Joining the club

by Joel Crews
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Costco exterior
Costco has joined the growing list of retailers making animal welfare a top priority.

With global sales of $114 billion, including approximately $4.6 billion in fresh meat and poultry sales, a company like Costco Wholesale Corp., based in Issaquah, Wash., is especially susceptible to public scrutiny on issues such as animal welfare.

During an Oct. 16 presentation focusing on customer perspectives at the North American Meat Institute’s Animal Care and Handling Conference, Christine Summers, director of global food safety and quality, discussed the company’s longstanding policy on animal welfare and its requirements of suppliers. These details were scrutinized and revisited after the world’s No. 2 retailer was thrust into the spotlight this past year after undercover footage of one of the company’s egg suppliers went public.

Video footage from the Humane Society of the United States depicted what HSUS considered inhumane conditions at one of the company’s egg suppliers. This unwanted attention was new to the retailer, and public interest and ensuing questions were overwhelming enough to temporarily shut down the company’s switchboard once the report was out.

“We needed to be able to respond back to our members about what was going on,” said Summers, which included Costco launching its own investigation. The result of the probe saw the company stand by the supplier, Hillandale Farms of Gettysburg, Pa., saying the incident was isolated, which did not quell the controversy.

“The next thing we knew, we were on billboards in Times Square,” Summers said, followed by multiple media stories and websites condemning the company for buying eggs from a farm that was known to treat its animals cruelly. Critics demanded that Costco respond by only sourcing eggs from suppliers using cage-free systems and to commit to a deadline to comply with that demand.

Costco CEO Craig Jelenek responded by going out and visiting many of the egg suppliers to the company and examining the types of housing they used. This past August, Jelenek said the company was being unfairly targeted as part of a negative HSUS campaign that expanded to include Brad Pitt and Bill Maher as HSUS spokesmen. Jelenek pointed out that Costco already had an animal welfare policy and that it was one of the largest sellers of cage-free eggs. The company went on to say that it wouldn’t commit to going entirely cage-free, stating that in certain facilities cages are safer for laying hens.

In the wake of the frenzy, a minority shareholder requested a proxy be put on the ballot of the next shareholders’ meeting that would require the company to publish an annual animal welfare report and address the level of risk situations like the Hillandale Farms incident posed to shareholders. Costco proactively produced a report preempting any shareholder vote on the initiative.

Costco’s US Animal Welfare Report has been publicly published and covers where the company started in animal welfare, and where it’s going in the future. The report includes Costco’s longstanding mission statement on animal welfare, which endorsed treating the animals with proper care, the five freedoms of animals, and accentuates that cruelty has no place in the food supply chain.

In July, Costco also published its Animal Welfare Audit Expectations addressing scoring specifics on farm and at slaughtering facilities and it includes protocols for animals used to produce dairy products and all the meat sold at the stores.

The Costco customer perspective of animal welfare is influenced by the demographics of its members, which include 80 million cardholders and represents 44 million households. Summers said Costco members have a heightened awareness of issues and more than 85 percent of them are college educated. Members also have a higher-than-average household income, tend to be technology savvy, and are engaged in social media and read and write blogs. The fastest-growing sector is millennials, which brings with it a widespread social consciousness.

When it comes to issues that include quality, food safety and animal welfare, Summers said the company’s approach is, “If you come to shop with us, you shouldn’t have to think about those things,” which is why there is no trumpeting of these issues at the stores. It is the self-imposed responsibilities to its customers that have guided the company to make specific requirements of its suppliers. And, Summers added, while it may not seem like it in some cases, “We really want to be partners with our suppliers, especially when you get into something as sensitive as animal welfare.”

Too often, when suppliers are asked for audits or information from them, it is because the company is suspicious of wrongdoing and is playing a “gotcha” role, she said. “That’s not it at all. Our approach and where we are coming from is that we want to partner with you, but we also need to have some transparency about the process.” Especially because Costco customers pay to shop at the stores, they ask questions and are entitled to answers about the products. The company needs to be able to answer with confidence that its suppliers are doing what they say they are doing, Summers said.

She insisted the purpose of the audits is not to tell suppliers how to run their businesses, rather to identify and address issues.

“Issues are fine,” she said. “The whole thing with this audit step to us is that it’s not a punitive situation. Just because something is wrong doesn’t mean ‘oh, no, you’re out,’” she said. Instead, the Costco approach is focused on how to improve the situation. The company is willing to leave that up to the producers, the experts in this arena.

“Audits measure things, and that’s how we know if we’re doing better,” she explained.

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