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January 27, 2000
Shareholders Take On Genetically Modified Organisms
A suite of resolutions filed by shareholders this year pose a significant challenge to the use of
genetic engineering in agricultural products and foods.
SocialFunds.com --
Genetically modified organisms (GMOs) used in agriculture and food production have been under
development for 20 years, and widely used in the last several years, despite growing controversy
over their health and environmental risks. This coming proxy season, for the first time,
shareholders are asking that companies remove GMOs from their products until long-term testing
proves their safety.
 GMOs represent the latest advance in the
production of crops and livestock that are more productive and resistant to disease, pests, and
herbicides, pioneered by biotechnology giants like Monsanto, Novartis, Dupont, and Astra-Zeneca.
Instead of using selective breeding, as has been applied for thousands of years, biotech engineers
are able to insert desirable genes from other plants, animals, or bacteria.
"Crops are
being engineered to resist frost, delay ripening, or ward off viruses," said Steven Heim, Research
Analyst at Walden Asset Management, in their "Values" newsletter. "Other major crops are being
engineered to be insect resistant. And this is only the first round. Next up is increased
nutritional quality and drought resistance, for example."
Hailed by many as the biggest
breakthrough in modern agriculture, GMO seeds have been readily adopted by U.S. farmers for their
proposed economic benefits. By 1999, one fourth of all U.S. cropland was planted with genetically
altered crops, including 55 percent of all soybeans, 35 percent of corn, and 50 percent of cotton.
Some experts suggest that 60 percent of what we buy in U.S. supermarkets contains some GMOs.
So what's the problem? As early as 1989, scientists reported that GMOs may pose risks to human
health, and subsequent evidence suggests that GMOs may also yield unexpected toxins or carcinogens.
Fears of environmental impacts were spurred by the discovery that genetically modified pollen from
pest-resistant "Bt" corn can kill monarch butterfly larvae. Other potential impacts include the
creation of more persistent "superweeds," or irreversible disruption of natural ecosystems.
"It is too early in GMO development history to determine whether or not GMOs cause other
disruptions throughout the ecosystem," said Stefanie Haug, Vice President and Environmental Analyst
at Winslow Management Company, in Boston. "However, some activists in England have taken the
monarch butterfly as their symbol, and dressed their children up in butterfly costumes when
petitioning Parliament."
Concerns in the European Union about the environmental and health
costs of GMOs have preceded the growing awareness in the U.S. In 1998, the E.U. required mandatory
labeling of foods including GMOs, and in 1999 they banned all new GMOs until the implementation of
a new safety law in 2002. Several of Europe's largest food retailers and two European-owned
multinationals, Unilever and Nestle, are removing GMO ingredients from their products sold in
Europe.
"Dan Glickman, the U.S. Secretary of Agriculture has called the international
distrust of GMOs and 'infectious disease,'" said Heim, of Walden. "With European consumer rejection
of genetically engineered foods, the markets for these crops are crumbling."
In the U.S.,
awareness has largely been driven by the insistence of the E.U. to label imported GMO food
products, and their resistance to further genetically modified (GM) agricultural products. The E.U.
ban on GM corn resulted in a loss of $200 million for American grain producers, and three fast-food
giants in the U.K., McDonald's, Burger King, and Kentucky Fried Chicken, are eliminating GM soy and
corn ingredients from their menus.
Last summer, the U.S. Department of Agriculture finally
acknowledged the need to develop a comprehensive approach to evaluating the long-term and secondary
effects of GMOs. In the mean time, Gerber Products Co. and H.J. Heinz Co. have both eliminated GMOs
from their baby food lines, and Archer Daniels Midland has asked its grain suppliers to segregate
their GM crops from conventional crops.
With the growing awareness in the U.S., the 2000
proxy season is an opportune time for shareholders to begin addressing the GMO issue with the
companies that they own. Accordingly, 19 resolutions are being filed, 11 of them with food and
dairy companies and restaurants, 3 with supermarket chains, and 5 with "life sciences companies"
that produce GM agricultural products, such as DuPont, Monsanto, and Archer Daniels Midland.
"The issue of genetically engineered food has mushroomed faster than virtually any other issue
in the history of corporate social responsibility and shareholder advocacy," said Dr. Ariane van
Buren, Director of Energy & Environmental Programs at the Interfaith Center on Corporate
Responsibility (ICCR). ICCR is a coalition of religious and other investors that co-sponsors the
majority of social and environmental shareholder resolutions.
"In half a year, it went
from no shareholder action to 33 different investor groups putting shareholder proposals to 24
different companies (19 U.S. and 6 in Europe and abroad)," van Buren said.
The
resolutions request that the companies remove GM crops from all of their products until long-term
safety testing has shown that they are not harmful to humans, animals, and the environment.
"Without comprehensive long-term safety testing for GMOs, consumers and environmentalists will
likely remain leery," said Heim. "For five years both the U.S. Food and Drug Administration (FDA)
and Environmental Protection Agency (EPA) have failed to deliver their promised safety testing
programs." Shareholders will take the issue directly to the companies that produce and distribute
GMOs.
The sponsors of the new GMO resolutions, including several socially responsible
mutual funds, pension funds, and religious institutional investors, propose an interim step of
labeling and identifying products that contain GMOs, highlighting the consumer's "right to know."
"Forty years ago, DDT was thought to be a safe and promising aid to agriculture," said
Haug, of Winslow Management. "And not so long ago, nuclear power was touted as the cleanest energy
source on earth. With the past and future to consider, proceeding with caution is just common
sense."
Genetically modified organisms represent an important new sector of environmental
shareholder resolutions this year, indicating a growing concern of shareholders in the long-term
environmental impacts of the companies they share ownership of. In the coming months it will be
instructive to see how corporations respond to their shareholders' suggestions on this issue.
ICCR: 212-870-2293
Walden Asset Management: 617-726-7250
Winslow Management Company:
www.winslowgreen.com
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SRI World Group, Inc. All Rights Reserved.
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