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Avon – Expand Disclosure Related To Breast Cancer Fundraising and Grant Distribution (2005 – 2006)

Avon – Expand Disclosure Related To Breast Cancer Fundraising and Grant Distribution (2005 – 2006)

Outcome: 3.5%

WHEREAS:

Through philanthropy and product tie-ins, Avon Products has enhanced its brand reputation by becoming the largest corporate fundraiser for the breast cancer cause. The Avon Foundation’s “Breast Cancer Crusade” has raised more than $400 million worldwide since 1992, and 92% of the foundation’s program and service expenditures were directed toward the breast cancer cause in 2004. Avon merchandise benefiting breast cancer charities includes numerous “pink ribbon products” such as stuffed bears, apparel, jewelry, cosmetics, umbrellas, candles, water bottles and Christmas ornaments.

Breast cancer “cause-related marketing” has been subject to much scrutiny in the media (Business 2.0, 02/03; PR Week, 10/25/04; The Guardian, 10/11/04; Harpers, 11/01; Agence France Press, 10/08/04; St. Louis Post-Dispatch, 10/03/04; Montreal Gazette, 10/26/04; Arizona Republic, 10/09/04; numerous others). Avon has been criticized for a lack of transparency and accountability in key aspects of its fundraising and grant-making. Specifically:

· Basic information about the Avon Foundation’s research grants are unavailable, such as the scientific question they address, their purpose and duration, and the scientists to whom they are awarded. For example, although research currently suggests that hereditary factors account for only 5-10% of all breast cancer cases, it is impossible to discern whether any of the Foundation’s grants are directed toward researching the potential contribution of man-made environmental toxins.

· The Foundation has yet to disclose, on a city-by-city basis, the overhead expenses associated with each walk.

Avon’s 2004 annual report states, “The Foundation’s ultimate goal is to become the world’s largest women’s foundation.”

RESOLVED: Shareholders request that Avon Products report annually to shareholders (at reasonable cost and omitting proprietary information) on the following, beginning in 2006:

· Total contributions (itemized by in-kind contributions, product donations and staff time) of Avon Products to the Avon Foundation,

· Fundraising and administrative costs, separately stating those incurred in connection with each Avon 2-Day Walk for Breast Cancer,

· Criteria for awarding research grants, including the extent to which criteria include the role of environmental factors and the role of genetic factors,

· Geographical distribution of grants awarded for screening, treatment, patient care and support services,

· Description of the purpose of each research grant awarded, including the scientific question addressed by the grant, and,

· Description of the mission, function, and qualifications for serving on the Avon Foundation’s community advisory board.

SUPPORTING STATEMENT: The incidence of breast cancer has nearly tripled in the past 50 years. Women who migrate to the U.S. acquire our breast cancer rates within one generation. In the shareholders’ opinion, these facts can simply not be explained by changes in our genes or lifestyles; it is only logical that carcinogens in food, water, air, soil, and household products are factors in the breast cancer epidemic. Avon’s prominence and ambitions in this area, in our view, obligates it to our company to adhere to the highest standards of transparency and accountability with respect to its fundraising operations and grantmaking criteria.

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