As You Sow
311 California Street, Suite 510
San Francisco CA 94104
June 12, 2007
Vote FOR Proposal 5
Urge Bed Bath & Beyond Management to Attend to
Toxicity Issues in Products Sold in its Stores
Dear Fellow Bed Bath & Beyond Shareholder,
We are writing to urge you to vote in favor of Proposal 5 on the Bed Bath &
Beyond proxy ballot. The proposal asks the management to report on how it is
handling emerging issues of toxic materials in products sold in its stores.
Numerous products sold in Bed Bath & Beyond, as well as in the company's Harmon
beauty products division, contain materials which raise concerns regarding
potential health or environmental impacts that we believe could lead to
significant financial or reputational risks. Examples of the materials of
concern include polyvinyl chloride (PVC), phthalates, bisphenol A, and
perfluorooctanoic acid (PFOA) -- chemicals known to cause or to have been
associated with cancer, developmental harm to children, or other health
concerns.
In its opposition statement to the resolution, the management has stated that
"these matters are most appropriately addressed by informed legislators and
regulators." Despite the fact that the company feels the "concerns raised in the
proposal are real," the opposition statement gives the impression that the
management is unwilling to tackle these issues beyond initial steps such as
monitoring and complying with regulations. This position is in sharp contrast to
how the company is addressing the issue of climate risk raised in Proposal 3. In
that response the company has provided a detailed description of its planning
(above and beyond legal compliance) to reduce greenhouse gases including
specific plans and numbers.
We also find this response by management to be a disturbing neglect of its
duties to seize opportunities and reduce risks associated with these issues. By
contrast, other retailers, from Wal-Mart and McDonald's to several smaller
retailers, have adopted more proactive policies. We urge you to vote YES on the
proposal in order to encourage management to more proactively manage these
issues in the Bed Bath & Beyond supply chain.
Following are some of the key issues that the proponents believe pose serious
financial and legal risks to the company and are of concern to us, as
shareholders:
PVC ADDITIVES AND ENVIRONMENTAL ISSUES: PVC is often produced with the use of
toxic stabilizers - such as lead, cadmium and organotins. These additives may
leach, flake or outgas from PVC over time; a review of the scientific literature
demonstrates these compounds have the potential to cause or exacerbate lead
poisoning, damage brain development, reduce cognitive ability and IQ of
children, cancer, suppress immunity, and disrupt the endocrine system. Thus it
is reasonable to conclude that these compounds, if they are contained in PVC
products sold in Bed Bath & Beyond stores, may pose legal or reputational risks
to the company. Out of concern for PVC's possible toxic effects, prominent
retailer Ikea has eliminated PVC from its products, except for casings around
electrical wires.
Although regulations are emerging on PVC (PVC has been banned or restricted in
Canada, the Czech Republic, Germany, South Korea, Spain, and Sweden) awaiting
government restrictions in relevant markets may not be an optimal business
strategy. In 2006, multiple retailers were embarrassed by a recall of children's
PVC lunchboxes containing excessive levels of lead. In an effort to get ahead of
and avoid the reputational and other problems associated with such enforcement
efforts, Wal-Mart has announced a "preferred substances policy" pursuant to
which it will proactively address chemicals about which scientific concerns have
been raised, even where regulatory action has not been taken.
In addition to product toxicity concerns, PVC also poses environmental
challenges at the point of production and disposal. Dioxin, ethylene dichloride
and vinyl chloride are unavoidably created in the production and disposal of
PVC, and when they are released to the workplace or the environment, the
scientific literature demonstrates that these substances may cause severe health
problems (variously evidenced to cause or exacerbate cancer, endocrine
disruption, endometriosis, neurological damage, birth defects, impaired child
development and reproductive and immune system damage).
SPOTLIGHT SHINING ON PFOA RISKS AND EXPOSURES: Perfluorooactooanoic Acid (PFOA)
is used to produce stain and grease resistant coatings including in carpets,
cookware and food packaging. In June 2006, the majority of EPA's Science
Advisory Board identified PFOA as a likely carcinogen. Canadian, Australian, and
European regulators are contemplating restrictions due to PFOA's potential role
in birth defects, cancers and other concerns. PFOA exposure appears to be
widespread. For example, researchers at Johns Hopkins University reported
earlier this year that they found PFOA in 100% of 297 serum samples collected in
2004 and 2005 from the umbilical cords of children born in Baltimore.
Previously, just prior to eliminating its own PFOA production, the 3M Company
found PFOA in the blood of 96% of the 598 children it studied across the United
States.
Retailers including Wal-Mart and McDonald's have announced their intent to seek
products which use safer alternatives to PFOA-based products or packaging. A
class action lawsuit seeking $5 billion in damages against DuPont alleges
failure to disclose health risks, including alleged emissions of PFOA, from
Teflon products. Products such as coated carpets may contain no PFOA initially,
but related chemicals present in the products may degrade to PFOA in use.
COSMETICS SECTOR SENSITIVITY TO CONSUMER SAFETY CONCERNS: Cosmetic products have
come under scrutiny due to common ingredients in U.S. products including
phthalates--which have been linked to liver and kidney damage, asthma, and
malformed or underdeveloped reproductive organs in males--and the carcinogen
formaldehyde, found in shampoos, mouthwash and nail hardeners. Legislation
recently enacted in California is requiring increasing ingredient disclosure and
media stories have prompted growing consumer attention. Signaling their
sensitivity to consumer concern about the safety of cosmetics products, more
than 550 manufacturers of cosmetics, including prominent retailer The Body Shop,
have signed "The Compact for Safe Cosmetics", which commits the companies to
implementing substitution plans to replace hazardous materials with safer
alternatives and to publicly report on progress to meet these goals.
A growing portion of consumers are shopping with strong awareness of these
toxicity concerns. A failure of our company to rise to the challenge may cause
those consumers to look to other competing retailers for consumer goods selected
with more sensitivity to these issues.
Thus while many retailers and manufacturers are acting proactively on these
issues, making their preferences to avoid problematic materials well known to
their suppliers, the management of Bed Bath & Beyond has responded to Proposal 5
by stating that it does not believe "shareholders would be well served by
diverting resources" to these issues.
We believe the available evidence demonstrates, to the contrary, that a more
detailed review of this issue is needed by the management. A report such as that
requested by shareholder Proposal 5 could begin to answer some of the very
substantial questions raised in the management's opposition statement. For
instance, given the management's response, it is reasonable for shareholders to
want to know:
o Which, if any, product lines or categories sold in Bed Bath & Beyond stores
may be affected by potential product toxicity concerns?
o What are the options for new initiatives that management can or will take
to respond to this public policy and marketplace challenge?
Vote YES on shareholder Proposal 5 to urge better disclosure of our company's
product safety challenges.
This communication is not a proxy solicitation, and As You Sow will not
accept any proxies.