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 SocialFunds.com.