Monsanto: How A Leader in Genetically Modified Foods Reports

Greater transparency has been a boon to economic decision-making. Better information, assuming it is intelligently organized and reported, results in more efficient allocation of capital. As part of this trend, companies are increasingly reporting on their on their sustainability and other corporate citizenship/responsibility initiatives. As a general rule, these efforts are useful, though some tend to use them as a Pr tool rather than a serious attempt to better manage their risks and opportunities. The Corporate Register assesses these reports. Below is one such report on Monsanto, the chemical and genetics company. It is of interest as an example of how such documents can be made more productive for the company and for those who read them.

William D'Alessandro analyzes the latest Monsanto report on CorporateRegister.com:


"Named by its founder in 1901 after his wife, the daughter of a Spanish nobleman, the Monsanto Co. produced the artificial sweetener saccharine. The company began to manufacture agricultural chemicals much later in 1945. One was the herbicide 2,4-D, which Monsanto eventually mixed with other compounds to make the military defoliant Agent Orange. Another legacy is polychlorinated biphenyls, the ubiquitous insulating material that became a health hazard. After it was banned in 1979, the environmental contaminant led to decades of intrigue and litigation.

Today’s legal entity, the biotechnology and seed company, was incorporated only in 2000. In just one decade, Monsanto has transitioned into a highly profitable leader in its field.

Monsanto’s latest sustainability report is titled “United in Growth.” The report documents the contribution Monsanto has made, not just in 2010 but over recent years, to the enrichment of farmers and the simultaneous increase in the global food supply. Monsanto drives the point home with human-interest stories and photos of people smiling and being productive. The message is writ large on page one: “If there were one word to explain what Monsanto is about, it would have to be farmers.”

The 56-page report follows the tried-and-true format of corporate booklets handed out for promotional and advertising purposes. The font is legible. The pages are airy. The text, headlines, and quote breakouts are unwaveringly positive from cover to cover.

The report has four parts. First, a section on sustainable agriculture tells of Monsanto’s achievements in developing technologies “that enable farmers to produce more while conserving more of the natural resources that are essential to their success.”

Then the subject of stakeholder engagement is addressed in a manner that appears to be unique to the company. Monsanto describes its philanthropic efforts and partnership programs as engagement activities. The discourse covers efforts such as the free distribution of hybrid seeds in India, training Brazilian farmers in forestry and biodiversity protection, and giving financial support to young people enrolled in the organisation Future Farmers of America.

Monsanto’s discussion of corporate governance also takes a singular turn. In the company vernacular, it means eagerness “to learn from the experiences of others and encourage new ideas in corporate social responsibility." The topic has no sharp boundaries. Monsanto explains how its licensing approach gives farmers more choices; how the company rewards employees for their stewardship achievements; and measures taken to prepare employees to handle ethical dilemmas.

The final section deals with operations. It contains routine types of data on resource and energy consumption, and occupational safety. Virtually all the quantitative information presented in the report appears in this section along with more success stories, including the program begun in 2006 to eliminate the widespread use of child labour in India’s cotton seed-production industry.


Communication:

Monsanto tells its story well. The theme comes across as clearly as a grain silo standing in a Nebraska corn field.

Monsanto says at the start: “In the next few decades farmers will have to grow as much food as they have in the past 10,000 years — combined.” Every sentence that follows supports the basic premise that customers who use the company’s biotechnology are much better off financially and protect the environment far more than those who decline. A typically bold assertion in the report is one that claims agriculture is fairing better in the US than in the EU because Americans embrace “the use of biotech traits to manage weeds and insects while regulations in the European Union limit farmers’ access to these same traits.”

Socially minded investors or, for that matter, any professional analysts who leaf through “United in Growth” will not find the sort of information that would warrant making sustainability reports mandatory for publicly traded companies.

No mention can be found in Monsanto’s report of the regulatory inquiries underway or ongoing court cases involving genetically modified crops. New concerns raised in 2010 about the safety of Roundup-ready crops are not discussed, either.

More than a few critics contend that democracy is undermined around the world by corporate-controlled seed supplies. Why is this true or not?

The US Environmental Protection Agency reached an agreement with Monsanto in 2010 to pay a $2.5-million (€1.8 million) penalty to resolve misbranding violations for cotton seed products containing genetically engineered pesticides. This the largest civil administrative penalty settlement ever under the nation’s Federal Insecticide, Fungicide and Rodenticide Act, but it goes unnoticed.

What steps is Monsanto taking to alleviate tensions with organic farmers whose crops are unwillingly mixed with GM varieties? What is the allocation of R&D funds between conventional breeding and biotech? What is the score on approvals and rejections of GM crops in various jurisdictions around the world?

So many critical questions are left unaddressed; the impression is that management consciously intends to communicate just with loyal members of its corporate family. Monsanto has been burned over the years by myths, disinformation, and wild, spurious allegations on the Internet. Perhaps the company has grown weary of trying to sway those who remain unconvinced.

Since 2000 Monsanto has attracted more than its share of attention from watchdogs in the media and at non-governmental organisations. Anyone who really needs to learn more about the company’s environmental and social performance can find it elsewhere. The sustainability report is worse than superfluous.


Credibility:

Monsanto offers no comments, much less any formal statement, about the means or methods of assurance. The absence of independent verification is not surprising. This reviewer is hard-pressed to see how a third-party auditor could attest that the report represents a complete and fair treatment of the material issues relevant to Monsanto’s sustainability.

Monsanto includes an index at the back of its report purportedly coinciding with the content requirements of the Global Reporting Initiative’s guidelines for disclosure. CEO Hugh Grant also refers to the GRI standard in introductory remarks. But Monsanto makes no claim to meet any application level (A, B, or C) for the GRI framework, and does not say its report is based on the guidelines.


Recommendations:

1. Give environmental professionals in the company the opportunity and the means to compile a sustainability report, if only to show the board of directors and the PR staff what one might look like.
2. Make a table of contents that bears some relationship to the subject matter actually found in the report.
3. Adhere to the Global Reporting Initiative or stop mentioning it