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May 04, 2006
Investor Environmental Health Network Addresses Product Toxicity Through Safer Alternatives
    by Bill Baue

The network is coordinating 11 shareowner resolutions addressing product toxicity at companies such as Avon, Becton-Dickinson, CVS, Dow, DuPont, and Whole Foods Market, among others.

Toxicity has long been a concern to socially responsible investors. Recently, the traditional focus on toxic pollution released into the environment through the manufacturing process has been augmented by attention to a potentially more pervasive source of exposure to toxins: products themselves. The launch of the Investor Environmental Health Network (IEHN) today marks the formalization of a shareowner advocacy campaign promoting safer alternatives to toxic chemicals contained in consumer products. IEHN, a coalition of 17 investing organizations representing over $22 billion in assets under management, issued a joint statement outlining the business case for phasing out toxic chemicals in products and moving toward safer alternatives.

"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," said Lauren Compere, director of shareholder advocacy at IEHN member Boston Common Asset Management. "Companies are not moving to safer alternatives quickly enough."

"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," added Karen Shapiro, shareholder advocacy associate with Domini Social Investments, another IEHN member. "We want to see our companies becoming more responsive and responsible."

Boston Common and Domini, along with fellow IEHN members Green Century Capital Management, Citizens Advisers, Amalgamated Bank, and Trillium Asset Management, have filed shareowner resolutions on product toxicity at 11 companies this proxy season. For example, resolutions filed at Avon (ticker: AVP) by Domini and CVS (CVS) by Boston Common and Citizens ask the companies to adopt policies for using safer cosmetics ingredients. Both resolutions go to vote over the next week.

The joint statement points out that the European Union adopted a Cosmetics Directive in 2003 that outlaws carcinogens, mutagens, and reproductive toxicants in cosmetics and personal care products. This directive not only impacts products sold in the EU, but also opens companies up to criticism in the US--American consumers do not want to expose themselves to toxic ingredients that are banned elsewhere in the world.

Resolutions that have already gone to vote have received very high levels of support. A preliminary count indicates 27.3 percent support by voting shareowners for a resolution asking DuPont (DD) to report on the feasibility of expeditiously phasing out PFOA, a chemical used in making Teflon as well as grease and stain repellents used for coating carpets and fast-food wrappers.

Support from Dupont shareowners jumped significantly from the 8.7 percent vote the resolution received in its first year last proxy season (with slightly different wording). IEHN members attribute this increase in support to the fact that Institutional Shareholder Services (ISS), the influential proxy advisory firm, recommended voting in favor of the resolution this proxy season.

Other resolutions that have gone to vote include one asking Whole Foods Market (WFMI) to report on endocrine disruptors that received 10 percent support, and another asking Becton-Dickinson (BDX ) to report on brominated flame retardants that got more than 8 percent support. Other resolutions coming to vote over the next week include two at Dow (DOW), one asking the company to report on the linkages between pesticides and asthma and another requesting a report on increasing the inherent security of chemical facilities.

IEHN's joint statement advances its business case not only by listing the risks of product toxicity, but also by enumerating the opportunities and financial benefits of safer alternatives.

For example, SC Johnson has been reducing its ecological footprint through its patented Greenlist process that scores the toxicity of the ingredients in all their products, and systematically seeks to improve those scores by using safer alternatives.

"One of my favorite examples is Windex, where they eliminated hundreds of thousands of pounds of volatile organic compounds, they eliminated a toxic chemical on one of the Canadian government's lists of suspect chemicals," said Rich Liroff, senior fellow in the toxics program at the World Wildlife Fund (WWF). "At the same time, they managed to improve the cleaning power of Windex by something like 30 percent, and they claim increased sales and increased market share as a result of reformulation."

"I think that example underscores the point that safer chemicals can be good for business," Dr. Liroff told


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