As most Americans know, consumers have battled with companies for years trying to find out the dangers of their products. A significant amount of discovery in any products liability suit is aimed at determining what a company that designed and manufactured a product knew and when. Now the companies face another disclosure issue as shareholders find themselves surprised by the financial impact to their portfolios caused by successful lawsuits and product recalls. A recent study by Investor Environmental Health Network (IEHN), a collaborative partnership of investment managers, reviewed thousands of SEC filings. The study revealed that companies are failing to disclose financially important information on product toxicity risks despite SEC shareholder disclosure requirements. The consuming public aren’t the only folks being left in the dark – it appears corporate shareholders are in the same boat.
Key findings from the study involved the knowledge of American toy companies of the risks of using Chinese imports, and the probable effects of the European Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) program due to go into effect later this year. Products linked to asthma, and concerns over nanomaterial, are among those that could cause difficulty for the manufacturers.
Some investors are already working to compel companies to disclose these risks by way of shareholder resolutions. Additionally, the IEHN report recommended that the SEC get more involved. Hopefully they will. However, it’s not clear what success the commission will have. The attempts in this area thus far haven’t been very notable. More information disseminated to the public can only make our society a safer place and that is very clear. It will be interesting to see how the battle for more and better corporate disclosure will turn out. We hear lots of politicians talking about a concept they call “transparency.” Let’s see if they will back up their words.
Source: Investor Environmental Health Network
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