SOCIAL TOPICS (Archive): EMERGING ISSUES

Published, November 2000

       In the past year, genetically engineered (GE) foods and crops have become a hot issue for socially concerned investors, fueling the biggest growth in shareholder resolutions filed at companies since the South Africa divestment campaign. Twenty U.S. companies were the targets of GE-related resolutions from more than 30 institutional investors. The resolutions called for the companies to stop producing genetically engineered seeds or to remove genetically engineered ingredients from their products, until they are found safe for humans, animals, and the environment. By contrast, no resolutions were filed with companies on this topic in 1999.

       Of the 20 resolutions, all companies except Monsanto challenged them before the Securities Exchange Commission (SEC) in an attempt to prevent their shareholders from voting on them. In a major victory, the SEC ruled in favor of proponents of the resolutions. The SEC agreed with shareholders on key points.

       1) the use of genetically engineered foods and crops is a major policy issue, not just “ordinary business” for management to deal with;

       2) companies could reasonably implement the resolutions;

       3) the shareholders’ statements in the resolutions were truthful.

       The shareholder initiatives were led by the Interfaith Center on Corporate Responsibility (ICCR) with support from Walden and others in the SRI community. Walden helped draft the text of the resolutions used by investors, participated in strategic planning, and helped defend the resolutions with the SEC. Shareholders, in their dialogues with companies, were supported by technical experts from the Friends of the Earth, Council on Responsible Genetics, Rural Advancement Foundation International, Consumers Union, and National Wildlife Federation.

       Walden led shareholder initiatives with six companies this past year: Kroger, ConAgra, Tricon Global Restaurants (KFC, Taco Bell, Pizza Hut), Campbell Soup, Novartis, and Schering AG. Walden’s shareholder resolution with Kroger, the largest supermarket chain in the United States, won just over 3 percent of the vote by its shareholders, just enough to bring the issue before the company in the coming year. Walden withdrew its resolutions with Tricon and ConAgra to pursue dialogue with the companies on the issue, and filed a resolution with Campbell for 2001. Campbell is also the target of a national campaign led by Genetic Engineering Food Alert, a coalition of seven national environmental and consumer groups.

       In the coming year, shareholders led by ICCR will target more than 30 companies on genetically engineered foods and seeds, almost a 50 percent increase from the 2000 proxy season. To garner more votes from institutional investors, some resolutions will call for reports from companies on how they can phase out genetically engineered ingredients, and others will call for companies to label these products. Walden hopes that large institutional shareholders will vote in favor of the resolutions and so allow further opportunity for dialogue with companies on this important issue.