20 February 2024

Starbucks avoids first TNFD-related shareholder proposal of the US AGM season

Vancity Investment Management has withdrawn a shareholder proposal filed with coffee giant Starbucks that requested corporate reporting aligned with the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

The Vancouver-based investor requested from Starbucks "a material biodiversity dependency and impact assessment" and analysis to identify vulnerabilities in its supply chains, due to its reliance on Arabica coffee beans.

Kelly Hirsch, head of ESG at Vancity, told Corporate Disclosures that the proposal was withdrawn after discussions with Starbucks.

"We were satisfied with the company's response and commitment. They will be publishing the commitment in their upcoming Impact Report as per our withdrawal agreement so more details will be available at that time," Hirsch said.

In its shareholder proposal Vancity argued that Arabica coffee beans risk becoming "a scarce, highly expensive commodity" due to climate change and deforestation, quoting studies that predict Arabica beans could decrease by 50% by 2088.

While this is a potential business risk already acknowledged by Starbucks, Vancity urged the company to conduct a more thorough assessment of its nature-related risks and how it plans to manage them as part of the overall risk management strategy.

Domini Impact Investments filed similar proposals with Home Depot and International Paper. A spokesperson for the company told Corporate Disclosures that Domini Impact Investments agreed to withdraw the TNFD-related proposal.

The spokesperson said: "International Paper is an inaugural Early Adopter for Taskforce on Nature-related Financial Disclosure. We anticipate that we will start making disclosures aligned with the TNFD recommendations in our corporate reporting by financial year 2025."

The company is among the 14 US corporates, and 320 worldwide, that voluntarily committed to an early adoption of the TNFD framework.

Asked about the status of the proposal, Home Depot and Domini Impact Investments did not reply at the time of publication. Starbucks was also approached for comment.