Shareholders in Starbucks Corporation will vote at the coffee company’s March 12 AGM on a resolution about its approach to cage-free eggs in Asia.
The Humane Society of the United States (HSUS) is behind the proposal, which asks Starbucks to ‘disclose details of its implementation plans and timelines for reaching its cage-free egg commitment in China and Japan.’
In its supporting statement the society quotes Starbucks’ Form 10Ks as stating ‘the ongoing relevance of our brand may depend on making sufficient progress toward our social and environmental program goals’ including those related to ‘animal health and welfare.’ The HSUS also quotes the company as stating that one of its objectives is ‘to exclusively use 100 percent cage-free eggs and egg products in company-operated stores globally.’
The society alleges that, although Starbucks discloses progress toward that goal in some regions, in China and Japan – two of its biggest markets – ‘cage-free egg production is limited and supply is not yet widely available.’
It writes: ‘But now it seems the company may have finally developed plans for moving forward there. In June 2024, an organization called Global Food Partners announced it worked with Starbucks to develop ‘cage-free implementation roadmaps for China and Japan’ to enable the company to ‘set [its] implementation plans and advance their cage-free commitments in both markets by [its] deadline.’ Yet Starbucks hasn’t disclosed details of these roadmaps or any related deadlines.’
The society adds: ‘Especially since animal welfare is a ‘primary focus’ for Starbucks, its brand relevance may depend on progress toward its animal welfare goals and the use of cage-free eggs is linked to highly material factors like food quality and safety, we think the company should simply disclose its new plans for achieving its goal in China and Japan.’
Arguments to exclude
Starbucks had asked the SEC for no-action relief to exclude the proposal on the grounds that per Rule 14a-8(i)(7) the resolution directly relates to the company’s ordinary business operations, seeks to micromanage its ordinary business operations and does not focus on a significant policy issue that transcends those ordinary business operations.
‘The proposal relates to the company’s ordinary business operations insofar as it implicates the company’s decision-making regarding its marketing, sales efforts and brand positioning,’ Starbucks wrote.
‘Moreover, the [HSUS] supporting statement suggests that the implementation of its proposal is meant to address risk by emphasizing that the company’s ‘brand relevance may depend on progress toward its animal welfare goals’… There is no function more ‘core’ to ordinary business management than marketing and public relations… [T]he proposal addresses [Starbucks’] advertising and public presentation, namely the company’s positioning of its sourcing of eggs, which the supporting statement explicitly links to the company’s brand relevance.’
Among other things, Starbucks also argued that the HSUS proposal does not focus on a significant social policy issue that transcends its ordinary business. ‘The proposal is not focused on matters of animal health (ie whether the chickens are caged) – and in fact the supporting statement itself states that Starbucks has a public goal for ‘all of our products to meet high quality and ethical standards,’ leaving no doubt that the proposal’s primary focus is on the company’s marketing and advertising of its products and its decision-making regarding supply chain.’
The SEC staff did not agree, writing in a letter to Starbucks: ‘We are unable to concur in your view that the company may exclude the proposal under Rule 14a-8(i)(7). In our view, the proposal transcends ordinary business matters and does not seek to micromanage the company.’
Proxy statement
The Starbucks board is now urging shareholders to vote against the proposal, writing in the company’s 2025 proxy statement: ‘Our goal is for all of our products to meet high quality and ethical standards. For the food and dairy we serve, this means a commitment to social responsibility standards, with animal welfare as a primary focus… Since we first began buying cage-free eggs in 2008, we have made significant progress, increasing our purchases year over year…
‘While cage-free egg supply has significantly increased in North America and the UK, the industry still faces challenges globally. In certain markets where we operate, including China and Japan, cage-free egg production remains limited and supply is not yet available on a commercially viable scale, a fact that we have validated internally and with third-party analyses.’
The board adds: ‘Given the significant expansion of supply that is required in China and Japan, we believe the requested disclosure of detailed implementation plans and timelines around sourcing of cage-free eggs in these markets would be both premature and an unnecessary use of resources that would not provide meaningful value to shareholders.’
A request for comment from Starbucks was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
