Accountability in the Pesticide Industry

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Accountability in the Pesticide Industry THE POCANTICO CONFERENCE CENTER OF THE ROCKEFELLER BROTHERS FUND ACCOUNTABILITY IN THE PESTICIDE INDUSTRY A REPORT BASED ON A FORUM AT THE POCANTICO CONFERENCE CENTER OF THE ROCKEFELLER BROTHERS FUND JUNE 25–28, 2002 THIS REPORT WAS PREPARED BY PETER RIGGS AND MEGAN WAPLES OF THE ROCKEFELLER BROTHERS FUND POCANTICO PAPER No 5 ROCKEFELLER BROTHERS FUND Madison Avenue New York, New York - Telephone: .. Facsimile: .. E-mail: [email protected] World Wide Web: www.rbf.org THE POCANTICO CONFERENCE CENTER OF THE ROCKEFELLER BROTHERS FUND Lake Road Pocantico Hills, New York Telephone: .. Facsimile : .. E-mail: [email protected] © Rockefeller Brothers Fund, Inc. All rights reserved. CONTENTS FOREWORD 5 INTRODUCTION 7 RISKS 9 Accelerating Legal Liabilities: Trends in Product Liability Suits 9 Market Trends Toward Organics and IPM 9 Regulatory Trends Away From Pesticide Use 11 Quality of Management 13 Reputation Management 18 Risks from Long-Term Uncertainties 18 REACHING THE MARKETS 21 STRATEGIES AND OPPORTUNITIES 25 Research and Analysis 25 Advancing Social Reporting 25 Supply Chain Management— Investor and Consumer Activism 28 Increasing Funding to Alternatives 28 Advancing Legal Precedent 29 De-Certification Campaigns 29 Shareholder Activism on Obsolete Stocks 30 Worker-Oriented Strategies 30 CONCLUSION 31 FIGURES Legal Liabilities 8 New European Union Directives Could Expand Liabilities for Chemical Companies 12 PIC and POPs 14 Conditions of Pesticide Use in Developing Countries 16 Unwelcome Surprises 20 2001 Top Seven Agrochemical Companies 24 POCANTICO PAPER NO 5 3 PARTICIPANTS Greenpeace Germany Pesticide Action Network UK Harrington Investments, Inc. Domini Social Investments Strategic Counsel Domini Social Investments Pesticide Action Network North America Rose Foundation for Communities and the Environment Rockefeller Brothers Fund EarthJustice Legal Defense Fund Foundation for Advancements in Science and Education (Observer) Rockefeller Brothers Fund FOREWORD This paper takes a sector-specific view of a widespread bargain for improved occupational health and safety problem currently dominating the news headlines. The standards. The prevailing attitude we heard from gov- problem is corporate accountability. The lens used for ernment officials, public health workers, and NGOs analysis is the agrochemical sector. can be summed up as follows: “Despite the existence of Investor concerns about the inadequacy of cor- viable agricultural alternatives, and despite a broad porate disclosure rules in the United States have fueled understanding of the problems and risks associated across-the-board declines in stock prices. At the time of with these products, deceptive marketing and outright this writing, President Bush’s moves to tighten report- dumping of these chemicals in the farm sector contin- ing requirements and punish corporate wrongdoers ues. There seems to be no way to hold these companies haven’t calmed the markets. On the contrary, in recent accountable for their actions.” weeks we have seen one of the sharpest falloffs in major At the RBF, we watched a great deal of donor stock indices in more than 15 years. Whether this dan- and activist attention migrate to the related issue of gerous downward spiral will end soon is anyone’s guess; biotechnology, and we became concerned that the neg- but even were it to end tomorrow, it is clear that this ative effects of pesticide use was considered “yesterday’s year’s massive loss of confidence in the financial mar- news”: the general perception apparently being that the kets will permanently alter our perceptions of what “the pesticide problem” had already been solved. In fact constitutes adequate corporate responsibility. many corporations with agrochemical interests are now When staff at the Rockefeller Brothers Fund getting involved with the manufacture and marketing (RBF) began late last year planning a meeting on of transgenic crops; and indeed some transgenics are accountability in the pesticide industry, we had no idea designed to promote expanded herbicide use, so issues that accounting procedures and financial risk disclosure of agrochemical use and the deployment of new trans- requirements would become such prominent issues. genic crops are in fact inextricably linked. But in stark The RBF has been involved in agriculture issues for contrast to pesticide use, a great deal of basic work many years. And while we felt our work had con- remains to be done regarding actual and potential tributed to a positive agenda for tropical agriculture, health and environmental impacts of transgenic particularly in Asia, we were often left with the nagging crops — and, as usual, regulatory controls are lagging feeling that we were having little impact on a major far behind the science. obstacle to the development of sustainable alterna- At this point in history, the science regarding the tives—that is, the power of agrochemical interests. ecological and public health consequences of pesticide Everywhere we worked, we heard similar stories. misuse is unequivocal. We know these products cause Pesticide use was expanding despite awareness of the serious and lasting harm. While additional controls are dangers; the influence of agrochemical companies on needed, a number of important regulatory and judicial national development plans continued unabated; pesti- handles already exist that should enable us to curb the cides banned in industrial countries were being aggres- worst pesticide abuses, at least in theory. However, the sively marketed in the Global South; and that the full range of what those handles are, and how they whole industry-promoted notion of “safe use” of pesti- might be used to accomplish this, have not yet been cides in the tropics was a cruel joke perpetrated on fully described or attempted to date. Similarly, farmers and agricultural laborers who lack the power to although many of the problems associated with pesti- POCANTICO PAPER NO 5 5 cides are generally understood by the public, we believe whom we might wish to reach regarding this informa- that specific information about the long-term down- tion on financial risk; and suggests strategies and oppor- side risks of investments in pesticides are not being ade- tunities for engaging those parties. Reflecting the varied quately communicated to market analysts. We further expertise of participants, and their different institution- believe that efforts to help to provide this information al affiliations, the paper tries to address rather different in ways useful to financial service professionals repre- audiences: financial service professionals, “corporate sent a profoundly constructive contribution both to campaigners,” and those who work in agriculture and ensuring greater corporate accountability, as well as public health on pesticide impacts. We hope that the safeguarding public and environmental health. creative deployment of the strategies discussed here will It was with these tasks in mind that in June of be useful in several ways: by creating an impact on cor- 2002 the RBF brought a small group of concerned sci- porate responsibility and financial market perceptions of entists, lawyers, socially responsible investment profes- investment risks in the pesticide industry; and as a gen- sionals, and sustainable agriculture advocates to our eral blueprint for using financial disclosure and Pocantico Conference Center. It turned out that we improved transparency to increase corporate accounta- were convening the meeting at a time when corporate bility in any economic sector. accountability was front-page news. With this breadth of intended audience in The report that follows distills the brainstorming mind, we hope that the paper provokes comment and and suggestions of those who participated in the debate and perhaps a modicum of well-informed out- Pocantico meeting on “Accountability in the Pesticide rage. We hope it is spread around and that its ideas are Industry.” On behalf of the Rockefeller Brothers Fund, applied to other sectors. Responsibility for any mistakes we would like to sincerely thank the participants, as well found in the text rest with the primary authors. A full as several outside reviewers whose schedules prevented listing of citations and endnotes for this paper can be them from attending in person. To an unusual degree, found on the Rockefeller Brothers Fund website this Pocantico paper should be seen as a collective effort. (www.rbf.org). Since we are all learning how to do this Because of the range of expertise arrayed around the sort of interdisciplinary work better, we would greatly Pocantico table, everyone’s contribution was vital—and appreciate your candid feedback. all of us faced very steep learning curves. We came away with a much better appreciation of the range of strate- gies, and of the expertise needed to make our arguments in a compelling way. As such, the paper lays out the risks 20 July 2002 of investments in pesticides; mentions those parties 6 ACCOUNTABILITY IN THE PESTICIDE INDUSTRY INTRODUCTION This paper assumes basic familiarity on the reader’s part expand their markets, prolong the patent-protected life with the debate on the ecological and public health and overall use of their products, and shape IPM pro- impacts of pesticide use. It asserts that the current vol- grams to ensure a future role for their chemicals. In ume of pesticides used globally is unnecessary to main- addition, there is legitimate disagreement over the tain global food
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