In another move on the environmental disclosure front, two groups have now issued a report calling for companies to disclose their "toxics policies." Reflecting the move from pushing environmental regulation and legislation in the face of an unfriendly Congress and White House, these two groups, Investor Environmental Health Network and The Rose Foundation for Communities and the Environment have issued a report entitled Fiduciary Guide to Toxic Chemical Risk.
This story from Greenwire discusses this report.
Russell J. Dinnage, Greenwire reporter
Chemical manufacturers' shareholder meetings are increasingly being turned into forums for social-activist investors to protest products they consider to be public-health threats, an environmental investment group says in a new report.
Seventeen companies faced proxy resolutions addressing the financial risks of toxic chemicals last year -- up from three in 2004 and 2005, the Investor Environmental Health Network says in the report released last week. All of those resolutions urged management to consider the financial risks associated with certain chemical products.
So far this year, more than 13 such proxy resolutions are in the works, the report says. They are expected to be submitted at the shareholder meetings of Apple Inc., CVS Corp., Dow Chemical Co. and DuPont Chemical, among others.
There are two reasons that stockholders have grown wary of chemical-company investments, the report says: Companies are facing more lawsuits seeking large damage awards, and mutual and pension funds are starting to see a link between their investments and public health threats.
Richard Liroff, a network director and co-author of the 52-page report, said manufacturers are wary of allowing litigation and regulation to act as their corporate consciences. "At some point, one wonders if these companies will begin to trade on litigation expenditures as a cost of doing business, just as tobacco companies have done," he said in an interview. "If that becomes the case, then they will surely begin to take big hits on their profits and sales of their products as a result."
The Investor Environmental Health Network represents 20 investment organizations with $22 billion in assets under management. The network was involved in 24 responsible-use stockholder resolutions in recent years, and all but one succeeded in garnering the 6 percent of shareholder support that legally requires management to address the issues being raised, Liroff said.
"What we've seen with our resolutions in many cases was support for the concerns coming from previously unknown quarters once the proxies are proposed," Liroff said. "That's the big money that talks. Sizeable resolutions on corporate governance are getting sizeable votes."
Key lawsuits
The report cites a landmark jury verdict in a Rhode Island public-nuisance case against Sherwin-Williams Co. and other former lead-paint manufacturers as an example of how share prices can be driven down even if a companies have long phased out harmful ingredients. The final damages awarded to the state and lead-paint victims of lead paint could eventually top $1.37 billion.
Also, the report marks an upcoming $5 billion consumer class-action lawsuit against DuPont concerning the company's sale of Teflon products as another example of a potential stumbling block for shareholder interests.
"Investors or trustees should not hold an image of icebergs in mind when considering the financial risks of toxics," the report says. "After all, an iceberg may be identified on radar and avoided. The growing waves of scientific interest in toxic chemicals may perhaps be better likened to tsunamis poised to strike vulnerable companies and their shareholders."
