Mid- Term Submission

Case Title: Monsanto Attempts to Balance Stakeholder Interests Submitted to: Prof. Vivak Raina Submitted by: Nidhi Jain G.R. No. : M00101

Summary: Monsanto Company is the worlds largest seed company. They specialize in genetic manipulation of organisms. Monsanto was founded by John E Queeny in 1901 in St. Louis, Missouri and was named after his wife, Olga Monsanto Queeny. The companys first product was artificial sweetener. At the start of World War 1, company leader realized the growth opportunities of industrial chemicals and renamed the company The Monsanto Chemical Company. The company began specializing in plastics, its own agricultural chemicals, and synthetic rubbers. Due to its expanding product lines, Monsanto was renamed again the Monsanto Company in 1964. By this time, Monsanto was producing such diverse products as petroleum, fibers, and packaging. A couple years later, Monsanto created its first Roundup herbicide, a successful product that would propel the company even more into the publics consciousness. In 1970s, Monsanto had produced a chemical known as Agent Orange. Agent Orange contained dioxin, a chemical that caused a legal nightmare for Monsanto. Dioxin was found to be extremely carcinogenic, and in 1979, a lawsuit was filed against Monsanto on behalf of hundreds of veterans who claimed they were harmed by the chemical. Monsanto and several other manufacturers agreed to settle for $180 million. The repercussions of dioxin would continue to plague the company for decades. In 1981 Monsanto leaders determined that biotechnology would be the companys new strategic focus, so in 1994 they introduced the first biotechnology product to win regulatory approval. Soon the company was selling soybean, cotton, and canola seeds that were engineered to be tolerant to Monsantos Roundup Ready herbicide. Many other herbicides killed the good plants as well as the bad ones. Roundup Ready seeds allowed farmers to use the herbicide to eliminate weeds while sparing the crop. In 1997 Monsanto spun of its chemical business as Solutia and changed its name to Pharmacia. Two years later, a new Monsanto, focused entirely on agriculture, broke off from Pharmacia, and the companies became two separate legal entities. The company before 2000 is often referred to as old Monsanto, while todays company is known as new Monsanto. The New Monsanto was tainted by disturbing news about the companys conduct. Monsanto had been covering up years of environmental pollution. For nearly forty years, the Monsanto Company had released toxic waste into a creek in an Alabama town called Anniston. It had also disposed of polychlorinated biphenyls (PCBs), a highly toxic chemical, in open-pit landfills in the area. The results were catastrophic. Fish from the creek were deformed, and the population had elevated PCB levels that astounded environmental health experts. A paper trail showed that Monsanto leaders had known about the pollution since the 1960s, but had not stopped production. Once the cover-up was discovered, thousands of plaintiffs from the city

filed a lawsuit against the company. In 2003, Monsanto and Solutia agreed to pay a settlement of $ 700 million to more than 20,000 Anniston residents. However, no amount of money will give people back their health of their environment. Hugh Grant took over the company in 2003. But because of the scandals and stakeholders uncertainty, the price of Monsantos stock had fallen by 50 percent, and they lost $1.7 billion dollars. Grant knew by strategic focus on GM foods, the company would recover. Monsantos Pledge and Code of Ethics: The Monsanto Pledge is to listen more, to consider their actions and their impact broadly, and to lead responsibly. The Monsanto Code of Ethics placed a special rule for Chief Executive and Senior Financial Officers it was adopted by the Board of Directors of the Monsanto Company stating that the Chief Executives and the senior leadership of the Finance Department must follow in addition to Monsantos Code of Conduct. Because of it the organisation faces significant risk from strategies and also from employee striving for high performance standards. Due to such pressure, employees are encourages for illegal activities. So, in 2002, a senior manager at Monsanto instructed an Indonesian consulting firm to pay a bribe of $50,000 to a high-level official in the countrys environment ministry. The bribe apparently was for the company to disguise an invoice, which showed that Monsanto was facing opposition from farmers and activists in regard to the introduction of GM cotton in Indonesia. It was later revealed that such bribery was not an isolated event; the company had paid off many officials between 1997 and 2002 Monsanto accepted full responsibility for its employees behavior and agreed to pay $1 million to the Department of Justice and $500,000 to the SEC. It also agreed to three years of close monitoring of its activities by American authorities. The incident showed that although Monsanto has not been immune to scandals, it has been willing to work with authorities to correct them. Now after all correcting the bribery issues, the patents issue arise. Like other businesses Monsanto also patents its product. Under the terms of the patent, farmers using Monsanto seeds are not allowed to harvest seeds from the plants for use in upcoming seasons. Instead, they must purchase new Monsanto seeds each season. By issuing new seeds each year, Monsanto ensures it will secure a profit as well as maintain control over its property. In spite of their controversial nature, GM foods have become popular both in developed and developing countries. Monsanto became so successful with its GM seeds that it acquired Seminis, Inc., a leader in the fruit and vegetable seed industry. The acquisition transformed Monsanto into a global leader in the seed industry. Today, Monsanto employs nearly 20,000 people in 160 countries. It has been recognized as the top employer in Argentina, Mexico, India, and, for eight times in a row, Brazil.

1. Does Monsanto maintain an ethical culture that can effectively respond to various stakeholders? Yes, it does. Ethical culture means to assert the supreme importance of the ethical factor in all relations of life, personal, social, national, and international, apart from any theological or metaphysical considerations (Encyclopedia.com, 2012). On the outside, Monsanto seems to be following ethical corporate responsibility. They are given back to the community, and making sure that the do not pollute the envys. The company use the concept of social responsibility and business ethics. To create a reputation of value to various stock holders. They give 15 million to Donald deport plant science centred to do crop research Fund also helps brazilin children in maintaining good health and hygiene

But, Monsanto also do some practices: Monsantos regulation has become a financial burden to many farmers Farmers who buy from Monsanto could not save seed for further growth

Now farmers are looking for an easy way to solve this problem so that they can reach to an ethical solution. Their company seems to be very centralized and only top authority have right to take any decision. It is stated in their website: If you are faced with a difficult ethical decision or whenever you have doubts as to the right course of action in a particular situation, you should talk to the General Counsel or Director of Business Conduct. Violations of this Code, including failures to report potential violations by others, will be viewed as a severe disciplinary matter that may result in personnel action, including termination of employment. If you believe that a violation of this Code has occurred, please contact the General Counsel or Director of Business Conduct. Reports may be made by phone or in person, or submitted in writing via email or intercompany mail1. This statement is great for employee but what about the stakeholder who do not work for the company? Although they have committee for it but r they effectively and timely response? Over a few decades, Monsanto has been hiding about the environmental pollution that is harmful for people. The stakeholders were loss of confidence to the company that cause the stock price to fall drastically. However, when Hugh grant took over the position as a CEO of Monsanto, the company was growing more and more.

http://www.monsanto.com/whoweare/Pages/code-of-ethics.aspx

2. Compare the benefits of growing GM seeds for crops with the potential negative consequences of using them. The benefit to growing GM seeds mean farmers can expect better yields. Furthermore, GM seeds can now grow more on less land, meaning that it increases the profit to the farmers. With better yields, it meets the demand for the humanity. Some other benefits are as follows: Pest resistance Crop losses from insect pests can be staggering, resulting in devastating financial loss for farmers and starvation in developing countries. Farmers typically use many tons of chemical pesticides annually. Consumers do not wish to eat food that has been treated with pesticides because of potential health hazards, and run-off of agricultural wastes from excessive use of pesticides and fertilizers can poison the water supply and cause harm to the environment. Growing GM foods such as B.t. corn can help eliminate the application of chemical pesticides and reduce the cost of bringing a crop to market. Herbicide tolerance For some crops, it is not cost-effective to remove weeds by physical means such as tilling, so farmers will often spray large quantities of different herbicides (weed-killer) to destroy weeds, a time-consuming and expensive process, that requires care so that the herbicide doesn't harm the crop plant or the environment. Crop plants genetically-engineered to be resistant to one very powerful herbicide could help prevent environmental damage by reducing the amount of herbicides needed. For example, Monsanto has created a strain of soybeans genetically modified to be not affected by their herbicide product Roundup. A farmer grows these soybeans which then only require one application of weed-killer instead of multiple applications, reducing production cost and limiting the dangers of agricultural waste run-off. Disease resistance: there are many viruses, fungi and bacteria that cause plant diseases. Plant biologists are working to create plants with genetically-engineered resistance to these diseases. Cold tolerance Unexpected frost can destroy sensitive seedlings. An antifreeze gene from cold water fish has been introduced into plants such as tobacco and potato. With this antifreeze gene, these plants are able to tolerate cold temperatures that normally would kill unmodified seedlings. (Note: I have not been able to find any journal articles or patents that involve fish antifreeze proteins in strawberries, although I have seen such reports in newspapers. I can only conclude that nothing on this application has yet been published or patented.) Drought tolerance/salinity tolerance As the world population grows and more land is utilized for housing instead of food production, farmers will need to grow crops in locations previously unsuited for plant cultivation. Creating plants that can withstand long periods of drought or high salt content in soil and groundwater will help people to grow crops in formerly inhospitable places. Nutrition Malnutrition is common in third world countries where impoverished peoples rely on a single crop such as rice for the main staple of their diet. However, rice does not contain adequate amounts of all necessary nutrients to prevent malnutrition. If

rice could be genetically engineered to contain additional vitamins and minerals, nutrient deficiencies could be alleviated. For example, blindness due to vitamin A deficiency is a common problem in third world countries. Researchers at the Swiss Federal Institute of Technology Institute for Plant Sciences have created a strain of "golden" rice containing an unusually high content of beta-carotene (vitamin A). Since this rice was funded by the Rockefeller Foundation, a non-profit organization, the Institute hopes to offer the golden rice seed free to any third world country that requests it. Plans were underway to develop a golden rice that also has increased iron content. However, the grant that funded the creation of these two rice strains was not renewed, perhaps because of the vigorous anti-GM food protesting in Europe, and so this nutritionally-enhanced rice may not come to market at all. Pharmaceuticals Medicines and vaccines often are costly to produce and sometimes require special storage conditions not readily available in third world countries. Researchers are working to develop edible vaccines in tomatoes and potatoes. These vaccines will be much easier to ship, store and administer than traditional injectable vaccines. Phytoremediation Not all GM plants are grown as crops. Soil and groundwater pollution continues to be a problem in all parts of the world. Plants such as poplar trees have been genetically engineered to clean up heavy metal pollution from contaminated soil. However, GM seeds have potential negative consequences as well. Critiques were unsure about the health safety issue that caused by GM seeds since the effect might not be shown in short-term period. Even though FDA has approved, many still believe that GM seeds were unnatural since what goes into the seeds can be controlled.

Environmental hazards Unintended harm to other organisms: Last year a laboratory study was published in Nature showing that pollen from B.T. corn caused high mortality rates in monarch butterfly caterpillars. Monarch caterpillars consume milkweed plants, not corn, but the fear is that if pollen from B.T. corn is blown by the wind onto milkweed plants in neighbouring fields, the caterpillars could eat the pollen and perish. Although the Nature study was not conducted under natural field conditions, the results seemed to support this viewpoint. Unfortunately, toxins kill many species of insect larvae indiscriminately; it is not possible to design a toxin that would only kill crop-damaging pests and remain harmless to all other insects. This study is being re-examined by the USDA, the U.S. Environmental Protection Agency (EPA) and other nongovernment research groups, and preliminary data from new studies suggests that the original study may have been flawed. This topic is the subject of acrimonious debate, and both sides of the argument are defending their data vigorously. Currently, there is no agreement about the results of these studies, and the potential risk of harm to non-target organisms will need to be evaluated further. Reduced effectiveness of pesticides: just as some populations of mosquitoes developed resistance to the now-banned pesticide DDT, many people are concerned

that insects will become resistant to B.T. or other crops that have been geneticallymodified to produce their own pesticides. Gene transfer to non-target species: another concern is that crop plants engineered for herbicide tolerance and weeds will cross-breed, resulting in the transfer of the herbicide resistance genes from the crops into the weeds. These "super weeds" would then be herbicide tolerant as well. Other introduced genes may cross over into non-modified crops planted next to GM crops. The possibility of interbreeding is shown by the defence of farmers against lawsuits filed by Monsanto. The company has filed patent infringement lawsuits against farmers who may have harvested GM crops. Monsanto claims that the farmers obtained Monsanto-licensed GM seeds from an unknown source and did not pay royalties to Monsanto. The farmers claim that their unmodified crops were cross-pollinated from someone else's GM crops planted a field or two away. More investigation is needed to resolve this issue. There are several possible solutions to the three problems mentioned above. Genes are exchanged between plants via pollen. Two ways to ensure that non-target species will not receive introduced genes from GM plants are to create GM plants that are male sterile (do not produce pollen) or to modify the GM plant so that the pollen does not contain the introduced gene. Cross-pollination would not occur, and if harmless insects such as monarch caterpillars were to eat pollen from GM plants, the caterpillars would survive. Another possible solution is to create buffer zones around fields of GM crops. For example, non-GM corn would be planted to surround a field of B.t. GM corn, and the non-GM corn would not be harvested. Beneficial or harmless insects would have a refuge in the non-GM corn, and insect pests could be allowed to destroy the non-GM corn and would not develop resistance to pesticides. Gene transfer to weeds and other crops would not occur because the wind-blown pollen would not travel beyond the buffer zone. Estimates of the necessary width of buffer zones range from 6 meters to 30 meters or more. This planting method may not be feasible if too much acreage is required for the buffer zones. Human health risks Allergen-city Many children in the US and Europe have developed life-threatening allergies to peanuts and other foods. There is a possibility that introducing a gene into a plant may create a new allergen or cause an allergic reaction in susceptible individuals. A proposal to incorporate a gene from Brazil nuts into soybeans was abandoned because of the fear of causing unexpected allergic reactions. Extensive testing of GM foods may be required to avoid the possibility of harm to consumers with food allergies. Labelling of GM foods and food products will acquire new importance, which I shall discuss later. Unknown effects on human health: There is a growing concern that introducing foreign genes into food plants may have an unexpected and negative impact on human health. A recent article published in Lancet examined the effects of GM potatoes on the digestive tract in rats. This study claimed that there were appreciable differences in the intestines of rats fed GM potatoes and rats fed unmodified potatoes. Yet critics say that this paper, like the monarch butterfly data, is flawed and

does not hold up to scientific scrutiny. Moreover, the gene introduced into the potatoes was a snowdrop flower lectin, a substance known to be toxic to mammals. The scientists who created this variety of potato chose to use the lectin gene simply to test the methodology, and these potatoes were never intended for human or animal consumption. On the whole, with the exception of possible allergen-city, scientists believe that GM foods do not present a risk to human health. Economic concerns Bringing a GM food to market is a lengthy and costly process, and of course agribiotech companies wish to ensure a profitable return on their investment. Many new plant genetic engineering technologies and GM plants have been patented, and patent infringement is a big concern of agribusiness. Yet consumer advocates are worried that patenting these new plant varieties will raise the price of seeds so high that small farmers and third world countries will not be able to afford seeds for GM crops, thus widening the gap between the wealthy and the poor. It is hoped that in a humanitarian gesture, more companies and non-profits will follow the lead of the Rockefeller Foundation and offer their products at reduced cost to impoverished nations. Patent enforcement may also be difficult, as the contention of the farmers that they involuntarily grew Monsanto-engineered strains when their crops were crosspollinated shows. One way to combat possible patent infringement is to introduce a "suicide gene" into GM plants. These plants would be viable for only one growing season and would produce sterile seeds that do not germinate. Farmers would need to buy a fresh supply of seeds each year. However, this would be financially disastrous for farmers in third world countries who cannot afford to buy seed each year and traditionally set aside a portion of their harvest to plant in the next growing season. In an open letter to the public, Monsanto has pledged to abandon all research using this suicide gene technology.

3. How should Monsanto manage the potential harm to plant and animal life from using products such as Roundup? As the advancement of technology, Monsanto created seeds containing the herbicide Roundup Ready, which kill weeds but spare the crops. Monsanto asserts that Roundup Ready doesnt usually end up in ground water and it wont contaminate ground water. It is safe and wont disturb aquatic species. They are trying their best to take actions so that farmers would feel safe to use Roundup. Monsanto's Roundup assaults the planetary biosphere Microorganisms are responsible for much more than just the health content of raw and fermented foods. The most numerous inhabitants in the web of life, microorganisms participate quite literally "at the root" of the nitrogen, phosphate, oxygen and carbon cycles, and are therefore indispensable for the health of the entire biosphere. Astoundingly, there are an estimated 6,000,000,000,000,000,000,000,000,000,000 (6 x 10 to the 30th power) bacterial cells on the planet, and these soil microrganisms represent about 50 percent of the the total biodiversity in terms of numbers of species. As Roundup usage threatens these soil microrganisms, including fungi and the mycellium (technically the largest organism in the world), it could lead to devastating implications. Compromising the health of the mycellium, in particular, may cause serious harm to the planet. According to prominent mycologist Paul Stamets, mycellium may actually act as a 'network' within the biosphere, acting as the Earth's 'natural internet' in which virtually all organisms may rely upon. It has been recognized throughout the ages that all life depends on the soil. Without healthy soil, the health of the entire planet is at risk. Charles E. Kelogg was one individual who stated such in the USDA yearbook back in 1939. Kelogg said: "Essentially, all life depends upon the soil ... There can be no life without soil and no soil without life; they have evolved together." Franklin Delano Roosevelt also voiced similar concerns, warning: "The nation that destroys its soil, destroys itself." Based on an ever-increasing body of scientific evidence showing glyphosate biodegrades slowly, sinks down through the topsoil where it accumulates in the groundwater (source for natural drinking water, e.g. aquifers, springs), and is found in nearly all air and rain samples tested in the US, it is safe to say that Monsanto's best-selling Roundup is one of the greatest threats to human and environmental health ever created. As the USDA continues to sit back and allow Monsanto to threaten the environmental stability of the planet, it becomes more apparent that the USDA and Monsanto are gladly willing to exchange the future of the planet and its inhabitants for short term gain. In fact, the USDA has even given Monsanto's latest GMO crops

speedier approval in order to secure the company's profits, ignoring the numerous known harmful effects of Monsanto's past creations, e.g. Agent Orange, Aspartame, DDT. The known effects of Roundup The negative effects of Monsanto's Roundup on human health and the environment have been firmly established by numerous scientific studies and large-scale investigations, with scientists even linking the best-selling herbicide to conditions like infertility and cancer due to its genotoxic (DNA damaging) nature. Amazingly, even when diluted by 99.8 percent (450-fold lower dilutions than used in agricultural applications), Roundup still exhibits serious genotoxic characteristics and is harmful to the integrity of human DNA. Meanwhile, this carcinogenic herbicide product is used nationwide by unsuspecting homeowners and agricultural workers. According to the United States Geological Survey, 176 million lbs of glyphosate were used in the U.S. in 2007. Outside of the public health realm, Roundup's startling environmental havoc is perhaps an even greater cause for concern. Despite being created to fend off weeds, Roundup is actually spawning resistant superweeds across millions of hectares (one hectare is 10,000 square metres), bankrupting farmers and destroying crop land. These resistant weeds currently cover over 4.5 million hectares in the United States alone, though experts estimate the world-wide land coverage to have reached at least 120 million hectares by 2010. The onset of superweeds is being increasingly documented in Australia, Argentina, Brazil, Chile, Europe and South Africa. The research is clear: Roundup is not only harming human health and damaging farmland, it is threatening the very biosphere itself by destroying microbial biodiversity, with the future agricultural stability of the planet, i.e. the ability to produce food through monoculturing, at serious risk of collapsing.