Monsanto Investors Face Catastrophic Risk
Berlin/New York, April 16th, 2003 The agrochemical giant Monsanto has received the lowest possible environmental and strategic management rating of a triple-C from Innovest Strategic Value Advisors, a global environmental and social investment research firm. Innovest s report, Monsanto and Genetic Engineering: Risks to Investors, commissioned by Greenpeace, was released at a briefing at the Harvard Club in New York City this morning.
The report, which comes just days before Monsanto s annual general meeting, warns shareholders and potential investors of Monsanto's "above average risk exposure and less sophisticated management than peers." Innovest analysts predict that "it [Monsanto] will likely under-perform in the market over the mid to long-term."
Monsanto suffered $ 1.7 billion in losses in 2002 and has failed to open new markets for its controversial genetic engineered (GE) products. Yet Monsanto continues to pursue its unsound business strategy of betting on a speedy and widespread global acceptance of GE foods. Next in the Monsanto pipeline is GE wheat, which is being boycotted in key markets by farmers and food industry even before its approval.
"While last year's
profit losses led to a change in leadership at the
company, they did not lead to a change in strategy. If
Monsanto does not take steps to mitigate its substantial
market risks, further investor losses are likely," said
Frank Dixon, Managing Director at Innovest Strategic
Value Advisors. The risk of heavy financial losses due to genetic pollution or technology failure coupled with sustained market rejection of GE foods makes Monsanto a poor investment.
In its assessment of Monsanto s key markets, Innovest underscores the lack of regulatory approval and stiff consumer opposition that continue to block the company's GE crops. GE products constitute one of the most widely rejected product groups ever, and major food importers such as China, Japan and Korea have recently followed the restrictive European approach. In the US, upwards of 90% of consumers now demand GE food to be labeled and many would reject GE food if given the choice.
The Innovest analysis of the risks and liabilities associated with Monsanto's genetic engineering (GE) business pays special attention to the inevitability of GE contamination. Referring to the example of the StarLink corn contamination scandal in 2000, in which the company Aventis lost $1 billion, Innovest estimated Monsanto's potential financial fallout from a "StarLink scenario" to be $3.83 liability per share.
"Monsanto's cash cow remains its agrochemical business, but last year's 24% drop in sales of Round-up and other non-selective herbicides has left the company vulnerable and increasingly desperate. Monsanto appears to be digging its own grave with its GE strategy," said global markets specialist with Greenpeace, Lindsay Keenan.
The Innovest report can be downloaded from www.greenpeace.org/monsantoinvestor
A comprehensive video on GE wheat market rejection, called Slice of Life , is available from Greenpeace International, Martin Atkin +31 627 000 057
For more information, please contact: Frank Dixon, Managing Director, Innovest Strategic Value Advisors,Tel +1 646 237 0220 or +1 212 421 2000, ext. 200; Lindsay Keenan, Greenpeace global markets specialist, Mob: +1 202 550 3845; Teresa Merilainen, Greenpeace International Press Office, Tel: +31 205 236 637