Could a shareholder proposal push Walgreens in the same direction as CVS, which eliminated its tobacco category in 2014?
Tobacco sales could be evaporating from Walgreens in the near future. Walgreens’ shareholders and members of the Interfaith Center on Corporate Responsibility filed a shareholder proposal on Aug. 25, requesting that the Board of Directors review the risks of tobacco sales in Walgreens pharmacies.
A separate resolution requesting disclosure of lobbying expenditures was also filed.
According to a post on the Interfaith Center on Corporate Responsibility (ICCR) Website, those in favor of the proposal claim selling tobacco products, which are known to carry health risks, exposes Walgreens to long-term risks that could hurt shareholder returns. A main concern is the way tobacco sales seem to contradict the company’s corporate mission to “help people lead healthier and happier lives,” as a company focused on health.
Management has reportedly failed to respond to shareholders requests for further study of the topic, causing them to take action with the proposal.
Lead filer, Tom McCaney of the Sisters of St. Francis of Philadelphia said, “When the evidence of the health impacts of tobacco are so abundant and glaring, the public has no alternative but to view Walgreens’ persistence in selling these products as profiteering at the expense of the health of its customers. This perception can only hurt the company. We question the board’s oversight on this matter and are requesting a report that lays out the potential risks to the company.”
ICCR pointed out that in 2014, a letter sent by 28 U.S. attorneys general urged Walgreens to discontinue the selling of tobacco products, noting: “There is a contradiction in having these dangerous and devastating tobacco products on the shelves of a retail chain that services health care needs. The availability of such products in a retail store that also serves as a pharmacy normalizes tobacco use; furthermore, selling tobacco products in the same store as smoking-cessation products is likely to increase impulse tobacco purchases among those trying to quit and undermines their efforts.”
“In our conversations with management the arguments for continuing to sell tobacco products are extremely weak,” ICCR quoted McCaney. “In the end, Walgreens needs to decide whether it truly wants to be credibly seen as a company that cares about the health needs of the communities it serves.”
Drugstore competitor CVS made headlines when it discontinued tobacco products in 2014, noting it conflicted with the health-focused message it was looking to send.
The proposed resolutions are expected to appear on the company ballot, and all shareholders will have a chance to vote at the Walgreens annual meeting on Jan. 26, 2017.
