Shareholder Resolutions

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Company: Dr. Pepper Snapple Group
Subject: Pesticide Reduction
Year: 2018
Sector: Food Retail/Processing
Lead Filer: Green Century Capital Management
Cofiler(s): Trillium Asset Management
Outcome: Withdrawn in response to corporate commitments

Whereas: Companies with exposure to pesticide use that poses risks to public health and pollinator communities through their supply chains may face business risks due to supply chain disruption and growing interest by consumers, policymakers, companies, and investors.

Certain pesticides are of particular concern due to their impacts on public health. Approximately 40 chemicals found in EPA-registered pesticides are classified as “known, probable, or possible” carcinogens. Further, low level exposure to chlorpyrifos, an organophosphate used widely on fruits and vegetables, has been linked to adverse effects on children’s brain development.

Another class of pesticide, neonicotinoids, has been implicated as a key contributor to pollinator decline. With crops reliant on pollinators valued between $235 and $577 billion, decreases in these populations pose a threat to supply chains, ecosystems, the economy, and the global food system.

Consumers are caring more about how food is grown and its impacts on health and the environment. According to Consumer Reports, 86 percent of those surveyed believe it is critical to reduce pesticide exposure.

Regulatory actions are also increasing, creating new restrictions to which companies must adapt. Three states  have enacted restrictions on neonicotinoids, with proposed restrictions introduced in over ten states. In 2017, California adopted rules restricting pesticide applications in proximity of schools or daycares.

In light of consumer demand and regulatory trends, companies have committed to tracking and reducing pesticide use, potentially leaving laggards with a competitive disadvantage.

·       Unilever discloses amounts of pesticides avoided by farmers using Integrated Pest Management (IPM) practices, and its subsidiary Ben and Jerry’s banned the pre-harvest use of glyphosate in its supply chain by 2020;

·       General Mills is working to disseminate guidance to growers on how to protect and minimize the impact of neonicotinoids and other pesticides, investing $4 million in pollinator habitats;

·       Sysco’s suppliers avoided 4.6 million pounds of pesticides in 2013 by utilizing IPM principles.

Dr Pepper Snapple Group, in contrast, does not provide sufficient information including policies, goals or metrics to determine if it is effectively managing pesticide use and the associated business risks. The Company has not published a sustainability report since 2015, which was notably silent on pesticides. In May 2017, an environmental health organization sued Mott’s, owned by Dr Pepper Snapple, after finding neonicotinoid residue in its products labeled “natural.”

Last year, 31.6 percent of the Company shares voted (counting votes for and against) supported this proposal, yet the Company has taken no substantive action to address this issue.

Resolved: Shareholders request that Dr Pepper Snapple Group publicly report on strategies and/or policy options, at reasonable cost and omitting proprietary information, to protect public health and pollinators through reduced pesticide usage in its supply chain.

Supporting Statement: Shareholders recommend that the requested report include:

·       Quantitative metrics tracking the amount and/or classes of pesticides avoided, reported annually;

·       Overall goals to reduce pesticide use and/or toxicity; and

·       Measures including technical assistance and incentives provided to growers to avoid or minimize the use of pesticides.