Natural investors shift Costco toward sustainable seafood

By Michael Kramer

Evolving capitalism is a long-term process, and quite a roller-coaster ride, so each victory along the way is all the more meaningful. After spending a year with other SRI colleagues in dialogue with senior Costco management, I am thrilled to share that our efforts on your behalf have led Costco to adopt its first sustainable seafood policy, addressing a variety of policy, supply chain, labeling, and endangered species issues.

Costco is the largest retailer of seafood in the U.S., so this policy change will have a significant impact on the health of fragile global fisheries, and will spur immediate changes in the practices of every supplier of seafood to the company. Costco is limiting purchases of 12 endangered species, including Atlantic cod, Chilean sea bass, bluefin tuna, grouper, shark, orange roughy, monkfish, and Atlantic halibut, and will require that shrimp and other fish farmers comply with sustainability standards defined by non-governmental organizations in collaboration with global government and industry leaders. Costco’s policy states that the company will purchase the 12 endangered species only if they are certified by the Marine Stewardship Council (MSC), the most widely-respected independent certifier of sustainable fisheries.

Foremost on shareholders’ minds when approaching Costco was the desire to see adoption of a formal sustainability policy to guide all aspects of procurement, set targets for the achievement of sustainability goals, ensure the availability of “sustainable” choices for customers, and avoid the sale of unsustainable seafood products, including endangered and other over-harvested species. We requested that Costco define its sustainability goals, establish regular reviews of fisheries at great risk, and use practices that will mitigate or limit environmental impacts associated with aquaculture.  The resulting policy changes begins to address all these concerns.

Costco’s new sustainability standards include measures for shrimp, tilapia, canned tuna, and farmed salmon. While Costco already sells wild salmon that is sustainable, they need sustainably farmed salmon to keep moving along that dialogue since salmon is their best-selling fish. By the end of 2011 the company will buy tilapia only from suppliers who have been verified under the Tilapia Aquaculture Dialogue or comparable third-party standards by the Aquaculture Stewardship Council or other reputable certifying agency, with similar programs to follow for shrimp and tuna.

Several of our requests are still being discussed with the company, including  the need to engage in a broad education program with its members, in order to make them aware of challenges to sustainable seafood and what Costco is doing to address them. We also recommended the publishing of data in its annual Corporate Responsibility Report that includes clear and consistent metrics that shareholders and other stakeholders can use to assess Costco’s efforts in this area, and urged improved seafood labeling to ensure better traceability.

Jeff Lyons, Costco’s senior vice president of fresh foods, stated, “Being held accountable a little bit is not a bad thing.” Ken Kimble, assistant general merchandising manager for corporate foods at Costco, said stocking its stores with sustainable seafood is imperative to the company’s longevity, since replenishment of global fisheries is necessary to keep supplies available.

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Michael Kramer

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