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.

1
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 non-
government 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 genetically-
modified 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 agri-
biotech 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 cross-
pollinated 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.