Napa, CA — Harrington Investments, Inc. (HII), a socially responsible investment advisory firm with more than 30 years of experience directly challenging corporate power, is asking Starbucks to be clear with shareholders about who is ultimately responsible for keeping the company’s sustainability promises.
In several months, Starbucks’ shareholders may have the opportunity to weigh-in on whether or not sustainability oversight should be a high priority focus for the company at the highest level–as a duty of the Board of Directors.
In a proposal submitted to Starbucks last week, on behalf of shareholders by HII, CEO John Harrington is asking Starbucks’ Board of Directors to establish an independent sustainability committee. The company currently has committees in place to oversee compensation practices and audit compliance, but Board members only review, once a year, a single sustainability report based on management’s voluntary public disclosures.
In contrast, the proposed Board Committee on Sustainability would be authorized to initiate, review, and make policy recommendations on an array of issues regarding the company’s preparedness for changing environmental conditions that may affect the sustainability of business. Issues might include global climate change, emerging concerns regarding toxicity of materials, resource shortages, biodiversity loss, and even political instability resulting from environmental uncertainty and upheaval.
Harrington has had success with this issue with other companies. In 2008 at Harrington’s urging, both Intel and Monsanto instituted oversight of sustainability at the board level and even produced legal opinions stating that the newly created oversight processes brought with them a new fiduciary duty of board members to oversee sustainability. In the past, according to Harrington, Starbucks has been responsive to shareholder concerns.
HII is a long-term shareholder of Starbucks, and John Harrington has worked with the company on important corporate governance issues for almost a decade. Harrington’s advocacy led to the elimination of undemocratic voting for the Board of Directors (known as “classified” voting), and the enactment of a requirement for an annual election of directors by a majority vote. Harrington has also worked with other institutional shareholders supporting non-GMO and fair -trade coffee purchasing policies for Starbucks.
“The only body directly accountable to shareholders within public companies is the board of directors,” Harrington said. “Corporate managers will do, say, or sign anything to make their company look good – but anything that lacks an enforcement mechanism amounts to, ultimately, just a public relations move.”
Harrington said while the current Starbucks CEO Howard Schultz is recognized as an industry leader in social responsibility, sustainability oversight is too important to be left to any one individual.
“If Starbucks’ CEO wants to ensure his legacy of sustainability is carried on beyond his lifetime,” said Harrington, “he and the Board should embrace policy proposals designed to protect the company – and the environment – in perpetuity. It should be inserted as policy into the DNA of the company.”
HII is a 32-year old registered investment advisory firm based in the Napa Valley, California, managing over $180 million in assets. The firm manages individual and institutional accounts utilizing a comprehensive social and environmental screen, while engaging in shareholder advocacy, challenging corporate management on key social, environmental, and corporate governance policies. HII also invests the firm’s assets and assets of its clients in profit and non-profit organizations engaged in high social impact investments, or in companies or organizations that maximize social and environmental performance.