Proposals about animal welfare in the food supply chain have surged, while resolutions about antibiotics and pesticides are not much different than before. Proponents also have returned to ask again about waste and pollution, but also have new ideas on hazardous materials and business practices that harm the environment. In all, the total of 67 resolutions is up from 38 last year and 48 the year before.

Agricultural Practices

Proponents have long expressed concern about how food is produced, looking at the use of antibiotics, pesticides and farm animal treatment. Filings on these topics have ballooned this year. Thirty this year address animal welfare and five are on pesticides and antibiotics.

Farm Animals and Food

Supply chain animal welfare: Most of the resolutions seek more information from companies about how animals used for human consumption are treated in the food supply chain.

“Five Freedoms”—The Accountability Board wants Amazon.com to provide an analysis

of the practices currently in its food and grocery supply chain which violate the conditions mandated by the ‘Five Freedoms’ of animal welfare—including how prevalent each practice is within Amazon’s supply chain and what specific steps Amazon has taken, and will take, to address past violations and eliminate each practice from future occurrence.

Nearly the same proposal is at McDonald’s, from the Humane Society of the United States (HSUS), a resubmission that earned 38.6 percent last year when it asked about the welfare of chickens used for meat sold at the company’s restaurants. It also asks about which “Five Freedoms” the company uses in its animal welfare program, asking for “specific details about the metrics the company is using each one to measure and improve the welfare of animals in its poultry supply. The group notes the company adopted indicators to address the welfare of chickens in 2017 and reported in 2022 that it is using them to rank suppliers, encouraging improvements. HSUS believes the specific indicators should be disclosed, however. In 2022, HSUS withdrew a proposal about pig welfare after the company acknowledged some are confined during pregnancy.

Eggs and pigs—A new proposal at Cheesecake Factory, its first, says previous farm animal welfare pledges mean it should report on its progress. HSUS withdrew after the company provided information about progress on implementing its gestation crate-free pig supply chain pledge and also plans to source only cage-free eggs.

Enslaved monkeys—A second proposal at Amazon.com from People for the Ethical Treatment of Animals (PETA) raises a wholly new issue for proxy season—concerns about enslaved monkeys used to harvest coconuts in Thailand. The proposal may not go to a vote, however, since Amazon is arguing at the SEC that PETA did not prove its stock ownership. The proposal asks for a report by December,

assessing the feasibility of halting Whole Foods’ sourcing of any coconut milk from Thailand, whether through its own 365 label or other brands. The report should consider the potential risks to Whole Foods’ reputation, sales, and share value by continuing to sell coconut milk sourced from Thailand. The report should omit confidential and privileged information and be prepared at a reasonable expense.

Chickens— Chickens were the subject of another HSUS proposal that it has withdrawn at Jack in the Box, (without any agreement) a proposal asking about their welfare, seeking

a “broiler” welfare progress report that discloses: (1) what percentage of its chicken is compliant with each component of its commitment, (2) what specific steps the company took toward reaching compliance with each component (and when it took them), and (3) what next steps it’ll take to reach compliance with each component.

Shake Shack is arguing at the SEC that its proposal is ordinary business, moot and false and misleading—but the SEC has yet to respond. The Accountability Board suggests the company is making baseless marketing claims about the chicken in its food products and requests that it

confirm its chicken is “100% hormone-free” with “no hormones” ever, providing details about how its “culinary innovation” achieved that milestone, and what the Board’s and management’s oversight responsibilities are regarding its hormone-free chicken sourcing. If the company cannot confirm its chicken is hormone-free, then shareholders ask it to disclose the precise meaning of its repeated claims to that effect, along with a risk analysis about the impacts of those claims—including risks to public health.

Pain—HSUS has filed the first proposal ever at Target on animal welfare, reasoning it should back up its commitment to animal welfare by providing a report showing how this is implemented. The proposal is fairly specific—seeking a progress report on the company’s “‘Pain Management’ commitment for animals in its food supply. This should be done by disclosing each painful procedure, the percent of its supply chain free of that procedure, and, for the remainder, the percent where animals are provided pain management.”

Adopt welfare policy: At Biglari Holdings, the proposal is simply “to develop (and publish) standards to address and improve animal welfare in Steak ‘n Shake’s supply chain.” Likewise, the Wingstop resolution, the company’s first, just asks for a report that “at a minimum, analyzes its policies and impacts on animal welfare and includes targets for measurably improving animal welfare in its supply chain.” A similar but longer proposal at Weis Markets (where a cage-free egg proposal earned 11.8 percent last year) asks for a report within six months that will explain

the details of how, precisely, it’s prioritizing “supporting the humane treatment of animals in our supply chain.” This should include all animal welfare commitments, standards, requirements, and policies Weis has for its supply chain (both general and specific)—with details about when it adopted each one, and how the company has been (and will continue) enforcing them.

Pigs: There are six proposals specifically about housing swine, bringing up an issue that has earned considerable support both in proxy season and around the country. Six proposals are pending and two have been withdrawn so far.

The Accountability Board wants action on pig gestation crates at Kraft Heinz and SpartanNash, a food distributor. It asks each to “disclose its percent of group-housed pork in each main geographic region and establish measurable targets” for “phasing out the purchase of pork from suppliers who use gestation stalls.” The Humane Society has a similar request at Denny’s asking it to “publish measurable, timebound targets for eliminating (or at least significantly reducing) gestation crates in its pork supply—and regularly report progress meeting them.” At Dine Brands, HSUS also asks it to set “measurable targets for switching to group-housed pork in its U.S. restaurants, then regularly report progress meeting them.” At Papa John’s International HSUS asks for a report within six months on domestic group-housed pork and “measurable targets for eliminating or reducing gestation crates in its pork supply.”

Three of the companies with proposals this year have seen similar ones before from HSUS. It withdrew a proposal last year about pig housing after Denny’s changed its policy, a 2022 proposal asking about Dine Brands’ implementation of ESG policies and pig grates received 19.2 percent, while the Papa John’s proposal is a resubmission that receive 41.8 percent support last year.

Withdrawal—HSUS withdrew at Hormel Foods after an agreement about pigs, when it asked for

details of how exactly it’s working with contract farms to convert to group housing, the total percentage of its pork produced through group housing, measurable goals and targets for reaching 100% (or at least for significantly increasing the percentage), and specific steps it’ll take to meet those goals and targets.

Hormel in 2018 agreed to gradually implement group sow housing on company-owned farms by 2018 and these facilities are now in compliance with new laws banning gestations crates in California and Massachusetts, with meat from the animals available for sale as of January 2022. Now it plans to study how it might replicate this shift in its supply chain and hopes to share a report this spring, which will report on what percentage of its total pork production comes from group housing. It promised to provide quantitative data on the subject going forward, engage customers and create a working group with “farm partners” that will meet twice a year. It has posted details on the commitment to its website.

Eggs: The Accountability Board wants four food companies to report on cage-free eggs. It asks Flowers Foods to “reissue a commitment and timeline for switching to cage-free eggs, with measurable interim benchmarks and regular progress reporting.” Similarly, it asks McDonald’s and Wendy’s “to publish measurable targets for switching to cage-free eggs… and regularly report its progress meeting those targets.” At McDonald’s it asks for worldwide action, while at Wendy’s it is confined to the United States and Canada. The proposal already has gone to a vote at the grocer Ingles Markets, earning 5.4 percent on February 13.

Plant-based foods: Last year four healthcare companies received a proposal asking them to require plant-based food options for patients at every meal, but the SEC agreed all could be omitted on ordinary business grounds. This year, Physicians Committee for Responsible Medicine (PCRM) is back with a similar proposal at health care providers and two airlines, but no votes seem likely, as discussed below.

At HCA Healthcare, Select Medical Holdings, Tenet Healthcare and Universal Health Services, the proposal says each company

shall achieve significant revenue savings, improve patient satisfaction, improve staff health, reduce absenteeism, and enhance its image as a healthcare leader by adopting the American Medical Association policy for healthful foods for healthcare facilities and adopting the innovative program for healthful hospital food developed by the New York Health+ Hospital System.

A shorter version at Encompass Health says the company “will make healthful, plant-based meals the default option in all food service settings, other than for patients who have special dietary exclusions.”

At American Airlines, Delta Air Lines and United Airlines, the proposal says the company

shall make air travel more sustainable, achieve significant revenue savings, enhance customer satisfaction, prevent complaints, reduce staff burnout, and bolster its image as a customer service leader by ensuring that all in-flight special meals are free of common allergens and meet the needs of people seeking gluten-free, vegan, lactose-free, and other diet options.

SEC action—All five medical firms say the proposal is ordinary business since it would micromanage, or moot since they already offer plant-based food options. Encompass Health also says it would be illegal and is not phrased as a request as required by SEC rules. All the airlines also say it is an ordinary business matter. The SEC has already agreed that the HCA Healthcare and Select Medical proposals are ordinary business, so similar decisions are likely on all the others.

Plant-based milk: PETA has returned to Starbucks with a proposal that last year earned 5.3 percent. It again asks for a report “examining any costs to Starbucks’ reputation and any impact on its projected sales incurred as a result of its ongoing upcharge on plant-based milk. The board should summarize and present its findings to shareholders by the end of the third quarter of the current fiscal year.”

Antibotics and Pesticides

Antibiotics: Two resolutions address the dangers of antibiotic resistant bacteria this year and both are from The Shareholder Commons (TSC) and reprise past concerns that food companies are not sufficiently attending to risks that the World Health Organization and others see as significant threats to human health. TSC has resubmitted a proposal to McDonald’s (which earned 18.7 percent last year) and filed it for the first time at Yum Brands, where the group has engaged in the past about antibiotics and withdrew proposals in 2021 and 2022. The proposal asks each firm to comply with WHO’s Guidelines on Use of Medically Important Antimicrobials in Food-Producing Animals throughout their supply chains.

Another resubmission at McDonald’s comes from the Benedictine Sisters of Bourne, Texas, who want the company to “adopt an enterprise-wide policy to phase out the use of medically important antibiotics for disease prevention purposes in its beef and pork supply chains. The policy should include, in the discretion of board and management, global sourcing targets with timelines, metrics for measuring implementation, and third-party verification.” The resolution received 16.6 percent support last year.

Pesticides: Two pesticide proposals have been filed this year and both are pending:

• As You Sow wants Kellanova (formerly Kellogg) to regularly report “on the risks to the Company associated with pesticide use in its supply chain.” As You Sow withdrew a nearly identical proposal after an agreement with the company in 2020, in which it agreed to phase out glyphosate in its wheat and oat supply chains.

• At Target, Mercy Investments is seeking a report “explaining if and how the company is measuring and curtailing pesticide use in its agricultural supply chains that cause harm to human health, pollinators, and the environment.” Mercy notes the company earns about one-fifth of its revenue from food and beverage sales but says it needs more specific commitments to match its peers when it comes to pesticides.

Waste & Pollution

Plastics and Packaging

As You Sow and Green Century remain the main players seeking to cut the use of plastics at both producers and users, with 18 proposals (five not yet public); five are resubmissions. The proposals reiterate concerns about the harmful effects of plastics on the oceans and human health, and the potential risks that could come should governments impost fees to recapture the coast now borne by society at large. A key reference is still the 2020 Pew Charitable Trusts report, Breaking the Plastic Wave, which estimated that ocean plastics will triple by 2040. The resolutions call for sharp reductions in production and use, plus more recycling. More recently, a new investor statement in May 2023 called for “urgent action” from “intensive users of plastic packaging,” prompting several new proposals; the statement also urged companies to join a new Business Coalition for a Plastics Treaty.

Plastics producers: Four proposals at plastics producers repeat previous requests that earned signification support to report on “whether and how a significant reduction in virgin plastic demand, as set forth in Breaking the Plastic Wave’s System Change Scenario, would affect the Company’s financial position and the assumptions underlying its financial statements.” This proposal is before Chevron, Dow (30.2 percent in 2023), ExxonMobil (25.3 percent in 2023 and 36.5 percent in 2022) and Phillips 66 (11.8 percent last year, down from 50.2 percent the year before).

At another producer, Westlake, the resubmitted proposal asks how it “could shift its plastics resin business model from virgin to recycled polymer production as a means of reducing plastic pollution of the oceans.” The company makes and markets chemicals but also now makes consumer products from post-industrial recycled polyethylene and PVC. The proposal earned about 9 percent in 2023 and must earn 15 percent in 2024 to qualify for resubmission.

SEC action—Chevron is arguing the proponent failed to prove stock ownership, which generally is successful, while ExxonMobil is making an argument that As You Sow impermissibly submitted multiples resolutions.

PRESSING THE TOBACCO INDUSTRY TO CLEAN UP ITS PLASTIC CIGARETTE WASTE

CONRAD MACKERRON
Sr. Vice President, As You Sow

While soda bottles and fast-food containers are usually cited as major sources of single-use plastic that escape capture and pollute rivers and oceans, cigarettes often have been overlooked as another major source of plastic pollution. Yet cigarette filters are a form of single-use plastic and, by volume, are likely the most littered form of plastic on the planet. Smokers annually discard about 4.5 trillion cigarette butts with plastic acetate filters, releasing into the environment an estimated 300,000 tons of potential plastic microfibers. Cigarette butts are the most collected plastic waste over 40 years of annual International Coastal Cleanups.

Exxon says its proposal can be omitted because As You Sow is acting as the agent for United Church Funds, the stockholder, but also has filed a second proposal about divested high-carbon assets (p. 27); the company says this violates an SEC requirement from 2020 that bars representation by the same entity for more than one proposal. The SEC has yet to respond.

While no challenge has surfaced yet at Phillips 66, it seems likely the proposal will be excluded if the company objects, since last year’s vote failed to meet the 15 percent resubmission threshold.

Single-use plastics: Yum Brands (36.9 percent in 2023), Keurig Dr Pepper and five more companies as yet unnamed face resolutions about single-use plastics. This resolution seeks a report describing how the firms can “shift away from single-use packaging” and align their approach with the Plastic Wave report or other recommendations.

Withdrawals— Green Century withdrew a proposal at Costco after it agreed in October 2023 to a new five-year action plan that commits it to expand the scope and scale of its plastic reduction effort. Costco will report on the total percentage of recycled content in its plastic packaging as part of the deal. No other deals appear to have been struck so far, but a resolution on plastics was withdrawn last year at Keurig and it also agreed to cut its virgin plastic use by 20 percent back in 2021, prompting a withdrawal.

Packaging: The idea that product packaging can be reused and be part of a “circular economy” came up last year and again features in a proposal at four companies. The resolutions is still pending at Constellation Brands and Hershey and earned 4.0 percent in early February at Tyson Foods, not enough for resubmission. It was withdrawn at Hormel Foods. The resubmission at Constellation asks for a report “describing opportunities for the Company to support a circular economy for packaging” (it earned 25.3 percent last year at Constellation). At Hershey, it seeks a report “describing opportunities for Hershey’s to support a circular economy for packaging at its end-of-life.” There have been no votes there before, but similar managementsupported proposals at Jack in the Box and Sysco in 2022 earned more than 90 percent.

Another proposal from individual investor Jan Dell, who founded the non-profit group The Last Beach Cleanup, is focused specifically on adherence to California labeling laws at Kraft Heinz. Dell argues that the laws are being challenged in court to prevent “consumer confusion” about recycling, presenting the risk of large fines. This new proposal seeks a report by next December,

providing the factual basis for legitimacy of all recyclable claims made on plastic packaging. Report should include substantiation required by California law (Cal. Bus. & Prof. Code § 17580) that must be made available to the public on request, including that plastic packaging labeled as recyclable meets all of the criteria for statewide recyclability pursuant to subdivision (d) of Section 42355.51 of the Public Resources Code. The report should be prepared by independent legal and technical experts who have no financial conflicts caused by working for the plastics or plastics recycling industry.

Other waste proposals: One proposal asking for a report from Deere on the rights of its customers to repair products on their own has been omitted on ordinary business grounds. Proponents withdrew five similar proposals at other companies in 2021 and 2022—one at Apple, which agreed two years ago to allow customers repair their phones and other products with independent repair shops.

Two are about tobacco and both are new. Investors gave limited support to a resolution voted on at Walgreens Boots Alliance in January, with 6 percent of shares cast in support of a report on company “efforts to educate its customers who purchase tobacco products about the environmental damage caused by improperly discarded tobacco products, and provide information on methods of proper disposal.” The remaining proposal is along the same lines at Altria, seeking a report “assessing the benefits to the Company of extended producer responsibility laws for spent tobacco filters for tobacco companies operating in the U.S. market.”

Hazardous Materials and Risks

Mining: The last proposal about hazardous materials occurred in 2020, when a proposal at TJX asking about toxic chemicals consumer products earned 44.5 percent. But mining, a new issue this year, has been largely absent from proxy season for some time, perhaps testament to the success of industry efforts to mitigate the inherent environmental harms of their operations and report about what they are doing. This year, resolutions about deep sea mining are at two automakers and proponents want to know about titanium mining at a chemical company and two retailers.

DEEP SEA MINING POSES RISKS TO BIODIVERSITY, CLIMATE, AND INVESTORS

ELIZABETH LEVY
Biodiversity Program Coordinator, As You Sow

As You Sow recently launched a Biodiversity Program in response to increasing global concern about the systemic risks to nature posed by biodiversity loss and looming ecosystem collapse. These risks include food insecurity, fresh water, clean air, climate change and the collapse of innumerable ecosystem services relied on by companies, communities and the world. The benefits of a functioning environment are at risk and shareholders are beginning to raise the alarm.

The emerging deep-sea mining (DSM) industry embodies one of the most significant new threats to virgin wilderness and global biodiversity.

Oceans—As You Sow proposes that Tesla “commit to a moratorium on sourcing minerals from deep sea mining, consistent with the principles announced in the Business Statement Supporting a Moratorium on Deep Sea Mining,” which is new and has been signed by 46 companies. The resolution is similar at General Motors but asks for a report about its “policies on the use of deep-sea mined minerals in its production and supply chains.”

Titanium—The other mining proposals raise a concern from last year about the Okefenokee Swamp, which straddles the Florida-Georgia border, hosts a storied national wildlife refuge and could be polluted should companies move ahead with titanium mining nearby. Green Century explained its approach in a press release last fall. There are two variants:

• Ban: At Chemours, the resolution is similar to one Green Century withdrew in both 2023 and in 2022 after what it said at the time was a company commitment. It asks now that the company issue a report within six months, “assessing the benefits and drawbacks of permanently committing not to engage in titanium mining, nor to purchase titanium mined by others, on the Okefenokee’s hydrologic boundary, and assessing risks to the company associated with same.”

• Paint: At Home Depot and Sherwin-Williams, the angle is paint. Each has received a proposal asking for a report on “permanently committing not to sell paint containing titanium dioxide sourced from the Okefenokee, and assessing risks to the company associated with same.”

SEC action—Tesla is arguing at the SEC that the resolution is too specific and therefore an ordinary business matter. Both paint retailers are saying the same thing, noting that the proposal is about specific types of products. Similar arguments have been successful in the past, so votes seem unlikely.

Environmental and safety risks: New dual-concern proposals are about worker safety and the environment. At Align Technology, The Sustainability Group of Loring, Wolcott and Coolidge wants a report:

drawing upon the ISSB’s Medical Equipment Sustainability Accounting Standard…discussing Company processes and policies to manage potential environmental and human health risks associated with chemicals in Align’s products, as well as related risks to Company operations and finances such as reputation and liability.

Elsewhere and in a different context, the Utility Workers of America want Sempra to report by next year’s annual meeting “on the steps Sempra has taken to reduce the risks of significant environmental hazards or life-threatening safety incidents involving the operations of Sempra and its subsidiaries.” It says, “The report should describe the Board’s oversight of Company performance regarding environmental and safety risks and include an analysis of the underlying causes of any significant environmental incidents endangering public safety or life-threatening safety incidents during the preceding ten years.” The resolution is new and raises concerns about a major gas leak at the company’s facilities in California.

Another new proposal about environmental risk management is at Granite Construction. As You Sow asks that it provide a report “assessing the risks posed by the Project’s apparent misalignment with the Company’s disclosed environmental and community engagement commitments.” It expresses specific concerns about a quarrying project in Utah and its impact on the surrounding land and community.

SEC action—Sempra argues it is being sued about safety issues and that the proposal is therefore an ordinary business issue. Granite says current disclosure make its proposal moot.

Toxics: Two additional new proposals discuss the impact of old lead cables and risks from tires.

• BellTel Retirees have a new proposal that references a July 2023 report in The Wall Street Journal about lead-sheathed telephone cables and related liabilities. AT&T, before its breakup, used lead-sheathed cables until the 1960s and many remain in place, presenting a source of toxicity. The retirees want Verizon Communications, formerly part of AT&T, to undertake a

comprehensive independent study and publicly release an independent report by December 2024 that demonstrates the Company has assessed all potential sources of liability related to lead-sheathed cables, including a comprehensive mapping of the locations impacted and conclusions on the potential cost of remediation, along with the most responsible and cost-effective way to prioritize the remediation of sites that pose a risk to public health.

• Another new issue is being raised by an individual investor, Michael R. Stephen. He wants Tesla to report about damaging impacts from its tires. He asks that the company “redesign vehicle tires to avoid pollution from harmful chemicals such as 6PPD-Q.” The proposal explains that researchers discovered the substance was killing many salmon in urban streams in the Pacific Northwest and suggests harms likely come from shredded tires widely used in playgrounds.

SEC action—Verizon is arguing at the SEC that current reporting makes the resolution moot and also that it is ordinary business given pending litigation. Tesla says Stephen’s proposal is ordinary business since it is about product design, and also argues the proposal is misleading.