In the past decade, the use of toxic pesticides – the catch-all term for chemicals used to control insects (insecticides), weeds (herbicides), and fungi (fungicides) – has created economic harm and financial risk for investors. For example, after acquiring Monsanto, a leading producer of glyphosate, a pesticide linked to cancer, Bayer is facing an estimated $16 billion in litigation costs [1]. The economic dependence we have on toxic chemicals is unsustainable as the costs associated with these products increasingly exceed the economic benefits. Just like Roundup, this harmful short-cut has been overused.
Companies that are dependent on continued production and use of hazardous pesticides face growing business risks that could impact financial performance through increased exposure to:
- Consumer safety litigation
- Worker health and safety violations
- Environmental injustice controversies
- Biodiversity loss and food insecurity risks
Increases exposure to consumer safety litigation:
As noted in the Childhood Cancer: Cross-sector strategies for Prevention Report, the incidence rate of childhood cancer—the number of new cases of cancer per 100,000 children—is increasing. Since the mid-1970s, cancer incidence rates in American children have increased sharply [2]. From 1975 to 2017, leukemia incidence rates increased by roughly 34%, and incidence rates of brain and other central nervous system cancers increased 40%. Recognition is growing that hazardous exposures in the environment, including to pesticides, have been implicated as a risk factor for childhood cancers. A robust evidence base has emerged tying early life exposures to pesticides used at home to an increased risk of childhood leukemia and brain tumors, and an increased risk for childhood lymphomas has also been observed [3][4][5][6][7][8][9]. Pesticides continue to be used on school property, and some schools are at risk of pesticide drift exposure from neighboring farms, which leads to pesticide exposure among students and school employees [10].
Additionally, environmental exposure to endocrine disruptors, including pesticides, could contribute to a decline of human fertility. New research found glyphosate concentrations four times higher in human sperm than in blood, raising concerns about how glyphosate could be disrupting the blood testis barrier and negatively impacting sperm quantity and quality [11].
Increased exposure to worker health and safety violations:
Substantial scientific evidence demonstrates that the use of toxic pesticides also harms public health through the supply chain, from farmers and farmworkers to consumers. Pesticide exposure has been linked to increased risk of various health problems, including cancers, infertility, neurodevelopmental disorders, and endocrine disruption. Annually, the United States uses over a billion pounds of pesticides, accounting for approximately one fifth of worldwide use [12]. This pesticide exposure causes more chemical-related injuries and illnesses to farmworkers and their families than any other workforce in the U.S. Farmworkers of color are disproportionately impacted with an estimated 10,000 to 20,000 Latinx agricultural workers falling ill each year from pesticide exposure [13]. Furthermore, the U.S. Environmental Protection Agency (EPA) has acknowledged that its own Worker Protection Standard (WPS), which is designed to protect farmworkers from pesticide exposure, is insufficient.
Increased exposure to environmental injustice controversies:
Additionally, a recent peer-reviewed study found that in the U.S., Black, Indigenous and people of color, as well as low-income communities, bear an outsized burden of the harms caused by pesticides [14]. Specifically, biomarkers for 12 harmful pesticides tracked over 20 years were found in the blood and urine of Black or Mexican Americans at average levels as much as five times higher than in white residents. Children living in communities surrounded by manufacturing facilities, refineries, or intensive agriculture—where residents are often low-income or people of color—may have particularly high exposures due to the cumulative impacts they face.
Increased exposure to biodiversity loss and food insecurity risks:
Finally, we cannot ignore the devastating impact that toxic pesticides are having on biodiversity and environmental health. The World Economic Forum’s Global Risks Report 2024 identified biodiversity loss and natural resource crises amongst the top 10 “most severe risks on a global scale over the next 10 years [15].” Approximately 40% of all invertebrate pollinating species are on the brink of extinction, due, in large part, to the pesticides used in agricultural production [16]. The continued loss of pollinators poses significant financial risks for the entire food industry as an estimated $235 billion to $577 billion worth of global annual food production relies on contributions by pollinators. And it has been estimated that crop production in high-income countries could fall by about 5% and closer to 10% in low-to-middle income countries due to pollinator decline [17].
In consideration of the above, pesticide use, exposure, and contamination is a material issue for investors and therefore important to track and assess portfolio vulnerabilities. Leading companies are beginning to recognize these business risks. For example, in response to investor engagement, Walmart, Target, and Dollar Tree, among other retailers, established pollinator protection policies to reduce pesticide use in their food supply chains. After a series of dialogues and a 34% vote in support of a shareholder proposal addressing pesticide risk, Lamb Weston, a leading food processor agreed to incorporate pesticide use reduction measures in its 2020 Corporate Responsibility Report [18]. In 2021, the company set and disclosed a quantitative pesticide use reduction goal while also committing to use a science-based strategy to address its climate impacts [19].
As shareholders and fiduciaries, we recognize the material risks posed by the impacts of pesticides on human health and children’s health most profoundly, biodiversity loss, and environmental health. The economic benefits of pesticide use reduction are well established. Annual economic gain from a regenerative agriculture system is estimated to be $1.17 trillion by 2030 [20] and $3.04 trillion by 2050, with a reduction of public health costs of $850 billion a year by 2030. Consumer demand for organic products has exhibited double-digit growth most years since the 1990s, and now accounts for approximately 5.5% of total U.S. food sales [21]. In response, industry leaders, including Costco, Kroger, and Target are working to expand their market share of organic products. Industry leaders are best positioned to capture and grow the market for organics and products grown using regenerative agricultural practices.
[2] https://www.vox.com/the-highlight/24093360/early-cancer-young-adults-colon-stomach-research
[3] Van Maele-Fabry G, Gamet-Payrastre L, Lison D. Household exposure to pesticides and risk of leukemia in children and adolescents: Updated systematic review and meta-analysis. Int J Hyg Environ Health. 2019;222(1):49-67.
[4] Bailey HD, Infante-Rivard C, Metayer C, et al. Home pesticide exposures and risk of childhood leukemia: Findings from the childhood leukemia international consortium. Int J Cancer. 2015;137(11):2644-63.
[5] Chen M, Chang CH, Tao L, et al. Residential exposure to pesticide during childhood and childhood cancers: A Meta-Analysis. Pediatrics. 2015;136(4):719-29.
[6] Van Maele-Fabry G, Gamet-Payrastre L, Lison D. Residential exposure to pesticides as risk factor for childhood and young adult brain tumors: A systematic review and meta-analysis. Environ Int. 2017;106:69-90.
[7] Turner MC, Wigle DT, Krewski D. Residential pesticides and childhood leukemia: a systematic review and meta-analysis. Cien Saude Colet. 2011;16(3):1915-31.
[8] Van Maele-Fabry G, Lantin AC, Hoet P, et al. Residential exposure to pesticides and childhood leukaemia: a systematic review and meta- analysis. Environ Int. 2011;37(1):280-91.
[9] Vinson F, Merhi M, Baldi I, et al. Exposure to pesticides and risk of childhood cancer: a meta-analysis of recent epidemiological studies. Occup Environ Med. 2011;68(9): 694–702.
[10] Walter A Alarcon 1, Geoffrey M Calvert, Jerome M Blondell, Louise N Mehler, Jennifer Sievert, Maria Propeck, Dorothy S Tibbetts, Alan Becker, Michelle Lackovic, Shannon B Soileau, Rupali Das, John Beckman, Dorilee P Male, Catherine L Thomsen, Martha Stanbury Acute illnesses associated with pesticide exposure at schools, 2005 Jul 27;294(4):455-65. doi: 10.1001/jama.294.4.455.
[11] Claudine Vasseur, Loïse Serra, Souleiman El Balkhi, Gaëlle Lefort, Christelle Ramé, Pascal Froment, Joëlle Dupont, Glyphosate presence in human sperm: First report and positive correlation with oxidative stress in an infertile French population, Ecotoxicology and Environmental Safety, Volume 278, 2024, 116410, ISSN 0147-6513, https://doi.org/10.1016/j.ecoenv.2024.116410.
[12] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2946087/pdf/nihms-232681.pdf
[13] https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-022-13057-4
[14] https://bmcpublichealth.biomedcentral.com/articles/10.1186/s12889-022-13057-4
[15] https://www.weforum.org/publications/global-risks-report-2024/digest/
[17] https://www.weforum.org/agenda/2021/08/how-essential-are-pollinators-for-global-food-security
[18] https://esg.lambweston.com/LambWeston_2021_ESG.pdf
[19] https://esg.lambweston.com/
[21] https://www.ers.usda.gov/topics/natural-resources-environment/organic-agriculture/