A coalition of more than 20 institutional investors have published an open letter urging investors to shun Toys 'R' Us' upcoming initial public offering until the retail giant agrees to label and phase out the sale of toxic polyvinyl chloride (PVC) toys.
The letter was signed by members of the Interfaith Center on Corporate Responsibility, a coalition of 275 institutional investors with more than $150 billion in assets, and the Investor Environmental Health Network, representing more than 20 institutional investors with some $30 billion in combined assets.
Toys 'R' Us, which went private in a 2005 purchase by Kohlberg Kravis Roberts & Co., Bain & Co., and Vornado Realty Trust, plans to return to the public markets and raise $800 million.
"We urge investors not to participate in Toys 'R' Us' IPO unless they commit to labeling toxic chemicals in toys it sells and to phase-out PVC toys," said Pat Zerega, Corporate Social Responsibility program, Evangelical Lutheran Church in America, in a statement.
"Providing fresh capital to Toys 'R' Us and its private equity owners will encourage business practices that put children's health at risk and threaten shareholder value over the long-term," added Laura Berry, of the Interfaith Center on Corporate Responsibility.
Under pressure from concerned parents and product safety advocates, Toys 'R' Us in 2008 announced a plan to reduce PVC plastic in children's and infants' toys and eliminate PVC-based products -- a pledge the coalition says the company has yet to completely honor.
"Recent testing found the company has failed to fully implement this commitment," said Sr. Mary Ellen Gondeck of the Congregation of St. Joseph, in a statement. Popular products like Barbie Doll, Bucket O Soldiers, and Toy Story 3 Buzz and Woody figurines, were all found to contain PVC.
"Toys 'R' Us did not immediately respond to a request for a comment.
PVC is the most toxic plastic in existence, the letter states, with no safe way to manufacture, use, or dispose of, according to scientific experts. Chemicals released in the plastic's life cycle have been linked to chronic diseases in children, impaired child development and birth defects, cancer, disruption of the endocrine system, reproductive impairment, and immune system suppression. Toys containing PVC have already been banned or restricted in many other countries.
"Toys 'R' Us' failure to phase out PVC products and label toxic chemicals in toys could hurt them during the critical Christmas season, which accounts for roughly 40% of Toys 'R' Us' annual revenues," said Susan Baker of Trillium Asset Management Corporation in a statement.
The letter to investors also says major retailers all around the world are implementing restrictions on PVC packaging and products, potentially putting Toys 'R' Us at a competitive disadvantage. Over the past few years, the letter continues, Target, Sears Holdings, Wal-Mart Stores, Bed Bath and Beyond, Best Buy, and JCPenney have all announced major initiatives to significantly reduce and/or phase out PVC in products and packaging.
The letter, which contains a full list of signatories, is available here.
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