Costco Challenged on Membership in Sustainability Trade Association
by David Almasi
Issaquah, WA / Washington, DC - For a second time, Costco CEO Craig Jelinek is being called out by the National Center for Public Policy Research to reconsider the big box chain's membership in a divisive retail trade association working to advance top-down sustainability measures that could distort the retail marketplace and compromise the company's profitability.
"Costco is one of America's largest retailers, and as such, carries considerable clout. So it is disconcerting that this company remains in league on sustainability issues with the Retail Industry Leaders Association (RILA) - a massive trade association that has been promoting sustainability mandates at the expense of American consumers," said Justin Danhof, Esq., director of the National Center's Free Enterprise Project. "Craig Jelinek ought to assure investors and consumers that he is placing sound business methods ahead of RILA's radical environmental ideology."
In January, at Costco's annual meeting of shareholders, Danhof asked Jelinek, in part:
As a shareholder, our concern is that this push for so-called "sustainability" will harm Costco's shareholders, suppliers, and customers, as they will bear the cost of these self- imposed green regulations.
A recent poll that my organization conducted indicated that 52 percent of consumers, given a choice, are unwilling to pay even an extra cent for such sustainability. Furthermore, 56 percent of consumers think it is unfair to ask them to pay more so that retails can impose sustainability standards.
So Mr. Jelinek, I ask you whether Costco will reject RILA initiatives on "sustainable" activities that have the potential to reduce the company's bottom line. And if your answer is no, do you think it is fair to charge low and middle-income Americans - many of whom are on very tight budgets - more for products because Costco and other retailers want to green-wash their images?
Danhof's full question is available here.
Jelinek responded that he was unaware that Costco was even a RILA member. Furthermore, he refused to answer Danhof as to whether Costco's leadership would reject any of RILA's green initiatives should they be found to harm the company's shareholders or bottom line. This should have been an easy question for Jelinek to address.
"Jelinek has had more than eight months to educate himself about RILA and its progressive sustainability platform," noted Danhof. "It is time that he answer to his customers and shareholders by eschewing RILA's costly proposals. Our poll on retail spending clearly shows that American shoppers want no part of RILA's green morass."
If Jelinek still needs more information about RILA's green goals, he and other RILA member company CEOs should read, "The Retail Industry Leaders Association (RILA): A Cartel that Threatens Innovation and Competitiveness," a new paper by National Center Senior Fellow Dr. Bonner Cohen.
In his groundbreaking paper, Dr. Cohen notes that:
Redirecting retailers' behavior so as to achieve these environmental and social goals will often require "expertise not yet available within an organization." Forging a path forward will have retailers reach out to "nonprofits, academics, and governments, as well as to their suppliers, consumers, investors, vendors, and communities." RILA assures us that these "stakeholders" will provide "diverse perspectives that will accelerate sustainable innovation." Note that RILA puts nonprofits (shorthand for environmental and other approved pressure groups), academics, and governments ahead of consumers, investors, and suppliers as sources of the "expertise" it believes retailers need.
"Costco has an opportunity to take a leadership position by rejecting the wayward path of RILA that Dr. Cohen describes," said Danhof. "If left on its own, the free market would dictate sustainable measures such as reducing packaging and improving shipping routes that also reduce company costs. Jelinek should vow to only follow free market sustainable reforms and reject RILA's top-down approach."
Starting in early 2012, National Center staffers confronted the CEOs of five major retailers, who are all members of RILA - Target, J.C. Penney, Bed Bath & Beyond, Gap and CVS Caremark - about their engagement with RILA. Through its Free Enterprise Project, the National Center demanded these corporate leaders explain how RILA's goals are consistent with their fiduciary duties to increase shareholder value, and explained how they could adversely affect customers.
And the retail industry took notice. Prominent retail writer Joan Verdon wrote an article detailing the National Center's work to expose RILA that appeared in more than a dozen major publications nationwide including Bloomberg Businessweek, the Minneapolis Star-Tribune and the Honolulu Star-Advertiser.
In early 2013, the National Center's Free Enterprise Project continued to pressure RILA members regarding their complicity with RILA's new monopoly agenda. Through the shareholder resolution process, National Center Chairman Amy Ridenour and Free Enterprise Project Director Justin Danhof, Esq. had conversations with top executives at Best Buy and received assurances that the company would not pursue any RILA initiatives that, in their view, contradict best business practices dictated by the free market.
Also in early 2013, Danhof asked Walgreens CEO Greg Wasson how much more a consumer should have to pay for retail products so that RILA members can push so-called sustainable goods. Totally flustered and baffled by the very simple question, Wasson became incoherent and was unable to answer or defend his company's sustainability practices in any meaningful way. Writing for the Motley Fool , Gene Koprowski praised Danhof's question at the Walgreens meeting, and warned would-be company investors saying: "I agree that that is an excellent question to ask, and suggest that investors refrain from buying shares of Walgreens until CEO Greg Wasson can provide a solid answer to the query."
Just last week, the National Center again called on Wasson to come clean about Walgreens dealings with RILA. So far, Wasson remains silent.
In the first half of 2013, the National Center also confronted the CEOs of Sears and Home Depot, educating them about RILA's new monopoly agenda. Following the Home Depot meeting, National Center President David Ridenour privately discussed the issue of RILA's new monopoly with company CEO Francis Blake and other top executives. They assured Ridenour that the company does not always agree with RILA and would not pursue an initiative that would harm customers or the bottom line in the name of going green.
At the Sears meeting, newly installed CEO Edward Lambert appeared to reject any extra-regulatory mechanism of RILA saying in part that "[p]ersonally, I don't like coercive solutions. I think America is overregulated."