For Release: August 19, 2004
For More Information: Liz Hitchcock or Richard Caplan
FOOD COMPANIES FAIL TO DISCLOSE SHAREHOLDER RISK OF GENETICALLY ENGINEERED
Despite Requirements, Most Companies Not Following Letter or Spirit Of
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 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
"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."
U.S. PIRG is the national advocacy office for the state Public Interest
Research Groups. State PIRGs are non-profit, non-partisan public interest
Green Century Capital Management, Inc. is the investment adviser to the
Green Century Balanced Fund and the administrator of the Green Century
Funds. The Green Century Funds are the first family of no-load,
environmentally responsible mutual funds and were founded by a partnership
of non-profit environmental advocacy organizations.