Increasing Investor Concern

Increasingly since 2001, investor groups working together with environmental and public health advocacy groups have been demanding greater accountability in corporations' management of toxic chemicals and products containing toxic chemicals. Shareholder resolutions have been directed at chemical producers (e.g., Dow, for its production and discharge of dioxin and other persistent pollutants), at chemical choosers (e.g., Avon, for its use of hormone-disrupting chemicals in its cosmetic products), and retailers (e.g., SuperValu and JCPenney, for selling mercury thermometers). Some shareholder resolutions appear to have encouraged changes in corporate policies, while others have not. In 1999, in exchange for the withdrawal of a resolution proposed by two religious groups and a union, Baxter International signed a memorandum of understanding, agreeing to a timetable for replacing the polyvinyl chloride in containers of intravenous solutions and to work on replacing PVC in all its medical products. Baxter also agreed to ask that various chemical industry groups refrain from using Baxter products in their public advertising campaigns.77 Amidst a wave of corporate management scandals, some investors believe that how companies manage their chemical challenges may reflect the overall quality of their management and this, in turn, may be reflected in investors' return on investment. Poor quality management may also lead to increased litigation risks and attendant financial liabilities. In a 2002 report for The Rose Foundation, "The Environmental Fiduciary: The Case for Incorporating Environmental Factors into Investment Management Policies," Susannah Blake Goodman and her colleagues show how a corporation's ability to profit from environmental innovations and prepare for future environmental risks and exposures can have a significant impact on corporate earnings potential, cash flow, and growth opportunities.78

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