Ethics Profile Monsanto (NYSE: Mon) Thesis

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Ethics

Profile

Monsanto (NYSE: MON) is one of the largest food production companies in the world, if not the largest. The company, based out of St. Louis, is a global conglomerate with subsidiaries operating around the world. Monsanto employs an estimated 21,700 people and did $11.97 billion in sales last year (MSN Moneycentral, 2009). The company is broken down into two main divisions - Seeds & Genomics and Agricultural Productivity. The company also breaks down its businesses into its three main crops - corn, soybeans and cotton (Monsanto 2008 Annual Report).

At the core of Monsanto's business is biotechnology. Monsanto typically develops seeds that are resistant to various diseases, in order to increase crop yield. One strategy that has proven critical to Monsanto's success is the development of pesticides, such as Roundup, and concurrently developing seeds that are resistant to those pesticides. Roundup products are expected to produce $1.9 billion in gross profit for the company by 2012 (their current gross profit for the entire company is $6.177 billion).

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Monsanto has been subject to significant controversy, however, for a variety of reasons. Some of the complaints relate to outcomes from Monsanto's approach to food-chain management. These include the destruction of biodiversity, the introduction of genetically-modified foods into the food chain, the replacement of staple crops in favor of cash crops grown for feed and damage to family structures in developing countries. Monsanto has also been criticized for direct actions they have taken. These include lobbying the U.S. government to prohibit GMO labeling, the introduction of Bovine Growth Hormone, dumping PCBs in Alabama and bribes in Indonesia that earned the company a $1.5 million fine for violating the Foreign Corrupt Practices Act.. Paradoxically, Monsanto won the 2008 Corporate Secretary Magazine Award for "Best Governance, Compliance and Ethics Program" (Monsanto, 2008).

Human Resources Practices and Policies

TOPIC: Thesis on Ethics Profile Monsanto (NYSE: Mon) Is One Assignment

At the core of Monsanto's ethics program is what is known as the Monsanto Pledge. The Pledge is focused on increasing yields and productivity. Thus, yield forms the heart of the company's philosophies. Flowing from the Pledge is a human rights policy, which pertains largely to the company's partners overseas. The human rights policy is guided by the Universal Declaration on Human Rights. Thus, the company stands against child labor and forced labor. Human resources policy also touches upon minimum pay rates, working hours, harassment, discrimination, worker safety and other such issues.

Monsanto's human rights policy was largely crafted with their overseas partners in mind. The company itself, being essentially a biotechnology firm, is generous with its own employees in terms of both pay and benefits. The company's policies with regards to equality are generally progressive, landing them a spot in Working Mother Magazine's 100 Best Companies in 2008 and Diversity Inc.'s Top 50 Companies for Diversity list. The company also has a Code of Business Conduct that provides guidance to employees regarding a myriad of issues, including business dealings, the environment, health and safety, stewardship, research methodology, and communication of information regarding Monsanto's finances and products.

Plans for the Company

Monsanto's future is tied to building strong growth in their existing lines, and in a new technology that is due to be released in 2010. The company plans to continue to push Roundup as their core product, growing profits from that one product to $1.9 billion by 2012. The company's research and development efforts are geared towards new biotech traits, elite germplasm, breeding, new variety and hybrid development and Genomics research (Monsanto.com, 2009).

Two emerging areas that are key to Monsanto's future plans are vegetables and their next wave of technology. Currently, Monsanto is focused on three large-acre crops, but vegetables are the company's next frontier. This focus comes as a result of their recent purchase of vegetable seed producer Seminis. In 2010, Monsanto hopes to launch SmartStax, a new corn technology that the firm has stated will be a "game-changer" (Monsanto 2008 Annual Report). This is expected to be a synthesis of the different corn technologies that have come before it.

Incidents

In 2002, Monsanto lost a civil lawsuit from 3500 individuals who were claiming health and property damages relating to Monsanto's dumping of PCBs near its Anniston, Alabama PCB manufacturing plant. The company had owned the plant since 1931 and in 1938 had received evidence that PCBs were harmful to animals. Despite the evidence, Monsanto continued to produce the chemicals and dump the in local landfills without regard for the health and safety of the people in the region. It was determined that the company could have installed an oil-water separator for about $3,000 that would have provided significant protection against the pollution, but chose instead to dump production waste into landfills and local waterways, untreated. Company records showed that management was aware of the damage the pollution was causing in the 1960s, but decided the cost of limiting discharges was too high (Grunwald, 2002).

The aggressive marketing of the Bovine Growth Hormone (BGH) is another example of Monsanto's lack of ethical compass. The company developed BGH, a steroid, to increase the production of milk in cows. However, BGH was found to significantly increase the risk of health problems in cattle, including mastitis, fertility reduction, increased risk of lameness and other disorders. BGH was subsequently banned in Canada, Australia, New Zealand and in Europe. Aggressive lobbying in the U.S. allowed BGH to be used in American dairy cattle. Monsanto took further measures to protect against public debate about the potential health risks of BGH, including pressuring a Fox affiliate in Tampa to fire reporters who posed the debate (Schweitzer, 2000). In another incident, Monsanto sued a small, independent dairy farmer in Maine for advertising that his milk did not contain BGH, in apparent fear of the inference the claim made (Wickenheiser, 2003). Such aggressive marketing of a product that is known to cause health problems in cows and may cause health problems in humans exemplifies Monsanto's desire to put profits ahead of health and safety. In late 2008, Monsanto divested its milk division to an Eli Lilly subsidiary.

Hiding their Policies

In the PCB case, Monsanto was able to hide their policies for decades. They had been dumping PCBs into the environment for decades before even management knew the extent of the problem. However, even when the scope of the pollution was revealed, the company kept it secret. Internal documents discussing the issue were kept strictly confidential, and Monsanto never made announcements to the public. Moreover, their lobbying efforts kept - and to this day continue - to keep the federal and state governments from becoming concerned about the issue. The company remains unrepentant today, opposing studies to determine if residents of Anniston are sicker than average as a result of the dumping. The company has also actively purchased properties in the affected areas and demolished buildings, to keep further evidence from emerging. Both independent and company studies of pollution in the Anniston area had showed horrific results, but Monsanto never once took these results public (Grunwald, 2002).

In the case of BGH, Monsanto did little to hide their policies regarding the controversy. This is due in part to the fact that they were essentially dragged into the public sphere with regards to the issue. Without the controversy, it is doubtful that the issue of BGH health concerns would be as well-known as it is; it is reasonable to assume Monsanto would not have advertised this. Once the issue became up for public debate, the company's actions were less secretive, including the lawsuits against dairies competing against Monsanto's customers.

How I would Change Things

In their actions, Monsanto has not only acted unethically, but they have exposed themselves and their shareholders to punitive financial action. The PCB case illustrates a willful disregard of human life, perpetrated on a poor small town in Appalachia. Precautions that could have been taken were not, partially because the firm realized they could get away with it. In this instance, however, basic human decency would have demanded that they take steps to limit their pollution. They knew, for example, that fish were killed instantly when exposed to the creek where they dumped their effluent, and the river that creek fed. It was reasonable to assume that pets and children would also suffer adverse consequences of exposure to that water. Monsanto should have installed safeguards when they had the opportunity in the 1930s, and again in the 1960s should have been forthcoming with the citizens of Anniston about the nature of the pollution. They could have installed equipment to limit the outflow, or at the very least armed the residents with information that could have allowed them to avoid future exposure to the toxicity.

With regards to the BGH, it seems clear that the product is harmful, it having been banned in the rest of the developed world. Monsanto should have worked to develop a safer version of the product, and allowed competitive marketing. If the product is safe, they would have nothing to fear from Oakhurst and other… [END OF PREVIEW] . . . READ MORE

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