Acton Institute Powerblog

Not a nanoparticle of science in this shareholder resolution

Share this article:
Join the Discussion:

Sometimes clearer heads prevail, but at considerable costs to individual stock portfolios and corporations who have to mount a defense against uninformed, nuisance shareholder resolutions. Last week the Securities and Exchange Commission slowed the progressive roll of religious activist group As You Sow by denying an AYS proxy resolution seeking a detailed nanoparticle risk assessment by Mondelēz International Foodservice.

Mondelēz successfully convinced the SEC that its use of food whitener titanium dioxide (TiO2) in its Dentyne Ice chewing gum does not meet the dimensional criteria of nanoparticles as established by the U.S. Food and Drug Administration. Furthermore, the company hedged its bet by asserting that TiO2 use is “ordinary business, preventing shareholders from requesting information about the risk of these materials,” according to the AYS press release.

AYS’s resolution was predicated on two 2014 studies that concluded all food-grade TiO2 contained “a significant proportion of nanoparticles,” that AYS claims “may also result in greater toxicity for human health and the environment.” Note the qualifier “may,” which sums up the degree of scientific accuracy and disingenuousness throughout the AYS’s fear-mongering release. But there are others:

‘This is a dangerous precedent,’ said Danielle Fugere, President of As You Sow. ‘The SEC failed to recognize nanotechnology as a significant policy issue, despite growing public concern about using nanoparticles in foods before it is proven safe.’

‘If Mondelēz was confident in its management of risk and disclosures around nanoparticles, it would have no need to block shareholders from voting on this non-binding proposal,’ said Fugere….

Mounting evidence suggests that some nanoparticles, including titanium dioxide, are toxic in cell cultures and to animals….

This reads more like teenage petulance than sound science. Perhaps Mondelēz knows a little bit more about its business than AYS pseudo-scientists. In a memo to the SEC, the company’s attorney stated last month [Spoiler Alert: Actual science ahead!]:

As discussed in greater detail in the No-Action Request, the Company does not use nanotechnology in the development or engineering of its food products or food packaging. As a result, consistent with the FDA guidance, (1) no food product or food packaging is “engineered [by the Company] to have at least one external dimension … in the nanoscale range (approximately 1 nm to 100 nm)” and (2) no food product or food packaging is “engineered [by the Company] to exhibit properties or phenomena … that are attributable to its dimension(s), even if these dimensions fall outside the nanoscale range, up to one micrometer (1,000 nm).”

The Response Letter cites (and includes as Appendix C) testing data purporting to show that one of the Company’s products, Dentyne Ice Gum, contains titanium particles smaller than 200 nm as a result of the Company’s use of titanium dioxide (which is commonly used for coloring foods and other materials) in this product. However, applying the FDA’s standards, the testing data does not show that Dentyne Ice Gum involves the application of nanotechnology. In fact, (1) the testing data does not show that Dentyne Ice Gum contains any nanoparticles below 100 nm and (2) the Company has not engineered this product to exhibit properties or phenomena attributable to nanoscale dimensions or dimensions outside the nanoscale range, up to one micrometer (1,000 nm). Instead, the Company uses standard, grade titanium dioxide that has been manufactured using conventional methods of manufacturing. And while it is possible that a small fraction of titanium dioxide’s “primary particles” may be less than 100 nm due to conventional production processes, FDA specifically recognized that “conventionally manufactured food substances can sometimes include particles with size distributions that extend into the nanometer range” but confirmed that its guidance on nanomaterials was “not intended to bring into question the regulatory status of such products if they have already been … approved …. ” Therefore, simply because titanium dioxide (which has been approved as a color additive since 1966) “can sometimes include particles with size distributions that extend into the nanometer range,” the Company’s use of this material in one or more of its products is irrelevant as long as the Company does not engineer this material to have at least one external dimension in the nanoscale range or to exhibit properties or phenomena that are attributable to its dimension(s).

Moreover, the Titanium Dioxide Manufacturer’s Association explains that, when titanium dioxide is purposely manufactured as a nanomaterial, it is “engineered to have primary particles less than 100 nm.”Notably, in that case, titanium dioxide does not exhibit the properties for which it is used in gum (i.e., it does not produce a white color and, therefore, would not be used as a colorant in gum). Thus, in any event, the relevant size for considering titanium to be “engineered” or deliberately manipulated to be a nanomaterial (within the meaning of the FDA guidance) is 100 nm. As confirmed by the testing of Dentyne Ice Gum provided by the Proponent, that is not the case with respect to the Company’s use of this material. For these reasons, the Proposal is excludable under Rule 14a-8(i)(5).…

Therefore, in seeking to control which ingredients the Company uses in its products (and, specifically, an ingredient that has been approved for use as a color additive by the FDA for fifty years), the Proposal deals with a matter relating to the Company’s ordinary business operations and is, therefore, excludable under Rule 14a-8(i)(7).

The SEC concurred with Mondelēz, and blocked the AYS proposal. It’s about time someone stood up to their anti-science bullying.

Good Profit

Good Profit

In 1961, Charles Koch joined his father’s Wichita-based company, then valued at $21 million. Six years later, he was named chairman of the board and CEO of Koch Industries, Inc. Today, Koch Industries’ estimated worth is $100 billion -- making it one of the largest private companies in the world. Koch exceeds the S&P 500’s five-decade growth by 27-fold and plans to double its value on average every six years. What exactly does this company do and why is it so remarkably profitable? Koch’s name may not be on your stain-resistant carpet, stretch denim jeans, the connectors in your smart phone, or your baby’s ultra-absorbent diapers but it makes them all. And Koch’s Market-Based Management® system is what drives these innovations and many more. Based on five decades of interdisciplinary studies, experimental discovery, and practical implementation across Koch businesses worldwide, the core objective of MBM is to generate good profit. Good profit results from products and services that customers vote for freely with their dollars, products that improve people’s lives. It results from a culture where employees are empowered to act entrepreneurially to discover customers’ preferences and the best ways to satisfy them. Good profit is what follows when long-term value is created for customers, employees, shareholders, and society. Here, drawing on revealing, honest, and previously untold stories from his nearly six decades in business, Koch walks the reader through the five dimensions of MBM to show how to apply its framework to generate more good profit in any business, industry, or organization of any size. Readers will learn how to: · Craft a vision for how to thrive in spite of increasingly rapid disruption · Select and retain a workforce possessing both virtue and talent · Create an environment of knowledge sharing that prizes respectful challenges from everyone at every level · Award employees with ownership and decision rights based on their proven contributions, not job title · Motivate all employees to maximize their contributions by structuring incentives so compensation is limited only by the value they create A must-read for any leader, entrepreneur, or student, as well as anyone who wants a more civil, fair, and prosperous society, Good Profit is destined to rank as one of the greatest management books of all time.

Bruce Edward Walker has more than 30 years’ writing and editing experience in a variety of publishing areas, including reference books, newspapers, magazines, media relations and corporate speeches. Much of this material involved research on water rights, land use, alternative-technology vehicles and other environmental issues, but Walker has also written extensively on nonscientific subjects, having produced six titles in Wiley Publishing’s CliffsNotes series, including study guides for "Alice’s Adventures in Wonderland" and "One Flew Over the Cuckoo’s Nest." He has also authored more than 100 critical biographies of authors and musicians for Gale Research's Contemporary Literary Criticism and Contemporary Musicians reference-book series. Most recently, he was managing editor of The Heartland Institute's InfoTech & Telecom News. Prior to that, he was manager of communications for the Mackinac Center's Property Rights Network. He also served from 2006-2007 as editor of Michigan Science, a quarterly Mackinac Center publication. Walker has served as an adjunct professor of literature and academic writing at University of Detroit Mercy. For the past three years, he has authored a weekly column for the mid-Michigan Morning Sun newspaper. Walker holds a bachelor’s degree in English from Michigan State University. He is the father of two daughters and currently lives in Midland, Mich., with his wife Katherine.