Impact Update Quarter 3, 2019 Pat Miguel Tomaino, Director of Socially Responsible Investing

Impact Update Quarter 3, 2019 Pat Miguel Tomaino, Director of Socially Responsible Investing t Zevin Asset Management, we build responsible investment portfolios for our clients. We then address risks and create positive social impact by engaging with portfolio companies. In the third Aquarter of 2019, we challenged companies for positive change on several important issues. Costco’s protein problems The link between industrial agriculture, meat products, and greenhouse gas emissions is increasingly well understood. Demand for meat has gone global and surged 372 percent since 1960 with 70 billion animals land use and deforestation, along with the cow-burp emissions that are laughable to some but nevertheless contributeconsumed yearly.non-trivially Significant to the climate greenhouse change effect. impacts Beef come especially from acarries beef supply a heavy chain water that cost: is plagued one burger by poor patty represents as many as 2,000 liters of water used in the supply chain. Proteins are essential for humans, but increasingly they are creating risks for food companies, food retail- ers, and society at large. In addition to climate risk and land mismanagement, the food sector faces a loom- ing crisis around its addiction to livestock antibiotics and widespread lapses in animal welfare can damage brands’ relationships with their customers. We have teamed up with the UK think tank FAIRR to better understand how these forces affect the compa- - ing other, smaller-footprint, plant-based proteins. This year, FAIRR ranked 25 companies on how well they addressnies in our environmental clients’ portfolios and social and, alternatively,risk surrounding how proteins. firms might Kroger access, a newcommercial supermarket opportunity name in by many provid client portfolios, ranked fairly well. Meanwhile, Costco ranked relatively poorly. We consulted with FAIRR’s experts and sent Costco a series of pointed questions related to climate risk analysis, water reduction in the meat supply chain, animal welfare, and what the popular discount chain is doing to merchandise and scale plant-based meat substitutes, which are currently exploding in popularity. higher-risk poultry operations that the retail club plans to bring online in Nebraska over the next several years. Costco is the leading seller of rotisserie chickens in America, mov- We also focused specifically on new, has attempted to control so much of its own chicken supply chain. ing upwards of 90 million units per year at $4.99 each. This is the first time, however, that a US food retailer The advantages are clear: uniformity, cost savings, and Costco says that its chicken operation will provide fair price security for local farmers. Costco has said less about the standards and density with which chickens will be housed. Next quarter, we will press for a meeting with executives on Costco’s protein supply chain risks, which are growing as it directly enters the hen house. China challenges in tech If you live in the United States and you have a smartphone, there is a close-to-50 percent chance that it’s an iPhone. Having penetrated Western markets with its hardware, Apple hopes to get consumers on the upgrade cycle and sell them services like AppleTV+. But China remains a huge opportunity for smartphone came under pressure for free speech limits they accept in order to do business in China, several other giant sales, and Apple’s eagernessWalt to do Disney well in, Microsoft that market, and carries Nike )significant faced similar risks. questions. Last quarter, as NBA teams US firms (including2 Oliver Street,Apple, Suite 806 • Boston, MA 02109 • 617-742-6666 • www.zevin.com • [email protected] Responding to Chinese pressure, Apple pulled from its App Store an iPhone program that helped Hong Kong available on Google’s Android platform.) This comes amid renewed reports that Apple compromised the democracy protesters coordinate with each other and avoid police. (The app, while controversial, is still securityApple CEO of ChineseTim Cook users’ generally data whendownplays it subcontracted human rights local concerns, iCloud serviceand he’s to drawn a China-based praise for firm. navigating trade tensions between China and the Trump administration. However, it’s clearer than ever that Apple is out its welcome in China’s consumer market. Meanwhile, thousands of Chinese workers continue to face stressfulplaying with and fire:often poor unsafe handling conditions of human in Apple’s rights factories. puts people We inhave danger engaged even with as the Apple company across risks this wearingrange of issues for several years, and last quarter we submitted a shareholder proposal challenging the company to willfinally help tie turn a portion up the of heat Tim on Cook’s the above paycheck concerns, to social, and human we will rights, report and on progress.diversity metrics. The proposal (and a group of investor partners we assembled including SEIU and the State of Rhode Island treasurer’s office) What Else Is New? • This summer, we joined a coalition of investors to call for changes that would strengthen the Equator Principles, an industry-wide commitment of global banks to address negative impacts of large project lending. Investors are pressing banks to go beyond those commitments and pay more attention to human rights, indigenous community concerns, and climate change risk. • Marriott, TJX Companies, Apple, and Costco, asking how those large employers might make it easier for all their workers to get to the polls andTogether vote inwith local another and federal responsible elections. investing firm, we wrote to • In a meeting with UPS, we reiterated our call for the logistics company to get a handle on greenhouse aboutgas emissions UPS’s encouraging in its sizeable electric airplane vehicle fleet. plans UPS and has weimproved urged the its emissionscompany to disclosure set an absolute in response carbon to goalour challenge that does earliernot ignore this itsyear airline. — but the new figures reveal just how far it has to go. We learned much • We challenged pharmaceutical makers AbbVie, GlaxoSmithKline, and Novartis to improve their policies and resources to help poor people around the world access medications in line with the United Nations Sustainable Development Goal 3: Good Health and Well-Being. Thanks for reading and sharing. For more on this work and our broader advocacy, join us on our website, Me- dium, Twitter, and LinkedIn. And please don’t hesitate to contact Pat Miguel Tomaino ([email protected]) with your questions, thoughts, and suggestions. Disclosures: Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen or experience. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. This communication may include opinions inand such forward-looking forward-looking statements. statements All arestatements reasonable, other we than can statementsgive no assurance of historical that such fact beliefsare opinions and expectations and/or forward-looking will prove to statementsbe correct. Various(including factorswords such could as cause “believe,” actual “estimate,” results or “anticipate,” performance “may,” to differ “will,” materially “should,” from and those“expect”). discussed Although in such we believeforward-looking that the beliefs statements.Unless and expectations stated reflected oth- or may not hold the securities discussed in their portfolios. Zevin Asset Management makes no representations that any of the securities discussed erwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Zevin Asset Management’s clients may have been or will be profitable. 2 Oliver Street, Suite 806 • Boston, MA 02109 • 617-742-6666 • www.zevin.com • [email protected].

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