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Sunday, August 29, 2010

Company Law - Corporate Social Responsibility and Trade in Genetically Modified Organisms


Corporate Social Responsibility as a concept have gained in prominence in today’s world, wherein the standards being demanded from the corporates, in the various domains of their functioning is on the advent. It is expected that they would be ‘socially responsible’ not only in the manner in which the function, but also regarding what they perform. It is expected that even though the basic premise on which the entire concept of companies is based is profit making, the companies will not be blinded by the same and the same endeavour would be by keeping in mind the duties they owe to the people of this world, the society, the environment and the world as a whole. This is all the more true when we keep in mind the fact that many of the MNCs have got immense economic power, which in many cases are more that the GDPs of various developing nations. And hence the expectation to be socially responsible.

Keeping the same in mind, the present project is an endeavour to analyse the same concept of CSR vis-à-vis Genetically Modified Organisms (GMO). There is a huge debate rowing internationally whether, at all GMOs should be allowed to be traded, used or produced by any organisation. Consequent to the same, two schools of thought have emerged, one advocating vociferously the utilities of allowing the use of GMOs in various fields, ranging from agriculture to food products; and the other group highlighting the potential catastrophic consequences, which might ensue from the allowance to use the same technology.

However, there are various MNCs, specially those from the United States which have been involved in the production of various transgenic varieties of organisms and selling the same in the developed and also the developing countries. The present project would seek to lay down, as to whether the same line of activity of the MNCs is sufficient conformity with their responsibilities emanating from the CSR regime. For the same, the various potential risks and benefits of the use of GMOs would be analysed, along with some specific case studies to see what has in reality been the effect of the introduction of GMOs in the environment. The project would also look into the laws governing GMOs internationally to find out what is the level of diligence and compliance expected from the companies involved in the manufacturing and trading in GMOs. Also a very important aspect of the same question is the effect of patenting of the various GMOs by the companies producing them and their social and economic repercussions. And finally, the project would conclude with determining whether the companies indulging in the trading of GMOs will per se violate the mandate of Corporate Social Responsibility. If not, then what should be the minimum standard of precaution that they should be following to avert and environmental and social catastrophe.


The European Commission describes CSR as: ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.’ Similarly, the UK Department of Trade and Industry (TDI) regards CSR as involving: ‘….business looking at how to improve their social, environmental and local economic impact, their influence on society, social cohesion, environmental and human rights, fair trade and on the ways that fairness can be corrupted. CSR is an issue for large multinationals and for small, locally based business.’

As such, a social responsibility policy can provide value as a strategic part of a firm's daily activities. Under a strategy that integrates socially responsible practices, a company's analysis of profit, return on investment, or return on equity as the bottom-line should be replaced by a "triple bottom-line" approach, encompassing economic, social, and environmental factors. CSR is a comprehensive notion that takes into account economic, social, and environmental concerns and, at the same time, protects the interests of all stakeholders by requiring greater transparency. Inherent in social responsibility of corporations is the understanding among corporate managers that their business decisions must be made with consideration of a wider range of constituents than shareholders, and thus they ought to consider the implications of their actions on employees, consumers, suppliers, the community, and the environment.

Three main areas that CSR policies will influence, have been identified. First, CSR requires the implementation of socially responsible core business activities that minimize negative impacts and optimise positive impacts. This includes compliance with international standards concerning the environment, labour, and human rights. Companies can also be more proactive in controlling the risks and social costs associated with their activities. Second, companies should institute poverty-focused social investment and philanthropy programs such that their contributions to host communities and social causes become integral to the company's strategy. Third, CSR requires corporations to become engaged in public policy dialogues and institution-building with the goal of fostering an environment that is conducive to both profitable business and sustainable development. This requires the establishment of trade and business associations or corporate leadership networks that will address issues beyond immediate commercial interests.

Thus, it is clear that the nature of today's global economy calls for something more than a profit-oriented approach by large and small enterprises alike. As globalization increases, so do inequalities among nations with regard to labour standards and environmental regulations, decreasing the likelihood that global development is sustainable. With a purely profit-oriented strategy, there is no value addition in appraising a company's competitive position. But if the strategy takes into account economic changes wrought by globalization and implements a socially responsible value system within the corporation, it will contribute greatly to the company's long-term profitability and competitiveness. Such strategy will not only perpetuate the MNE's existence, but will also contribute to the sustained development of the global economy.

Corporate Social Responsibility is a crucial element of international efforts to foster sustainable and equitable development worldwide. Its creation will require four stages: setting standards; monitoring compliance with standards and exposing abuses; creating binding legal obligations; and enforcing those binding laws. Social responsibility should accompany power; therefore, the view that MNEs should play a significant role in the protection of rights through a CSR regime is correct. However, to be effective in bringing about sustainable development, the regime must be the product of national and international initiatives and must be carried out by corporations operating globally. An international, cooperative approach is thus necessary to allow for the controlled furtherance of globalization and accompanying sustainable development. This cooperative approach will require MNEs to change their core values to incorporate protection of the environment and fair labor standards.

Further, compliance with CSR should be a completely voluntary approach to render the object of the same to be effectively implemented. Over the last ten years, those institutions that have grown in power and influence have been those, which can operate effectively within a global sphere of operations. It may so happen that without acting in an environmentally and socially benign manner, companies may be able to increase their immediate profits, and consequently be content with its performance. But its actions can potentially affect the environment and the society adversely, and consequently it will be diminishing its own profit making opportunities.

Keeping the above overview of the company’s responsibilities in mind, let us now relate to the second string of this Project, and that is the aspect of the Genetically Modified Organisms.


The EC has defined a GMO as follows, “An organism, with the exceptions of human beings, in which the genetic material has been altered in a way that does not occur naturally by mating and/or natural recombination. However, the same has not been accepted unanimously. Proponents of GMOs point out that genetic modification of one sort or another has been practiced by mankind for centuries, first in the form of selective breeding, and later in the form of crossbreeding. This argument maintains that GMO technology is really nothing new, but merely a modern version of an ancient technique. The argument goes on to say that since mankind has been selectively choosing the genetic traits of his crops for hundreds of years, this new technology does not raise any new ethical or safety issues. Instead, GMO technology merely gives the modern world a greater ability to control the process and to make more exacting choices of genetic traits.

However, the above argument has been vociferously negated by various authors. While proponents of genetic modification point out that this technique allows more control over the addition of desired traits, the technique also opens up an entirely new set of variables. An organism's DNA, according to some scientists, is mostly made up of "junk DNA" that serves no purpose in the development of the organism. Recent research, however, shows that the interactions between strands of DNA (genes) is highly sophisticated and interconnected. It is thus impossible to completely control a particular trait simply by isolating a particular strand. In other words, no strand is an island, and we do not yet have the knowledge to account for all the possible influences one strand has throughout the entire chain of DNA.
There are also quantitative differences between rDNA technology and traditional techniques. The new technology allows for a far greater number of organisms to be produced at a far greater speed compared to traditional methods, and the collective impact of these organisms presents problems for risk assessment.

The first genetically modified commercial food item, the Flavr Savr tomato (a slow-ripening tomato), was introduced in 1994. Since that time, genetically modified foods have become widespread, as over fifty types of transgenic plants have been commercialized in the United States. These plants include delayed- ripening crops, pest-resistant crops, herbicide-tolerant crops, virus-resistant crops, bacteria-resistant crops, fungus-resistant crops, and nematode-resistant crops, among others.

According to figures, the global area of GM crop cultivation has grown 40-fold since 1996, and the estimated global GM crop area in 2003 was around 67.7 million hectares, cultivated by 7 million farmers in 18 countries. Herbicide-tolerant soyabean has been the dominant transgenic crops, followed by the Bt-Maize and the herbicide resistant canola. Six countries accounted for 99% of global transgenic crop area (United States, 63% of global total; Argentina 21%; Canada 6%; Brazil and China, 4% each and South Africa, 1%). Minor plantings were found in Australia, India, Mexico, Bulgaria, Spain, Germany etc. Almost 1/3rd of the global transgenic crop area in 2003 was in developing countries. In the same year the global market value of GM crops was estimated to be between US $ 4.5 to US $ 4.75 billion. The market value is based on the sale price of transgenic seed plus any technology fees that apply.

Numerous companies are working on producing pharmaceuticals that grow in plants. Once grown, the pharmaceuticals can be extracted from the plant, or in some instances people may be able to eat the genetically engineered plant to obtain the benefit. Relatedly, plants may be used to grow industrial compounds for uses such as detergent manufacturing, paper production, and mineral recovery. Various species of trees are being genetically engineered to grow faster, produce wood that is easier to process, or resist certain diseases and other problems. Many laboratories are working on varieties of genetically modified fish, such as transgenic salmon, carp, catfish, and trout, in an effort to increase rates of growth and reproduction, improve disease resistance, enhance cold tolerance, or provide other benefits. Transgenic cattle, sheep, pigs, chickens, goats, rabbits, rodents, shellfish, and insects also are being developed. Goals here include increasing growth rates, reducing fat levels, and improving disease tolerance, among others. Experimentation is under way to genetically engineer animals to produce human biologics and other products, including organs and tissues for human transplant. Animals could be modified to produce human proteins in their milk, which could then be extracted and purified for therapeutic use in humans. In sum, genetically modified crops are already widely commercialized, and the commercialization of many next-generation biotechnology products is just around the corner. Further, developments in rDNA technology and genomics, including the genetic sequencing of plants, are expected to lead to the accelerated development of even more new biotechnology products, both in number and diversity.


General risks involved

First is the risk that altered DNA will contaminate an ecosystem, referred to as genetic pollution. Such pollution was recently identified in Mexico, where DNA from genetically modified corn has found its way into native corn varieties growing in remote southern Mexico, heightening fears about the dangers of bioengineered crops. Apparently, the polluting DNA came from consumable modified corn used as seed. The effects of genetic pollution are difficult to predict and are likely to vary, but could potentially include super insects and super weeds. Related to the phenomenon of genetic pollution is the threat that the use of GMOs may also cause the loss of diversity in a gene pool, a process also known as genetic erosion. Such erosion may occur as the ecosystem changes in response to its newly modified organisms. Choices by farmers may increasingly limit the range of plants grown for agricultural purposes. This latter effect may yield adverse economic, as well as environmental, effects. Genetic pollution and genetic erosion are present in certain geographic areas located in less-developed nations that have richly diverse ecosystems which are untested in terms of the impacts on biodiversity. When compared to the risks that agricultural biotechnology poses to the environment, the risks posed to human health so far appear more limited. Genetic engineering poses risks related to human allergies. Significant uncertainty prevails in this area, because allergenicity risks are extremely difficult to assess and testing for human health effects has been sporadic and inconsistent. Moreover, incidents of serious risks to human health arising from adaptations to the genetic material of traditional food products give rise to concerns that engineered changes in plant genes may cause other, similar risks to human health.

Impact on agriculture

The effects that genetically modified crops will have on agriculture present both economic and social concerns that strike at the heart of our perceptions and policies towards agriculture in general. Presently, we are in a time where much of the farming that takes place in the United States is industrialized, and the small family farm has struggled to compete. There are, however, strong undercurrents keeping traditional farms alive and functional, and it is arguably more than mere sentimentalism that keeps such ideals vital.

Man's relationship with agriculture is unique in many ways. Without sustenance, we would perish, and it is through of farming that we are able to sustain in the world. Traditionally, agriculture has been defined in terms of community, with local growers providing needed crops. Although a shift has occurred whereby we no longer receive the majority of our food products from local farmers, the values of community, land stewardship, and animal husbandry remain strong throughout much of the United States. With this in mind, it is important to consider the effects that genetically modified crops will have on agriculture.
Biotechnology need not be synonymous with the industrialization of agriculture, but in practical terms they are very similar in content and in effect. It is from this perspective that the effects of biotechnology on the agriculture must be examined.
One of the primary concerns about the effect of genetically modified crops on farmers is that of economic costs and controls. One such cost involves the continual updating of modified seed to keep up with the co-evolution of pests and changing ecological conditions. Another cost involves the renewing of licenses required to plant many genetically modified crops. The patented plants are often sold only for one growing season, and farmers must purchase new seed or renew their permits to plant in order to continue growing the crops. Traditionally, seed was simply harvested and used again during the next growing season. Under the terms of most GMO contracts, such a procedure would now constitute patent infringement, and the biotechnology corporations who own the patents have brought a number of lawsuits against farmers. Such agreements thus produce the possibility of litigation costs, as well as monitoring costs to ensure infringement does not occur. The concern is that such a system "leaves farmers at the economic mercy of the companies they support and separates farmers from their natural linkage with consumers and the public."

Genetically modified crops also pose a risk to non-modified growers, and organic farmers in particular. Until recently, organic certification required that crops be unmodified. When modified seed ends up in organic fields, the result is that the organic farmer loses his certification. Since the market price for organic foods is much higher than for non-organic foods, the result is a substantial decrease in the worth of the crop. Furthermore, it would be impossible to sort out the plants that contain the modified genes from those that might not, and there is no way to remove the gene. To make matters worse, it is difficult to tell where the contamination occurred. The genes could have come from a local combine operator who failed to clean his machinery, or they could have simply blown in from a neighboring field in the form of pollen. Due to the proliferation of genetically modified crops, zero-contamination may soon be impossibility.

Another economic concern comes in the form of international resistance to genetically modified crops. Over the past five years, farmers in the United States have lost more than $814 million in foreign sales due to international restrictions on genetically modified crops. That figure does not include the amount farmers lose as a result of the oversupply in the domestic market. Presently, the United States, along with the biotechnology industry, is putting pressure on foreign markets to accept genetically modified imports. Such tactics may not be effective, especially in regions where there is concern that the patenting of genetically modified crops "will create a new feudalism in which farmers, especially those in developing countries, will be dependant upon a few multinational companies from the northern hemisphere." Whatever the result may be, the current market is drastically affected.
While in a technological sense, genetically modified crops may represent a shift in how farming is done, it is not revolutionary in terms of the modern culture of agribusiness. Critics of biotechnology suggest that the pest and disease problems that genetically modified crops have been designed to counteract are a result of the monoculture farming of industrial agriculture. Vast fields of identical plants are particularly vulnerable to weeds, pests, and disease, while the usefulness of pesticides is lost to resistance. Genetic modification allows the system of monoculture to survive without changing its basic structure. Rather than exploring the use of more diverse crops or alternative farming techniques, genetic modification allows for "business as usual," at least for the time being.
Two specific examples of biotechnology's impact on agriculture are "roundup ready" soybeans and "Bt" corn. The genetic material of these plants is engineered in the first case to survive the application of a herbicide, and in the second to kill insects eating the plant. There are numerous other examples of such crops. The significance of biotechnology for modern agriculture can be assessed from several perspectives. Although specific estimates vary, an inescapable conclusion is that modern agricultural production yields very substantial and growing amounts of GMOs. Production of roundup ready soybeans and Bt corn contribute to the striking growth in production. This growth in production is matched by a growth in the level of consumption of genetically engineered food products. Not surprisingly, the economic stakes associated with opportunities for unrestricted trade in genetically modified agricultural products are already high and are steadily increasing. Countries that have an economic interest in trading these products, most especially the United States, have promoted their interests in unimpeded trade. Moreover, this interest in the rules of trade for genetically engineered agricultural products has implications for trade in all agricultural products.

Cochrane’s "Technological Treadmill"

It has been another argument that shows the harmful effects of deploying GM seeds and crops in the agricultural sector. The treadmill is characterized by continuous cycles of technology adoption, competition in markets with unfavorable prices, elimination of farms with older technology, and consolidation into large farms. And hence this theorem shows that the introduction of genetically modified organisms clearly lead to the elimination of smaller farms, which cannot afford to upgrade to the more advanced breeds being produced by the companies, which consequently lead to the consolidation in favour of the larger farms.

A common tendency in the face of farm restructuring is to see technology as biased, either directly or indirectly, in favour of large farms. Cochrane emphasized the role of technology in propelling farm structure toward fewer and larger farms. Increases in farm size observed in industrialized countries might be traced to biases or distortions in capital substitution that favour large farms. Another explanation of increasing farm size looks to the decreasing proportion of food expenditures in an expanding economy, described by Engel's Law. The price inelasticity of food in an expanding economy results in competition among farms for a decreasing slice of the total economic pie. The superiority of urban wages over rural ones and the tendency of food budgets to decline proportionately with income increases pull people out of agriculture and offer explanations for increasing farm size as equally plausible as biased technology.

The Mousetrap Analogy

Environmental conditions are not static. Species are constantly evolving in response to the changes in environment. The evolution of the predators or prey of a species, or the evolution of another type of organism that competes for the same resources as the first species, can provide especially strong selective pressures. Since species evolve as a result of selective forces in nature, building a better mousetrap should result in the breeding of a better mouse, one that is able to defeat or avoid the new trap. If the species does not evolve in response to a strong selective pressure, the extinction of the species becomes more likely. The producers of biotechnology have altered agricultural species to give them traits that create advantages over their competitors, and this will at least in theory cause the competitors in the environment to evolve. It is possible that pest species could be rendered extinct by aggressive pesticides, but as is illustrated by man's efforts to eliminate pests such as termites and rodents, it is unlikely that humans could defeat a hearty insect species such as the potato beetle. It is much more likely that the overuse of chemical pesticides will make the species more resistant to the overused pesticides.

The altered biological products that farmers introduce into the environment can further evolve and can cause other organisms in the environment to evolve in harmful ways. For example, pest species may become resistant to the adaptations of genetically modified organisms such as the ability to produce pesticides, and become a greater nuisance as the techniques farmers use to combat them begin to fail.

This particular theory that the introduction of genetically altered organisms can back-fire can be well illustrated by considering certain particular examples.

Chemical-Resistant Crops

A genetic feature that biotech companies have given to agricultural products is the ability to resist high levels of herbicides and pesticides. This allows farmers to spray greater amounts of chemicals on their plants without damaging the crop. One example of this is the Roundup-Ready soybean. Monsanto owns both the genetically modified soy species and the patent to the popular herbicide Roundup. The growing of Roundup-Ready produce may advance Monsanto's market share for the herbicide. There is a risk that weed species can secure resistance to herbicides through cross-pollination or natural selection. Herbicide-resistant weed species can increase the crop loss of all farmers, and drive up food prices due to a need for the use of costlier, less effective herbicides or the need for greater quantities of currently used chemicals. Greater amounts of these harsh chemicals in the environment pose risks to other species in the environment and to farmers who have to administer the chemicals.

Mutations of Mutations

Another danger that results from the genetic manipulation of crops is that once genetically altered organisms are placed into the environment, they are then free to mutate further, and these mutations may be far more destructive to the environment than their first generation ancestors. The interaction of genes is not yet predictable, and it is impossible to foresee the myriad of possibilities that nature may produce. For example, a potato strain that produces a pesticide may mutate to produce a far deadlier chemical that could harm humans, benevolent insect species or domesticated animals. The organic potato may not have developed these dangerous chemicals through thousands of years of evolution or selective breeding, but the possibility becomes far more likely when the potato is given a head start by genetic engineers. It will take some extension of our current tort laws to assign liability to the biotech firms if this occurs. It would be difficult to prove that the biotech companies, rather than "acts of God," are both the but-for and proximate causes of the harmful mutated strain.

Unlike the improvement of the mousetrap, the environmental conflicts created by these organisms are not just a simple case of one product being replaced by another superior product, but rather a case of one brand of product altering the environment so that it may become the only choice to the market. A large segment of the population would prefer organic vegetables to their genetically enhanced counterparts and would be willing to pay higher prices for them. In the United States alone, the organic food market is a four billion dollar a year industry. Many other consumers worldwide prefer organic produce. In Britain, where the labelling of genetic crops is required, the majority of the public is opposed to the genetic modification of food species. This illustrates that genetically engineered varieties are not necessarily viewed as superior products. The consumers who prefer crops that have not been genetically modified will incur greater costs if farmers who grow these crops lose the ability to use certain pesticides and herbicides and therefore cannot raise crops in a cost-effective manner.

Certain real life examples of possible harm from GMO

A Cornell University study found that pollen from corn genetically modified to produce the toxin Bacillus thuringiensis (Bt) is fatal to monarch butterflies. Environmental groups immediately thereafter filed a petition with the Environmental Protection Agency (EPA) seeking protection for butterflies from the Bt corn pollen. The potential impact on butterflies and other species could be enormous because Bt varieties comprise thirty percent of the U.S. corn crop, which grows on approximately twenty million acres. Considerable resistance to any EPA action is expected from multi-national agra-business giants Novartis, Monsanto, and Pioneer Hi-Bred, whose annual revenues from genetically modified seeds have grown to over a billion dollars each year, and was there in that instant case also. Monsanto, however, continued to maintain the health and environmental benefits of its Bt corn. Claiming the safety of dangerous products, even when science indicates otherwise, is not a new strategy for Monsanto. Three years after Congress mandated a ban on polychlorinated biphenyls (PCBs) (of which Monsanto was the only commercial producer), the company publicly stated that regulation was unnecessary because "PCBs, while not harmless, are not carcinogenic and do not have serious long-term health effects." Since that time, corporations using Monsanto's PCBs have spent enormous sums in remediation under the federal Superfund law. Due to the widespread use of genetically modified organisms (GMOs), and the scientific uncertainty of their long-term environmental and health effects, corporate liability could approach Superfund levels in the event of serious GMO damage.
In addition to possibly transferring herbicide-resistant genes via the errant pollen to weeds, pollen from genetically modified crops could cross-pollinate crops, thereby stripping organic farmers of their organic status certifications and the accompanying price premiums.
Organic tortilla chip processor, Terra Prima, recalled and destroyed 87,000 units of certified organic tortilla chips from Europe after tests revealed the presence of genetically modified corn. The company traced the corn used to make the recalled chips back to the specific organic farmer who grew the corn. The probable cause of the "positive" test was pollen from genetically modified corn in nearby fields cross-pollinating with the farmer's originally grown corn.

A study conducted in the United Kingdom identified pollen from genetically modified crops that bees carried 4.5 kilometers away from the test site. The researchers also found airborne genetically pollen up to 475 meters away from the test crops. Many consumers, especially in Europe, oppose genetically modified food because they suspect the food will prove unhealthy in the long run. Such fears are understandable given the past food scares involving Mad Cow Disease, bacterially contaminated meat, and dioxin in poultry, pork, and beef products.

In each of these cases, the affected country's government either suppressed "'inconvenient' scientific data" or directly lied about the food's safety.
In 1996, the New England Journal of Medicine published a report identifying possible negative health effects of genetically modified food. The report detailed agra-business giant Pioneer Hi-Bred's efforts to increase amino acid levels in soybeans through genetic modification. The modification transferred to the soybean the same genetic material that occurs naturally in Brazil nuts and causes allergic reactions in some people. Food allergies affect anywhere from two and one half to five million people in the United States, with symptoms ranging from mild discomfort to a severe and even fatal reaction known as anaphylactic shock. Citing fears of potential allergic reactions and antibiotic resistance, the British Medical Association called for a ban on the release of GMOs into the environment.
A United Kingdom survey conducted in June 1999 found that fifty-six percent of those surveyed thought genetically modified foods were unsafe to eat. Sir Paul McCartney, a leading advocate for GMO-free food, publicly criticized the U.K. Government's support of GMO technology. Throughout Europe, larger supermarket chains banned the use of GMOs as ingredients in generic and brand-name labels. Prominent European food producers Nestle and Unilever quickly adopted a GMO-free policy. Grupo Maseca, Mexico's largest tortilla producer, announced it would no longer purchase genetically modified corn, thereby possibly impacting the $500 million annual U.S. corn export to Mexico. In the United States, Heinz and Gerber, the two largest baby food manufacturers, also announced a GMO-free policy. Gerber's announcement was especially troubling to U.S. farmers because Gerber's parent company, Novartis, is a leader in the biotechnology industry and was the first company to sell genetically modified corn seed. Due to market uncertainties and the potential for "massive liability from damage caused by genetic drift [or cross-pollination]," over thirty farm groups, including the American Corn Growers Association and the National Family Farm Coalition, warned farmers about the dangers of planting genetically engineered crops. Furthermore, Deutsche Bank, a large German bank, withdrew its previously positive projections and issued a report warning investors to "steer clear of companies associated with GMO crops."

There has been similar, GMO scares and catastrophes with various other organisms like the Starlink Corn, Salmons and the famous, Threat to Monarch Butterflies.

StarLink Corn

Probably the best-known genetically modified food scare was the discovery of StarLink corn, a genetically engineered strain of corn not approved for human consumption, in human food in the fall of 2000. StarLink corn was not approved for human consumption because it carried transgenic genes that expressed a protein containing some attributes of known human allergens. Because these proteins were never a part of the human diet before, it was unknown whether they would cause severe and potentially life-threatening allergic reactions in some humans.

In 1998 the EPA approved Aventis CropScience's registration of StarLink corn for commercial use as animal feed, and for nonfood industrial uses, such as in ethanol production. Aventis CropScience requested approval for use in human food, and resubmitted such a request to the EPA in 1999. A series of tests by the EPA found that it was not possible to determine whether StarLink might trigger food allergies. As a result, the EPA did not approve StarLink corn for human consumption. An independent Scientific Advisory Panel later convened by the EPA concluded that StarLink was a potential food allergen, and that no safe threshold level could be established.

In September 2000, StarLink corn was discovered in Kraft Foods' Taco Bell-brand taco shells. As a result, Kraft Foods ordered a recall of more than 2.5 million boxes of taco shells and halted production of the Taco Bell-brand shells. The recall cost Kraft Foods millions of dollars. StarLink corn was later found in many other brands of taco shells and other human food products as well, resulting in the eventual recall of over three hundred products.

Shipments of U.S. corn were turned away from Japan and South Korea after testing revealed contamination with StarLink corn, leading to a sharp reduction in corn exports from the United States and costing United States farmers tens of millions of dollars. Grain elevators and transporters were forced to institute expensive tests on corn shipments to assure that they were not contaminated.

At the urging of the EPA, Aventis CropScience voluntarily agreed to cancel its StarLink registration, thus prohibiting StarLink corn from being planted for any reason. Aventis CropScience stated that "it would no longer market bioengineered products for any use until they had been cleared for use in human food." The EPA stated that "it would no longer grant 'split' approvals for genetically modified crops."

A number of people complained of adverse reactions from eating food products containing StarLink corn. The Centers for Disease Control investigated some of these reports but "did not find any evidence that hypersensitivity to the transgenic Cry9C protein in StarLink corn was responsible for the self-reported allergic responses." A class action lawsuit was filed by citizens alleging allergic reactions to taco shells containing StarLink corn. Numerous class actions were filed against Aventis CropScience on behalf of growers alleging that their corn crop was contaminated by StarLink corn or that they were injured by the widespread decline in corn demand. Nationwide and statewide class action lawsuits were consolidated into a multidistrict litigation in In re StarLink Corn Products Liability Litigation.

StarLink corn was planted in twenty-nine states in 2000. In early 2001, the USDA announced that StarLink corn had been detected in non-StarLink seed intended for sale that year. It was anticipated that all StarLink corn would be removed from the corn grain supply by 2002. On December 27, 2002, Japanese authorities found "traces of StarLink corn in a shipment from the U.S." Several final points should be noted on this case study. The harvesting, storage, shipping, and processing equipment are often the same for human and animal food. Corn from myriad farms is commingled as it is gathered, stored and transported. Consequently, StarLink corn was commingled with human food corn in numerous grain elevators. Due to recognized commingling, the agricultural industry accepts about 2-7% foreign matter in bulk shipments of corn in the United States. The StarLink corn-contaminated taco shells contained only about 1% StarLink corn. Further, it was later discovered that growers of StarLink corn had been inadequately warned about the need to keep it segregated from other corn.

Someone with working knowledge of the country's agricultural system would have recognized from the outset that it was inevitable that once StarLink corn was grown, produced, and processed on a large-scale basis, some of it would make its way into the human food supply. According to one agricultural expert, "Anyone who understands the grain handling system ... would know that it would be virtually impossible to keep StarLink corn separate from corn that is used to produce human food...."

Genetically Modified Salmon

Work has been going on in the US to get clearance for genetically modified Salmon to be declared fit for human consumption. These salmons are engineered to contain genes intended to make them grow faster and use feed more efficiently. The main concern raised by genetically modified salmon is environmental: Studies have shown that wild fish populations could be eliminated through mating with genetically engineered fish. In addition, there is the risk of unpredictable environmental impacts occurring as a result of the introduction of a nonnative species into an ecosystem.

In an attempt to limit the potential for wild propagation of transgenic salmon, the salmon are treated in an effort to produce only reproductively sterile, all-female offspring. In addition, the salmon will be grown in enclosed ocean net pens. However, full sterility currently cannot be achieved and escape of pen fish into open waters is common. Therefore, escape of fish from pens will occur and may include females capable of reproduction. As noted earlier, escaped nontransgenic net pen Atlantic salmon have been known to spawn successfully. Only a few fertile individuals are necessary to change the genetic structure of a wild species.

Other such incidents include the threats from Bt-Cotton crops in India, which have led to a widespread loss to the farmers, as they have not lived up to the promises and also the threat of harm posed by Bacillus thuringiensis (Bt) in general to Monarch Butterflies have already been stated.

The Problem of Imputation of Liability

Recovering damages for injury resulting from the release of GMOs into the environment, such as allergic reactions, cross-pollination of conventional or organic crops, or harm to natural resources, like the Monarch butterfly, must proceed under the common law's difficult burden of proof. But, it becomes increasingly difficult when one wants to impute environmental liability from hazards emanating from incidents such as cross-pollination. This is because, it becomes easy for the polluters to argue that why should pollen drift be actionable if it involves a GMO which by definition has cleared regulatory hurdles and there is no evidence of harm to plant or person? Is this a version of condemnation of the technology? Should a farmer of a superior variety of canola, have the right to sue the neighbouring non-GMO farmer whose inferior variety of canola is cross pollinating? If not, why so for GMO unless it is the taint of the technology?

There are also the reverse liability questions. If GMO helps the environment, water courses, soil conservation, reduces chemical inputs, reduces phosphate waste in livestock operations, is the non-GMO operation liable for the increased pollution? Should it be? Thus it becomes imperative for the regulatory regimes governing GMO to address these particular difficulties so that their operation becomes smooth and the guilty are punished in reality.

Thus, an industry entering into biotechnology research for profit should have a minimum duty to protect society from possible damages, even in the face of congressional inaction. Courts may have difficulty, however, extending this duty beyond farmers who plant genetically modified crops in fields adjacent to organic crops. Farmers planting genetically modified crops could face severe pressure from two fronts--the large seed companies selling genetically modified seeds and neighboring farms using organic methods. Unless courts impose a duty on genetically modified seed developers, little incentive exists to re-engineer seeds to eliminate the chances of cross-pollination or conduct field tests to determine effective methods for pollen containment.

The Intellectual Property factor and Food Security

Thompson identifies the two primary negative consequences associated with intellectual property protection for GMOs: 1. Farmers will be deprived of rightful compensation for property they already own; and 2. Farmers will be deprived of important future economic opportunities.

Corporations like Monsanto are able to genetically engineer a particular seed with a foreign trait and then patent that seed. The Monsanto Corporation can then dictate the terms of use of their patented product. Some corporations holding patents on seeds and crops have required farmers to sign legal documents compelling them to grow only that company's seed, use only that company's chemicals, and pay "technology fees" for the genetically engineered seeds in addition to the cost of the seeds themselves. The availability of patent protection for these products increases the interest of investors, as patents help to ensure profits as long as farmers agree to plant the genetically engineered crops and consumers agree to buy the food. The role of patents in genetically engineered food and crops raise many issues that cannot possibly be addressed here, but are important nonetheless.

Food security is further threatened by the fact that a smaller and smaller number of huge corporations are taking control of the ownership of the food supply. For example, last year, a single company, Empresas La Moderna, owned twenty five percent of the world seed market. Companies and divisions like Aventis CropScience, Dow Agro Science and Monsanto, all with millions of dollars invested in ag-biotechnology, have taken control of the agricultural biotech market. These gigantic monopolies threaten to squeeze out the voices of farmers and consumers in the debate about genetically engineered food and will clearly use all their power to protect their financial interests in the technology. Relying on a handful of self-interested corporations to make important and far-reaching decisions about agriculture and food cannot possibly result in equitable policies, because genetic engineering threatens even the small organic farmer with risks of genetic drift and genetic pollution.

One final issue in food security is the encouragement of monocultures, which is a by-product of the current ag-biotech system. The large ag-biotech companies invest money in research until they have created a promising strain of a particular crop. They then patent that strain, replicate it, and mass-produce it. Farmers can buy the genetically engineered seed and plant endless rows of genetically identical crops, all containing the foreign gene. History and science show that plants need diversity to survive, one devastating example of that fact was the 1845 Irish Potato Famine. The creation of monocultures by ag-biotech companies, leaves no room for natural diversity. If a genetically engineered crop is susceptible to a new virus, the whole crop will be destroyed since there will be very little chance that some of the crop may have a particular mutation to protect it from the virus.

The industry responds: the purported benefits of GMO

The Corporations involved in the manufacturing of GMO have however, been strongly advocating that genetic engineering will be beneficial to the existence and progress of the human civilization owing to a great many reasons, which will be enumerated below. Even though some of them might be true, they all come with the hazards, which have been stated above. One can in now way neglect the possible harm that the same may cause, if the same goes awry, and on the happening of such an incident, human civilization would be greatly harmed, instead of being benefited by such experiments.

However, let us have a look at what exactly they are claiming. First, genetically modified crops may reduce the need for, and application of, such agricultural toxins as herbicides or insecticides. Second, genetically modified crops may provide higher yields of crops and thereby reduce demand for land dedicated to agricultural use. Lastly, genetically modified crops may provide food products with an enhanced nutritional value and thereby alleviate the scale of human malnutrition.

It has been argued that the history of crop breeding involves the use of genetic material on an ever-widening geographic and biological scale. Progressing from selection within local populations to crosses among populations, crosses of crop lines from distant regions, and wide crosses across species within a crop's lineage, crop geneticists have continually extended the range of diversity and complexity of the pedigrees of the crops. Arguably, the modern human population would be either more malnourished or smaller in size without the crop varieties furnished by organized crop breeding.

However, the merits have some grounds to prove their credence. Despite hyperbolic population growth during the twentieth century, a smaller proportion of the human population is malnourished today than ever before. Indeed, absent the roles of science and industrial capital in agricultural development, it is likely that many more people would be hungry today than the current levels, which are themselves viewed as unacceptable. It is precisely those areas where crop science and industrial capital are lacking in which hunger is most severe. Between 1975 and 1986, a time when crop breeding programs were active in most developing countries, the population of these countries increased by twenty-six percent while the supply of food per capita increased fourteen percent. During this same period, yields of the world's most important food sources, rice and wheat, increased by thirty-two percent and fifty-one percent, respectively. It is all but impossible to imagine an industrial society, with its attendant wealth and well-being, without applied crop genetics. The inescapable question this history presents is: "what can crop science do to maintain the food supply in order to feed the estimated eleven billion people who will inhabit the planet by the end of this century?" To many crop scientists, the obvious answer is that crop science should support the application of the newest technology available, including transgenic transformation of the crop plants we depend on.

Increasing the yield potential of crops, cropping more intensively, improving disease and pest resistance, and eliminating post harvest losses could greatly benefit food availability. Access to new genetic resources, identification of useful genes, and breeding those genes into crops will play an important role in achieving these goals. To crop breeders, genetic modification is a logical and necessary element in their tool kit of crop improvement techniques. Recombinant DNA technology is more precise and rapid than conventional breeding, and precision avoids the transfer of unwanted or potentially dangerous germplasm. Nevertheless, numerous other crop traits, such as higher protein or improved digestibility, are in the advanced stages of development. Genetic modification has also been focused specifically on traits that will be more useful to the populations of developing countries, such as breeding a Beta-carotene trait into rice to address the vitamin A deficiency that blinds 250,000 to 500,000 preschool children yearly, most of whom die within months of going blind. Because of their ability to draw on a much wider pool of genes than conventional breeding, transgenic methods have greater potential to add such valuable traits as salt tolerance or disease resistance to crops. In sum, GMOs have the potential to meet the need for greater production and to solve health problems relating to nutrition, and this potential is not confined to wealthy countries.

Thus, it may be very well argued that instead of violating their obligations owed to the society, the MNE-s involved in the research, production and selling of GMO are in fact discharging their obligations under CSR. However, the acceptance of such an argument blindly will not be justified in light of the available scientific evidence and incident from real life, which have clearly gone on to show that GMO have the potential to bring about an ecological disaster. Thus, even though involvement in the GMO by the MNEs may not be detrimental per se, various factors have to be considered before doing the same, and herein comes up the importance of an interface between the GMO Regulatory regime and the CSR regime. Both of them have to act simultaneously to bring about adequate safety measures which the corporations must mandatorily follow to ensure that no disaster befalls mankind.


The most important international regime governing GMO is the Cartagena Protocol on Biosafety. Apart from this there are various international directives, conventions and protocols which are relevant to the discussion of GMO-relates liability. However, it’s the Cartagena Protocol which has the potential to have the greatest reach. This stems from the 107 countries that have ratified the protocol.

The objective of the protocol is to ensure that the protection exists in the transfer, handling and use of living modified organisms that may adversely affect the conservation and sustainable use of biological diversity. Liability and redress are envisioned as tools to ensure this adequate level of protection is met. The original protocol deferred establishing a liability regime, but stated that rules will be adopted within four years of the protocol coming into force, and would be based on an elaboration of current international rules and procedures on liability taking into account ongoing processes in international law. With the protocol coming into effect on September 11, 2003, it is expected that rules of liability and redress should be in place by 2008. The impact of the rules will be limited since they only involve trabs-boundary damage, and will not touch liability that is purely an internal matter.

As its central governance mechanism, the Cartagena Protocol calls for the "advance informed agreement" of an importing country before transnational transfers of genetically modified organisms. The notion of "advance informed agreement" has its genesis in the better-known concept of "prior informed consent," which has been relied upon in the international realm to regulate trade in hazardous waste and restricted and banned chemicals. Also the same advocates Risk assessment by the parties and also AIA. Along with this, Information Disclosure and Informed Consent of Product Purchasers is the central governing principle running through the protocol.

Other international laws like the EU’s Environmental Liability Directive are not limited to transboundary damage. It establishes an environmental public liability regime based on the polluter pays principle. The directive covers environmental damage caused by GMOs. However, the scope of the coverage is limited by the directive’s narrow definition of environmental damage. The definition only includes damage to protected species and natural habitat, and land contamination that creates a significant risk of adversely affecting human health. It is likely that the possible harmful effects of GMOs will occur outside the protected habitat. In addition adverse effects may have no impact on protected species or human health. Although the directive does not confer protection for all potential damages, it is significant that it recognises the release of GMOs as a possible activity leading to environmental harm.

Apart from this the Lugano Convention, which addresses environmental liability and is based on the polluter pays principle may be considered for our purpose. The convention also covers activities associated with GMOs at Art. 2(l)(c).

Also, a mention must be made of the WTO regime governing the trade in GMOs, as it also plays a very important role in protecting the interests of the prospective customers. Under the WTO regime nations have agreed to make significant reductions in trade barriers and not to build new trade barriers. Article XX of GATT, however, authorizes nations to impose restrictions "necessary to protect human, animal or plant life or health," or "relating to the conservation of exhaustible natural resources." Nations normally do so under their own national legal and administrative procedures, building on their own understanding of the scientific evidence involved. In doing so member states have agreed that they will also follow relevant specific WTO agreements. Although there is a more broadly applicable Agreement on Technical Barriers to Trade, which requires that the measures "not be more trade restrictive than necessary".

The more specifically relevant agreement is the Agreement on the Application of Sanitary and Phytosanitary Measures. The Phytosanitary Agreement reaches measures "to protect animal or plant life or health ... from risks arising from ... pests, diseases, disease-carrying organisms or disease-causing organisms" and measures protecting against "additives, contaminants, toxins or disease-carrying organisms in foods, beverages or feedstuffs." The Phytosanitary Agreement is almost always applicable to measures for protection of biodiversity and those relating to agriculture and to agricultural biotechnology.

Under this agreement, measures must be: [a] "necessary to protect human, animal or plant life or health;" [b] "based on scientific principles;" and [c] not be "maintained without sufficient scientific evidence." The measures are deemed "necessary" (but not clearly deemed "based on scientific principles") if they are based on "international standards, guidelines or recommendations." These "international standards, guidelines or recommendations" are defined as those of specific international organizations, namely the Codex Alimentarius Commission for food safety, the International Office of Epizootics for animal health, and the Secretariat of the International Plant Protection Convention for plant health. For matters not covered by these organizations, the standards are those promulgated by "other relevant international organizations open for membership to all Members, as identified by the Committee on Sanitary and Phytosanitary Measures of the WTO." A nation may however enact a higher standard, but this requires a scientific justification or a risk-based analysis. A nation may also provisionally adopt measures on the basis of "available pertinent information," where "relevant scientific information is insufficient," but must seek to obtain the information "within a reasonable period of time." The Committee on Sanitary and Phytosanitary Measures provides a regular forum for consultations and is instructed to maintain close contact with the specific international organizations named above.

There is important contention over the interpretation of this language, and the freedom of nations to choose a "level of protection" or "acceptable level of risk." Annex A of the Phytosanitary Agreement refers to such a level. In its legislative approval process, the United States strongly indicated an interpretation under which this level can be defined in a political way and the scientific rationality requirement arises only after the level is set. Such an interpretation of course allows very severe standards to be applied. This interpretation, however, risks undercutting the harmonization goal. Article 3, paragraph 3 clearly gives freedom to set a higher standard, but requires that such a standard take into account risk assessment, scientific, economic, and trade factors. Thus the freedom is somewhat limited.

Similarly in the case of CSR, a complete governing piece of law, which mandates and lays down the ingredients of CSR is not available. However, the OECD has tried to develop a framework, which governs the CSR regime, in the form of OECD Guidelines for Multinational Enterprises. In the same, in relation to the environment, it has been laid down that businesses should take due account of the need to protect the environment, public health and safety and generally conduct their activities in a manner contributing to the wider goal of sustainable development. They should also assess, and address in decision-making, the foreseeable environmental, health and safety related impacts associated with goods and services of the enterprise over their full life cycle. Where the proposed activities have significant environmental, health, or safety impacts, the company should prepare an appropriate impact assessment.

Further, the European Commission has set out a number of basic principles for the EU’s programme relating to CSR. Among them it has been stated that the Company strategy should adopt a balanced and comprehensive approach to CSR, including not only consumer concerns, but also economic, social and environmental issues. Also it has been laid down that the strategy should support other international legal obligations such as environmental treaties, basic human rights and other conventions etc.

Thus, we see that CSR mandates that environment, societal health and safety and sustainable development should be the key considerations before the companies enter into the implementation of a business strategy. Only if the product or service is found to be environmentally and socially benign, then only it should be implemented. And similar were the requirements when we looked into the international regimes governing GMOs, which required prior informed consent, Environmental Impact Assessment (EIA), and other Risk Assessments and Advanced Informed Agreement, to be mandatorily followed by the companies, which are engaged in the trade of GMO. Hence, harmonisation of the requirements of the two regimes is imperative for an effective implementation of a hazard free GMO development regime to be effectively implemented.


It has been seen from the elaborate description above that GMO development and sale by the huge companies, is indeed fraught with numerous perceivable and unperceivable dangers. Apart from direct environmental damage that GMOs may inflict upon the fragile ecosystem, there are also various potential harms that can be caused by them to the societal and economic structure of the farming community. On the other hand, it is true that if those drawbacks are checked and carefully handled, then there are manifold benefits, which can be obtained from judiciously using the particular technology, which is at our disposal.

Thus, the onus lies on the Companies which are involved in the development, marketing and selling of GMOs that they comply with all the regulations governing them and before every project, ensure complete adherence to the risk assessment requirements. Only after a thorough research and EIA should they be allowed to be traded in the market. As it may not only prove to be fatal for other organisms, but may also lead to complete destruction of our biodiversity. Further, they must be aware of the fact that they will be responsible for any loss of livelihood of the numerous farmers who will be engaged in the cultivation of Genetically Modified Crops, which might result from a faulty implementation of a wrong product. Also, the products must live up to the promised developments that will be alleged to have been brought about by the modification in their genes.

Only, if they place precaution before profits and engage in this highly volatile sector in a socially responsible manner, will the same bear fruits for humanity. There should not be blind profit-making drives by the corporations, in which case the entire social, economic and social rubric of our existence may be ruptured.

Evolution of the law pertaining to the same must also play a leading role to ensure the percolation of CSR in the GMO regime. Precautionary measures like Labelling (Which is not mandatory in the US) must be made the sine qua non of any transaction of GMO products. Social rights groups, NGOs and concerned citizens must take up the cause and fight the global giants if they are found wanting in the standards they are using. The farmers must not be allowed to remain gullible to the Corporations who flout their economic might to drive up their bottom line, and in effect deplete the natural biodiversity and the farmer’s right to livelihood.

Thus, it can be concluded by saying that engagement by corporations in trade of GMOs may not per se be violative of the mandate of CSR. They can take opportunity of the unmatched resources at their disposal and engage in the development of varieties of genes which would in reality bear fruits for all, in the form of increase of productivity, increase of nourishment value etc. such that, malnourishment and hunger can be alleviated, especially from the developing countries. They can take this cue to in fact promote, preserve and propagate corporate social responsibility. But till date, most corporations involved in this particular trade, instead of complying with, has been flagrantly violating the mandate of CSR, as can be evinced from the plight of the farmers in Andhra Pradesh, India, who used Bt-Cotton developed by Monsanto, only to be deprived of all their yields. Other examples, even from developed countries can be evinced, as has been laid down earlier. Hence, compliance with CSR will depend upon how the Corporations go about their activities and how they harmonise their profit making endeavour with their responsibility to be socially and environmentally benign. But till the same is done, and till the corporates become aware of the huge prospect in front of them to add value to the society; and also the calamity they might be the reason of on the other hand, CSR will be a distant dream for the Companies involved in trade of Genetically Modified Organisms.

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