|Investors Challenge Monsanto Over Risks Of GM Products (20/1/2005)|
An impressively argued, and carefully referenced, indictment of Monsanto filed by a series of religious communities who are mostly part of a coalition of 300 religious institutional investors and socially responsible investment firms with more than $150 billion in combined assets.
More detailed information, the text of the shareholder resolution, and related financial and scientific reports the on this issue, at www.proxyinformation.com
Shareholder Resolution Calls for Reporting Impacts of Biotech Products
St. Louis - Jan 20, 2005 - A shareholder resolution to be voted on Thursday, January 20, asks Monsanto (MON NYSE) to report on impacts related to its genetically engineered products.
"Major market rejection and sudden business strategy reversals raise doubt that Monsanto is properly evaluating the risks of its genetically engineered products," said Michael Passoff, of the As You Sow Foundation. "In the last 14 months Monsanto has had to abandon plans to commercialize its most important future product, its most important future area of research, and the country with its highest level of market penetration."
Some of the major business strategy reversals that took investors by surprise include: Monsantos decision to not commercialize genetically engineered wheat despite spending $60 million on it in 2004 alone; the cancellation of its plans to develop pharmaceutical crops; forsaking its operations in Argentina despite 90 percent market penetration of genetically engineered soya; and suspending its investment in genetically engineered canola in Australia.
Shareholders see untested and underreported environmental impacts as perhaps the biggest risk. "Contamination of conventional crops by genetically engineered crops is happening," said Sister Susan Jordan, coordinator of the Midwest Coalition for Responsible Investment. "Even Monsanto's annual report recognizes the removal of genetically engineered seed and products may be necessary, yet the company offers no contingency plan to address it."
"There are a significant number of scientific studies that challenge Monsanto's claims of safety and benefits," added Jordan. "Food is not merely another market commodity; it is essential to life and sacred culturally to all peoples. We believe that agricultural genetic engineering has not demonstrated that it safeguards the common good, human dignity, and the natural and social systems that sustain life for our time and for the future. Monsanto needs to be responsible, accountable, and socially just."
Recent reports by the National Academy of Science, Environmental Protection Agency, Union of Concerned Scientists, and the Center for Food Safety, among others, raise warnings about extensive crop contamination, increased pest resistance, increased herbicide use, impacts on non-target populations. Furthermore, the reports identify serious gaps in testing methodologies, the regulatory approval process, and a lack of oversight once products are commercialized.
"The biggest misperception about genetically engineered crops is that the FDA has tested these plants and declared them safe," added Passoff. "What the FDA has done is approved genetically engineered crop commercialization based on Monsanto's assurance that the products are safe. The FDA does no testing of its own nor does it monitor these products after they are commercialized. Monsanto and its shareholders are responsible for all legal and financial liabilities."
"As the world's leading producer of genetically engineered seeds, Monsanto faces unique business risks," said Marc Brammer, Senior Analyst of Innovest Strategic Value Advisors. "These risks require a detailed assessment by management and reporting to shareholders." Innovest has just released the most in-depth look at Monsanto's financial risk from genetically engineered products. The report warns shareholders about hidden risks to Monsanto's profitability and points out that Monsanto's stock price is likely overvalued compared to its actual earnings.
"A sound balance sheet, bullish marketing of Ag biotech potential, and the perception that many big litigation risks were behind it, has pushed Monsanto's share price to all-time highs," added Brammer, "but Wall Street's bullishness is not reflected in actual earnings as seen in the high PE ratio of over 70. Significant risks to financial performance remain un-examined in Monsanto's business plan and are not properly reflected in current stock market valuations."
Among the key findings of the report are:
*the potential costs of contamination of conventional seed with biotechnology traits is not delineated properly for investors by management;
*the lack of regulatory oversight is not acknowledged as a business risk since liability remains with Monsanto once genetically engineered crops are commercialized;
*ambitious profit targets do not reflect political and economic realities facing genetically engineered crops with respect to consumer acceptance and commercialization;
*reliance on litigation to "capture value" and fend off competitors is not fully acknowledged in the business plan, or accounted for in SEC filings; and
*regular appearance of "Extraordinary Charges" on the balance sheet as a result of environmental litigation costs and restructuring charges imply that such costs will likely continue to be burdensome.
The shareholder proposal was filed by School Sisters of Notre Dame of St. Louis; Sisters of Mercy Regional Community of St. Louis; St. Mary's Institute (Sisters of the Most Precious Blood), O'Fallon, MO; Sisters of St. Joseph of Carondelet; Sisters of Loretto; Mercy Investment Program; Sisters of Mercy, Regional Community of Detroit Charitable Trust; Sisters of the Blessed Sacrament; Sinsinawa Dominicans; Daughters of Charity of Saint Vincent dePaul, St. Louis; Adrian Dominican Sisters; Sisters of Charity of Cincinnati; and As You Sow Foundation. Most of the co-filers are part of a coalition of 300 religious institutional investors and socially responsible investment firms with more than $150 billion in combined assets.
For more detailed information, the text of the shareholder resolution, and related financial and scientific reports the on this issue, please visit www.proxyinformation.com