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Avon – Expand Disclosure Related To Breast Cancer Fundraising and Grant Distribution (2004 – 2005)

Avon – Expand Disclosure Related To Breast Cancer Fundraising and Grant Distribution (2004 – 2005)

Outcome: 6.0%

SUPPORTING STATEMENT

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 $300 million worldwide since 1992, and 92% of the foundation’s program and service expenditures were directed toward the breast cancer cause in 2003. 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, how much money is raised by the multi-city Avon 2-Day Walk[s] for Breast Cancer (which collectively raised more than $31 million in 2003), the overhead expenses associated with each walk, and the grants dispatched to local areas from which the money is raised (the predecessor “3 Day Walks” did disclose this information).

Avon’s 2003 annual report states, “Our dream is to create the world’s largest-ever foundation for women.” In the proponent’s view, this obligates our company to adhere to the highest standards of transparency and accountability.

RESOLVED

Shareholders request that Avon Products report annually to shareholders (at reasonable cost and omitting proprietary information) on the following, beginning in 2005:

· 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.

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