Kroger 2014 Annual Report Download - page 60

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58
TH E B O A R D O F D I R E C T O R S R E C O M M E N D S A V O T E A G A I N S T T H I S P R O P O S A L F O R T H E
FO L L O W I N G R E A S O N S :
Kroger฀recognizes฀the฀importance฀of฀ensuring฀basic฀human฀rights฀are฀recognized฀by฀those฀seeking฀to฀
do฀business฀with฀us.฀In฀the฀past฀12฀months,฀we฀have฀undertaken฀a฀number฀of฀steps฀to฀improve฀our฀social฀
responsibility฀and฀compliance฀programs.฀An฀internal฀team฀of฀Kroger฀leaders฀has฀been฀working฀in฀the฀past฀year฀
to฀evaluate฀and฀assess฀our฀current฀and฀future฀efforts฀with฀regard฀to฀social฀responsibility฀and฀compliance.฀We฀
looked฀at฀our฀supply฀chain฀and฀identified฀key฀areas฀where฀we฀believe฀additional฀supply฀chain฀audits,฀especially฀
with฀regard฀to฀social฀responsibility,฀would฀be฀beneficial.฀The฀specific฀items฀we฀have฀undertaken฀are:
•฀ We฀ have฀ revised฀ and฀ updated฀ our฀ Vendor฀ Code฀ of฀ Conduct.฀ It฀ will฀ be฀ published฀ in฀ our฀ 2015฀
Sustainability฀Report.฀
•฀ We฀ have฀ updated฀ our฀ existing฀ social฀ audit฀ protocol฀ to฀ better฀ align฀ with฀ industry฀ best฀ practices฀ and฀
recommended฀standards.฀This฀audit฀will฀be฀required฀for฀Kroger฀suppliers฀that฀are฀being฀audited.฀We฀will฀
choose฀which฀suppliers฀to฀audit฀based฀on฀various฀risk฀variables฀such฀as฀country,฀product฀and฀industry.
•฀ We฀are฀significantly฀increasing฀the฀number฀of฀social฀compliance฀audits฀that฀we฀will฀conduct฀in฀future฀
years,฀beginning฀with฀2015.฀Our฀strategy฀includes฀adding฀new฀compliance฀audit฀managers฀to฀our฀team.฀
This฀team฀will฀be฀responsible฀for฀reviewing฀social฀compliance฀audits,฀assessing฀risks฀as฀described฀above,฀
and฀developing฀a฀reporting฀structure฀that฀informs฀our฀business฀decisions.
•฀ Our฀2015฀Sustainability฀Report฀will฀include฀a฀more฀in-depth฀report฀on฀our฀social฀compliance฀activities.฀
This฀ will฀ include฀ our฀ revised฀ Vendor฀ Code฀ of฀ Conduct,฀ a฀ description฀ of฀ our฀ 2015฀ and฀ beyond฀ social฀
compliance฀audit฀strategy,฀and฀our฀approach฀to฀identifying฀risks.
These฀ are฀ the฀initial฀ steps฀ that฀ we฀ will฀be฀ taking฀ and฀ we฀expect฀our฀ program฀to฀continue฀to฀evolve฀
and฀ develop฀ based฀ on฀ new฀ trends,฀ input฀ from฀ suppliers,฀ customers,฀ government,฀ and฀ non-governmental฀
organizations.฀We฀believe฀that฀these฀efforts฀represent฀significant฀and฀positive฀steps฀forward฀for฀our฀company’s฀
social compliance program.
As฀such,฀we฀do฀not฀believe฀that฀the฀requested฀report฀would฀serve฀to฀benefit฀our฀shareholders฀and฀that฀
preparation฀of฀a฀report฀different฀from฀what฀will฀be฀included฀in฀our฀sustainability฀report฀would฀divert฀resources฀
that฀otherwise฀could฀be฀more฀appropriately฀used฀in฀the฀best฀interest฀of฀our฀shareholders.
This฀proposal฀covers฀the฀same฀subject฀matter฀as฀one฀submitted฀to฀a฀vote฀at฀the฀last฀four฀years’฀annual฀
meetings฀and฀was฀defeated฀by฀our฀shareholders.
SH A R E H O L D E R P R O P O S A L
( I T E M N O. 5 )
We฀have฀been฀notified฀by฀four฀shareholders,฀the฀name฀and฀shareholdings฀of฀which฀will฀be฀furnished฀
promptly฀to฀any฀shareholder฀upon฀written฀or฀oral฀request฀to฀Kroger’s฀Secretary฀at฀our฀executive฀offices,฀that฀
they฀intend฀to฀propose฀the฀following฀resolution฀at฀the฀annual฀meeting:
“WHEREAS:฀A฀portion฀of฀Kroger฀house฀brand฀product฀packaging฀is฀unrecyclable,฀including฀plastics,฀which฀
are฀ a฀ growing฀ component฀ of฀ marine฀ litter.฀ Authorities฀ say฀ that฀ marine฀ litter฀ kills฀ and฀ injures฀ marine฀ life,฀
spreads฀toxics,฀and฀poses฀a฀potential฀threat฀to฀human฀health.
Plastic฀is฀the฀fastest฀growing฀form฀of฀packaging;฀U.S.฀flexible฀plastic฀sales฀are฀estimated฀at฀$26฀billion.฀Dried฀
fruit,฀frozen฀meat,฀cheese,฀and฀dog฀food฀are฀some฀of฀the฀Kroger฀house฀brand฀items฀packaged฀in฀unrecyclable฀
plastic฀ pouches.฀ Private฀ label฀ items฀ account฀ for฀ a฀ quarter฀ of฀ all฀ sales-฀ nearly฀ $20฀ billion฀ annually.฀ Using฀
unrecyclable฀ packaging฀ when฀ recyclable฀ alternatives฀ are฀ available฀ wastes฀ valuable฀ resources.฀ William฀
McDonough,฀a฀leading฀green฀design฀advisor,฀calls฀pouch฀packaging฀a฀“monstrous฀hybrid”฀designed฀to฀end฀up฀
either in a landfill or incinerator.
Recyclability฀of฀household฀packaging฀is฀a฀growing฀area฀of฀focus฀as฀consumers฀become฀more฀environmentally฀
conscious,฀ yet฀ recycling฀ rates฀ stagnate.฀ Only฀ 14%฀ of฀ plastic฀ packaging฀ is฀ recycled,฀ according฀ to฀ the.฀
Environmental฀ Protection฀ Agency฀ (EPA).฀ Billions฀ of฀ pouches฀ and฀ similar฀ plastic฀ laminates,฀ representing฀