Financial Risks of Genetic Engineering Undisclosed by Food Companies

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GMW: Financial Risks of Genetic Engineering Undisclosed by

Food Companies, Report Says

 

" GM WATCH " <info

 

Wed, 29 Sep 2004 09:44:05 +0100

 

 

 

Financial Risks of Genetic Engineering Undisclosed by Food Companies,

Report Says

 

http://www.gmwatch.org

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EXCERPTS: The report then establishes that Sarbanes-Oxley and US

Securities and Exchange Commission regulations require companies to

disclose financially material risks.

 

Those who doubt whether GE-related risks would qualify as financially

material would have trouble maintaining their skepticism after reading

the litany of examples listed in the report.

 

The clearest example is the StarLink debacle, when GE corn not

approved for human consumption was discovered in foods marketed to

humans. The resulting recall of more than 300 products caused

billions of dollars of losses for food companies.

 

" Green Century [owned by a group of state US Public Interest Research

Groups] has asked Kraft to play a more active role in seeking to

reduce the risks posed to the company -- and the country -- by

genetically engineered crops, by moving towards eliminating

genetically engineered ingredients from its products, " Mr. Leone told

SocialFunds.com. " Kraft has acknowledged that GE foods do pose risks

to the public and to the company, and it has taken some positive steps

such as disclosing these risks to shareholders in its annual SEC filings. "

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Material Risks of Genetic Engineering Undisclosed by Food Companies,

Report Says

 

by William Baue

SRI News from SocialFunds.com

 

28 September 2004

http://www.csrwire.com/sfarticle.cgi?id=1527

 

A survey of the 35 largest food processors finds only two mentioning

genetic engineering risks in their annual reports, and none analyzing

these risks.

 

Disclose: The Failure of Food Companies to Disclose Risks of

Genetically Engineered Crops to Shareholders allots a mere

two-and-a-half of its 38 pages to actual food company disclosure on

genetic engineering (GE). This dearth of discussion is not for lack

of research, but for lack of information: only two of the 35 companies

surveyed (those topping a list of the largest 100 food processors)

mention genetic engineering or related terms in their annual reports.

 

The rest of Duty to Disclose outlines the risks associated with

genetically modified organisms (GMOs) in detail sufficiently enough to

make an objective investor wonder why companies are not addressing

these risks more comprehensively.

 

The author of Duty to Disclose, Saida Benguerel of the US Public

Interest Research Group (http://www.uspirg.org/ US PIRG) Education

Fund, noted that of the company annual reports surveyed, only Kraft

and Interstate Bakeries mention GE-related risks.

 

However, even these companies fail to elaborate on or analyze these

risks.

 

Kraft, Nestle, ConAgra, Farmland Industries, and

Hormel mention agricultural biotechnology on their websites, but the

scant discussion inadequately addresses GE-related risks, according to

the report.

 

" Just as crops require sunlight to grow, investors need the 'sunlight'

provided by full disclosure of material risks in order to grow their

portfolios, " said Michael Leone of Green Century Capital Management.

 

Green Century is owned by a group of state PIRGs and it donates

proceeds from the two socially responsible investment (SRI) funds it

manages back to these PIRGs. " The risks of genetically engineered

foods should be disclosed so that investors can make informed decisions. "

 

The report first establishes the prevalence of GMOs, noting that 60 to

70 percent of processed food on supermarket shelves contain GE

ingredients. The report then discusses the " imprecise " science of GE,

citing multiple instances illustrating the basic unpredictability of

genetic modification, as well as the health and environmental risks of GE.

 

The report then establishes that Sarbanes-Oxley and US Securities and

Exchange Commission regulations require companies to disclose

financially material risks. Those who doubt whether GE-related risks

would qualify as financially material would have trouble maintaining

their skepticism after reading the litany of examples listed in the

report.

 

The clearest example is the StarLink debacle, when GE corn not

approved for human consumption was discovered in foods marketed to

humans. The resulting recall of more than 300 products caused

billions of dollars of losses for food companies, according to a 2000

report entitled Jurassic Foods? The Food Industry in a Post-StarLink

World, written by Promar International, a food industry consulting

firm.

 

Potentially material risks include: consumer boycotts, international

renunciation, loss of insurance coverage, cross contamination

lawsuits, compliance with sudden regulatory changes, and shareowner

resolutions and divestment. The report cites commentary by SEC

Commissioner Harvey Goldschmid at a July 2003 Senate Symposium on

environmental disclosure.

 

" [C]urrent shareholder proposals on genetic engineering " are material,

Commissioner Goldschmid stated.

 

Companies studied in this report where such resolutions were filed

include Archer-Daniels-Midland, ConAgra, and Kellogg.

 

Green Century is considering filing a resolution at Kraft, depending

on the outcome of ongoing dialogue

with the company over genetic engineering. Green Century last met

with Kraft in July of this year.

 

" Green Century has asked Kraft to play a more active role in seeking

to reduce the risks posed to the company--and the country--by

genetically engineered crops, by moving towards eliminating

genetically engineered ingredients from its products, " Mr. Leone told

SocialFunds.com.

 

" Kraft has acknowledged that GE foods do pose risks to the public and

to the company, and it has taken some positive steps such as

disclosing these risks to shareholders in its annual SEC filings. "