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Carrolls CSR Pyramid

For theoritical Explanation Please Reffer APPENDIX 1.1

Economic Responsibilities:

Historically business organizations were created as economic entities designed toProvide goods and services to societal members with a motive of making profits, Now a days

Big corporate like Monsanto have shareholders as owners of business who expects areasonable return on their trust that they have showed by investing in the corporation, Which

makes the organisation liable to the primary stakeholder group called share holders.

Besides that they have other stakeholders groups such as employees who want safe and fairly

paid jobs and customers who demands quality goods at fair prices. S o the first responsibility of

business is to properly functioning economic unit and to maximise the earnings of shareholders

by maintaining a completive position

Monsanto has delivered profits consistently looking and the Net profits figures below given in

255

689

993

2024

2109

2005

2006

2007

2008

2009

Net Pr fit( illi $)

Net Profit(million $)

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the graph we can see that it has shown a growth of 7 . % in year 200 when we

compared to the current Net profit figure $ 2 0 million in 200 to $ 2 7 million in 2004

.

Not just that but it has attained a strong competitive position over its compe titors around the

world by attaining a Majority market share of 22.4 %

23

, which makes its a safe company toinvest looking at its profits and market shares.

Looking at the dividend and share price history of Monsanto (Please refer Appendix .2) its

shows a sign of a organisation which can keep its investors really happy its share price has

consistently done well and its last year closing share price was $ 0.74 and if we compare it

to the share price of April 2005 which was $27.52 we can see its has seen a growth of

2 3.3 % and moreover from the table we can observed that they havent missed a single

dividend in last years which is quite commendable looking at the current economicscenarios4.

Looking at the data given In the APPENDIX .2 we can come to a conclusion that Monsanto

has been successful in making money for its investor hence fulfilling the most basic

Economic Responsibility towards shareholder.

Other than that Monsanto all over the globe Employees 22, 00 regular employees and 4 00

temporary employees (Annual Report 200 ) and it has been awarded with :-

y Science Magazine ranks Monsanto as the #2 Worldwide Biotech/ harma

Employer5

http://www.monsanto.com/investors/documents/pubs/200 /200 AnnualReport.pdf

2http://www.nature.com/nbt/journal/v23/n4/full/nbt1082.html

34

http://finance.yahoo.com/q/hp?s=MON&a=03&b=

&c=2005&d=02&e=3

&f=200

&g=m5http://www.monsanto.com/careers/Pages/company-awards-recognition.aspx

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y Monsanto Receives 100% on Human Rights Campaign Foundation 2011 (largest

lesbian, gay, bisexual and transgender (LGBT) civil rights organization) Corporate

Equality Index.

y Monsanto earns top spot in year 2010 among large science companies in The

Scientist Best laces to Work in industry survey. 6

Above list of awards shows that Monsanto is not only a reason for providing Employmentopportunities to so many people but also being a quality Employer.

But In past Even Monsanto has shown The face of evil employer who only thinks of its own

profit and loss statements, Monsanto in 2003 shed 25 jobs when it closed its European

cereal seed business headquartered at Trumping ton, Cambridge, UK. & recently according

to an article (3 /0 /20 0) 7 its been heard that Monsanto has plans to trim an additional 50

to 700 jobs from its global work force in addition to 00 jobs eliminated last summer .

Besides that Monsanto has been always accused of neglecting its Economic

Responsibility towards its customers by controlling the seed prices through

monopolistic approach (Market leader by 23% of world seed market share andcontrolling 62% market US seed market 8) and patenting of genetically modified Seed,

it increased some corn seed prices last year by 25 percent, with an additional 7 percent hike

planned for corn seeds in 20 0. Monsanto br and soybean seeds climbed 2 percent last

year and will be flat or up percent in 20 0.

LEGAL RESPONSIBILITY:

Society has not only sanctioned business to operate according to the profit motive; at thesame time business is expected to comply with the laws and regulationsPromulgated by federal, state, and local governments as the ground rules under which businessmust operate.As a partial fulfilment of the "social contract" between business and society firms are expected

to pursue their economic missions within the framework of the law. Isabelle Maignan (2001) 10has found that while US consumers stress the Economic responsibility of company, theirFrench and German counterparts tend to be far more concerned about companies complyingwith social norms and laws relating to social performance. Which Ifound correct while doingresearch on Monsanto, According to the Annual statement t( 2009) company claims to be legallyresponsible in their conducts of managing business and abiding by law while making strategiesand for keeping a check they have also formed a compliance and Audit function which managedby independent auditors.

www.allbusiness.com/reports-reviews-sections/.../14934553-1.html

7http://www.publicbroadcasting.net/kwmu/news.newsmain/article/0/

5

5/

5003/Economy/Monsanto.plans.to.c

ut.700.jobs.. 50.in.St..Louis

8 http://iowaindependent.com/24537/monsanto-big-ag-has-troubling-control-over-seed-market-report-finds

9 http://www.countercurrents.org/sharma141209.htm 0

Maignan,I & Ferrel,O.C 200 ,Consumer perception of corporate Responsibility- A cross culturalcomparision,Journal of BusinessEthics,23:2

3-

7

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The auditors Receive reports from management, including the Companys Director of BusinessConduct and senior internal auditing executive, concerning the Companys and its subsidiariesand foreign affiliated entities conformity with the Companys Code of Business Conduct andapplicable legal requirements. This Independent Auditors Advise the Board with respect to theCompanys policies and procedures regarding compliance with the Companys Code ofBusiness Conduct and applicable laws and regulations11.

According to their Annual report they claim We are committed to long term environmentprotection & compliance to all environmental laws to reduce and monitor emission of hazardousmaterial into the environment and to the remediation of identified existing environmentconcerns, our operations are subjected to environmental laws and regulations in the jurisdictionwe operates12.

However these claims seems to baseless Recently (Washington, DC - July 8, 2010) - The U.S.Environmental Protection Agency announced that Monsanto CompanyInc., of St. Louis,Missouri, has agreed to pay a $2.5 million penalty to resolve misbranding violations related tothe sale and distribution of cotton seed products containing genetically engineered pesticides.This is the largest civil administrative penalty settlement ever received under the Federal

Insecticide, Fungicide and Rodenticide Act (FIFRA).13 And in another case in 2006 MonsantoCompany has been charged with violating the Foreign Corrupt Practices Act (FCPA) inconnection with an illegal payment of $50,000 to a seniorIndonesian Ministry of Environmentofficial, and the false certification of the bribe as consultant fees in the companys books andrecords14.

Other Related legal actions (Please Refer Appendix 1.3)

Ethical responsibility:

Ethical responsibilities oblige corporations to do what is right, just, fair even when they are notcompelled to do so by the legal framework.15In one sense, changing ethics or values pre- cedethe establishment of law because they become the driving force behind the very creation oflaws or regulations. For example, the environmental, civil rights, and consumer movementsreflected basic alterations in societal values and thus may be seen as ethical bellwethersforeshadowing and resulting in the later legislation.

Monsanto in their Sustainability report talks about pledges, Code of ethics and theircommitment to those pledges in making their business decision more ethical, these code ofEthics are discussed in Appendix 1.4 Below,

According to one of their pledge under the headline RESPECT they claim that they willrespect the religious, cultural, and ethical concerns of people throughout the world. The safety

http://www.monsanto.com/ourcommitments/Pages/board-of-directors-audit-and-finance-committee.aspx

2www.monsanto.com/.../board-of-directors-sustainability-corporate-responsibility.aspxc 3 http://www.epa.gov/compliance/resources/cases/civil/fifra/monsanto-infosht.html4 http://www.justice.gov/opa/pr/2005/January/05_crm_00

.htm

5Crane.A & Mattern (20 0) .D, Business Ethics,Managing coprorate citizenship & sustainability in

the age of globalisation,Oxford press

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regulations Ifeel something or some kind of a law should be created to address issues like thisotherwise companies Like Monsanto and other big companies dealing in GM seed would beseen controlling the food chain in the coming time through their patents.

Philanthropic Responsibilities

Philanthropy encompasses those corporate actions that are in response to societiesExpectation that businesses be good corporate citizens. This includes actively engaging in actsor programs to promote human welfare or goodwill.21 Monsato has also engaged itself in quite alot of these philanthropic responsibilities but the question is are these Activities to clean upthe acts and restore the image of organisation which has been hampered through along goingissues discussed above and also in later part of this report.

Monsanto establishedMonsanto Fund in 1964 as the charitable arm of the company. It statesthatour philanthropic goal has been to bridge the gap between peoples needs and theiravailable resources22. Some of the Recent Example of grants issued by Monsanto Fund were:23

y 2006:US$7.5 million to the Danforth Center (USA) for research to combat cassava mosaic

virus in Africa.y 2007:US$257 thousand to the Kenya Red Cross Society (Kenya) for irrigation, agricultural

seeds, water, and sanitation in the Kerio Valley of Kenya.y 200

%

:US$70 thousand to JEENA (India) to train women in livestock raising and in improvedmethods to grow mushrooms, jack fruit, and rice in rural Jharkhand.

Other then that in 2009,Monsanto announced Beachell-Borlaug internationalacholar programmeto support students worldwide who are seeking a Phd in rice or wheet plant breeding, Monsatois also working with conservation international and farmers to protect bio diversity in Brazil thetotal cost of this project is estimated to be $ 13 million, and it has commited another $ 5 millionto another project which is targeted to improve the water quality of Mississippi river basin24.

But the question comes to my mind is that its the same company which has been held liable in aenvironmental suite for Dumping toxic waste and Millions of tons of PCB,s Into open landfills incity of Anniston and Hudson River Valley for nearly four decade continuously. The jury, heldMonsanto liable on all six counts it considered: negligence, wantonness, suppression of thetruth, nuisance, trespass and outrage25.

Another one of its most criticised Philanthropic act is was its Small holders programme where ithad stated purpose of providing resource poor, smallholder farmers with a package ofagricultural extension services, including technical advice, chemicals, improved seeds andgenetically modified (GM) traits, as well as other forms of support. This particular programme

had other hidden objectives which were to reconstruct the corporate image and at the sametime promote is products and GM seeds in developing countries of Asia and Africa. . Thisrather restrictive concept fitted well into the companys long-standing view of the three strands

2 & A.B. Carroll, "In Search of the Moral Manager," Business Horizons, March-April' ( )

7,pp. 7-'

522

http://dissidentvoice.org/200(

/05/monsanto-and-its-philanthropy/23 http://www.terravivagrants.org/Home/view-grant-makers/foundations-and-ngos/monsanto-fund24www.monsanto.com/.../board-of-directors-sustainability-corporate-responsibility.aspxc25 http://www.washingtonpost.com/ac2/wp-dyn/A54

0 14-2002Feb22?language=printer

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of its activities, its core business of selling agricultural inputs, its philanthropic activities, and atransitional strand which provided special help for small farmers to become new customers forthe company. Therefore, the project was integrated into Monsantos regular businessoperations and implemented by sales staff26.

Idoubt the Philanthropic activities of Monsanto as another way of per suing their commercial

interest and a way to reconstruct their bruced & battered corporate Image as according to aresearch conducted by Swiss organisation Covalence in 2010 its one of the most un ethicalorganisation of the world.

APPENDIX 1.1

Carrolls CSR Pyramid

According to Carroll (1983), corporate socialresponsibility involves the conduct

ofa business so that it is economicallyprofitable, law abiding, ethical and socially

supportive. Tobe socially responsible thenmeans that profitabili ty andobedienceto the law are foremost conditions whendiscussing the firms ethics and the extentto which it supports the society in which it exists with contributions ofmoney, timeand talent (p.608). By Carrolls (1999) own admission, this is only one of

countless definitions which have proliferatedin the literature since the 1950s.

Carroll (1979) first delineated the now-familiarfourcategories ofCSRin a paper

oncorporate socialperformance, depicting them as orderedlayers which he

labelled economic, legal, ethical anddiscretionary responsibilities (see Figure 1:1).

APPENDIX 1.2

22

http://www.c3.unu.edu/plec/plecserv/index.cfm?template=view_plecserv.cfm&message=203

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Source:http://www.forbes.com/forbes/2010/0118/americas-best-company-10-gmos-dupont-planet-versus-

monsanto.html

Prices (Source:http://finance.yahoo.com/q/hp?s=MON&a=03&b=1&c=2005&d=02&e=31&f=2009&g=m)

Date Open High Low Close Avg Vol Adj Close*

Mar 03

74.4

05

7.3

24 3

.42

5

3.60 7,40

5

,5

005

0.74

Feb 03

75.435

5.77 72.5

67

4.27

5

,056,400 74.

6 6

Jan 7, 2003

$ 0.24 Dividend

Jan 03

70.45

5

7.324 3

.74 74.0

4

60,272,

400 73.

30

Dec 05

74.

5

05

4.33

45.

40 70.35 7,223,000

4

5

.63

Nov 05

5 5

.35

3

4.3

54

3.47 73

.205

,6 3

0,3

00 74

.70

Oct 05

3 3

.56

600.

4 3

4

5

.025 5

.3

5

65,

377,400

5

4.

6

5

Oct6, 200

5

$ 0.24 Dividend

Sep 05

6 6 6

.5

262

6.32

32.

47

3

5

.3

5

3,05

6,400

35.

43

Aug 05

6 6 3

.56

6

26

.4 3

6

03.506 6

4.254

,6 3

4,0006 6

0.35

Jul 05

623.3

3

62

4.

3 6

6 60.03

6 6 3.

6 67,330,500

6 65.0

5

Jul 6 , 2005

$ 0.24 Dividend

Jun 05

6

27.44

6

45.5

06

22.406

24

.445

,73

5

,5

006

26

.3

3

May 05

6 6

3.5062

5

.4560

5

.6 6

627.40 5,7

5

2,500622.

5

5

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Apr 2, 2007

$ 0.875 Dividend

Apr 07

8 8

3.04832.3

9

804.

90

8 84.02

7,

90

9,200

80

@.

@5

Mar 07

8 8

5.47

8 8 @

.0@

@0.50

8 8 8.50

@,

80

@,

700

807.35

Feb 07

8 8 8

.33823.

70

@ 7.57

8 85.

9 7

9,754,

900

8 8 8.3

7

Jan 07

8 8

2.@

282

@.2

7

@3.22

8 8 8.5

@

80,3

90,000

807.44

Jan 2, 2007

$ 0.875 Dividend

Dec 07@ @

.578 8 9

.25@ 9

.278 8 8

.9 @

3,@ 7

7,@

00807.37

Nov 07@ 9

.20800.

@0

77.50

@ @.37 4,

@3

7,400

@5.52

Oct 3, 2007 $ 0.875 Dividend

Oct 077 9

.2@

@ 7

.7072.5

8

@7.

93 5,4

84,200

@3.

75

Sep 079 @

.7@

7 9

.@

09 @

.227

5.74 4,5@ 9

,7

0072.25

Aug 0795.74 70.

7 75

7.50

9 @.74 4,25

@,

700

9 9.

@0

Jul 3, 2007 $ 0.825 Dividend

Jul 079 7

.2@

70.7593.05

94.45 4,277,500

9 8.

73

Jun 079

2.479 7

.7 8

5@

.8 7

9

7.54 4,444,3009

4.9

7

May 07 57.

74

93.

@0 5

9.

70

9 8.

90 3,04

9,000 5

7.

@ @

Apr 3, 2007 $ 0.8 25 Dividend

Apr 07 55.08

90.4

954.34 5

7.

@ @3,2

8 8,400 5

9.4

@

Mar 07 58.3

@55.

@0 50.0

854.

@ 93,0

8 7,300 52.5

8

Feb 07 55.24 57.07

58.04 52.7

82,

7 @4,200 50.3

9

Jan 07 52.00 59 .24 4@ . 8 0 55.0 @ 3,7 04,500 52.9 3

Jan 3, 2007 $ 0.825 Dividend

Dec 09

47.

@7 53.4

@47.

82 52.53 2,7

8 9,700 50.07

Nov 09

44.05 4@.44 43.55 4

7.07 3,4

95,300 45.

72

Oct 4, 2009

$ 0.80 Dividend

Oct 09

49.

7 84

7.0

@42.75 44.22 5,4

@ @,

@00 42.

85

Sep 09

47.45 47.45 43.

77 47.0

82,5

7 8,

@00 44.7

8

Aug 09

42.@

0 47.57

42.8

0 47.44 2,7

43,300 45.8

2

Jul 3 8 , 2009 2: 8 Stock Split

Jul 5, 2009

$ 0.80 Dividend

Jul 09

74.23

77.7

842.77 42.

@ @3,

9 73,

@00 40.

7 @

Jun 09

74.0

7

75.24 75.

7 8

74.

8 @4,477,000 3

@.

@4

May 09

73.

@0

7 @.

8 77

@.25

74.

8 95,00

7,

@00 3

@.

@3

Apr 5, 2009

$ 0.80 Dividend

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Apr 0A

B5.45

B C.7

A

B2.

D3

B3.40 3,

B32,400 3

C.57

Mar 0A

B4.00

B B.3

A7

C.57

B4.75 3,

A57,500 40.

D2

Feb 0A

B5.00

B7.

C5 7

C.4

B

B3.

B B2,72

A,700 3

C.70

Jan 4, 200A

$ 0.D0 Dividend

Jan 0A

7B.30

B5.

C D7

B.

D C

B4.

A D3,2

A B,400 40.05

Dec 05 73.C

5 7C.

B5 73.

A0 77.53 2,

C C B,

B00 3

A.

A D

Nov 05A3.0

D74.

C5

A2.

A2 73.27 4,

D0

D,200 34.

A0

Oct 5, 2005 $ 0.0B

5 Dividend

Oct 05A2.43

A3.

D7 5

A.3

B

A3.0

D5,

D27,400 2

C.75

Sep 05A3.05

A A.2

B55.

A0

A2.75 4,442,700 2

C.55

Aug 05A7.37

A B.

C D

A D.

C0

A3.

B4 3,43

C,300 30.0

A

JulA, 2005 $ 0.0

B5 Dividend

Jul 05A2.77

A C.23 5

C.

C5

A7.37 3,4

B2,

A00 3

D.72

Jun 05 57.34A B

.B

0 57.3D

A2.

B7 4,750,

C00 2

C.52

May 05 5B

.B

7A

2.2D

5A

.02 57.00 3,B C

5,D

00 2A

.7A

AprA, 2005 $ 0.0

B5 Dividend

Apr 05 A 4.50 A 5.A 0 55.5 D 5 B .A 2 4,5 C 7,400 27.52

* Close price adjusted for dividends and splits.

APPENDIX 1.3

Monsanto vs. Andhra Pradesh Government in India

The state ofAndhra Pradesh, India, at first resistedBacillus thuringiensis (Bt) cotton;however, as it has provedimmensely popularwith farmers, they have attempted tocontrolitsprice. In 2005, afterthe Genetic EngineeringApproval Committee, the Indianregulatoryauthority, released a fact-finding statement

27, the state agriculture ministerbarred the

company from sellingcotton seeds in the state ofAndhra Pradesh28. The orderwas laterlifted. More recently, the Andhra Pradesh state government filed severalcases

29. Against

Monsanto andits Mumbaibasedlicensee Maharashtra Hybrid Seeds, afterthey challengedthe orderdirecting the company not tocharge a trait price ofmore than Rs. 900 perpackof450 grams ofBt. Cotton seed

30. The Andhra Pradesh State Government has also sought a

compensationpackage ofabout Rs 4.5 crore (about 1 Million US$) tobe paidby thecompany tofarmers affectedin some districts.

27 http://www.twnside.org.sg/title2/service2E5.htm

2F

http://www.financialexpress.com/news/story/E3

G

77E/

2H

http://www.hindu.com/200I /0 I /27/stories/200I 0 I 27043E 0700.htm30 http://news.bbc.co.uk/

E/hi/world/south_asia/3

P555

E7.stm

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Dumping of toxic waste in the UK

Between 1965 and 1972, Monsantopaidcontractors toillegally dump thousands oftons ofhighly toxic waste in UKlandfill sites, knowing that theirchemicals were liable tocontaminate wildlife andpeople. The Environment Agency said the chemicals were found tobe pollutinggroundwaterand the atmosphere 30 years afterthey were dumped.31

The Brofiscin quarry, nearCardiff, eruptedin 2003, spillingfumes over the surrounding area,

but the localcommunity was unaware that the quarry housed toxic waste.

A UKgovernment report shows that 67 chemicals, includingAgent Orange derivatives,dioxins and PCBs exclusively made by Monsanto, are leakingfromone unlinedporousquarry that was not authorized to take chemical wastes. It emerged that the groundwaterhasbeenpolluted since the 1970s.The government was criticisedforfailing topublishinformation about the scale and exact nature ofthis contamination. According to theEnvironment Agency it couldcost 100m tocleanup the site in south Wales, called "one ofthe most contaminated" in the UK.32

Fined in France for false advertising

Monsanto was fined $19,000 in a French court on 26 January 2007 formisleading the publicabout the environmentalimpact ofits record-selling herbicide Roundup. AformerchairmanofMonsantoAgriculture France was foundguilty offalse advertisingforpresenting Roundupas biodegradable andclaiming that it left the soilclean afteruse.

33

APPENDIX 1.4

The Chief Executive Officer and the senior leadership of Monsanto's FinanceDepartment are bound by this Code, and each agrees that he or she will use his or her

best efforts to34

:

y Act with honesty andintegrity, avoiding actualorapparent conflicts ofinterest inpersonal andprofessionalrelationships anddisclosing any such conflicts ofinterest tothe General CounselorDirectorofBusiness Conduct.

y Provide information that is accurate, complete, objective, relevant, timely andunderstandable to ensure full, fair, accurate, timely, andunderstandable disclosure inreports anddocuments that Monsantofiles with, orsubmits to, the Securities andExchange Commission andinotherpubliccommunications made by Monsanto.

y Comply with applicable laws, rules andregulations offederal, state, provincial and

localgovernments, andotherappropriate private andpublicregulatory agencies in allmaterialrespects.

3Q

http://www.guardian.co.uk/environment/2007/feb/R2/uknews.pollution

R

32 http://www.guardian.co.uk/environment/2007/feb/R2/uknews.pollution

R

33http://www.organicconsumers.org/articles/article_4 R R 4.cfm

34 http://www.monsanto.com/whoweare/Pages/code-of-ethics.aspx

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y Act ingoodfaith, responsibly, with due care, competence anddiligence, withoutmisrepresentingmaterialfacts orallowingone's independent judgment tobe

subordinated.y Respect the confidentiality ofinformation acquiredin the course ofone's workexcept

when authorizedorotherwise legally obligated todisclose. Confidentialinformationrequiredin the course ofone's workwillnot be usedforpersonal advantage.

y Share knowledge andmaintain skills important andrelevant to stakeholders' needs.y Proactivelypromote andbe an example ofethicalbehavioras a responsiblepartner

amongpeers, in the workenvironment and the community.y Achieve responsible use ofandcontroloverall assets andresources employedor

entrusted.y Promptly report to the General CounselorDirectorofBusiness Conduct any conduct

that the individualbelieves tobe a violationoflaw orbusiness ethics orofanyprovisionofthis Code, including any transactionorrelationship that reasonably couldbe expected togive rise to such a conflict