Costco Shareholders Affirm the Importance of Oversight and Disclosure for Prison Labor


Costco Shareholders Affirm the Importance of Oversight and Disclosure for Prison Labor

Boston, MA and Bellevue, WA (February 13, 2019) – At the annual meeting of shareholders for Costco Wholesale, held on January 24 in Bellevue, Washington, nearly 29% of shareholders voted in favor of a shareholder proposal brought by NorthStar Asset Management, Inc. that asked for enhanced analysis and disclosure on risks related to prison labor in the company’s supply chain.

This year marks the second year of engagement with Costco regarding prison labor. After NorthStar’s 2018 shareholder proposal, Costco put in place a new Global Policy on Prison Labor that sets forth certain minimum standards for any suppliers using prison labor to produce goods sold in Costco stores. Given the company’s disclosure that it had found incidences of prison labor in its supply chain, NorthStar filed a new proposal seeking disclosure of the company’s diligence to verify that suppliers are complying with the new policy.

“Our concern is that the new Global Policy on Prison Labor is insufficient. Prison labor in the United States will be a continuation of slave labor unless corporate America establishes fair wages and better treatment, far above the minimum standards currently in place in state prison systems. Monitoring prison labor to meet insufficient standards is better than nothing, but is simply not enough. Fair wages, training and job placement upon release must be offered and required by companies before they earn one penny of profit,” explained NorthStar Asset Management, Inc.’s CEO Julie Goodridge.

Goodridge explained NorthStar’s commitment on this issue by discussing the historical context. “In the 19th century, the United States abolished slavery ‘except as punishment for crime,’ allowing the use of slave labor rather than paid labor for early corporate profit. We believe this tradition continues, as some inmates are producing products or performing services for outside suppliers to various organizations, including publicly traded companies.”

NorthStar began filing shareholder proposals on the topic of prison labor in corporate supply chains in 2017, the result of a multi-year research project that NorthStar considers part of its fiduciary duty to clients. “In 2015, when another food retailer was faced with a boycott for exposure to prison labor in its supply chain, we knew that we needed to investigate this issue further. We discovered that information on prison labor was piecemeal and murky, so we set out to map prison labor to the best of our abilities,” explained Mari Schwartzer, NorthStar’s Director of Shareholder Activism and Engagement, and one of the lead researchers on the paper which is available on NorthStar’s website.

“Costco did not seek to engage with us this year but instead opted to put minimal disclosures in its proxy statement to explain the results of its audits that included prison labor. The shareholder vote of nearly 29% shows that if a company discovers prison labor in its supply chain, shareholders want disclosure on how the company is proactively managing that risk,” continued Schwartzer.

Schwartzer also noted that she hopes that the shareholder response will encourage Costco and other companies to adopt progressive policies that will push suppliers using prison labor to treat incarcerated individuals fairly, and to adopt procedures that could potentially enhance the opportunities for incarcerated people after release.

NorthStar Asset Management, Inc. is a progressive wealth management firm based in Boston with a mandate to invest responsibly.  At NorthStar, creative shareholder engagement is a positive force for change.


Contact: Julie Goodridge

NorthStar Asset Management, Inc.

Boston, Massachusetts





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