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.
Shareholder resolutions at Servicemaster (ChemLawn) and Whole Foods Market:
Andrew Shalit, Green Century Capital Management, Inc. (617) 426-2503
Shareholder resolution at CVS regarding safer cosmetics products:
Lauren Compere, Boston Common Asset Management, Inc. (617) 720-5557
or Vesela Veleva, Citizens Advisers (603) 436-1513, ext. 3664
Shareholder resolution on DuPont and PFOA:
Julie Gozan, Amalgamated Bank (315) 477-7507
or Sanford Lewis, DuPont Shareholders for Fair Value (413) 549-7333
Shareholder resolution on Asthma and Dow Chemical:
Sanford Lewis (413) 549-7333
Shareholder resolution at Becton, Dickinson:
Karen Shapiro, Domini Social Investments, LLC (212) 217-1112
Benchmarking businesses on safer chemicals policies:
Richard Liroff, Ph.D. (202) 778-9644
Additional Background on the IEHN Web site:
- Complete Text of Investor Statement
- List of Network Members
- Shareholder Resolutions
- Background on Selected Chemicals