Shareholder activism is a primary reason why several large companies are eliminating harmful toxins from their plastic products. In a recent investigative series launched by the Milwaukee Journal Sentinel, reporters found that lax governmental regulation of Bisphenol-A and PVC plastic has led to their proliferation in a wide range on consumer products – including baby bottles and toys. In the last two years, however, shareholders have launched and won a record number of resolutions to get corporations to remove these toxins from their products.
It appears that shareholder activism may be a more effective form of corporate regulation than federal law. The first Journal Sentinal report found that, “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.” A second report showed that the federal government’s assurances that such chemicals are safe are “based on outdated U.S. government studies and research heavily funded by the chemical industry.” Shareholder activism, in contrast, can be credited for the recent decisions of companies like Target, Bed, Bath, & Beyond, and Apple for reducing chemical toxins in their products.
So how can a company respond to shareholder demands to make safer products? What is the best way to mitigate the financial risks and increase opportunities to benefit from the reduction of toxic chemicals in plastics? I highly recommend this short video produced by the Investor Environmental Health Network. In it, you learn how big companies based in different regions of the globe have enhanced their social and environmental performance as a result of shareholder pressure.
I highly applaud the efforts of organizations like As You Sow, the Investor Environmental Health Network, and RiskMetrics for bringing institutional investor attention to the delinquent acts of corporations that continue to use such chemicals in their products. We assume that if a product is on the shelf, it must be safe. We assume that federal legislation to regulate the use of such chemicals is stringent. On both counts, our assumptions are wrong. Shareholder activism is the new face of public accountability for market wrong-doing and such influence can be expected to continue.