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June 27, 2001
Shareowners Push Companies on Gene-engineered Food
by Mark Thomsen
This proxy season, shareowner resolutions continue to ask manufacturers and retailers to disclose
information about or phase out the sale of gene-engineered food products.
SocialFunds.com --
Reflecting ongoing concern in the U.S. about the use of genetically modified organisms (GMOs) in
food, the 2001 proxy season follows the 2000 season with another bumper crop of GMO-related
shareowner resolutions.
 The Interfaith Center on Corporate Responsibility (ICCR)
has been coordinating the majority of GMO-related resolutions since it launched a campaign in 1998.
According to Ariane van Buren, ICCR's Director of Director of Energy and Environmental Programs,
the campaign worked with 22 companies in 1999, growing to 24 companies last year. This year, van
Buren says ICCR's campaign will encompass about 40 companies.
Filers of a GMO-related
resolution received significant support from other shareowners at the Kroger (ticker: KR) annual meeting
held last week. Using the Securities and Exchange Commission method of calculating votes, which
excludes abstentions and non-votes, the resolution received 15.3 percent of the votes cast. This
is a large percentage considering most resolutions usually garner between 2-5 percent.
The
resolution asked the company's board of directors to adopt a policy of labeling private-label or
store-brand products that may contain genetically engineered foods, where feasible. The Kroger
Company, based in Cincinnati, Ohio, is the nation's largest grocery retailer with 3,500 stores
across the country. It also is a manufacturer and processer of food for sale by its supermarkets.
Boston-based Walden Asset Management was the primary filer, and co-filers included members
of ICCR. It was the second year the resolution was filed, and easily cleared the six percent vote
threshold for eligibility to file the resolution again next year.
"The vote should send a
strong signal to management that they must address the issue directly and not leave it to
government regulators or trade associations," said Steven Heim, Research Analyst at Walden.
"Adding in abstentions demonstrates almost one in four voting shareholders show some concern about
this issue. This is a dramatic result."
Walden was also involved with filing resolutions
with Albertson's (ABS), America's
second-largest supermarket chain after Kroger, Campbell Soup (CPB) and Tricon Global Restaurants (YUM). The
Albertson's resolution, which also asked for GMO labeling, received 6.1 percent at the June 14
annual meeting. It was the first year for the resolution.
The resolution for Campbell
Soup, filed for the November annual meeting, asks the company to report on the impacts and risks of
using genetically engineered food ingredients. The resolution with Tricon was withdrawn because of
ongoing dialogues with the company. Walden says it is also continuing a dialogue with ConAgra (CAG) about phasing out
genetically engineered food ingredients.
Harrington Investments, an asset management firm
based in Napa, California, has also been actively sponsoring GMO-related resolutions. It was the
primary filer of resolutions with Anheuser-Busch (BUD), Coca-Cola (KO) and PepsiCo, Inc. (PEP). The
Anheuser-Busch resolution asked for a phasing out of GMO ingredients, and received 3.1 percent in
its first year.
Both the Coke and Pepsi resolutions asked that labels indicate the use
of GMO ingredients. The Coke resolution, in its second year, garnered only 3.6 percent, so the
resolution cannot be filed next year. The Pepsi resolution gained 8.2 percent in its second year,
and Harrington said it plans to file again next year.
Harrington has also filed, or plans
to file, resolutions with General
Mills (GIS), Procter & Gamble
(PG), Quaker Oats (OAT), Sara Lee (SLE) and Hain Celestial
(HAIN). The General Mills and Procter & Gamble resolutions concern labeling, as does the Quaker
Oats resolution. The Quaker Oats resolution is pending because the company has indefinitely
postponed its annual meeting due to merger talks being held with PepsiCo.
The Sara Lee and
Hain Celestial resolutions ask for a report on the financial and environmental impacts of using GMO
food ingredients.
Alana Smith, Director of Research and Development for Harrington, says
the firm has worked closely with ICCR members on many of the resolutions. She said their
discussions with General Mills, for example, illustrate the gap that often exists between corporate
management and other company stakeholders.
"They (General Mills) see a promise for this
technology in the future, and they trust the regulatory agencies. We're not quite so sure we trust
the regulatory agencies," explained Smith. "We would like more pre-release safety testing done,
and we would like some consideration for the environment, which is not being taken into the account
by the FDA (Food and Drug Administration)."
Other companies that received GMO-related
resolutions this season include Hershey
Foods Corporation (HSY), Philip
Morris (MO), Dow Chemical (DOW)
and DuPont (DD). The Dow and
DuPont resolutions, filed by the Adrian Dominican Sisters and Benedictine Sisters, respectively,
were withdrawn because of ongoing dialogue with management.
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SRI World Group, Inc. All Rights Reserved.
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