Beveridge & Diamond
 

UK Organizations Seek Comment on Draft Voluntary Code of Conduct for Nanotechnology

Beveridge & Diamond, P.C., October 24, 2007

On October 9, 2007, a group of UK-based organizations initiated a public consultation with U.S. stakeholders on a draft voluntary code of conduct, entitled the “Responsible NanoCode.”  The organizations that sponsored development of the Code include the UK Nanotechnology Industries Association, the Royal Society, the Nanotechnology Knowledge Transfer Network, and the asset management firm, Insight Investment.  Through an international public consultation process, the sponsors aim to establish broad consensus on what constitutes “good practice” for companies involved with nanotechnologies across the product lifecycle.  The draft that has been released for public comment is the work product of stakeholders from multiple interest groups, including industry, academia, labor, and environmental NGOs.

The Responsible NanoCode establishes seven principles of good practice, but it does not set out a set of auditable, performance-based standards.  Instead, the authors of the Code have provided examples of behaviors that would demonstrate compliance with the principles.  Adherents are expected to annually report their compliance or explain any deviations.  The sponsors anticipate establishing a compliance monitoring mechanism, but have not identified a specific mechanism to date.  Comments are requested on each of the seven principles as well as an appropriate compliance monitoring mechanism.  The comment period will remain open until November 12, 2007, and the final version of the Code is anticipated in February or March 2008.

Insight Investment has stated that it will encourage adoption of the Code by the companies in which it invests.  The asset management firm is planning consultation sessions for the UK Social Investment Forum and the European Social Investment Forum, whose members include other large shareholder organizations.  Publicly-traded companies involved with nanotechnology therefore should anticipate inquiries from at least some of their large European shareholders during 2008.

Before agreeing to adopt the Code, companies should carefully evaluate the attendant risks for their operations.  In the United States, these might include increased exposure to: (1) false advertising claims under state consumer protection statutes for statements made about compliance with the Code; (2) shareholder proxy initiatives regarding implementation of the Code or requesting additional governance measures for nanotechnology; (3) derivative lawsuits under state corporation laws regarding implementation or seeking additional governance; and (4) higher standards of care in the tort liability context. 

Key documents can be found at:  http://www.responsiblenanocode.org.

For more information, please contact Philip Moffat at pmoffat@bdlaw.com or Cindi Lewis at clewis@bdlaw.com.