Shareholder Risk Of Genetically Engineered Crops
Despite Requirements, Most Companies Not Following Letter or Spirit of The Law
FOR IMMEDIATE RELEASE
AUGUST 19, 2004
CONTACT: U.S. PIRG
Liz Hitchcock or Richard Caplan 202-546-9707
WASHINGTON - August 19 - Ninety-five percent of the top food companies in the United States fail to properly inform shareholders about the risks posed by genetically engineered (GE) ingredients, according to Duty to Disclose: The Failure of Food Companies to Disclose Risks of Genetically Engineered Crops to Shareholders, a new report released today by the U.S. Public Interest Research Group (U.S. PIRG).
While one mistake involving genetically engineered crops is estimated to have already cost the food industry over one billion dollars, and more shareholder resolutions have been filed regarding GE issues than any issue since apartheid-era South Africa, only two of the top 35 publicly traded food companies mention GE ingredients in their Annual Reports as required, according to Duty to Disclose.
"Shareholders need to know about the products their company makes," said U.S. PIRG Safe Food Advocate Richard Caplan. "By not disclosing the many risks posed by genetically engineered crops, food companies are failing to meet their legal duty to be fully honest with shareholders."
"Duty to Disclose" describes the risks posed to food companies from genetically engineered ingredients, including product liability lawsuits, loss of insurance coverage, damage to reputation, consumer rejection, international renunciation, cross contamination, and economic loss due to sudden regulatory changes. While federal regulations require that investors receive full disclosure of any material facts about the companies in which they own shares, only Kraft Foods Inc. (KFT-NYSE) and Interstate Bakeries (IBC-NYSE), makers of Hostess Cupcakes and Wonderbread, disclosed to shareholders that genetically engineered ingredients might pose a material risk to shareholders.
"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, a mutual fund company. "The risks of genetically engineered foods should be disclosed so that investors can make informed decisions," he concluded.
Industry estimates maintain that 60 to 70 percent of all processed foods on American grocery store shelves contain GE ingredients. Human safety testing by the Food and Drug Administration is not mandatory, nor are companies required to label GE products. A recent poll by the Food Policy Institute found that 78 percent of respondents thought it "very important" that the food they purchase does not contain GE ingredients, and 94 percent believe that GE foods should be labeled as such.
Duty to Disclose makes several recommendations, including a call for food companies to remove the financial risks associated with genetically engineered ingredients by removing genetically engineered ingredients from their products.
"The risks from genetically engineered food aren't only to the environment or human health, but are financial as well," concluded Caplan. "Food companies should stop hiding the truth from shareholders, and let them know the risks they face from genetically engineered crops."