WHEREAS, the UN Guiding Principles on Business and Human Rights state that companies have a responsibility to respect human rights within their operations and throughout their value chains. This responsibility entails that companies should know their human rights risks and impacts; take concrete steps to prevent, mitigate, and remediate adverse impacts when they occur; and publicly communicate how they are addressing their most salient human rights issues. 

As shareholders, we look to the companies to manage their human rights risks and address their human rights impacts as a demonstration of strong risk oversight and sound corporate governance. This is necessary and prudent at management and board levels in order to prevent, mitigate, and address potential and significant operational, financial, and reputational risks associated with negative human rights impacts, including throughout the value chain.

Loblaw’s Risk and Compliance Committee is mandated to review actions taken by management with respect to environmental and occupational health and safety matters. However, we believe the Board should assign specific responsibility at the Board level for oversight of human rights risks. Such top-level responsibility is necessary to effectively manage the company’s principal risks.

RESOLVED: Shareholders request the Board of Directors of Loblaw enhance the mandate of the Risk and Compliance Committee to assign it with specific responsibility for human rights risk assessment, mitigation and prevention, as well as policy formulation and adoption.

Supporting Statement: As part of the Board’s responsibility for determining and addressing the company’s principal risks, proponents believe that the Board of Directors should embed respect for human rights in the company’s culture, knowledge and practices, and review the company’s efforts to manage the company’s salient human rights risks.

There is increasing recognition that company risks related to human rights violations, such as reputational damage, fulfillment delays and disruptions, and litigation, can adversely affect shareholder value:

• KnowTheChain gave Loblaws a total score of 16/100, scoring it poorly on monitoring, traceability/risk assessment, commitment and governance.[1]
• The Corporate Human Rights Benchmark (CHRB) gave Loblaw a total score of 6.93 out of 100, placing it 167th of 196 companies analyzed globally. Loblaw failed to meet indicators on governance, commitments from the top, board discussions, and failed to identify, assess, act, track and communicate on key human rights risks.[2]

Furthermore, the Loblaw Supplier Code of Conduct does not impose meaningful protections relating to paying a living wage in the supply chain, and Loblaw does not appear to make purchasing decisions in consideration of human rights issues.[3] While Loblaw has stopped sourcing in certain countries in response to concerns over child labour, CHRB notes that Loblaw failed to meet indicators on the prohibition on child labour.[4]

Expanding the mandate of the Risk and Compliance Committee would better position Loblaw to quickly identify and mitigate human rights risks and would allow shareholders to better understand their potential impact on shareholder value.

We urge shareholders to vote for this proposal.

[1] https://knowthechain.org/benchmarks/comparison_tool/5/

[2] https://www.corporatebenchmark.org/download-benchmark-data

[3] https://www.loblaw.ca/content/dam/lclcorp/pdfs/Responsibility/SupplierCodeOfConduct/Supplier%20Code%20of%20Conduct%20-LCL-2016.pdf

[4] https://www.corporatebenchmark.org/download-benchmark-data

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