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May 30, 2007

PVC Chemical Issue Also Raised with Target and Bed, Bath & Beyond; Toy/Game Maker Hasbro Lags Other Companies, Progress Seen at Sears and Mohawk Industries

In a vote that ranks among the highest ever for resolutions on sustainability and toxic chemicals opposed by management, almost half (44.776%) of Hasbro Inc. (HAS) shareholders endorsed a proxy resolution calling on the toy/game company to produce a sustainability report by December 2007. The resolution highlighted the hazards to public health and company finances posed by the chemical polyvinyl chloride (PVC) used in toys and packaging. The resolution noted that Hasbro lags other companies in addressing this issue.

Hasbro shareholders registered their strong support for the resolution during the company’s annual meeting Thursday (May 24). Speaking for the resolution filers, Margaret Weber, coordinator of Corporate Responsibility for the Adrian Dominican Sisters in Adrian, Michigan, and also a representative for the Camilla Madden Charitable Trust, commented, “The high vote for this proposal from shareholders indicates that Hasbro needs to meet the standard for accountability on sustainability issues and also that shareholders understand the potential liabilities with continued use of PVC in children’s toys.”

The filers at Hasbro had noted in a recent letter to shareholders, filed with the Securities and Exchange Commission, that Wal-Mart had recently reached a voluntary agreement with the attorneys-general of New York and Illinois on a recall of PVC baby bibs laced with lead; Wal-Mart committed to support a voluntary industry standard to eliminate PVC from all products intended for use by children. Wal-Mart is Hasbro’s largest customer, representing 24 percent of Hasbro’s consolidated net revenues in 2006.

The Hasbro resolution was voted on the same day that shareholders were raising PVC issues at Target’s (TGT) Annual General Meeting. Shareholders began a dialogue with senior management in September 2006 asking the company to review health concerns related to PVC, as well as product alternatives and procurement options. Shareholders have found Target unresponsive to questions about the company’s PVC sales practices and management goals. These issues were raised again at the annual meeting.

Michael Passoff, associate director of As You Sow Foundation commented, “Despite consumer and investor concern Target can still not answer basic questions such as what is the company’s commitment to exploring alternatives to PVC? What is the process, who is responsible, what is the timeframe?”

The Hasbro and Target responses stand in marked contrast to those from Sears Holdings and Mohawk Industries, where earlier this year shareholders withdrew resolutions following fruitful meetings with both companies regarding their plans for PVC.

The PVC issue will surface one more time during the current proxy season, in a resolution filed at Bed, Bath, & Beyond (BBBY), whose annual meeting is scheduled for July 10 in Morristown, New Jersey. BBBY shareholders are asking the company to address management options for addressing the scientific and business concerns raised by PVC, toxic chemicals in cosmetics, and the toxic chemical PFOA that is used to provide stain and grease resistant coatings for carpets, cookware, and food packaging.

The Hasbro and Target meetings occurred on the same day that 200 scientists meeting at an international environmental health conference issued a statement warning that exposure to common toxic chemicals in the womb can cause health problems later in life. In “The Faroes Statement: Human Health Effects of Developmental Exposure to Environmental Toxicants,” the scientists note the need to move beyond the “old paradigm” of “the dose makes the poison.” For early in life exposures (such as those that can result from the chemicals found in common household products and office environments), “the timing makes the poison.”

Richard A. Liroff, director of the Investor Environmental Health Network (IEHN), commented, “The new statement by the scientists elevates the concern investors have been expressing to companies this season — emerging science casts in doubt the viability of keeping various toxic chemicals in products. The parallel to global warming is obvious—science is building up, regulators are taking action, and if companies don’t respond they’re at financial, reputational, and litigation risk.”

The resolution asked Hasbro to prepare a sustainability report by December 2007. The resolution recites scientific concerns about PVC, notes regulatory action to outlaw PVC products containing certain toxic additives, and adds that prominent competing toy companies and retailers such as Wal-Mart and Ikea are phasing out PVC in products and/or packaging.

The resolutions at Hasbro and Bed, Bath, & Beyond are two of thirteen resolutions addressing toxic chemicals in products introduced this proxy season, according to The Investor Environmental Health Network (IEHN). IEHN is a collaborative partnership of investment managers concerned with the use of toxic chemicals in products of their portfolio companies. IEHN and its participants have documented the need for investor concerns in the March 2007 Fiduciary Guide to Toxic Chemical Risk and in a twenty-minute video, Toxic Chemicals in Products: Financial Risks and Opportunities.


Richard A. Liroff (703) 243-0085 and [email protected]

Note to editors

Other sustainability resolutions receiving high votes include machinery manufacturer Terex Corporation (48.4%) in 2006 and electronics and tool manufacturer Cooper Industries (44.3%) in 2003. A resolution at Canadian steel producer IPSCO on toxic releases and greenhouse gas emissions received 49.2% in 2003.