CVS Health Corporation | Report on Effect of Junk Food Sales on Diversified Portfolios

AGM date
Previous AGM date
Proposal number
8
Resolution details
Company ticker
CVS
Resolution ask
Report on or disclose
ESG theme
  • Social
ESG sub-theme
  • Health, safety and well being
Company sector
Health Care
Company HQ country
United States
Resolved clause
Shareholders ask that the board commission and publish a report on (1) the link between the public-health costs created by the Company’s food, beverage, and candy business and its prioritization of financial returns over its healthcare purpose and (2) whether such prioritization threatens the returns of diversified shareholders who rely on a productive economy to support their investment portfolios
Supporting statement
The Company’s website emphasizes health:

Our purpose:

Helping people on their path to better health.

This purpose is belied by the unhealthful foods, beverages, and candy that feature prominently on the Company’s store shelves,1 which are among the top culprits in the obesity epidemic. In its quest for sales, the Company is willing to force customers with type-two diabetes or hypertension to run a gauntlet of sugar and salt to obtain their prescriptions.

The World Health Organization assesses the unpriced social burdens of obesity as almost three percent of global GDP. Yet the Company does not disclose any methodology to address the public-health costs of its “front-store” business, which promotes consumption of chips, soda, cookies, and candy. This is a good strategy for growing profits: on a recent earnings call, the CEO highlighted strong revenue growth in the category that includes these items: “Front store sales [showed] revenue growth of 13%. . . . with . . . volume increases across most front store categories.”

But it is a bad strategy for putting people on a better path to health:

The point of purchase is the setting where people are challenged to either follow through
on their long-term goals to stay healthy or are tempted to buy and consume foods that will
increase the risk of weight gain, hypertension, diabetes, and cancer.

Promoting junk food isn’t only bad for customers—it hurts most of the Company’s owners as well because a gain in revenue that comes at the expense of public health is a bad trade for most Company shareholders, who are diversified and rely on broad economic growth to achieve their financial objectives.
A strategy that increases Company financial returns but that contributes to obesity runs counter to the interests of most Company shareholders: a reduction in GDP created by public-health costs reduces diversified portfolio returns over the long term.

This proposal asks the Board to commission a report that analyzes the trade-offs the Company makes by prioritizing its financial returns over public-health risks and the global economy, taking the perspective of its diversified shareholders, whose portfolios are at risk from public-health threats.

The report will help shareholders determine whether Company policies serve their best interests and whether the Company should prioritize certain public-health issues over financial returns.