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Agrochemical Shareholders Call for Corporate Accountability
June 13, 2003

During the 2003 “Annual Meeting Season,” shareholders strongly signaled the three largest agrochemical companies to acknowledge the environmental and health risks of their products. Led by socially responsible investment firms, shareholders at Dow and Monsanto requested detailed information about the handling of dangerous pesticides and byproducts and the possibility of costly lawsuits. Although not legally required, this information helps investors to assess their risk and promotes a corporate commitment to environmental health and safety. Bayer shareholders, meanwhile, highlighted the board’s insufficient response to a tragic poisoning in Peru.

Investors at Monsanto’s annual meeting in April 2003 expressed concern about the company’s handling of unregistered, carcinogenic and obsolete pesticide stocks. A resolution submitted by Harrington Investments, Inc. called on Monsanto to disclose its policies and procedures for exporting probable or likely carcinogens and pesticides not registered in the U.S. to developing countries. Since training and safety equipment are often limited or unavailable in these countries, Harrington Investments also requested disclosure of training and educational information Monsanto provides to farmers and farmworkers using these dangerous pesticides.

The resolution garnered support from 13.32% of the voting shareholders. John Harrington, said of the vote, “For a first year resolution this vote was loud and clear to Monsanto: Don’t continue dumping dangerous chemicals overseas. This only adds another level of financial and legal risk to an already very risky stock.”

Harrington went on to explain, “Monsanto is exporting numerous dangerous chemicals to developing countries, exposing workers and other citizens to carcinogenic chemicals. The company is clearly at risk from product liability claims if workers or others are poisoned, suffer ill health, or death from such U.S. banned pesticides.” Investors fear that such liability claims would strongly impact the company’s valuation.

Meanwhile, at Dow’s annual meeting on May 8, 2003, a proxy filed by the socially responsible investment firm Trillium Asset Management expressed concerns for liability from the emission and disposal of dioxins and other persistent toxic pollutants. Trillium listed concerns about lawsuits already filed by residents living near Dow facilities in Michigan and Louisiana and demanded full disclosure of Dow’s known and potential liabilities.

Dow’s board challenged the resolution at the U.S. Securities and Exchange Commission (SEC) and urged shareholders to vote against the proposal. Dow board members explained that Dow’s web site contains sufficient information on dioxin to enable investors to assess the associated risks.

Shelley Alpern, at Trillium, disagreed, saying, “Dow has not informed investors on the extent of contamination at existing Dow facilities nor quantified the associated long-term liabilities as requested in the resolution. Dow shareholders don’t need another unknown and open-ended risk.”

Dow is one of the world’s leading emitters of dioxins, which form as the byproduct of numerous industrial processes, including pesticide production, and is one of twelve chemicals targeted for a worldwide ban under the 2001 Stockholm Convention on Persistent Organic Pollutants (POPs). Dioxins are environmentally persistent and accumulate in the tissues of humans and other animals, where they are thought to cause cancer, reproductive illnesses and developmental disorders. According to the U.S. Environmental Protection Agency there is currently no known safe level of dioxin exposure.

Trillium’s request comes just months after Dow released information on long-term asbestos liabilities from its purchase of Union Carbide. Dow acknowledged a potential US$2.2 billion in liabilities, and charged US$832 million against fourth quarter 2002 revenues. Dow continues, however, to reject liability claims for widespread contamination caused by the 1984 explosion of a Union Carbide pesticide plant in Bhopal, India. Bhopal survivors are pursuing claims against Dow in courts in India and the U.S.

The Germany-based Bayer was the third company to come under fire as Luis Gomero of Pesticide Action Network Peru appeared before the Board in late May to demand justice for the victims of the 1999 Folidol (methyl parathion) poisoning in Tauccamarca, Peru.
Folidol, a pesticide produced by Bayer, killed 24 school children and badly poisoned 18 others after it was mistaken for milk powder at a local school. Bayer had marketed the pesticide, a white powder with no strong odor, in small plastic bags labeled in Spanish and without any appropriate pictograms to indicate its use or danger. The Spanish text was of little help to the local farmers, most of whom speak Quechua and are illiterate. Citing these failures, a Peruvian Congressional Subcommittee found Bayer criminally responsible for the poisonings in 2002.

In order to ensure justice for the Tauccamarca victims, Gomero would like the Dow Board to accept responsibility for the poisoning; provide medical monitoring, care and special education for the surviving children as necessary; establish a functioning health post in the village; and recognize the families’ suffering, in part through financial compensation.

In his response to Gomero’s testimony, Bayer Chairman Werner Wenning asserted that the pesticide that poisoned the Tauccamarca children was not a Bayer product and that Peruvian courts had dismissed any claims against Bayer. However, representatives of the Tauccamarca families point out that Bayer registered both pesticides implicated in the case (methyl parathion and ethyl parathion) for use in Peru, and the Peruvian court has not yet received all relevant documents, and has not ruled in the case.

Gomero’s appearance was coordinated by the German group Coordination gegen BAYER-Gefahren (CBG) using Bayer shares held by Pesticide Action Network Germany. CBG has been working since 1978 to increase Bayer’s transparency, publicize its global abuses and violations, and ensure appropriate response and compensation.

The impact of these recent shareholder actions remains uncertain, but John Harrington reminds investors that “companies with greater corporate responsibility and transparency prosper long-term.”

Sources: Harrington Investments Press Release April 25, 2003; Trillium Investments Press Release May 6, 2003; Trillium’s Agenda 5 Proxy, http://www.proxyinformation.com/dow/summary.htm; Dow Response to 2003 Proxy Statement, http://www.dow.com/financial/2003prox/agenda5.htm%00; Coalition Against BAYER-Dangers Press Release, http://www.cbgnetwork.org/ubersicht/presseinfos/presseinfos_2003/hauptversammlung_2003/hauptversammlung_2003.html; Global Pesticide Campaigner, August 2002.

Contact: PANNA.

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