Impatient over repeated attempts to engage board around hypocrisy of a health company selling tobacco and nicotine-based products, investors deliver stern rebuke to board at annual meeting.
NEW YORK, NY, FRIDAY, JANUARY 25TH, 2019 – At today’s annual meeting of shareholders of Walgreen’s Boots Alliance (WBA), investors issued a strong challenge to management and the board of directors over their continued sales of tobacco products.
The investors, who are members of the Interfaith Center on Corporate Responsibility, a shareholder coalition advocating for improved corporate performance on social and environmental themes, have been engaging Walgreens’ management for several years on the many conflicts tobacco sales pose for a health care company. Beyond the glaring public health risks, investors say tobacco sales expose the company to significant legal and reputational risks with material consequences that may prove hard to recover from over the long term. At bottom, they see the failure to adequately manage these risks as a failure in governance and board competency.
In his statement to board members, Tom McCaney of the Sisters of St. Francis of Philadelphia, one of the leaders of the Walgreens engagement, highlighted the ethical and moral conflicts tobacco sales pose for the company: “The idea that our company, a retailer pharmacy chain, positions itself as a champion of community health while selling products widely known to be a leading cause of disease and death belies our stated purpose of ‘championing the health and well-being of every community in America’. It calls into question our ethics and frankly, our morality; it betrays the trust of the millions of customers who walk into our stores every day believing we are prioritizing their long-term health over the short-term gains to be had from selling cigarettes.”
Walgreens and Rite Aid, which is partially owned by Walgreens, are currently the only major retail pharmacies still selling tobacco and other nicotine-based products. As competitors like CVS remove tobacco from their shelves in order to solidify their health positionings, Walgreens refuses to give up tobacco sales.
When confronted by investors on this topic, McCaney says the company has repeatedly used arguments that strain credulity, “We have listened to the company’s tortured logic that making profits from both the disease (cigarettes) and the cure (cessation products) is in the best interest of customers and shareholders. Are they saying it’s okay to put public health at risk, because we are also selling potential remedies? This reasoning is astonishingly reckless and, frankly, offensive.”
The shareholders say they were heartened when, after the 2016 annual meeting, a couple of board members assured them that discontinuing tobacco sales was on the board’s agenda in the near future. This change never materialized and now the investors say their communications to the board go unanswered.
“As ICCR, we are productively engaging hundreds of companies annually on a range of themes impacting people and planet, but we have never come across a more egregious violation of the social contract,” said McCaney. “Walgreens must decide what it wants to be. If it wants to be a healthcare company, then it has no business selling tobacco, period.”
The investors vow to continue to hold both Walgreens management and board accountable on tobacco sales, until they are discontinued.
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 48th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300 member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $400 billion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. www.iccr.org