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August 08, 2012
Certified Coffee to be on Menu at Smucker's
    by Robert Kropp

A resolution from Calvert Investments and Trillium Asset Management, supported by 30% of shareowners in 2011, is withdrawn after Smucker's agrees to targets for purchases of certified coffee.


During last year's proxy season, a first-time shareowner resolution submitted at the Smucker's food conglomerate, calling for "detailed disclosure by the company about climate-related risks to the Folgers Coffee and other brands," gained 30% of shareowner support.

The resolution, submitted by Calvert Investments and Trillium Asset Management, requested that the company report on how it "will manage the social and environmental risks and opportunities connected to the company's coffee business and supply chain."

Despite the vulnerability of coffee production to changes in precipitation and extreme weather events, the company's 2011 sustainability report included a total of one page devoted to coffee, and none to climate change.

The two investment firms re-submitted the proposal this year, requesting that Smucker's establish quantitative goals for purchases of certified coffee, which is produced according to environmental and labor standards. The resolution also calls on the company to devise a method with which to evaluate its responses to the effects of climate change.

Calvert and Trillium announced this week that the resolution has been withdrawn following successful engagement. Smucker's has agreed to a goal of 10% certified coffee purchases by 2016; to partner with the Hanns R. Neumann Stiftung Foundation to improve the conditions of small-scale coffee farmers through training and climate change adaptation strategies; and to partner with World Coffee Research in an effort to develop hybrid coffee varieties.

The investment firms have further requested that Smucker's "articulate how these initiatives are beneficial, not only to some of the ecosystems and communities in its supply chain, but also how they are linked to the long-term financial prosperity of the company."

While acknowledging that Smucker's "has begun to recognize its responsibility to address climate change," Jonas Kron of Trillium stated, "The company must do more to address investor concerns through greater disclosure, performance improvements, and accountability mechanisms."

And Rebecca Henson of Calvert said, "We have not found a clearly articulated business case for why the company has adopted its plan and why it, in particular, is the best way to proceed. Given that climate change is a material issue for the company—it is a risk factor discussed in its 2011 and 2012 10-K—we believe the company must provide shareholders with this information."

 

 
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