l'w Kna? mde dly isyt'h? - P9 The v- r: 5nl1?3v?f?5ri?t'f: a CITESteadm?nw ?Jr: hehw i i res1den settf?WiMorto g. r? . 107 . How a major chemical company manages. the risks and bene?ts in technological progress Monsanto?s early warning . i system Inlterviewed by .4 1 David W. Ewing and 5 Millicent R. Kindle . ?1 John W. Henley 3,4 lr fr} i . o, Few potential conflicts Perhaps no one at Mon- Following the interview The four inter?ews were henveen business and so-f santo supports such efforts with Mr. Henley are short conducted by David ciety have created so muCh more vigorously than does interviews wit three Ewing. managing editor public concern as the risks its chairman and?chief Monsanto executives who of HBR, and Millicent R. inherent in scientific and technological advance. One leading corporation I that has sought to reduce this area of conflict is Monsanto. At various stages in the development Of a new material or chem- ical product, it brings to- gether knowledgeable sci- entists and engineers to 1 "blow the whistle" on a' new product concept that may introduce unaccept- able hazards to users. Monsanto has organized task forces to analyze the role and effects of so- called "devil's chemicals" -that is, product and pro- cess chemicals that may cause cancer. Moreoverj with scienti?c advances taking place every day,E the company seeks to de- velop a realistic, up-to-T date philosophy about the trade- offs between risks and bene?ts in technical progress. executive officer, lohn W. i-lanley, the subiecr of the main interview in tl?s article. Formerly execu- tive vice president at Procter eJ Gamble, Mr. Henley came to.Mon- santo as chief executive in 1972. He is also a director of Citicorp and May De- partment Stores, in addi- ti0n to serving on various government boards con- cerned with foreign trade. arc?intimately involved with efforts to assess the potential hnzards in new and existing products. Curtis Elmer manager of_ cnvir mental staff 1n- form'a' describes a massiv ongoing project to collect late on the im- pact iernicals on the health {the company?s 45,00 .doniestic and 20.000 overseas employees. Dexter Shrirp, director of environmental sciences research for- agricultural products discusses efforts to assess possible carcino-i genie and other toxic ef? fects of herbicides. And. Dr. Roger Eolk. director of the environmental health laboiratories, dis- cusses his g?ro'up' philos- . ephy and approach in_ test- ing the effects of the com- pany '5 products on health and the environment I Kindle, manuscript editor. Photographs courtesy of Monsanto Company. . . il 1 .. he rather, I regard it as ite appropriate. The facts are I that Americans don? have a very good perception operators?complete with leaky valves and drip- can?t afford to have a safe process or a safe place to . development, especially the potential hazards to Interview with john W. Hanley HER: What does it feel like to be chief executive of a giant chemical company dur- ing a period when the word "chemic?al" haS'come to mean ?cancer maybe" in the minds of much of Mr. Hanley: I don sense any appre- ciable difference in my role from that of other chief executive officers of reasonably complex com- pari es. BCCause Monsanto and the entire chemical' ind stry are in the public we re perhaps more sensitive to certain societal issues th.11 orne of my counterparts. But I dog?t see thatps proddctive, of the risks and the benefits of chemicals. Our whole society is moving to ad- dress itself to a range of problems and Opportunities, and the chemical industry has perhaps a dispropof? of those Opportunities at the moment but doesn b0ther me. I think we recogmze an Obligao to help educate the public which is the solution t01 the problem. n: so": i It must be hard to counter the pop- ular' impression of chemical companies as risky places to work. The trouble is, there are a few schlock ping pipes?on the economic margins of the in- dustry. or wrongly, they believe that they work. But for the vast majority of the industry, that's a'serio'u'sl'y distorted perception. Many observers believe that Monsanto has developed an effective approach to anticipating and handling the risks of new product health and the environment. How does this work? I 1 We try to climinatefall of the pos- sible surprises, and that?s easier to do with new than existing projects. At every major stage of research and development wb formally assess the possible hazards of a new material or process. We look at things like the-known or expected impurities of-a new product, its expected toxicity (what technical people call "acutef? and ?chronic? toxicity), fore- seeable dangers in disposal, and the ability of cus?- . . tomers to use the material properly and safely. So these are our preliminary assessments of the hazards ?any effects on the health of workers, users, the public at large, the natural environment, the chain of life. I . If the new product passes these early tests and goes into development, we hold tech- nology risk reviews. This means that we bring together the most people we can ?nd?doctors, industrial hygienists, chemists, biol-. o'gists, safetyexperts, epidemiologists, animal .toxi. cologists, and anyone 'else who is technically quali-. ?ed to see how, where, and when that material or process might cause tiouble. What might go wrong? What exposure levels Emight cause what risks? If the experts see potential hazards, . the question becomes', ?Can those dangers be managed?? For example, can we change the pro- . duction methods to recycle the hazardous dust? Can we eliminate the risk {by a special valve or some . other safeguard? If the answer is yes, we go ahead, assuming that the prdject makes economic sense; if it is no, then we sto?p work on the project. Do these eXperts?the ?early whistle- blowers??come from your own staff? Many ?df them do, but not all. It de- pends. We don?t claim to be the fountain of all ?i knowledge, and so we contact experts outside the company universities and other organizations in the United States?in organizations all over the world, in fact. For instance, we may have a product that raises a questionf about the effect of zinc in the metabolic system. We don?t have experts here on . zinc metabolism, but we know where they are and . we call on them Dr. Bert Vallee at the Harvard Medical School is one. So we would ask him to come in and help us assess the risk with a zinc metabolite. What happens if the experts dbn't agree? - . Then we are forced to take the most conservative posture possible. If the product would pose substantial risk in the judgment?of one or more of the best quali?ed experts, we can?t take a chance on it.? If there is uncertainty, we?ll go out and try to get more data on" the questions raised? and then more judgments either refuting or con- firming the experts' Concern; . Peoplel here understand that if a proj- ect ought to be stopped because of environmental risks, the earlier it is istOpped, the better as we all are. What Ireally huris is going all the way through much of the research and developm?ntand than - . . urn-I'm . 'Eatly 1 . ?nding sombthing that invalidates all of that prior work. 2 I I Is it'a problem to keep this con-1.. servatisin (?ll potential health and environmental . . and proiduct development? risks om'dhmpening enthusiasm for research . The conservatism I?m talking about . is not in it?s in being r'ealiStic researchers and developers to do theirhomevt?ork? befo new rogluetls are put to the market td?st. he goal is to m-?ke ealth and environmental cone ns an?integral part of our business thinking just'as raw material and costs, retumenj'nvestm rile t, and other considerations-are part of our.think? . Instead pf being a deterrent to innovation, I see I approach as a stimulant, for it means can proceed3con?dently in-the development and marketing of a new product because we know, it sses strictjmedical and enyironmental tests:- 3 It is true that when we put 05; ternal review systems in-placeanumber ears ago, they m?t with resistance here. But those doubts have long sihce dissipated. New product de'velppers know that if it wdren?t for the internal checks' [and balances, they would be r'olling'the dice every time a they committed time and money to a new pfoduct -introduction. . i How new isthis early warning? approach at Monsanto? - ed it, and I believeowe practice it ir'io'r thorou hly than ever before, but the basic be ce?pt ?isn?t new. For instance, in the mid-Igsos'w'e - 'a . veloped a new organo-phosphate insecticide,I marked COLEP, in ourlabs, we 'did some limi ed field testing under scienti?c supervision. The estS' of acute toxicitymade by the medical'depdr en showed. that the toxicity wastoo difficult t:o 5' - . I troI; there were too many circumstances in 1ch the' user could make a smallmistake and suhi ct:' . - himself or herself to an unacceptable risk. So? e' - product was dropped, the project was tilled. - In other-word's, the prin?iplesw ire working on aren?t new.'I think that what is n'e . is easier for new products? . 3 . v- -i about aproduct?s?ultimate acceptability. We'want?a? In' recent years we have and hich' promised td'be very effective in controlling ce tai:nf--_ 1 insects After we tested this product, trade- . the comprehensiveness of our approach nowl her" . reviews are more analytical and systematic, - begin earlier, more experts are brought in. . 3 3 fax" . . Wh'yiis the risk aS's'essmerit'process'! . . ..- As I mentioned, environmental and" health risk studies are implicit in the deveIOpment of every new product. The existing products, how- ever, have the potential for unexpected ?ndings because when many of them were developed years ago, what is today a normal, thorough range of studies was not done. And we are in fact taking our new'found knowledge and looking retrospectively at these older businesses. A well- known MOnsanto example is PCBs, or biphenyls. We made this class of beneficial chemicals for nearly 40 years, only'to learn in theolatc 19605 that they were bio- 'accumulating in the environment. Long before we understood the possible consequences, we volun- tarily withdrew from PCB applications where we felt their discharge into the environment would be hard to control. And in 1977 we ceased production entirely because of the public?s increasing percep- tion that these chemicals presented an unacceptable level of risk. if Hofsuccessful has the early-whistle- blower approach been in eliminating unpleasant surprises after a new product is launched? Technically, it has been very success- -ful.,.aborting numerous projects that were tempting labee?seof the needs they could ?ll. Most of those- .proiects?I couldn even tell you about because they (ll were killed in early stages by our technical staff. 1 Politically, however we have had one well-known disaster?the Cycle Safe bottle. We must have spent more than $100 million on this pioneer- ing, recyclable plastic beverage bottle. You could grind it up and make another bottle out of it. We were even testing a version that could be washed out and refilled. People thought it would help to solve the nation?s litter problem. At every main step we asked the experts-both in and out of government?for their judgments on all the data that could be gathered about Cycle-Safe. We asked, ?Do you agree it?s? safe?? At every point they said they did. If there had been much negative opinion, we would not have proceeded. We even organized a scienti?c sympo- sium in Bostonthat brought together both those who opposed 'the ?concept of a plastic beverage bottle and those who supported the idea. We went as far as a company could go in encouraging scientific peer review and criticism. i think it's fair to say that the scientl? community considered our approach a model fwhat shohld be done. Officials of- both the FDA and the EPA congratulated us on our pro?le of test data I But a couple of years after Cycle-Safe went on the market, it was banned in 1977 by-the 0 Harvard Business Review November-December 1981 FDA. The bottle became the victim not of valid health and environmental concerns but of extreme, unforeseeable, and in?exible government restric- tions and interpretations fueled by the intense political pressures and emotions of the time. We said then, and we still believe, that the action . forcing this highly innovative product out of the marketplace was unfair, unwarranted, and not in the public interest. The disappointment from the ban on the Cycle-Safe bottle was enormous?to say nothing of all those who lost their jobs. - It was unbelievable. It is unbelievable. We gnashed our teeth and moaned and groaned and cried a lot, and then we said, ?Okay,?we?ve got to pursue this thing through the court to demonstrate to the regulatory agencies that they cannot make capricious moves without being called to task.? We still don?t have a reasoned, rational response from the FDA despite the fact that its basis for the ban was neither scienti?c nor proper and that it had to reconsider what that market now. The new plastic bottles you see on the shelves today are made from polyester and cannot be recycled or re- ?lled. I?m still angry because it was a very large, important opportunity for Monsanto and, when the whole story is written, it will be proved beyond the shadow of?a doubt that there was no scientific basis for the ban. It was a mistake made by the FDA. So what we want to do through our legal pursuit of the matter is,- in effect, to put a sign up on the bulletin boards of the regulatory agencies . saying: ?Be careful. Make sure you?re right before you make these moves.? . a What is Monsanto doing to overcome . the setbacks caused by the ban? On a broad scale, we?ve worked with the Carter administration and now the Reagan ad- ministration to try to bring some sensible guidelines into the relationship between industry and govern- ment. I personally have played a modest role ?in helping the new administration address the pivotal issues in the regulatory process. Within our company itself, there are some people who feel that their whole existence has been frustrated by the govem?ment?s unwar- ranted action against Cycle- Safe. We?ve reassigned them we? ve tried to help them understand that we want to make something positive out of all this. We emphasize that even if the FDA doesn?t think of Cy cle- Safe as a success, we do. But I?m sure there 1m are wounds that have not yet healed?~that will not healias a result of this unfortunate problem. Do you make contingency plans when a new project goes into production, or do you have special teams of investigators ready to go intc action if somethingg rtoes wrong? I can?t think of a situation today where we would have contingency plans for a new product as it enters production. By that time, we would have reviewed environmental constraints to the point that the possibility of a surprise is almost eliminated. Butwe?re ready in case a possible, un- expected problem'arises that involves one of our products or processes and we?d investigate the allegations and develop our data or work with other producers to deveIOp industry data. Then we ?d make one of three decisions: to defend the prodUCt, to change our methods even though production costs may increase, or to drop the product. As part of our overall corporate ap- proach, we established our environmental policy staff and the environmental policy committee, both headed by a senior vice president, in 1977. These new organizations provide corporate leadership and initiative for managing Monsanto impact on the environment. They also serve as cheeks and balances toeliminate crises as new proiects go forward; they act as a ?watchdog? internally and an early warning system externally. We?ve been talking mostly of new products and materials. What about investigating the risks in products that are already being marketed? ExiSting products need to be tested for . two reasons. First, some of them have been around . for a long time, and when they came out they were not subjected to modein? testing methods. Monsanto studies a few such products?formaldehyde is a recent example?but usually, because the products are produced by many-companies, they are assigned for testing to the Chemical industry Institute of Toxicology, which is {funded by the industry as a whole. AnOthei reason is that new evidence may come to light indicating a health or environ- mental problem n0t suspected before._Por example, some of our people are the world?s leading experts on the genetic and other possible effects of acry- lonitrile on animals and humans. When we leam something new about 'aerylonitrile?or any other subject of research?we?ll test any of-our products on the market that contain the chemical. 1 4 . tion? 5, or both? - 111 Benzene is another example that has been around forever. Yet in the last ten years some toxicological data on benzene suggest that in certain circumstances it can be troublesome to humans. Monjanto IS the world largest user of benzene, I belie and we are going to be testing this ch'ernical for quite some time. So surprises can come from new knowledge? ?new analytic capabilities?and we really don know what all of that knowledge means. - t' Discussions of chemical haza?fds .so etimes center 1111 ?devil? chemicals." Wha< liarie these? Devil's chemicals are contaminants ?-usually highly toxic or carcinogenic?that are inadvertently formed in trace amounts during pro- duction. Examples include the nitrosoamines, 'the bioxins, and the furans. You have indicated that ma un?cer- tainties exist about devil? chemicals. Doesthis fact complicate Monsanto?s iob? Yes. During the last two decades. our national ability to measure and quantify has taken quantum leaps forward, and this has changed much of our thinking and added a whole range of ques- . tions. A couple of decades ago we could measure chemi 3?1 impurities fairly accurately' in the range of parts per million. If something was notdetected in this 1. go, we considered the impuri UOH1 existent, ero. But today we ca re many trace 1_taminants in parts per 1151' 1 To give you an idc of this technical achievement, one par trillion is roughly the equivalent of a single grin of . sugar in an Olympic- -size swimming pool. Our increasing analytic capability has permitted us to measure things way beyond 0dr ability to understand what the data mean. And with this greater measuringability, society is beginning . to realize that there? 3 no such thing as zero in this business of Impurities. Even fresh water as im- 5 purities we now know. ll Whose iob' 15 it to identify and analyze devil chemicals?the government? 5, the corpora- .. 1. .1 Both. At Monsanto we have spent millions of dollars in this effort. We are not re? quired by law to do so, but like other industry leaders, we consider it our job. Our so-called devil? chemicals project is looking for trace contaminants in existing products, and we have now examined most of them. We have feund no product contain- Eli?l?llirll- Eksl' 111 ing trace hinounrs even close to the levels that medical add toxicological scientists believe could cause harm. As for government, organizations like the FDA, EPA, and OSHA spend large sums assess- ing devil?s chemicals, and their staffs work in con- ?tinuous contact with us. c" 5 your devil?s chemicals project related to the larly-whistleblower approach? ?The two are independent of each ether except when a new producr or process is being examined. Then the presence or absence of a devil's chemical could enter into the decision whether to continue development of the producr. How do you square the enormous ef- fort and expenditure Monsanto is making to ana- lyze devil's chemicals with the fact that you have lawsuits on your hands like the one ?led in March 1981?3 $1.7 billiorti'?laim by a group of Monsanto workers in West Vifgir'iia who allege that they were exposed to paramfhobiphenyl and dioxin? Maybe this suit proves that there?s no way to do your iob in this" dustry without having some brickbats thrown-at you. PAB was used from ntlw?t?gaos to the mid-19305 in the Nitro, West Vi?rgio?ia plant to produce certain raw materials. In the mid-19505, studies began suggesring'that pro- longed exposure to PAB could cause bladder cancer. Once this was confirmed, we halted the use of PAB and put all employees who had been exposed to it on a long-term health monitoring program. That program, by the way, continues to this day. Monsanto?s response was described in the medical literature as a model for other com- panies and occupational medicine departments. I don?t want to minimize the misfortune of those who may have become victims of PAB exposure. But it was the company that blew the whistle in this case, not a government agency?and certainly not the employees. How can society take these uncer- tainties into account when it sets standards for health and safety? . . lfwe go looking for a trace amount of something, chances are we?re going to find it in some minuscule amount at least. When we do find it, we must be prepared to take some action or be convinced that no?thion is?meeded. Again, what has happened is that our ability to detect substances in many cases has outstripped our ability to under- stand what, if anything, their presence means. A: growing body of evidence suggests that there?s a Harvard Business Review November-December 1981 threshold for all carcinogens?a level of use below which theyare not hazardous?but that theory is nor universally held. So we are far from hearing the lam words on the significance of trace chemicals. In the meantime, what we?ve got to do is strike the best balance we can between possible risks and known rewards. In the media there are many accusa- tions and much debate about the hazards of chem- ical products. Is all this debate simply a result of the scienti?c uncertainties you have mentioned? Only some of it, and sometimes only a small part of it. The trouble is our tendency to confuse risk assessment with risk acceptance. They are two very different things, separate parts of the equation. Risk assessment is primarily a scientific exercise. It is an attempt at quanti?cation-that is, determining that material at exposure level presents degree of risk to animals or human beings. Risk acceptance is quite different. This is a iudgment call, not a scienti?c measurement. It is 'a iudgment that the risk, high or low, is acceptable or unacceptable. Who are the experts in assessing risks as Opposed to those who decide whether to accept the risks? Risk assessment is the job of experts ~toxicologists, analytic chemists, environmental specialists, doctors, and epidemiologists. Risk ac- ceptance, on the other hand, is not for experts but society at large. It depends on the public?s general feelings about risk as well as the credibility of the risk assessors, the role and in?uence of activist or?? ganizations like the Sierra Club and antinuclear groups, the aetivity of legislators, the reputation of regulatory agencies, and so forth. As a result of all these influences, risk acceptance becomes incon- sistent at times, with high risks like cigarette smok- ing being accepted and low risks, despite scienti?c . assurances, being rejected. . One of the most intimate links I know between science and society is this bridge from risk assessment to risk acceptance. However, this link is the subject of a lot of confusion. Where do you see risk assessment and acceptance being confused? . All over. For example, a couple of {summers ago the saccharin?issue came bubbling up.? again. Well, before the scienti?c data were in on risk assessment, the question of acceptance was ing debated on Johnny Carson?s ?Tonight? show, in Congress, on the front page of the Ne York Times and in lots of other places That cockejjcd. You can reach a sound decision on acceptance until the scienti?c data are properly struCtured and analyzed. The data are in 011 smoking,pcn1cillin 'Earlv warning? system - 113 - comparing some 3,7130 male Du Pont chemists with more than 19 000 male Du Pont nonchemists 1nI the same salary categories found a somewhat loqu cancer mortality rate among the chemists. and many pesticides but for 1111 enormous number 1 During the last few years the media hav been giv or products there are st ill no guidelines or wh 11t- ever guidelines that do exist are under repair or advisement. Let me give you another example. Regularly our plants are visited by a group of world- famous pathologists who bring their expertise to bear on the quesrion of what further improvements might be made in the environment here Sometimes Isneak into the back of. the room and 11 to their discussions but frankly, their discussions are gen- erally too technical for me- they go right over my 11ead.O11e time I got them together at the end of a meeting and said: "You know we think (our plants are a safe place to work, but we re terriblv con- cerncd aboutl health land safety and we want to do everything we can to make them better. What can I do?? And they told 111ch ?Outlaw smoking. Its danger to health is higher than everything else." So I talked about this with my asso- ciates and discussed whether I should write 11 letter to every employee sharing this scientific perspec- tivc. We decided we should be very careful about any step like that. The data measuring the risks of smoking are one thing, but the acceptance of those risks is another. Employees have the right to make th at kind of decision themselves, except when smoking is hazardous because of working condi- tions You see ?no smoking? signs in many areas of the plants but not in odiees. How does Monsanto ensure the safe- ty and health of the public at hand?the employees? We have an 111-house medicahand e11? health department which keeps close tabs on cmplovees? .1eal and safety througha computerized medical and environmental health system that we call And detailed epidemio- logical studies on Monsanto employees show they are healthier than a comparable sample of the gen- eral population. Beyond that three or four path- ologists visit our plants regularly and advise us on how we could further improve pl ant safer: for our employees. 1 Overall we?ve set a new all time safe- tv record. Its kind of a theme you see signs all over our plants about ?the great safety race. in fact National Safety Council data for 1979 show the U. 8. chemical industry second of .11 industries in safety performance?more than ten times safer than non- military government service! And a recent study '1 '1 - of the factors 111 deciding whether to go ahead with (1:11:11 product. But the reviews don? tdeal directly with lag much attention to problems' in ehefnieal waste disposal. Is the early-whistleblower approach a way to head off that problem too? '1 Yes and no. The technical reviews ar useful in determining if a proposed prod?iict or ess can bC/?mOdl?Cd to avoid creating any {lift us waste and ease of modi?cation will bcEme isting waste streams created by chemicals. Those Stre mis are the subject of another effort underway. A hazardous waste study team is getting answers to such questions as: Where are our waste streafhs? What are the existing treatment and disposal m'eth- ods? What do projections show about likely inJ' creases or decreases in dangers: This tcan?will take another year to get the answers and then?wC will complete a ten- year plan for handling hazardous wastes We may even develop a network of re- l- gional facilities for disposal of wastes created by plants 111 different areas. . - I Does this mean Monsanto to worry about creating ?Love Canals"? We can't take anything for granted ls ther warehouse somewhere ?lled with dru'rns or chemical wasm left over from some dompan- Operatio of many years ago? We ve been in busi- ness for. years. We have surveyed all old closed waste "res and we don? think any of them could beconI a hazard. Nevertheless, it IS conceivablel -. that some ?site was used before the development of modern record keeping that we know nothing about. So we live with a certain risk from the paStI, - iust as other generators of hazardous waSte do. As for thef ure I?m? con?dentt at technology 15 the country 5 answer. Scientists in every right- -thinl