||Green Century Capital Management
Substituting Safer Alternatives in Personal Care Products
Investors have seen an increase in scientific and public concerns about the use of hazardous chemicals in health and beauty products. Some companies are responding by moving more quickly than regulators and peers to remove chemicals of concern from products.
A 2011 Deloitte survey found that 57 percent of consumer respondents stated safety was their number one concern when buying personal care products.
Other providers of cosmetics products are moving to address consumer chemical safety concerns and demand for safer alternatives by reducing or eliminating key chemicals of concern. In September 2013, WalMart announced it would require suppliers to phase out an initial list of 10 priority chemicals. Target subsequently announced a policy to begin using chemical safety standards as a basis for ranking suppliers, listing 1,000 ingredients of concern. In September 2013, Procter & Gamble announced plans to remove triclosan from its products.
In August 2012, Johnson & Johnson announced it will reduce or phase out selected chemicals- including triclosan, formaldehyde-releasing preservatives, and 1,4 dioxane from its adult and baby products globally. While noting chemicals in its products satisfy regulatory requirements, Johnson & Johnson took action to address concerns raised about their links to adverse human health effects. The Campaign for Safe Cosmetics, a non governmental organization, has publicly challenged Avon to meet or beat Johnson & Johnson's commitments.
Proponents believe Avon displays an antagonistic rather than precautionary approach to the safety concerns of consumers and scientists 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".
Proponents believe Avon's insufficient action on this issue increases its reputational and business risks; inaction could put the company at a competitive disadvantage. Avon could safeguard against potential losses by taking proactive steps to identify and phase out potentially harmful chemicals in products when safer substitutes are available.
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 2014.
Supporting Statement. Proponents recommend that Avon's report:
- describe a proactive approach to substituting safer alternatives - even when science remains uncertain - to respond to 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.