|DuPont must acknowledge GM risks - shareholders (28/3/2006)|
EXCERPT: "It is particularly important that the company conduct independent assessments of GMO products already in the market so that neither DuPont nor its shareholders are surprised if GMOs fail to live up to DuPont's preliminary safety and environmental claims. At a minimum, DuPont has an obligation under Sarbanes-Oxley to start acknowledging to its shareholders that there are valid concerns here about potential risks." - Christian Brothers Investment Services
Investors, others seek support for DuPont on GMOs
NEW YORK - Concerned that DuPont may be going down the same road that led to its current woes surrounding Teflon, Christian Brothers Investment Services, Inc. (CBIS) is urging DuPont investors to vote next month in favor of a shareholder resolution calling on the company to meet its Sarbanes-Oxley obligations to disclose any potentially material risk or "off-balance sheet liability" that could be posed by its manufacturing and distribution of food-related genetically modified organisms (GMOs).
CBIS is the primary filer of the shareholder resolution to be voted on at the DuPont annual meeting in late April 2006. A wide variety of government, industry and scientific experts have raised concerns about the lack of adequate testing and controls in place in relation to the GMOs unleashed by DuPont and other firms. Recent reports also have raised major health concerns -- including increased incidence of allergies -- that could result from the introduction of GMOs into agriculture and the food supply.
John K. S. Wilson, director of socially responsible investing at Christian Brothers Investment Services, Inc., said: "We are deeply concerned that DuPont unknowingly may be sowing the seeds of risk for its shareholders and the general public. A major issue here is the lack of information regarding the safety of these products. We wish to avoid a repeat of the Teflon controversy, which was brought about when DuPont inaccurately asserted the safety of perfluorooctanoic acid (PFOA) over many decades. It is particularly important that the company conduct independent assessments of GMO products already in the market so that neither DuPont nor its shareholders are surprised if GMOs fail to live up to DuPont's preliminary safety and environmental claims. At a minimum, DuPont has an obligation under Sarbanes- Oxley to start acknowledging to its shareholders that there are valid concerns here about potential risks."
In addition to citing recent health concerns and regulatory problems with GMOs, the CBIS resolution states: "Disclosure of material information is a fundamental principle of our capital markets. Investors, their confidence in corporate bookkeeping shaken, are starting to scrutinize other possible 'off- balance sheet' liabilities, such as risks associated with activities harmful to human health and the environment, that can impact long-term shareholder value. SEC reporting requirements include disclosure of environmental liabilities and of trends and uncertainties that the company reasonably expects will have a material impact on revenues. Public companies are now required to establish a system of controls and procedures designed to ensure that financial information required to be disclosed in SEC filings is recorded and reported in a timely manner."
The CBIS resolution urges that DuPont's "board of directors review and report to shareholders by the 2007 annual meeting on the company's internal controls related to potential adverse impacts associated with genetically modified organisms, including: reviewing the adequacy of current post- marketing monitoring systems; retaining an independent environmental expert to review the effectiveness of established risk management processes; and examining possible impact on seed product integrity."
Margaret Weber, coordinator of corporate responsibility, Adrian Dominican Sisters and co-chair of the Water & Food Working Group of the Interfaith Center for Corporate Responsibility (ICCR), said: "In contrast to some assertions that genetically engineered crops are simply the next generation of crop breeding, this process is actually a severe interruption of the ordinary natural process of breeding. There is no global agreement that these products are 'substantially equivalent.' Precaution would call, at a minimum, for post market monitoring for early detection of negative health effects. Yet that is not possible in the United States, the largest producer of these crops, because they are not labeled as genetically engineered. Consumers who are highly sensitive to allergens and public health officials have no method of monitoring health impacts."
Leslie Lowe, director of ICCR's Environmental Justice and Water & Food Working Groups, said: "The Sarbanes-Oxley Act, passed by Congress in 2002, requires the CEO and CFO of public companies to certify that the companies' financial statements 'fairly present' their financial condition and results of operations. In order to ensure that these certifications are meaningful, Sarbanes-Oxley also requires that companies have appropriate 'internal controls' over their financial reporting. Moreover, the Accounting Oversight Board has made clear that these controls should include 'monitoring and risk assessment' of areas where, given the nature of the company's operations, actual losses are reasonably possible."
Lowe added: "Proponents of this resolution believe it is reasonably possible that genetically engineered (GE) products could cause significant losses for the company. DuPont (and other biotech firms) should, therefore, establish post-market monitoring systems for their GE products. This would enable the company to act at the earliest moment should problems arise and it would reassure investors that the company actually knows whether its operations result in adverse impacts for which the company may be liable."
In outlining the potential risks surrounding DuPont GMOs, the CBIS resolution notes: "'Gone to Seed' [from the Union of Concerned Scientists] reports that genetically engineered DNA is contaminating U.S. traditional seed stocks of corn, soybeans and canola, and that if left unchecked could disrupt agricultural trade, unfairly burden the organic foods industry, and allow hazardous materials into the food supply ... Insurers in Germany, the UK and elsewhere are refusing liability coverage for genetically engineered (GE) crops, demonstrating heightened concern about the long-term safety of GE crops."