Shareholder
Proposal on Tyson Foods, Inc.’s 2022 Proxy Statement:
Report on Sustainable Packaging Efforts
Tyson Foods, Inc. Symbol: TSN
Filed
by: Green Century Capital Management, Inc.
Green Century Capital Management, Inc. seeks your
support for the plastic packaging-related proposal filed at Tyson Foods, Inc. (hereby referred to as “Tyson” or “the
Company”) in the 2022 proxy statement, which asks the Company to increase its sustainable packaging efforts. The Proponent believes
taking such action would serve the long-term interests of the Company by mitigating potential reputational, regulatory, competitive, and
market risks.
Resolved: Shareholders request that Tyson issue a report,
at reasonable cost and omitting proprietary information, assessing if and how the Company can increase the scale, pace, and rigor of its
sustainable packaging efforts by reducing its absolute plastic packaging use.
Supporting Statement: Proponents defer to management on the
content of the report, but suggest that indicators meaningful to shareholders may include:
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Quantitative, time-bound goals for reducing absolute plastic use, reducing
virgin plastic use, and increasing post-consumer recycled plastic use; and
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Annual disclosure of metrics related to the Company’s plastic use.
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RATIONALE FOR A “YES” VOTE
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1.
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Reputational risk – Consumers are concerned about the environmental impact of plastic packaging and are willing to change
their shopping habits to avoid it.
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2.
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Regulatory risk – Tyson may be unprepared to comply with new and upcoming legislation on plastic packaging.
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3.
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Insufficient disclosure – Unlike industry peers, Tyson does not report quantitative information about its packaging footprint
to investors.
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4.
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Competitive risk and loss of market access – Tyson’s packaging policies lag those of competitors and may put the
Company’s access to key customers at risk.
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This is not a solicitation
of authority to vote your proxy. Please DO NOT send us your proxy card; Green Century Capital Management, Inc. is not able to vote your
proxies, nor does this communication contemplate such an event. Green Century Capital Management, Inc. urges shareholders to vote
for Item Number 3 following the instruction provided on the management’s proxy mailing.
BACKGROUND
Plastic pollution is a growing problem globally. Less than one fifth
of all plastic is recycled,i with the majority
sent either to landfill or released into the environment.ii
Packaging that is used once and then discarded accounts for around 40% of plastic use today and is a major contributor to the 18 billion
pounds of plastic waste that enter oceans and waterways every year. iii
When plastic is released into the environment, it can greatly impact
biodiversity and human health. Animals like seabirds and fish can accidentally ingest or entangle themselves in plastic waste, which is
estimated to kill over one million marine animals every year.iv
When sea animals accidentally eat plastic, the material can also work its way up the food chain to species eaten by humans. As a result,
it is estimated that humans ingest about a credit card’s worth of plastic every week.v
While the full extent of its impact on human health is not yet known, current levels of microplastic consumption have been found to cause
cell death and allergic responses.vi
Plastic production and pollution also contribute to climate change
and may undermine the world’s ambitious goal to limit warming to 1.5 degrees Celsius. Plastic production and use is projected to
take up 10-13% of the entire remaining carbon budget between now and 2050.vii
Plastic that enters the ocean has also been shown to impact the ocean’s ability to sequester carbon, an ecosystem service critical
to limiting temperature rise.viii
While all types of plastic can negatively impact the environment, certain
plastics are more problematic than others. For example, plastic film, which Tyson uses to wrap meat and in bags for some of its frozen
products,ixx
can damage traditional recycling equipment and therefore is not commonly curbside recyclable.xi
While some plastic film can be brought to drop-off bins in retail stores, options are becoming more limited.xii
Polystyrene foam, which Tyson uses in trays, is very difficult to recycle.xiii
The material is also toxic and can leach carcinogenic chemicals into food with which it comes in contact.xiv
Historically, recycling has been touted as the solution to the plastic
pollution problem;xv however, to effectively
mitigate the worst impacts of this crisis, experts say that reducing global plastic use is key. A landmark study released by the Pew Charitable
Trust in 2020 found that current commitments from government and industry will only stem the flow of plastic pollution to the ocean by
7% by 2040 and corporations must reduce their absolute use of plastic by one-third by 2040 in order to bring the plastic pollution problem
under control.xvi
RATIONALE FOR A “YES” VOTE
Tyson uses significant amounts of plastic packaging, including problematic
plastics such as plastic film and polystyrene foam;xvii,xviii
however, the impact of the Company’s plastic use is not entirely clear to investors. The Company does not provide comprehensive
disclosures about the packaging materials it uses,xix
nor does it have measurable, time-bound goals for increasing the sustainability of its packaging.xx
Consumers are increasingly concerned about the plastic waste crisis,
and surveys show that they are willing to change their shopping habits in order to reduce their consumption of plastic packaging. Tyson
may become vulnerable to reputational risk if it does not take steps to improve the sustainability of its packaging, especially regarding
its use of single-use plastic packaging.
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A Shelton Group survey found plastic pollution to rank higher than climate
change as the top environmental concern among Americans, likely due to the immediate visibility of the issue to consumers. In the same
survey 80% of respondents said they would change their shopping habits to avoid single-use plastic packaging, if given the option.xxi
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Eighty-four percent of U.S. shoppers are concerned about plastic and packaging
waste, according to a 2021 Consumer Brands/Ipsos survey.xxii
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According to the 2020 Deloitte Millennial Survey, two-thirds of millennial
respondents said they are taking steps to reduce their personal consumption of single-use plastics. Both millennial and Gen Z respondents
named protecting the environment as their top societal concern.xxiii
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Meat industry outlet, The National Provisioner, has published numerous articles
in recent years highlighting sustainable packaging as key to maintaining consumer engagement with meat products.xxiv,xxv
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As public awareness of the plastic pollution problem grows, many states
are regulating single-use plastic packaging. This legislative trend does not show any signs of slowing down, posing potential regulatory
risk to Tyson.
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In 2021, Maine and Oregon became the first states in the country to adopt
extended producer responsibility (EPR) laws,xxvi,xxvii
and nine other states considered legislation, suggesting that similar laws are likely to pass elsewhere in the coming years.xxviii
EPR laws hold producers financially responsible for the end-of-life disposal costs of their product packaging.xxix
Some would place higher fees on types of packaging that are not recyclable, such as plastic film and polystyrene foam used in many Tyson
products.xxx
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Maine has suggested that producers that wish to minimize their financial obligation associated with the new EPR law should work to
reduce the total amount of packaging they produce and to increase the recyclability of the packaging they do use.xxxi
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States are also passing legislation to require minimum levels of recycled
content in consumer packaging. For example, Washington and Connecticut both passed laws in 2021 that will require a minimum percentage
of recycled content in certain plastic product packaging sold in the state.xxxii
Other states will likely follow suit in the coming years.
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Based on Tyson’s currently available disclosures, the Company
may be required to pay more than others when subject to EPR laws, and it may not be prepared to meet state-mandated minimums for recycled
content.
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3.
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Insufficient disclosure
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Disclosing quantitative plastic footprint information is critical to
investors’ understanding of how a company is managing plastic-related risks. Food companies now commonly disclose metrics related
to how much plastic packaging they use on an annual basis and the percentage of annual plastic use that is made from recycled plastic.
Tyson does not provide any of these now-commonplace disclosures.xxxiii
In its opposition statement the Company does provide the percentage of its packaging that is made from post-consumer and post-industrial
recycled material; however, it is unclear whether those numbers refer to its entire packaging footprint across all material types or solely
to its plastic packaging.xxxiv
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JBS reports on numerous metrics related to the company's packaging,
including the percentage of its packaging portfolio that is made of plastic and the percentage of packaging made from renewable materials.xxxv
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Sanderson Farms reports the percentage of its packaging footprint
that is made from recyclable or reusable materials.xxxvi
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Hormel Foods reports the percentage of its product packaging that
is recyclable or made from recycled materials.xxxvii
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4.
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Competitive risk and loss of market access
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Tyson lags competitors, as well as other food industry peers, in setting
goals to reduce the impact of plastic packaging waste. In a scorecard ranking corporate plastic commitments, shareholder advocacy group
As You Sow gave Tyson a D- grade.xxxviii
Although the Company notes in its opposition statement that it was able to improve its grade from an F to a D-,xxxix
this new grade still places the Company behind 33 others ranked in the scorecard and does not alter the laggard status of the Company’s
plastic packaging efforts.
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Smithfield Foods recently announced two goals aimed at mitigating
plastic-related risk. The company will make all packaging recyclable, reusable, or industrially compostable and reduce the use of virgin
petroleum-based plastic by half by 2030. The company is also working to identify replacements for Styrofoam trays.xl
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JBS subsidiary Pilgrim’s UK has goals to remove all unnecessary
single-use plastic from its operations by 2021 and to eliminate all single-use black plastic from completed products. The company also
has a goal to reduce the amount of packaging used per kilogram of product year over year.xli
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Nestlé has
goals to make 100% of its packaging recyclable or reusable and to reduce its use of virgin plastic by one-third by 2025.xlii
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Conagra Brands has a goal to make 100% of its plastic packaging renewable,
recyclable, or compostable by 2025. The company is working to avoid 33 million pounds of plastic through packaging innovations as part
of its 2025 sustainable packaging journey.xliii
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The Company’s lagging plastic packaging efforts also fail to
align with those of its customers, many of whom have extensive initiatives in place to address their owned-brand plastic packaging. As
retailers’ own efforts progress, their attention will likely turn to their suppliers. Tyson could risk losing market access if it
hinders progress toward its customers’ plastic packaging goals. The following retailers sell Tyson’s products and faced shareholder
resolutions during the 2021 proxy season similar to one Tyson is now facing, demonstrating increased investor concern on this issue.
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Walmart is Tyson’s largest customer, as disclosed in the Company’s
2021 10-K.xliv The company has goals to achieve
100% recyclable, reusable, or industrially compostable owned-brand packaging and to use 17% post-consumer recycled content in plastic
owned-brand packaging by 2025.xlv Walmart
has also committed to reducing its use of virgin plastic in owned-brand packaging by 15% by 2025, following a plastic-related shareholder
proposal filed last year.xlvi
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Walmart has an initiative called “Project Gigaton,”xlvii
a program designed to help the company address its Scope 3, or value chain, emissions. As part of this program, Walmart also aspires to
achieve zero waste across its whole supply chain and encourages its suppliers to set sustainable packaging goals.xlviii
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Target has set numerous goals to address its owned-brand plastic use,
including to incorporate 20% post-consumer recycled content and to reduce virgin plastic use by 20% by 2025.xlix
The company agreed to the last goal after a plastic-related shareholder proposal was filed last year.l
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Kroger has also set goals to achieve 100% recyclable, compostable
and/or reusable owned-brand packaging and to incorporate at least 10% recycled content into owned-brand packaging by 2030.li
Nearly a majority of Kroger shareholders voted in favor of a 2021 shareholder proposal filed with the company, urging it to reduce its
use of plastic packaging.lii
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In
its opposition statement Tyson says that it works with the Ellen MacArthur Foundation’s New Plastics Economy Global Commitment,
a collaborative effort comprising more than 500 organizations working toward a circular economy for plastics.liii
Tyson is not, however, listed as an official signatory to the Global Commitment, in contrast to customers and food industry peers like
Walmart, Target, Nestlé, Mondelez, Kellogg, and
others.liv Investors would welcome Tyson
becoming a signatory of this initiative.
CONCLUSION
Plastic packaging pollution is a rising concern among consumers and
is garnering increased attention from legislators. Investors are concerned that Tyson may face material financial risk if the Company
does not take steps to mitigate the risks associated with its use of plastic packaging, such as by disclosing information related to its
packaging footprint and setting measurable, time-bound goals to reduce its plastic use.
Shareholders are urged to vote FOR the proposal asking Tyson to
reduce its absolute use of plastic packaging.
For questions regarding this proposal, please contact Annalisa Tarizzo,
Green Century Capital Management, atarizzo@greencentury.com.
This is not a solicitation
of authority to vote your proxy. Please DO NOT send us your proxy card; Green Century Capital Management, Inc. is not able to vote your
proxies, nor does this communication contemplate such an event. Green Century Capital Management, Inc. urges shareholders to vote
for Item Number 3 following the instruction provided on the management’s proxy mailing.
ii
https://www.nationalgeographic.com/science/article/plastics-facts-infographics-ocean-pollution
ii
https://www.unep.org/interactive/beat-plastic-pollution/
iii
https://www.nationalgeographic.com/science/article/plastics-facts-infographics-ocean-pollution
iv
http://www.unesco.org/new/en/natural-sciences/ioc-oceans/focus-areas/rio-20-ocean/blueprint-for-the-future-we-want/marine-pollution/facts-and-figures-on-marine-pollution/
v
https://www.cnn.com/2019/06/11/health/microplastics-ingestion-wwf-study-scn-intl/index.html
vi
https://www.theguardian.com/environment/2021/dec/08/microplastics-damage-human-cells-study-plastic
vii
https://www.ciel.org/project-update/plastic-climate-the-hidden-costs-of-a-plastic-planet/
viii
https://yaleclimateconnections.org/2019/08/how-plastics-contribute-to-climate-change/
ix
https://www.tyson.com/products/fresh-chicken/
x
https://www.tyson.com/products/breaded-chicken/
xi
https://how2recycle.info/sdo
xii
https://www.wastedive.com/news/plastic-film-bag-takeback-chemical-recycling-coronavirus/592503/
xiii
https://www.airseacontainers.com/blog/is-styrofoam-packaging-recyclable
xiv
https://cehn.org/our-work/eco-healthy-child-care/ehcc-faqs/faqs-styrofoam/
xvhttps://www.npr.org/2020/09/11/897692090/how-big-oil-misled-the-public-into-believing-plastic-would-be-recycled
xvi
https://www.pewtrusts.org/-/media/assets/2020/10/breakingtheplasticwave_mainreport.pdf
xvii
https://www.tyson.com/products/fresh-chicken/
xviii
https://www.tyson.com/products/breaded-chicken/
xix
https://www.tysonsustainability.com/esg-data-center/
xx
https://www.tysonsustainability.com/progress-report/performance/goals
xxi
https://www.globenewswire.com/news-release/2019/06/19/1871135/0/en/Americans-Are-More-Concerned-About-Plastic-in-Oceans-Than-Climate-Change.html
xxii
https://www.newsweek.com/87-percent-american-shoppers-concerned-about-plastics-packaging-waste-poll-1617272
xxiii
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/deloitte-2020-millennial-survey.pdf
xxiv
https://www.provisioneronline.com/articles/111584-convenience-and-sustainability-remain-driving-forces-for-consumers
xxv
https://www.provisioneronline.com/articles/109201-making-meat-packaging-more-sustainable
xxvi
https://www.wastedive.com/news/extended-producer-responsibility-packaging-maine-oregon/602479/
xxvii
https://www.wastedive.com/news/oregon-epr-packaging-truth-in-labeling-living-wage/602640/
xxviii
https://www.wastedive.com/news/2021-state-extended-producer-responsibility-recycling/594873/
xxix
https://www.worldwildlife.org/blogs/sustainability-works/posts/what-is-extended-producer-responsibility-epr
xxx
https://uspirg.org/sites/pirg/files/reports/US_PIRG_EA_Break%20the%20Waste%20Cycle-scrn_0.pdf
xxxi
https://www.maine.gov/dep/waste/recycle/epr.html
xxxii
https://www.natlawreview.com/article/states-and-federal-government-continue-to-advance-plastics-recycling-and-minimum
xxxiii
https://www.tysonsustainability.com/esg-data-center/
xxxiv
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000100493/2a1ce5de-2523-4861-9f8e-8d09a0d3a49a.pdf
xxxv
https://jbs.com.br/en/sustainability/environmental-management/packaging/
xxxvi
https://cloud.3dissue.com/112651/113007/132393/2020SFICorpResponsibilityReport/index.html?r=69#
xxxvii
https://csr.hormelfoods.com/environment/packaging/
xxxviii
https://static1.squarespace.com/static/59a706d4f5e2319b70240ef9/t/6154c623609b283fdc013b6c/1632945709916/AsYouSow2021_PlasticsScorecard_fin-v2_20210927.pdf
xxxix
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000100493/2a1ce5de-2523-4861-9f8e-8d09a0d3a49a.pdf
xl
https://investors.smithfieldfoods.com/2021-03-15-Smithfield-Foods-Announces-New-Recyclable-Packaging-and-Plastic-Reduction-Commitments
xli
https://www.pilgrimsuk.com/sustainability/sustainable-packaging/
xlii
https://www.nestle.com/csv/global-initiatives/zero-environmental-impact/packaging-plastic-pollution/vision-commitments
xliii
https://www.conagrabrands.com/sites/g/files/qyyrlu371/files/2021-06/Conagra%20Brands%20Citizenship%20Report%202020.pdf
xliv
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000100493/0e19ce7f-8326-4529-9ad7-1f6a929f3dd8.pdf
xlv
https://www.walmartsustainabilityhub.com/waste/sustainable-packaging/goals
xlvi
https://progressivegrocer.com/walmart-commits-reduce-plastic-15
xlvii
https://www.walmartsustainabilityhub.com/climate/project-gigaton
xlviii
https://www.walmartsustainabilityhub.com/climate/project-gigaton/packaging
xlix
https://corporate.target.com/corporate-responsibility/planet/sustainable-products
l
https://packagingrevolution.net/target-announces-new-plastic-packaging-reduction-goal/
li
https://www.thekrogerco.com/wp-content/uploads/2021/07/Kroger-2021-ESG-Report.pdf
lii
https://www.asyousow.org/press-releases/2021/6/29/kroger-shareholders-support-proposal-cuts-single-use-plastic
liii
https://ellenmacarthurfoundation.org/global-commitment/overview
liv
https://ellenmacarthurfoundation.org/global-commitment/signatory-reports