Contact: Kate Kroll, Green Century Capital Management, firstname.lastname@example.org, 617-482-0800
February 11, 2016: At the annual shareholder meeting of Tyson Foods last Friday, shareholders voted on a proposal about the reputational and business risks the company may face due to its use of controversial gestation crates for pigs.
Tyson is the second-largest Fortune 500 food production company, and one of the largest meat producers in the world.
The proposal, filed by Green Century Capital Management and available here, urges disclosure about the operational impacts associated with continuing to use gestation crates. Gestation crates have come under fire for confining animals so restrictively that they can’t even turn around for years on end.
The two most prominent proxy advisory firms, Glass Lewis & Co. (Glass Lewis) and Institutional Shareholder Services (ISS), have recommended investors vote in favor of the proposal.
“Given the attention paid to the use of gestation crates and that 60 major restaurant chains have committed to sourcing pork from suppliers who have phased or will phase out the use of gestation crates,” writes Glass Lewis, “we believe that the Company could be placed at a financial disadvantage with respect to its ability to compete for contracts or supply certain pork customers and that increased disclosure of these risks would better allow shareholders to assess how the Company is addressing this issue.”
Though the Tyson family controls approximately 70% of the total voting power of outstanding voting stock, the proposal still received support from nearly 13% of the shares voted in favor and against the proposal.**
Recognizing the risks associated with gestation crates, a growing number of companies—including Tyson customers and competitors—have publicly announced plans to eliminate gestation crates from their supply chains, including McDonald’s,* Burger King,* Costco,* Safeway,* Kroger,* Oscar Mayer,* Cargill,* Smithfield Foods* and more.
“With virtually every leading pork buyer in the nation having committed to eliminating gestation crates from their supply chains, investors are extremely concerned about the implications of Tyson’s refusal to meet its buyers’ needs,” stated Katherine Kroll, Shareholder Advocate for Green Century Capital Management, the environmentally responsible mutual fund company that filed the shareholder proposal with Tyson. “Tyson may be at risk of losing its market access if it continues to ignore the changed economic landscape. Investors expect the company to act ethically and demand that it act sensibly.”
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Green Century Capital Management is the investment advisor to the Green Century Funds and offers two environmentally and socially responsible funds, the Green Century Equity Fund and the Green Century Balanced Fund. Green Century works to curb climate change through fossil fuel free investing, reinvestment in sustainable companies, and advocating with companies to improve their environmental policies and supply chains. Green Century also is the only U.S. mutual fund company owned by environmental non-profits, the Public Interest Research Groups (PIRGs).
*As of December 31, 2015, McDonald’s Corporation and Costco Wholesale Corporation comprised 0.00% and 1.48%, and 0.78% and 0.00% of the Green Century Balanced Fund and the Green Century Equity Fund, respectively. Other securities mentioned were not held in the portfolios of the Green Century Funds as of December 31, 2015. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
**The percentage in favor was calculated by (i) dividing the number of votes in support of the proposal by (ii) the sum of the number of votes voted in support of and against the proposal. Abstentions and broker non-votes were not included in the calculation.
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