supermarket
Analysis
NanotEchnology & Retailer Responsibility
February 1, 2008
A handful of grocers seeking the extremes of progress have been eyeing nanotechnology since the turn of the new millennium. Considered a technological tsunami, nanos cover a broad array of innovations, some of which are already commercially available. The one thing they have in common - nano: meaning - it involves manipulation and use of particles that are 1/80,000th the size of a human hair.
Nano met dark green this week as the EPA awarded 21 grants totaling $7.34 million to universities to investigate potential adverse health and environmental effects of manufactured nanomaterials. While some forms of nano hold the promise for clean up and good use, such as better sealants for solar panels and various alternative fuel improvements, irresponsible use and development is an increasingly serious issue.
It is also an issue that has affected grocers and those who invest in many of the products sold on their shelves. At the forefront, the Investor Environmental Health Network (IEHN), which represents 20 investment organizations with $22 billion in assets under management, has set its sites on the cosmetic and personal care industry, in particular.
IEHN serves as a meetingplace for a powerful convergence of forces - including shareholder resolutions, improved health risk information, European and U.S. regulatory changes and growing consumer pressure -- all of which could drive sweeping changes in the U.S. personal care and cosmetics industry, with significant implications for investors.
According to a recent IEHN report entitled "Beneath the Skin: Hidden Liabilities, Market Risk and Drivers of Change in the Cosmetics and Personal Care Products Industry" a largely self-policed industry in which regulatory action by the U.S. Food and Drug Administration (FDA) typically is triggered only by reporting from the companies themselves is a ticking time bomb.
"The result is a system that permits significant consumer exposure to occur before sufficiently rigorous safety testing is conducted - ultimately, a game of roulette which places consumers, manufacturers and investors at risk," said Sanford Lewis, an attorney specializing in corporate accountability and one of the report's authors.
Scientists and consumers also have expressed concern that the industry's use of nanoparticles - which involve the manipulation of microscopic particles - may allow them to penetrate into the bloodstream and the lymph system and damage tissue.
"Once they surface, health hazards may pose a serious threat to brand loyalty with significant implications for profitability and market share. It is difficult to overstate the potential magnitude of this challenge," said Lauren Compere, director of shareholder advocacy at Boston Common Asset Management, which has introduced shareholder resolutions on safer cosmetics at CVS Corporation.
The weak U.S. regulatory structure also limits product marketability in the 457-million person European market. In 2005, the European Union banned more than 1,000 chemicals for use in cosmetics, the report notes.
Closer to home, both California, the world's sixth-largest economy, and Canada have tightened their regulations of personal-care products.
The report says that "while questions about the health impact of nanotechnology are certainly broader than the cosmetics industry, their usage in cosmetics and personal care products represents a source of concern to investors since cosmetics companies are already deploying nanotechnology in various applications."
There are several types. First there are the "penetration enhancers" - these are encapsulating or suspending key ingredients which are contained in so-called nanospheres or nanoemulsions. The objective is to increase their penetration into the skin.
L’Oreal (which ranks No. 6 in nanotechnology patent holders in the U.S.) has used polymer nanocapsules to deliver active ingredients, e.g. retinol or Vitamin A, into the deeper layers of skin. In 1998 the company unveiled Plentitude Revitalift, an anti-wrinkle cream using nanoparticles.
Freeze 24/7 is a new anti-wrinkle skincare line which is planning to incorporate nanotechnology in future products and another one to watch out for.
Then there is La Prairie’s product, the Dollars 500 Skin Caviar Intensive Ampoule Treatment, which claims to minimize the look of uneven skin pigmentation, lines and wrinkles in six weeks using nanotechnology.
La Prairie’s vice president of retail marketing and training, Holly Genovese, says the nanoemulsions in the product “optimize the delivery of functional ingredients into the skin and allow these materials to get to the site of action quicker”.
Procter & Gamble’s Olay brand was designed with nanoemulsion technology in 2005, as well. Other companies using nanotech in their skin products as of 2005 include: Mary Kay and Clinique from Lauder; Neutrogena, from Johnson & Johnson; Avon; and the Estee Lauder brand.
Then there are the hair products. These use nanoemulsions to encapsulate active ingredients and carry them deeper into hair shafts. PureOlogy began experimenting with nanoemulsions in 2000 when the company’s founder set out to create a product line especially developed for color treated hair.
Sunscreens and skin care products are also going nano. Zinc and titanium in sunscreens are “micronized”, making them transparent, less greasy, less smelly and more absorbable into the skin.
DDF planned more nanotech-enhanced anti-aging products as of 2004.
Colorescience markets a product named Sunforgettable, a powder which contains titanium dioxide nanoparticles.
Paris-based Caudalie launched its Vinosun Anti-Aging Suncare, a sunscreen and anti-aging treatment that relies on “nanomized” UV filters and antioxidants, in the US in 2003.
Grocers are already taking steps.
According to the IEHN Spring 2007 update, t he 2006 proxy season saw a flurry of positive corporate steps following the filing of shareholder resolutions focusing on toxic chemical risks, including:
• Whole Foods Markets announced that it would remove baby bottles and other products that contain certain toxics from its shelves as part of a new corporate policy initiative to reduce customers’ exposure to hormone-disrupting chemicals.
• Wal-Mart announced a new “preferred substances policy” that incorporates a precautionary, hazards-based approach to chemicals management, initially focusing on persistent bioaccumulative toxics and carcinogens.
• ConAgra agreed to analyze and report on alternatives to PFOA in food packaging.
• Becton, Dickinson agreed to survey its suppliers regarding brominated flame retardants in its medical devices.
• Johnson & Johnson agreed to initiate a stakeholder dialogue with one of the cosmetics industry’s harshest critics, the Campaign for Safe Cosmetics.
By Jeff Overbeck, Freelance Reporter