||Green Century Capital Management
Substituting Safer Alternatives in Personal Care Products
Recently, investors have seen an increase in scientific and public concerns surrounding the use of hazardous chemicals in health and beauty products. Some companies are responding to these concerns by moving more quickly than regulators to remove chemicals of concern from products. As a result, proponents contend Avon Corporation faces business and reputational risks and believe inaction could put the company at a competitive disadvantage.
In August 2012, Johnson & Johnson announced it will phase out selected chemicals from its adult and baby products globally because of concerns raised about their links to adverse human health effects. While noting that chemicals in its products satisfy regulatory requirements, Johnson & Johnson took this action following a challenge from the Campaign for Safe Cosmetics, a nongovernmental organization. The Campaign for Safe Cosmetics has publicly challenged Avon to meet or beat Johnson & Johnson's commitments.
Proponents believe that Avon's insufficient action on this issue has resulted in consumer concern, unwanted attention, and reputational risks; the Company would benefit from taking proactive steps to identify and phase out potentially harmful chemicals in products when safer substitutes are available. Such precautionary actions would help mitigate those risks and safeguard against potential losses.
A 2011 Deloitte survey found that 57% of people responding said that safety was their number one concern when buying personal care products.
Proponents believe that Avon displays an antagonistic rather than precautionary approach to the safety concerns of consumers and the scientific community when it states on its website, "Avon is aware of claims that certain cosmetic ingredients are harmful ...and some of the claims carry alarmist tones. [R]umors ... spread quickly and can concern people unnecessarily".
Therefore be it resolved: Shareholders request the Board of Directors to prepare a report articulating Avon's policy, above and beyond regulatory requirements, on using safer substitutes as they become available for chemicals that are known or suspected to cause cancer or mutations, harm the reproductive system, affect the endocrine system, accumulate in the body, or persist in the environment. The report, prepared at reasonable cost and omitting proprietary information, should be made available to shareholders by September 2013.
Supporting Statement. Proponents recommend that Avon's report:
- describe a proactive approach to substituting safer alternatives - even when science remains uncertain - to respond to the emerging safety concerns;
- benchmark the company's policies against emerging best practices of others in the cosmetics and personal care sector;
- consider adopting a policy that meets or exceeds competitors' targets in this area; and
- evaluate the reputational risks of inaction.