CORPORATE CRIME REPORTER
CVS,
Bed, Bath & Beyond Targets of Cosmetic Industry Activists
21 Corporate Crime Reporter 9, February 20, 2007
CVS and Bed Bath & Beyond are the targets of a new shareholder campaign
by cosmetic safety advocates.
Shareholders will present resolutions at CVS’ annual meeting in mid-May and Bed, Bath & Beyond’s annual meeting in late June calling for action on unsafe cosmetics.
The campaign comes in the wake of a series of reports targeting unsafe cosmetics.
The most recent report was released today by the Investor Environmental Health Network (IEHN), which represents twenty investment firms with $22 billion in assets under management.
The report “Beneath the Skin: Hidden Liabilities, Market Risk and Drivers of Change in the Cosmetics and Personal Care Products Industry,” warns that “things could get ugly for investors who ignore glaring health risks in the cosmetics industry.”
The report was written by Sanford Lewis, an Amherst, Massachusetts based public interest attorney who specializes in corporate accountability.
On February 8, 2007, Innovest Strategic Value Advisors, a financial research firm, released a report detailing how the risk of “toxic lockouts” could result in a loss of market share and loss of market access for four major industries, including cosmetics.
More than 500 cosmetics companies – including The Body Shop and Burt’s Bees – have signed the Compact for Safe Cosmetics, a pledge to eliminate toxic ingredients from their products nationwide.
The IEHN report describes “a ticking time bomb scenario of a largely self-policed industry in which regulatory action by the U.S. Food and Drug Administration (FDA) typically is triggered only by reporting from the companies themselves.”
"The result is a system that permits significant consumer exposure to occur before sufficiently rigorous safety testing is conducted – ultimately, a game of roulette which places consumers, manufacturers and investors at risk," said Lewis.
According to the report, the U.S. cosmetics industry is dominated by ten large companies and accounts for the use of nearly one in seven of the 75,000 chemicals registered for use in the United States.
Common ingredients found in U.S. personal-care products include phthalates, which have been linked to malformed or underdeveloped reproductive organs in males, formaldehyde, classified as a carcinogen, and parabens, endocrine-active preservatives that have been found in breast tumors.
Many ingredients are exempt from labeling requirements because the product formulas are protected as proprietary, the report notes.
“Once
they surface, health hazards may pose a serious threat to brand loyalty with
significant implications for profitability and market share. It is difficult
to overstate the potential magnitude of this challenge," said Lauren Compere,
director of shareholder advocacy at Boston Common Asset Management, which has
introduced shareholder resolutions on safer cosmetics at CVS.
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