A key benefit of our investment decision-making model is the ability to make consistent comparisons between companies, and to follow trends over time. We also need to be flexible to address changing circumstances. Domini’s long-standing view on nuclear power has not changed — we believe that its inherent risks dramatically outweigh its benefits.
Tragically, many of these risks came to pass in March 2011 when an earthquake hit Japan and triggered a tsunami, leading to the worst nuclear disaster since the Chernobyl accident of 1986. Tokyo Electric Power (Tepco), the company at the center of this crisis, has been consistently excluded from the Domini Funds, as has General Electric, Toshiba and Hitachi, leading designers of nuclear reactors, including the reactors that failed in Fukushima.
We are constantly evaluating and updating our key performance indicators. In the wake of this tragedy, our team developed an approach to evaluating how Japanese companies were responding to these new and rapidly changing circumstances. Food contamination was one particularly pressing risk we highlighted. We wrote to Japanese retail food manufacturers and retailers with a set of questions about their efforts to protect Japanese consumers from radiation contamination. We discovered a significant divergence of practices, which led to the exclusion from our Funds of Toyo Suisan Kaisha and Yakult Honsha, two food production companies with facilities close to the site of the nuclear disaster. Yakult Honsha is known for providing dairy products to schoolchildren and Toyo Suisan Kaisha’s products include processed seafood using codfish captured in Japanese waters. Neither company’s safety measures were sufficient to alleviate our concerns.
By contrast, ÆON reportedly strengthened the radiation inspection programs on its food products by setting radiation standards two times safer than the national standard, and expanding the items subject to testing. If the company were to find excessive levels of radiation, its 1,000 retail stores would suspend purchasing those products until they fall below the company’s thresholds. The company also discloses inspection results on its website and updates its testing results several times a month. This information was welcomed by Greenpeace Japan.
Fujifilm launched an impressive set of programs to support disaster relief and reconstruction efforts in Japan, leveraging multiple company divisions, including its medical systems, logistics, pharmaceuticals and radioisotope divisions. The company’s consistent record of effective environmental risk management and reduction allowed the company to provide a comprehensive and meaningful response. The company dispatched medical teams with diagnostic equipment to support medical facilities in the affected area, provided drugs to the Japan Medical Association with emphasis on pediatric medicines, and worked closely with NGOs to execute disaster relief operations. A factory owned by one of the company’s subsidiaries, located in Fukushima prefecture, led decontamination activities and provided radiation level monitoring for the community. The company’s decontamination operation uses much stricter levels than the government, with a zero tolerance for any levels of radiation residue.