Costco Shareholders Bring Animal Welfare Lawsuit
Last month, Business Insider reported that:
Costco is facing a lawsuit over its breeding and treatment of chickens that are sold in stores as $4.99 rotisserie chickens, The Nebraska Examiner first reported. Plaintiffs say that Costco is violating its fiduciary duty to shareholders by not acting lawfully. The lawsuit, filed in Costco’s home state of Washington, accuses the membership club of “illegal neglect and abandonment” in its Nebraska chicken facility. This mistreatment is “an integral part of the company’s poultry production strategy and its business model,” according to the lawsuit viewed by Insider…
The suit was brought by two Costco shareholders who say that Costco knowingly breeds chickens too large to stand up, and the “disabled birds slowly die from hunger, thirst, injury, and illness.” Costco executives are named as defendants for ignoring reports of the abuse.
Our view: This follows in the footsteps of Carl Icahn’s unsuccessful shareholder activism related to McDonald’s treatment of pigs. This could be a new trend that companies in the business of managing animals and selling animal-based products may want to monitor.
HSBC Bus Adverts Draw Complaints & Enforcement
In the UK, banking giant HSBC is in hot water for greenwashing claims in advertisements placed at bus stops. Financial Times wrote:
The UK advertising watchdog is preparing to warn HSBC about using adverts to greenwash its reputation and order it to be more transparent about its contribution to climate change, in a ruling that could have wide implications for financial sector marketing. In a draft recommendation seen by the Financial Times, the Advertising Standards Authority deemed that HSBC misled customers in two adverts by selectively promoting its green initiatives, while omitting information about its continued financing of companies with substantial greenhouse gas emissions. The adverts, which attracted 45 complaints, were published by HSBC at bus stops in Bristol and London in October last year. One said the bank would provide $1tn in financing for clients to transition to net zero, while the other pledged to plant 2mn trees to trap 1.25mn tonnes of carbon.
Our view: I am struck by the fact that ads at bus stops about a rather complex matter caught the attention of the general public, with enough people skeptical of the claims complaining and triggering regulatory enforcement. Knowledge and skepticism of corporate carbon claims has definitely become mainstream. That might be a worthwhile consideration for any company planning on general advertising/marketing campaigns around their climate risk management plans and activities.
Methane Spotting from Space
Last year, I wrote about how using drones and other remote sensing technology for methane leaks was cause of concern. That concern has taken a giant leap forward as satellites are now increasingly used for that same purpose. Business Insider said “the tech will reshape global climate accountability.” That is a big claim, but I think it is accurate. The article explains:
By the end of next year, the remote sensors will hitch a ride into space on two satellites as part of a new era of global-climate accountability. Satellites can now pinpoint and quantify methane leaks almost anywhere and, within days, computers can calculate the amount of emissions escaping with artificial intelligence.
… detecting potent methane is much more challenging. Leaks are unpredictable and finding them still typically involves expensive field studies with aircraft and handheld infrared cameras that make the colorless gas visible. That approach only offers a snapshot in time.
“In the last decade, satellites have mainly been used to quantify emissions at a large scale. That’s important, but the other key is timely, actionable data so operators can find and fix leaks and verify that they stay fixed. That’s a huge change,” Riley Duren, the CEO of Carbon Mapper — which is managing the launch — said.
“A satellite can take three, four snapshots a day so you’re going to find things much quicker and have more confidence in the data,” Haines said… “Any extra set of eyes and helping identify larger leaks is really important.”
Our view: Controlling methane leaks is generally in companies’ financial interest because leaks mean lost money for companies in the natural gas, utility and chemical businesses – typical sources of meaningful methane leaks. Abandoned oil wells are another source of methane leaks that should be prevented, although doing so presents a cost without a financial return – except for achieving compliance with well abandonment regulations. There are clear benefits to finding and remediating methane leaks, but the fact that satellite technology could soon allow anyone with internet access to locate methane leaks in real time seems highly problematic from a corporate risk management perspective. Might even rise to a level of needing disclosure as an 10-K/Q Item 1A Risk Factor. Beam me up, Scotty (you know I had to…)