In the past two years, more than two dozen shareholder resolutions have taken publicly held corporations to task for their use of potentially toxic chemicals, according to the Investor Environmental Health Network, a nonprofit for money managers and shareholder groups that use investments to pressure corporations on chemical issues. The money managers in the umbrella group oversee $34 billion in assets.
"It has the potential to dramatically change the industry . . by placing corporations essentially in the same position that energy companies found themselves in with the climate risk issue," said Bart Mongoven, vice president for the public policy intelligence group at Stratfor, a national consulting firm. "The use of shareholder resolutions is, I think, the most effective way of making this an issue for the executives of the corporation."There's been a rash of media attention on the chemical issue, much of which has focused on compounds, such as bisphenol A and phthalates, that mimic hormones. In October, California, following the lead of the European Union, passed legislation banning products designed for young children that contain certain phthalates.
A recent Journal Sentinel investigation chronicled the slow movement by the U.S. government to test suspected endocrine disruptors - despite a law Congress passed in 1996 ordering the Environmental Protection Agency to begin testing.
The newspaper also found that government assurances about the safety of bisphenol A are based on outdated and incomplete science often funded by the chemical industry.
"It's an area where the laws are not being developed or they are not being enforced," Liroff said. "So, in essence, what you have here is market forces coming in to fill the void."
Though the chemical resolutions have received little media attention, activist shareholders are convinced that will soon change.
"Have you seen the number of recalls lately?" said Lauren Compere, director of shareholder advocacy at Boston Common Asset Management. "We're saying, 'Deal with this proactively, it's a form of risk management . . . We're talking about risk to your reputation.' "
"It's not a matter of being altruistic," Letsky said. "It's a matter of being smart in the long term."
Key Findings
- U.S. regulators promised a decade ago to screen more than 15,000 chemicals for their effects on the endocrine system. As yet, not a single screen has been done.
- As the U.S. testing process remains grounded, hundreds of products have been banned in countries around the world.
- It's impossible for consumers to know which products are made with these dangerous compounds.
- The federal government's assurances that bisphenol A is a safe chemical are based on outdated and incomplete government studies and science mostly funded by the chemical industry.