The votes are in at Loblaw Companies (L). 34% of overall shareholders – which works out to around 72% of independent shareholders – supported a call for greater transparency in supplier audits.
Earlier this week, we’d written about how Loblaw shareholders believe that suppliers to the Canadian supermarket chain allege that the company imported textiles from the Xinjiang region of China (the Uyghur minority people are from this region) as recently as August 2021, and a 2021 CBC Marketplace investigation also found that Loblaw was selling tomatoes produced with forced labour. To address this, the B.C. General Employees’ Union General Fund (BCGEU) and the B.C. General Employees’ Union Strike Fund Shareholders request that Loblaw publish annually a summary of the results of its supplier audits. Currently, Loblaw only discloses the number of audits it conducts with no additional information.
Independent shareholders voted 72% in favour of the proposal. Shareholder proxy advisory firms Sustainalytics (a Morningstar company), ISS and Glass Lewis all recommended a ‘FOR’ vote in favour of the BCGEU proposal. Find out about the proxy voting process here.
34% of the overall vote is a significant result, as a majority vote was unlikely in this case because the Weston family controls 53.5% of the votes at Loblaw. Read more about why dual share class structures might not be the best for investors here.
What is the Issue at Loblaw?
BCGEU filed the proposal following concerning supply chain controversies at Loblaw related to forced labour in the Uyghur region of China.
BCGEU met with Loblaw in March about this, and was prepared to withdraw its proposal if Loblaw agreed to make certain disclosures consistent with its peers, like Tesco, Gildan or Walmart. Loblaw replied that it was not yet ready to commit to specific disclosures. The BCGEU argues that the failure of Loblaw – Canada’s largest food retailer – in addressing the gap between its disclosure and that of its global peers leaves investors open to risk.
“Right now, investors are in the dark about what is going in Loblaw’s supply chain. Our proposal asked a simple question: should Loblaw disclose more information on the results of its audits in line with its peers? Today’s significant vote indicates Loblaw shareholders agree it must. We intend to keep pushing Loblaw to manage risk and protect shareholder value,” said BCGEU President Stephanie Smith.
Migrant Labour Gets Less Support
Another issue – this one around migrant workers – received less support. British Columbia Teachers Federation Salary Indemnity Fund, supported by shareholder advocacy group SHARE, asked for Loblaw to commit to conducting an independent Human Rights assessment of the impact of Loblaw’s business activities on migrant workers – and publishing the results of this assessment. This proposal received 12% of the overall support.
“Many of Loblaw’s competitors have already committed to conducting this type of assessment,” explained Anthony Schein of Share, adding that “As one of Canada's top food retailers, Loblaw must show stronger leadership on this issue.” This report would help Loblaw understand this issue from the perspectives of impacted rights-holders, such as workers. It will also help Loblaw proactively create policies that respect and protect migrant workers now, rather than having to react to external pressure or unexpected incidents in the future.
Shareholder proxy advisory firms ISS and Glass Lewis recommended against voting in favour of the proposal. Sustainalytics (a Morningstar company) recommended a ‘FOR’ vote.
