Are laws requiring the labeling of food containing genetically modified organisms (GMO) justified? Do consumers have a right to know what is in their food, or will the labels simply confuse the public?

Two states, Vermont and Connecticut, now require some labeling of GMO products, More than 30 states are considering adopting similar laws, and Oregon and Colorado voters will have the opportunity to vote on public referenda that would require labels on some GMO food products.

Genetically modified and engineered products were first developed in the 1970s, with the glyphosate herbicide “Roundup” patented by Monsanto in 1976. GMO products entered the consumer market in the United States in 1994: the rBST hormone was administered to cows to increase milk production, and the FlavrSavr, a tomato engineered to ripen without softening, appeared on food shelves. By the late 1990s, most soy and corn in the U.S. were produced from seed genetically modified to resist pests as well as tolerate herbicides.

Although the biotechnology industry has used genetic modifications to develop numerous medicinal products that have gained widespread acceptance, this new approach to food agriculture was never without controversy. Activists questioned whether sufficient testing of the environmental or health impacts had shown the products to be safe. Others worried that growing reliance on GMOs would make farmers, particularly in the developing world, dependent on a small number of multinational seed companies. Activists colorfully tagged the new products “frankenfoods,” stoking public concern about what was being added to the food supply.

As a tactic, anti-GMO activists argued that consumers have a right to know whether food products contain GMOs. Food and seed companies, however, argued that the products are “substantially equivalent” to their traditional counterparts and that labels would only signal that GMOs posed health or environmental risks that are, in their view, non-existent.

In the European Union, mandatory labeling was introduced in 1997¹ In 2014, the European Council allowed member states to easily restrict or ban GMO cultivation on their territory. GMO cultivation in Europe has remained relatively limited and according to estimates, as little as 5% of food sold contains GMOs. Today, the vast majority of GMO crops are grown in three countries: the U.S., Brazil and Argentina.

While activism has not stopped the production of GMOs in the U.S. – acreage of GMO corn and soy have roughly tripled in the last ten years – the introduction of new GMO traits has largely stalled. Early promises of food varieties that, for example, offer health benefits, have not materialized In 2002, researchers announced the development of a variety of rice engineered to produce beta-carotene, which promised to help address chronic Vitamin A deficiencies in malnourished children in Asian countries where rice is a dietary staple. Despite substantial improvements in the quality of so-called “golden rice” (as beta carotene turns the rice yellow) over the past decade, not a single country has approved the use of golden rice on a wide scale.

A 2001 New York Times² article suggested that the stalemate may have its roots in the early regulatory strategy of the seed companies, particularly Monsanto. When GMO products were nearly ready for commercialization, the companies recognized the potential for consumer rejection. They initially developed a strategy to engage their stakeholders as partners and consultants, while asking Washington for strict oversight of the products. However, later, a new generation of managers abandoned this strategy in the hopes of speeding products to market. The seed purveyors successfully lobbied the government for self-regulation and against public oversight, and began a public campaign to dismiss GMO critics as trying to “destroy capitalism,” in the words of Monsanto executive Robert Shapiro.

The companies sought to discredit all criticisms of GMOs by lumping together responsible critics with more radical activists. The resulting polarization served neither the public nor the companies, for two reasons. First, the public has displayed a greater trust in environmental groups and the government than companies, which many see as conflicted because of their financial stake in the products’ overall success. Therefore, alienating these groups squandered an opportunity to gain public confidence. Opposition to labeling further heightens concern that the companies are trying to force GMOs on the public in secret.

As time has passed, some of the critics concerns have proven to have actual merit: contrary to early company claims, the use of herbicide-tolerant plants seems to have sped up the natural process of herbicide resistance in weeds; by only supplying beta carotene, Golden rice may not be particularly beneficial to children who are generally malnourished; and while no short-term effects have been found in those who eat GMO products, longer-term studies have not been carried out because of the difficulty in identifying which foods actually contain GMOs.

Second, the GMO debate has been mired in the same superficial clichés for many years: cries of “frankenfood” on the one hand are countered with unrealistic claims of “feeding the world” on the other, with little movement from either side. Unresolved are more nuanced and productive discussions about the proper role, if any, of GMOs in sustainable agricultural development. These questions include: can GMOs be superior or complementary to alternative methods of pest management, such as integrated pest management? What is the impact of GMOs on traditional agricultural methods in developing countries? What is the long-term impact of GMOs on farmers’ livelihoods and autonomy? What role do GMOs play in world food security, especially considering rising populations and a changing climate? Might GMOs make us healthier — or sicker?

The current situation satisfies no one. Because most processed food in the US contains GMOs, the entire population is exposed to health or environmental risks, if indeed they exist. On the other hand, GMO technology has fallen far short of its early promise, never progressing beyond a convenience for farmers.

Today, over 90% of the U.S. public supports GMO labeling, a figure that has been consistent for over a decade. Aggressive spending by food and seed companies to defeat these laws have been successful to date. For example, in 2012, Washington voters narrowly rejected a labeling even though early polling suggested overwhelming support for the initiative. But things may be changing.

Vermont and Connecticut were the first states to have enacted laws requiring the labeling of GMOs, though the Vermont law has been challenged in court. Polls show that ballot initiatives in Colorado and Oregon asking for clear labeling have a good chance of winning voter approval. And numerous large companies are quietly experimenting with non-GMO alternatives. General Mills has gone so far as to label Cheerios cereal “GMO-Free” (although none of the ingredients in Cheerios come in GMO varieties).

Regardless of the fate of GMO labeling laws, there is no reason to believe that GMOs will either disappear from American diets or become the radical innovation that once seemed possible to some. It may not be possible at this point to change the dynamics of the GMO debate, but support for labeling may signal a broader challenge for companies.

This development comes in a broader context of rising consumer interest in the contents of food and the process of how it is produced. “Locavore” movements, gluten free diets, and “paleo” and vegan cooking are examples of a trend of individualization of food choices, connected to a greater desire for personal control over health choices. Consumers increasingly recognize of the connection between agricultural practices and emerging global environmental issues, such as climate change, water availability and pollution. The growing awareness of the treatment both of food and dairy animals and the workers in the meat industry has fueled a rising demand for sustainable meat production practices, at least among more affluent consumers.

All of the challenges of modern agriculture require engagement and transparency between companies and their stakeholders, of which the GMO labeling movement is one sign. The companies’ failure to engage its stakeholders on GMOs twenty years ago perhaps hastened the introduction of these products, but appear to have limited their long-term potential. Investors in agricultural companies should be concerned about whether companies will take a different approach to their stakeholders regarding the current generation of concerns, engaging them as strategic partners, or dismissing them as cranks. Some key questions shareholders should consider include:

• Does the company understand what information consumers want about their products?

• Is the company communication strategy motivated primarily by public relations or transparency? Has the company exposed new products to independent scientific scrutiny?

• Does the company support or oppose mandatory independent scientific review of its technologies?

• Does the company engage stakeholders about its new products, to uncover potential risks and to understand likely public reactions to specific innovations?

• Has the company engaged in dialogue with investors and other respected experts regarding the contributions of its products and operations to global trends such as economic development, environmental degradation, and cultural change?

• Is the company transparent about the results of its stakeholder engagement?

1 http://ec.europa.eu/food/food/biotechnology/gmfood/labelling_en.htm
2 REDESIGNING NATURE: Hard Lessons Learned; Biotechnology Food: From the Lab to a Debacle, By Kurt Eichenwald, New York Times January 25, 2001

John Wilson is the Head of Corporate Governance, Engagement & Research at Cornerstone Capital Inc. Prior to Cornerstone, he was the Director of Corporate Governance at TIAA-CREF and the Director of Socially Responsible Investing at the Christian Brothers Investment Services. He is also an Adjunct Assistant Professor at the Columbia University Graduate School of Business. 

Margarita Pirovska, PhD, is the Policy & Sustainability Analyst at Cornerstone Capital Inc. and former Project Manager at GDF Suez in the Sustainable Development Division.