Toxic Neglect: Mutual Funds Opposing Shareholder Resolutions on Chemicals in Products Ignore Financial Risks to Sh... (ctor The Rose Foundation and a contribut...)

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Toxic Neglect: Mutual Funds Opposing Shareholder Resolutions on Chemicals in Products Ignore Financial Risks to Shareholders

Date:2/28/2008

ctor, The Rose Foundation and a contributor to the report said: "Even as more and more evidence mounts of the danger posed to the public's health and the wealth of shareholders by toxic chemicals in products, America's largest fund families are continuing to turn a blind eye to the problem. The only problem for shareholders here is that denial is no investment strategy. When it comes to mutual funds investing in companies with toxic products, denial is inevitably going to be a prescription for financial disaster."

Richard Liroff, executive director of IEHN, commented: "Mutual fund investors are really shareholder/consumers. Their investment gains may be offset by the costs they incur from chemicals in everyday products. So their return on investment may be lower or even negative, if one counts their health costs from exposures to chemicals in products made by their portfolio companies."

According to the report, toxic chemicals in products can have a sizeable business impact of the sort that hurts the bottom lines of mutual funds and their shareholders. Examples include recall costs, litigation expenses and a sharp stock price drop at Thomas the Tank Engine manufacturer RC2; reduced sales growth in beauty products at Procter & Gamble because of allegations in China of contaminated skin cream; litigation and civil penalty costs at DuPont over the PFOA used to manufacture Teflon coatings; and reputational damage at Wal-Mart and other retailers over recalled baby bibs and lunch boxes.

ENCOURAGING SIGNS AND RECOMMENDATIONS

Despite the predominately gloomy picture it paints, the report finds several reasons for hope.

-- First, are revisions to TIAA-CREF's proxy voting guidelines in 2007. The $430 billion fund family's new proxy voting guidelines section on "Product Responsibility" declares that TIAA-CREF will generally support reasonable shareholder resolutions seeking disclosure of the safety and impact of company products o
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