2019 Shareholder Action Review:

The resolution took Atmos Energy to task on fugitive methane and earned an excellent 35% vote, representing over $3 billion in assets. This strong result sends a clear message to management. We will continue to follow the company’s progress in addressing fugitive methane.

At BP 99% of shareholders voted in support of a resolution drafted by Climate Action 100+, a group of 300 investors with more than $33 trillion in assets under management, calling for the oil giant to align its business strategy with the 2015 Paris Agreement. The global accord aims to keep global warming “well below” 2 degrees Celsius.

The Chevron resolution requesting a report on the company’s Paris Aligned Business Planning garnered a strong 33.18% support, representing $46.6 billion in assets. This was up dramatically from last year. We were supported by many of the Climate Action 100+ members. We intend to continue advancing the issue with additional institutional investors, as well as with Chevron and other oil and gas companies. Our work entails defining and building consensus on what is meant by “Paris Alignment” (net zero by 2050) and to demand that companies demonstrate plans for how they will achieve this.

Despite DowDuPont’s recent restructuring, which spun off its operations into distinct companies, we pushed forward with our proposals. We asked the company to consider climate change risks to petrochemical operations and their impacts to public health and disclosures of the company’s plastic pellet spills leading to ocean pollution. Dow was partially responsive, verbally agreeing to initiate some kind of pellet reporting process in 2020, but since it couldn’t provide a specific written commitment, we proceeded with the vote. Both first-year resolutions received a respectable vote, calling attention to critical, emerging issues.

This year’s resolution received the support of 41% of Duke shareholders. This vote highlights growing shareholder concern about the risks created by the toxic coal ash residuals produced when Duke burns coal to generate electricity. The resolution specifically requests information as to how Duke Energy will mitigate the public health risks associated with Duke’s coal operations in light of increasing vulnerability of coal ash pits to climate change impacts such as flooding and severe storms. In September 2019, the company took a positive step forward in committing to net-zero carbon emissions by 2050, but investors continue to press the company to address the risks of its substantial coal fleet in the near term.

At Exxon, 25% of investors voted in support of a first-time shareholder resolution asking the company to issue a report assessing the public health risks of expanding petrochemical operations in areas increasingly prone to climate change-induced storms, flooding, and sea level rise, bringing urgent attention to a critical, emerging issue.

The Facebook resolution requesting reporting on content governance was geared toward raising awareness around this critical issue; more than two thirds of the company’s votes are controlled by Mark Zuckerberg and a number of other insiders. We received 5.70% vote, which allows us to refile in the coming year. Significantly, the total assets under management supporting this proposal was $58.6 billion.

The proposal at Restaurant Brands International, parent company of Burger King and Tim Hortons, received thumbs up from 22% of shares voted, worth $5.5 billion. RBI is 51% owned by global investor 3G Capital. The results suggest that a majority of independent shareholders supported the proposal.

At Skechers, 26% of shareholders voted in support of a first-time resolution requesting a report to enhance board diversity. Spurred by shareholder pressure and CA state law, Skechers appointed its first female board member in its nearly 30-year history.

Nearly half of Starbucks’ shareholders supported our resolution to develop aggressive plans to meet packaging reuse and recycling goals. The 44.5% vote in favor represents $21 billion in investor support, far exceeding a similar vote last year that received 29% support. It is the largest shareholder vote result to date on packaging and recycling issues. We will use this strong result to redouble our efforts to get the company to restore strong reusables goals.

At Kroger, Nearly 40% of shareholders supported our proposal asking the largest U.S. supermarket chain to make all packaging recyclable. The proposal asked the company to assess the reputational, financial, and operational risks associated with continuing to use non-recyclable packaging for its private brand goods and to phase them out. Private label items are a quarter of sales — nearly $20 billion annually. The support of 39% of shares voted, valued at $5.4 billion, is a sharp increase from a 29% vote of support for the same proposal in 2018.

The resolution advanced the conversation on worker’s rights and for a first-year resolution, earned a respectable 5.5% vote at the annual meeting, which represents over $3 billion in company shares. This is sufficient to reintroduce the resolution next year and continue our conversation with the company.

Our proposal at YUM! Brands, parent company of KFC, Taco Bell, and Pizza Hut, attracted support from 33% of shares voted, worth $7.1 billion. We are asking the company to stop using polystyrene foam packaging and plastic straws, and to recycle consumer packaging on site as peers like McDonald’s have agreed to do.

We withdrew our 2019 resolution in recognition of announced greenhouse gas targets set for Amazon’s shipments (to reach net-zero carbon for half of its deliveries by 2030), a commitment to disclose the company’s GHG emissions and plans to address GHG emissions by the end of 2019, and an intent to continue to engage with us on these topics. In September 2019, the company took an additional step forward by launching a new climate pledge to achieve net-zero emissions by 2040.

The company committed to undertake a review of a climate change scenario analysis and climate-related financial disclosures. The company agreed to continue discussions with shareholders concerning these issues, including a discussion with the company’s Chief Executive Officer.

Following our engagement requesting a report on board diversity, the company’s general counsel successfully had the majority of the requested changes adopted by the Nominating Committee of the Board.

For ocean plastic pollution, the company has committed to report on plastic pellet production and spillage, recycling rates in production, best management practices in production and shipment, and how the company will engage its supply chain to further reduce/eliminate plastic pellet spills. As a result of these efforts, we withdrew our resolution and will continue to dialogue with the company and monitor its progress in meeting its commitments.

We entered into a withdrawal agreement after the company agreed to disclosure improvements on human rights risks in its operations and supply chain. Moving forward, the company’s human rights disclosures will include: a description of size and structure of the company’s supply chain; how supply chain oversight fits into the company’s corporate governance structure; the human rights principles used to frame its assessment; the frequency of its assessment; the methodology used to track and measure performance on forced labor risks among other provisions.

The company has updated its animal welfare standards to include monitoring and enforcement of existing FDA guidelines for responsible use of antibiotics. We will continue to work with the company directly to seek further progress. While we do not consider this a win, we are on the path to bringing COSTCO into alignment with other peer companies through continued engagement.

The company committed to hiring a consulting firm to support them in the process of developing GHG goals and targets. The goals will likely be effective in Emerson’s FY 2020 (which starts October 2019).

The company has agreed to evaluate materiality reporting standards and will work with us to implement such metrics into their ESG disclosures, providing more concrete reporting to investors. Dialogues have continued over specific SASB reporting metrics on issues relating to water. We expect to see a new sustainability report utilizing these metrics before Thanksgiving 2019.

The company has agreed to start reporting on spills of pre-production plastic pellets, or nurdles, manufactured in polymer production plants, which are believed to be a significant source of ocean plastic pollution. We will continue to dialogue with the company on this issue. Furthermore, the company continues to demonstrate a commitment to methane management following a 39% vote on our 2017 resolution.

The company has agreed to work with us to address the company’s assessment and disclosures concerning fossil-fuel related projects in developing countries.

The company has agreed to continue its dialogue with shareholders to determine ways to measure and disclose metrics demonstrating progress on pesticide reduction. Furthermore, the company has agreed to set goals to expand its regenerative agriculture program in terms of acreage and crops, and the company will report baseline data to investors. We will continue to work with the company to reduce the pesticide use within the company’s supply chain.

Following our engagement on risk of forced labor in the company’s supply chain, the company agreed to: 1) sign the AAFA/FLA Commitment to Responsible Sourcing; 2) to reference the AAFA/ FLA Commitment language in its Human Rights Policy going forward; 3) to further amend its Human Rights Policy and Global Code of Conduct to explicitly reference the expectation that workers in the Company’s supply chain will not be forced to pay for their job, or bear the cost of recruitment, transportation, or other fees associated with their hiring.

The company will consider carbon-reduction goals and policies for its financing and metrics to measure its performance. The company invited As You Sow to provide feedback and continue discussions with the company regarding these and other related topics.

The company has agreed to report on slavery and human trafficking in the supply chain and to adopt supplier codes of conduct, which the company will implement in renewed contracts while providing third party compliance training. As You Sow will continue to dialogue with the company in further improving its reporting, contracting, compliance, and supplier training.

To address the lack of diversity on its board, the company has stated its intent to appoint two new board members, a woman and a person of a minority group. The company also agreed to take additional actions including: the incorporation of a formal commitment into the charter of the Nominating and Governance Committee to diversify the Board; formalize a policy requiring director searches to similarly increase diversity; and, in the company’s proxy statement, report on the company’s commitment to Board diversity and steps taken to achieve its goals. The amendment of the company charter and other language is important to ensure that diversity is not a one and done, but is part of every Board candidate search.

The company has implemented many of the requested SASB materiality provisions and we will continue working with them on full implementation by 2020.

The company has agreed to adopt share ownership practices similar to peers in their field, to better encourage long-term planning by executives. The company also agreed to improve its ESG practices and disclosures.

We withdrew our shareholder proposal to PepsiCo following the release of a requested report detailing the company’s efforts to increase the U.S. recycling rate for beverage containers, which originated from our engagement with PepsiCo in 2010. The company failed to meet a goal to increase recycling to 50% by 2018. We recognize the report to be partially responsive, but concerns remain about information omitted from the report; it does not make clear that the recycling rate actually receded over the period of the commitment and contains no mention of setting revised goals. We hope additional data and commitments for action can be added to the report as we continue to engage with the company.

The company complied with our request for a report assessing the feasibility of linking executive compensation metrics to the accomplishment of greenhouse gas reduction objectives. The company further committed to continue working with As You Sow to address climate change risk, including the evaluation of setting absolute GHG reduction targets in consideration of the Paris Agreement.

Ralph Lauren received a poor rating from KnowTheChain. It was found deficient in disclosing its first-tier suppliers, assessing and disclosing forced labor risks in its supply chain. It also received a D+ score in the 2018 Ethical Fashion Report, with particularly low sub-scores in worker empowerment (F) and auditing and supplier relationships (D-). It received a C in traceability and transparency, and a B for the quality of its policies. The company was very eager to have the resolution withdrawn and has agreed to a number of withdrawal terms that will move it into a leadership position on this issue.

The company agreed to eliminate use of medically important antibiotics, becoming the last of the top four chicken producers in the U.S. to do so. We will continue monitoring the company’s progress on this commitment.

In the KnowTheChain 2018 benchmarking report, Texas Instruments scored only 38 out of 100 possible points, ten less than its score on the 2016 benchmarking report. The company can improve its performance and disclosure in traceability and risk assessment, recruitment, and worker voice. In exchange for the withdrawal of the shareholder resolution, TI committed to make available through its website a consolidated summary that outlines its processes and practices designed to prevent forced labor in the supply chain.

The company has followed through on our engagement request to hire a Director of Corporate Responsibility who will address the company’s greenhouse gas emissions. As You Sow will continue to engage with Cooper Companies to provide feedback and knowledge sharing on best practices, as the company completes its first ever assessment of its greenhouse gas inventory, and discloses actions that are feasible and practical to reduce the company’s carbon footprint.

The company committed to set a new carbon reduction target by the end of 2019 and is considering adopting more renewable energy. The company committed to bring on a third-party consultant and will continue to work with As You Sow to accomplish these commitments and publish findings on its website.

The company has committed to report on plastic pellet production and spillage, recycling rates in production, best management practices in production and shipment, and how the company will engage its supply chain to further reduce/ eliminate plastic pellet spills. As a result of these efforts, we have withdrawn our resolution and will continue to dialogue with the company and monitor its progress in meeting its commitments.

The company committed to working with us and has begun to improve its disclosures on methane management practices.

The company set a new renewable energy adoption target and committed to working with As You Sow and evaluating Paris-aligned GHG reduction targets.

The company has agreed to release SASB compliant standardized metrics on diversity and inclusion within the company’s workforce in a timely manner. This will allow shareholders to better assess the company’s long-term sustainability in a way that is comparable with other companies in the same sector. We will evaluate further action pending the release of these disclosures.