NEWS

Breast Cancer Group Targets ‘Shareholder Activism’ at Avon

Lou Fintor

Breast cancer activists are wielding a potentially powerful new tactic to pressure companies into taking a closer look at the chemicals they put in their products: shareholder activism.

Seizing on the growing grassroots movements aimed at better corporate accountability, the San Francisco-based Breast Cancer Action (BCA) has launched a campaign taking on Avon Products Inc. If successful, the international cosmetic giant will be forced to evaluate the feasibility of finding alternatives to their use of estrogenic chemical preservatives known as parabens in at least 82 products.

"We’re doing everything we can to force the company to behave in a way that is consistent with their public claims—that they care about women," said BCA executive director Barbara Brenner.



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Barbara Brenner

 
"We’re past the time when companies can have it both ways: They say they care about preventing breast cancer but then put things in their products that may contribute to the problem. We’re changing the standard," she added.

At issue is whether parabens may promote the growth of some cancer cells, particularly in the case of breast cancer, by mimicking effects of the naturally occurring hormone estrogen. At present there is disagreement among scientists and others about whether parabens pose a health risk and, if so, the magnitude of that risk.

Support for Stockholder Proposal

Nevertheless, the issue is potentially embarrassing and expensive for Avon, which has a history of supporting a variety of women’s health programs and in particular those aimed at breast cancer. A tradition of corporate accountability coupled with raising more than $190 million for programs in 30 countries has made Avon a favorite among "socially responsible" investors.

BCA became an Avon shareholder after purchasing one share of stock 2 years ago. But citing unwillingness on the part of Avon to meet and discuss their use of parabens and other issues, BCA sought allies among bigger investors.

They approached three "socially responsible" investment funds: Domini Social Investments Inc., Trillium Asset Management, and Walden Asset Management and convinced them to join in sponsorship of a shareholder resolution demanding that Avon study the feasibility of removing parabens altogether or substituting their use with "safer alternatives."

"Initially, we simply signed on to a statement along with Trillium and Walden urging Avon to sit down and talk with these breast cancer activists and listen to what they had to say," said Adam Kanzer, general counsel and director of shareholder advocacy for Domini. "We were quite surprised when we didn’t get any response to that request and decided to examine the issue more seriously."



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Adam Kanzer

 
According to Kanzer, Avon representatives’ initial response was to approach the U.S. Securities and Exchange Commission (SEC) in an unsuccessful attempt to prevent the proposal from appearing before shareholders.

Next, Avon’s board of directors urged stockholders to vote against the resolution but were forced to concede at their May 1 annual meeting when the resolution received 6.18% of all votes cast—well above the 3% threshold required by the SEC for reintroducing the proposal next year.

According to Brenner, that is precisely what the sponsors will do if Avon continues to balk.

"We accomplished this with relatively little outreach and very little resources. If we reintroduce the resolution next year, it will be accompanied by a bigger campaign. The company is going to find it difficult to make new arguments against the same resolution," Brenner said.

Conflicting Positions on Safety

Avon uses the chemical preservative in foundation, concealers, and pressed powders. Other manufacturers of consumer products—including food and beverages—have used parabens for more than 70 years. As a chemical preservative, they prevent fungal and bacterial growth.

In their statement opposing the proposal, Avon cited the efficacy of parabens in reducing the risk of microbial contamination and the conclusions of expert panels that the company said "do not support the proponents’ assertion that there is substantial scientific evidence linking exposure to parabens with increased health risk."

According to Avon, the use of parabens has been deemed safe both by the World Health Organization and the Cosmetic Ingredient Review (CIR), an independent body of experts. Avon maintained that the CIR conclusions are considered "as a significant basis for the use of ingredients in cosmetic products" by the U.S. Food and Drug Administration.

"We believe that discontinuing the use of parabens and replacement with inferior preservatives would present a potential health risk to our consumers that is neither necessary nor warranted," company officials wrote to their shareholders. The company declined to comment further for this article.

Those supporting the resolution maintain that the potential risks associated with parabens outweigh the benefits, particularly if they can be replaced with alternatives.

Among the studies they cite are a report by the National Research Council attributing reproductive problems and developmental mutations in animals to estrogenic substances and the listing of steroidal estrogens as "known human carcinogens" by the U.S. National Toxicology Program.

"Our resolution is based on the precautionary principle," said Kanzer. "If there is credible evidence of risk, you don’t have to wait for a conclusive, direct link. If parabens are proven to be carcinogenic, it’s already too late. As social investors, we don’t think this is a risk worth taking."

No Evidence for Risk or Safety

Meanwhile, some scientists maintain that parabens are already too widely used while far too little is known about their potential interaction with other chemicals and the effect of long-term exposure, according to Phillipa Darbre, Ph.D., senior lecturer in oncology at the United Kingdom’s University of Reading, who has studied estrogens and the chemicals that mimic their action for more than two decades.

"You can measure parabens in human breasts but you can’t say conclusively where they’ve come from. They’re in cosmetics, they’re added to food—quite simply, they are pervasive in consumer products," Darbre said.

"Still, parabens are not the end of the story, they’re only the beginning. With these cosmetics we are at a stage of chemical overload. There should be more industry interest in evaluating these compounds," she added.

Although Darbre acknowledges that many different factors likely contribute to the development of cancer, the lack of conclusive research linking parabens to breast cancer or other health risks does not establish that they are safe.

"I acknowledge all too well the many things that likely play a role in breast cancer: lifestyle, diet, genetics, and others—and I would never suggest that parabens are solely responsible," Darbre said.

"But no evidence means no evidence—and we need more research. It does not mean that they are safe to apply at any level to every man, woman, and child over the course of a lifetime. ‘No evidence’ does not mean parabens are any more safe than they are unsafe," she added.



             
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