Vote FOR Item 7 on the Management's Proxy
Asking Kroger to Issue Report on Toxic Chemicals in Products
A Letter from Catholic Healthcare West, Sponsor of Item Number 7
Dear Fellow Kroger Shareholder,
We are writing to urge you to vote in favor of Item 7 on the management's proxy
ballot. The proposal asks our company to publish a report to shareholders on its
policies on emerging product safety issues. This would include a summary of any
product categories sold in Kroger stores that may be affected by product
toxicity concerns. It would also include a description of any new initiatives
our company is taking to respond to this public policy challenge, above and
beyond regulatory compliance.
In its response to the proposal, Kroger stated that they "believe these matters
are most appropriately addressed by informed legislators and regulators."
However, in our opinion, this response by management is inadequate. Other
companies have already recognized the importance of these toxics issues and
responded rapidly. Kroger's response demonstrates well the need for the company
to engage in a more thorough examination of the consumer climate regarding
potentially toxic products. Before deciding that complacency is an effective
tactic, Kroger must consider the risks of inaction to the company, its consumers
and the environment.
Bisphenol A
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One issue our resolution raises is the use of Bisphenol-A (BPA) in plastic baby
bottles, sports water bottles, and food can linings. Recent research has
highlighted health concerns tied with exposure to this chemical. Even though US
regulations regarding this chemical remain unchanged, Health Canada has recently
determined that this chemical is harmful. Some companies are responding quickly
to these new reports and information on this chemical. Nalgene, whose signature
product is a BPA-containing polycarbonate water bottle, stated that they will no
longer sell any products containing BPA. In April 2008, Wal-Mart announced that
it was immediately ceasing sales in all its Canadian stores of food containers,
water and baby bottles, sippy cups, and pacifiers containing BPA. Wal-Mart plans
to phase out baby bottles containing BPA in the US by early 2009. These examples
indicate that some manufacturers and retailers are taking the health risk of BPA
quite seriously.
Cosmetics and Personal Care Products
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Kroger offers a variety of cosmetics and personal care products for sale. Recent
media stories have prompted growing consumer attention. The neurotoxicant lead
is found in some lipsticks. Phthalates- linked to harming the developing male
reproductive organs- are found in many hair products, deodorants, body lotions,
and fragrances. While Kroger's response to the Proposal indicates that the
company requires vendors "to assure their products comply with all applicable
laws, including those relating to content and labeling," this response fails to
acknowledge that current US regulations on cosmetics and personal care products
are inadequate to prevent the presence of such materials. The October 2007
Campaign for Safe Cosmetics tests for lead in lipstick revealed both that many
lipsticks contained measurable amounts of lead, and that this was surprisingly
not illegal. Neither cosmetic products nor cosmetic ingredients are reviewed or
approved by the Food and Drug Administration (FDA) before they are sold to the
public.
In our opinion, Kroger must follow the lead of other large retailers in
recognizing the importance of addressing these toxics issues proactively. For
example, CVS Caremark just announced a groundbreaking new cosmetics safety
policy as part of its first Corporate Social Responsibility report. The company
says it will remove chemicals linked to adverse health outcomes from its
house-branded
products and will replace them with safer alternatives, in response to consumer
and shareholder pressure. While Kroger stated in its response to the Proposal
that "informed legislators and regulators" should address these issues, CVS is
making needed internal changes that will also prompt similar action by its
manufacturing partners. According to a press release on CVS' new toxics policy,
"the policy further committed the company to continuously evaluating and
improving their house-brand products based on emerging science about the links
between cosmetic ingredients and health/environmental risks." This is the first
cosmetics safety policy to be released by a major drugstore retailer in the
United States, which puts CVS at the forefront meeting changing consumer demand
for safer products. This new policy at CVS also illustrates very clearly the
ability of retailers to make changes ahead of those imposed by regulators or
legislators.
PVC
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The Proposal also raises the issue of PVC in Kroger's products. Because of the
host of environmental and human health issues raised throughout their life cycle
and supply chain, PVC products and packaging are being phased out by Wal-Mart,
Target, Sears, and Kmart. Surprisingly, Kroger does not address this issue at
all in its response to the proposal. PVC is typically produced with the use of
toxic stabilizers - such as lead, cadmium and organotins - as well as phthalate
plasticizers (softeners). These additives leach, flake or outgas from PVC over
time; risks from consumer exposure evidenced in the scientific literature
include, for example, the potential to cause or exacerbate asthma, lead
poisoning, cancer and harm to developing reproductive systems. Thus, we believe
it is reasonable to conclude that these chemicals if they are contained in
Kroger's PVC products may pose additional legal and reputational risks to the
company.
The management's unresponsive defense of its product safety demonstrates to
shareholders that much more detailed review of this issue is needed by the
management. A report such as that requested by the proposal could in part begin
to answer some of the very substantial questions raised in the management's
opposition statement. Given the management's response to the proposal, it is
reasonable for shareholders to want to know, for instance:
o What Kroger products use hazardous materials in products and/or
packaging?
o Will Kroger implement a safer cosmetics policy similar to the new
policy at CVS?
o Does Kroger have plans to phase out the use of toxic products in
products and/or packaging?
Vote YES on proxy Item 7 to urge the company to publish a report to shareholders
on its policies on emerging product safety issues.
This communication is not a proxy solicitation, and Catholic Healthcare West
will not accept any proxies. Catholic Healthcare West urges shareholders to vote
"FOR" this stockholder proposal, Agenda Item 7 on Kroger's management's proxy.