Shareholders will again propose that Smucker’s develop a coffee sustainability plan
JM Smucker Co., owner of coffee brands including Folgers, Millstone, Kava, and Café Bustelo, is the fourth largest buyer of coffee in the world. In 2010, they purchased over 250,000 tons of coffee, and only a fraction of a percent was certified in any way. A recent analysis by the Tropical Commodity Coalition notes that the company “does not provide verifiable procurement figures of certified coffees, has no specific goals for a more sustainable coffee sector, and its future commitment is extremely vague.”
Readers will recall that last year two major investors, Trillium Asset Management and Calvert Investments, put forth a shareholder proposal requesting that Smucker’s prepare a sustainability report. The Smucker’s Board unanimously recommended that shareholders vote against this proposal. Nonetheless, at the August 2011 meeting, roughly 20% of shareholders voted in favor of the proposal, with another 10% abstaining, for about a third not agreeing with the board*. (You can read the whole story with background here.)
This year, a similar shareholder proposal will be presented. The resolution, filed recently by Trillium Asset Management, requests that Smucker’s, within six months of the annual meeting, develops and publishes a coffee sustainability plan that goes beyond the insipid 2011 “plan.” This proposal will specifically ask that the plan include:
(1) quantitative goals for quantities of certified coffee purchases; (2) a method for evaluating the success of the plan in addressing the challenges of climate change to the Company and the farmers and ecosystems in its coffee supply chain.
American consumers continue to reward Smucker’s. The U.S. retail coffee segment contributed 49% of the total profit for the company in the quarter ending in January 2012; this segment reported a profit margin of 21.7%.
From their nostalgic ads featuring a bygone era, to their honoring of centenarians via Willard Scott, to their antediluvian view of sustainability and transparency, Smucker’s is stuck in the past. Hopefully this proposal will meet with some success at the annual meeting this summer and move Smucker’s into the present day.
*Another interesting proposal has been filed by a different group, asking that Smucker’s follow the Security and Exchange Commissions standard for proxy vote counting. Currently, Smucker’s counts all abstaining votes as votes in favor of management. Abstentions, where shareholders want their vote noted but not counted, are not figured into the SEC formula. Counting these as in favor of the management seems to clearly be against the wishes of the abstaining voters.