Organization: Tootsie Roll Industries Inc

Year: 2018

Description: RESOLVED 
Shareholders request that Tootsie Roll Industries (Tootsie Roll) issue a report describing the company’s policies, performance, and improvement targets related to key environmental, social and governance (ESG) risks and opportunities, including disclosure of supply chain monitoring and compliance programs. The report should be available to shareholders within a reasonable timeframe, prepared at reasonable cost, omitting proprietary information.
 

SUPPORTING STATEMENT

We believe tracking, managing, and reporting on significant ESG practices strengthens a company’s ability to compete in today’s global business environment, which is characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies capture value from existing sustainability efforts, identify gaps and opportunities, develop company-wide communications, and recruit and retain top talent.
 
Support for the practice of sustainability reporting continues to gain momentum:
 

• In 2017, KPMG found that 75% of 4,900 global companies had ESG reports.
• The United Nations Principles for Responsible Investment has more than 1,700 signatories that represent $68 trillion in assets.  These members publicly commit to: “seek appropriate disclosure on ESG issues by the entities in which [they] invest” and to “incorporate ESG issues into investment analysis and decision making.”
• Leading asset owners and asset managers, including Blackrock, CalPERS, CalSTRS, Goldman Sachs Asset Management, UBS Asset Management, and Vanguard sit on the Sustainable Accounting Standards Board (SASB)’s Investor Advisory Group where they commit to encourage companies to disclose material and decision-useful ESG information to investors.

Shareholders currently have no access to important information about how Tootsie Roll is managing its most material ESG issues, which according to SASB include food safety, water management, energy and fleet fuel management, health and nutrition, product labeling and marketing, packaging lifecycle management, and environmental and social impacts of ingredient supply chain. 
 
According to Tootsie Roll’s 10-k, sugar, edible oils, cocoa, and dairy are key commodities utilized in production.  Globally, many of these commodities are associated with serious human rights violations and destructive environmental practices including child labor, forced labor, land-grabs, unsustainable water withdrawals, water pollution, and deforestation.  Tootsie Roll’s industry peers frequently acknowledge that such concerns can pose significant regulatory and financial risk, damage a company’s reputation, lead to loss of brand value, and threaten the security of raw material supply.
 
Leading companies in chocolate and confections, such as Nestle, Mondelez, The Hershey Company, and Mars benchmark and track progress on monitoring and managing these risks, and publish comprehensive ESG reports that describe sustainable business practices including supply chain monitoring processes and results.  We believe Tootsie Roll is falling behind peers in the disclosure and management of ESG practices and missing an opportunity to communicate with its shareholders about the company’s strategy to manage these potentially material factors.
 
We recommend that the report include a company-wide review of policies, practices and metrics related to ESG performance. The GRI (formerly Global Reporting Initiative) Standard and SASB provide helpful guidance.  The GRI is the most widely used reporting framework.