Boston Common Asset Management was the lead sponsor of a recent shareholders’ resolution to Scotts Miracle-Gro Corporation of Marysville. The resolution asked Scotts to report how much they spent from 1993 to 2005 opposing local government policies that aimed to protect human health and the environment by limiting the use of lawn chemicals.

I volunteered to read the statement by Boston Common Asset Management at Scotts’ annual shareholders meeting in Marysville on Jan. 25. The Massachusetts-based corporation, an employee-owned social investment firm, stated that they were pleased that Scotts has just published its first Corporate Responsibility Report. This report notes Scotts’ efforts to reduce the environmental impact of its products, from improved application devices and packaging to enhanced education of product users. The report also notes Scotts’ increased marketing of environmentally friendlier materials, especially in Canada. 

The Corporate Responsibility Report mentions that Scotts has been a member of RISE—Responsible Industry for a Sound Environment. It does not mention that RISE aggressively opposes local restrictions on pesticide use and that RISE also filed suit—unsuccessfully—to challenge restrictions enacted in Wisconsin on ‘weed and feed’ products.

Rather than funding such actions, Scotts’ reputation and shareholder value would be better served by reformulating products and making available a wider array of products to satisfy local wishes. This would be consistent with Scotts’ increased product offerings in Canada, where lawn chemicals are widely banned—and the reformulation of ‘Do It Yourself’ lawn fertilizer products sold around Chesapeake Bay.

Approximately 17% of Scotts’ revenues in 2005 came from sales to Wal-Mart. Wal-Mart wants to phase out two pesticide ingredients—propoxur and permethrin—even though these have been registered for consumer use by the US EPA. Wal-Mart wants to spur competition among its suppliers to provide safer lawn care products.

Localities are taking action because they recognize federal regulation of pesticides isn't strong enough. EPA regulates most pesticides individually, when in fact we're exposed to a mixture of pesticides. Ten years ago Congress told EPA to establish a screening and testing program to determine if pesticides are hormone disruptors, but EPA has not yet established a single screen or test. Good corporate governance involves more than mere compliance with government regulation; many companies recognize that going beyond compliance is essential to protect and enhance shareholder value.

In the proxy statement, Scotts stated that its expenditures to oppose local public health and environmental initiatives in fiscal 2006 were less than $300,000. The one-year estimate did not respond to the resolution’s request for figures from 1993-2005.

Although Scotts’ Board of Directors voted unanimously against the resolution, several officers stated privately that they were very concerned about the issue. Scotts, now is the time to show us that your concern is more than lip service.