Nanotechnology and the S&P 500

Corporations globally have been investing $9 billion annually in nanotechnology, yet less than one-tenth of S&P 500 companies report to shareholders and other stakeholders on their involvement in nanotechnology. Although it has the potential to revolutionize industries like healthcare, information technology and energy systems, nanotechnology’s promise is tethered to unique environmental, health and safety (EH&S) issues that are not yet fully understood. Investors eyeing rapid growth and minimal regulation are engaging companies in discussions about nano-related EHS risks and recently forced a vote on the first nano-related shareholder resolution.

A new study, Nanotechnology and the S&P 500: Small Sizes, Big Questions, summarizes the current state of disclosure by S&P 500 companies, provides detailed excerpts in the report’s appendices and reviews shareholder engagement dating back to 2008. Authored by the Sustainable Investments Institute (Si2) and commissioned by the Investor Responsibility Research Center Institute (IRRCi), the report also discusses key issues for investors to consider; development of the field and market; environmental, health and safety risks; and regulation.

The report found:

Only 27 companies included references to “nano” in their Form 10-Ks filed with the Securities and Exchange Commission.

• No S&P 500 company discussed risks associated with environment, health or safety issues.
• Six companies in the information technology (IT) sector reported on business risks associated with development, production and manufacturing or addressing technological advancements.
• Seventeen companies discussed nano products or services as part of their business descriptions. Similarly, 10 are in the IT sector. Two are in the health care sector. Abbott Laboratories discussed its drug-eluting stent franchise, and Waters discussed a nano system as part of its analytical tools and instruments. Other examples include Alcoa, which noted that it’s commercializing self-cleaning coatings for building products, and Dow Chemical listed a nanofiltration element.
• Lastly, 13 companies included a reference to nano in their financial discussions. Again, nine are in the IT sector. The four additional companies included Abbott Laboratories, Becton Dickinson, Air Products & Chemicals and Newell Rubbermaid.

Only 22 S&P 500 had references to “nano” in their corporate responsibility or sustainability reporting.

• Ten companies focused on disclosure, and notably, six of them have been contacted by shareholders on this issue. Mondelez International and Colgate-Palmolive reported that they do not use nanotechnology. Estee Lauder amended a previous statement that it did not formulate using nano particles, and Avon noted that it uses ingredients characterized as nanomaterials in a wide range of cosmetic products. Six of these 10 companies stated their support for nanotechnology development, including Merck, Johnson & Johnson, DuPont, Hewlett Packard, Lockheed and IBM.
• Another 10 companies, including seven of the 10 above, discussed risk assessment or risk management. In contrast to risk reporting in the Form 10-Ks by six IT companies that focused on production challenges, the companies that focused on EHS risks here are more diverse. They include Johnson & Johnson, Ford, Goodyear Tire & Rubber and Hewlett Packard.
• Some 13 companies highlighted specific products containing nanomaterials or developed with nanotechnology. Only four of these 13 companies also made a reference to nano in their business descriptions in their Form 10-Ks. Dow Chemical reported receiving financial assistance from the European Commission for a foam system for energy efficiency in buildings, while Celgene noted a principal therapy in its oncology division. Merck provided examples of how it is using nanotechnology, including in Coppertone sunscreen products. Ford discussed using nano-based materials to reduce vehicle weight while increasing strength, as well as using antimicrobial nanosilver coatings in vehicle interiors. Lockheed Martin reported that it was using carbon nanomaterials to “build stronger, lighter and higher-performing structures with additional electrical and mechanical properties for use on the F-35 aircraft and the Juno spacecraft.”

Shareholder engagement

• As You Sow filed a shareholder resolution at Dunkin’ Brands in 2014 that received support from nearly 19 percent of the shares voted. As You Sow is continuing to contact companies on this issue and says it is prepared to file resolutions in instances where it does not see progress being made.
• As You Sow, with the support of the Investor Environmental Health Network (IEHN), filed its first resolution on nanomaterials in 2008. The SEC allowed Wal-Mart to omit the resolution on nanomaterial product safety on ordinary business grounds. As You Sow came back the next year with resolutions to McDonald’s and Kraft Foods, asking each company to report on policies; identify product categories that contain nanomaterials, and discuss any initiatives or actions to “reduce or eliminate potential human health impacts.” As You Sow withdrew the two resolutions after:
  • McDonalds publicly stated it does not currently support the use by suppliers of nano-engineered materials, and
  • Kraft Foods publicly stated it was not using nanotechnology. McDonald’s and Kraft also continued in dialogues.
• In 2008 and 2009, Calvert Investments, also in collaboration with IEHN, filed shareholder resolutions at Avon, Colgate-Palmolive and Kellogg. The resolutions focused on product safety and identification of products containing nanomaterials. The resolution at Avon received support from more than 25 percent of the shares voted in 2008 and around 11 percent in 2009. Colgate-Palmolive provided the requested information, and Kellogg agreed to publish a policy in its corporate responsibility report.
• Members of the Interfaith Center on Corporate Responsibility have had dialogue on this issue with a number of additional companies, including DuPont, Estee Lauder, HenkelAG, Johnson & Johnson, Procter & Gamble, Sara Lee and Unilever.

Nanotechnology is an emerging field that focuses on the understanding and control of matter at near-atomic scale. It crosses scientific disciplines and has the potential to affect virtually every aspect of daily life and every economic sector. At least 1,600 consumer products have entered the marketplace in the last eight years, and this is just a sliver of the products and processes already in use and under development. By 2020, six million people worldwide may work with nanomaterials. Corporations now provide about half the funding for research on nano frontiers, catching up with governments led by the United States and 60 other countries such as Germany, France, Japan, Korea and China.

Download the research here.