Outcome: Successfully withdrawn following a commitment from the company to include information on their pesticide use in their next Corporate Sustainability Report, which is targeted for publication by the end of 2014.
Our company’s brand identity and value are strongly linked with health and wellness. A 2013 study by an accredited and independent lab, Eurofins, commissioned by Glaucus Research, alleged that ten of the 11 Celestial Seasoning teas in this study showed pesticide residue levels exceeding federally defined tolerance levels, or pesticides that did not have regulatory guidance.
In response, the company commissioned its own test from a different laboratory that allegedly showed no levels of pesticide residues above regulatory guidelines. The company explained these results on its website, but did not disclose the actual test it had commissioned. We asked our company to disclose the test report in 2013, but our company has not complied. According to the USDA’s Economic Research Service and Nutrition Business Journal, U.S. organic food sales grew to $28 billion in 2012, up 11 percent over 2011. This growth indicates strong consumer interest and demand for reduced pesticide use.
Many other companies are leading the way in pesticide use reduction. For example, Sysco Corporation, which supplies Wendy’s and other restaurant providers, has established an Integrated Pest Management (IPM) Program that in its first three years reduced pesticide use by nearly 900,000 pounds. Sysco’s program requires its suppliers to prepare IPM programs and employs third party auditors.
Numerous studies have defined pesticide exposure as a growing public health concern. Pesticides impose a heavy burden on farmworkers, adjacent communities, and the environment. In turn, a reduction in pesticide use can lessen these burdens and production costs. Reduced pesticide use and reduced worker exposure to pesticides can also yield reputational benefits.
Shareholders request that within one year a committee of independent directors of the board publish a comprehensive report to shareholders discussing how the company is addressing pesticide use reduction in its supply chain, at reasonable expense and omitting proprietary information.
While the company has the discretion to determine the precise content of the report, we believe the following information would be useful to shareholders: full disclosure of the results from the independent lab report commissioned by Hain Celestial in response to the Eurofins report; identifying procedures for testing non-organic teas and other products for pesticide residues; key performance indicators related to procedural change in pesticide use and exposure; outline of programs and initiatives entered throughout the supply chain, including technical assistance, incentives, or other positive encouragement provided to growers to reduce the toxicity and amounts of pesticides used; and substantive information regarding the company’s Health Teas, Healthy Planet certification program, which is described on the company’s website only briefly.