New York State Comptroller Thomas P. DiNapoli has announced agreements with Best Buy and Bed Bath & Beyond to encourage their suppliers to report on workplace safety, human and worker rights and environmental compliance.
"Companies face significant legal, reputational and operational risks when their suppliers do not promote sustainable business practices," DiNapoli said. "Best Buy and Bed Bath & Beyond have agreed to encourage accountability among suppliers on critical issues, which demonstrate that they are operating responsibly. Companies across the globe should take a comprehensive look at their operations and determine whether their suppliers are taking similar steps to ensure labor, environmental and safety standards are upheld."
The agreements follow discussions with both companies after the New York State Common Retirement Fund filed shareholder resolutions earlier this year. The resolutions, which have been withdrawn at both companies, asked that the companies' significant suppliers take necessary steps to publish an annual, independently verifiable sustainability report that it would make available to its shareholders:
Among other disclosures, reports should include the suppliers' objective assessments and measurements of performance on workplace safety, human and worker rights, and environmental compliance using internationally recognized standards, indicators and measurement protocols.
Best Buy agreed to encourage 20 of its major suppliers to produce regular sustainability reports and help them in building management systems that will increase those suppliers' abilities to report on their sustainability efforts. In addition, the company committed to send a letter to all of its suppliers encouraging them to produce regular sustainability reports and to provide them training and tools to support these efforts.
"Best Buy's efforts send an important signal to investors that the company values compliance and ethics as key components of good corporate governance practices," says Meredith Miller, chief corporate governance officer, UAW Retiree Medical Benefits Trust, the co-filer of the resolution at Best Buy. As of March 27, the trust held 119,825 shares of Best Buy, worth $2.6 million.
Bed Bath & Beyond agreed to add language to its vendor compliance guides, scheduled to be released in January 2014 or sooner, for domestic and foreign vendors. In particular, the company will add the following language to sections dealing with social compliance and merchandise quality standards:
"BB&B is constantly looking for ways to improve in the area of corporate responsibility. In connection with this effort, we encourage our vendors to adopt a comprehensive program of responsible practices and to prepare a corporate responsibility (or 'sustainability') report if they do not already do so."
In 2010, the Common Retirement Fund, in concert with other signatories of the United Nations Principles for Responsible Investment, wrote letters to selected apparel and consumer durables companies asking them to call on their overseas suppliers to implement the core labor rights standards of the UN's International Labor Organization, and to allow independent monitoring of their compliance.
DiNapoli reached an agreement in 2011 with Mohawk Industries, a leading supplier of flooring, to adopt a labor code of conduct for its suppliers. In 2012, Leggett & Platt, a leading manufacturer of furniture and bedding, agreed to create a supplier code of conduct, which provided a uniform code of conduct throughout its world-wide supply chain. The code became part of the company's standard contract terms and conditions.
As of March 22, the fund owned 770,945 shares of Best Buy valued at $17.6 million, and 703,193 shares of Bed Bath & Beyond valued at $45.4 million.