It’s all interactive, it’s all connected together; there’s no separation.“ ”

Understanding of their corporate social

responsibility

Holistic, inclusive implementation of CSR program to benefit of

all stakeholders.Relevant

Stakeholder-centricActive

CORPORATE SOCIAL RESPONSIBILITY AT WHOLE FOODSprogram analysis and investment recommendations

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Introduction to Whole Foods

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

“Whole foods” Ideally unprocessed and unrefined

Founded in 1980 in Austin, Texas

Expanded to become world’s leading retailer of natural and organic foods

Over 265 stores in North America and the United Kingdom

Market stats to the right

Key Products & Services

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

365 Everyday Value

Value branding means an emphasis on:• Only products that meet the store’s

standards for being “natural”• “Minimally processed foods that are

free of hydrogenated fats...”• Unacceptable Food Ingredients List • Supermarket, dietary supplements,

personal care items, In-store eateries

Overview of Competitors

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Tesco PLC

Sainsbury (J) PLC

Wm Morrison Supermarkets PLC

Tesco PLC

X5 Retail Group NV

Companhia Brasileira

Ocado Group PLC

Wesfarmers Ltd

Greggs PLC

Grupo Comercial Chedraui

The Kroger Co.

Whole Foods Market, Inc.

Other

Tesco, PLC

• 220 million dollars annually in funds, food and products to support local communities

• 80+ Feeding America food bank partners, women's health, the troops and their families.

Kroger Co.

Comparing CSR Comparing Market Share

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

CONSCIOUS CAPITALISMSECTION 2

IDENTIFYING, FRAMEWORK, STAKEHOLDERS

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

CONSCIOUS CAPITALISM“Conscious business is not the same as Corporate Social Responsibility. CSR

is taking a traditional, profit-centric business model and grafting onto it a social-responsibility department…But it doesn’t necessarily link to the

purpose of the business, whereas the conscious business is inherently socially responsible, because creating value for stakeholders and communities is at

the very essence of what they’re doing.”

Identifying a Complex “Conscious Business” Program

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Step 1. Categorize Stakeholders

Step 2. Condense Mission

Step 3. Network Stakeholders and Objectives

Enable a holistic evaluation of the program by establishing metrics and analyzing specific examples

APPLICATION: EVALUATION & ANALYSIS

Step 1. Categorizing Whole Foods’ Stakeholders

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Producers

Certifiers

Employees

Shareholders

Customers

Communities

Step 2. Condensing the Whole Foods’ Mission

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Core Values

Environmental Stewardship

Caring for Communities

Organic Farming

Seafood Sustainability

Whole Trade

The Whole Foods’ Conscious Business framework is best identified by networking the Whole Foods’ mission with its stakeholders. This “idea web” generates and solidifies an inclusive and holistic approach to conscious business.

Stakeholders:

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Whole Trade Guarantee: Four Key CriteriaQualityPremium Price to the ProducerBetter Wages & Working ConditionsEnvironment

CSR IN ACTION: Whole Planet Foundation

Locally Grown: Local Producer Loan Program

Defining Producers: Producers include global and local farmers and seafood harvesters, specifically focused on developing nations and requiring organic farming.

Producers

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Defining Certifiers: Whole Trade Certifier Partners are organizations, institutions and alliances that internationally known for their services in certifying producers as to their adherence to environmental and fair trade standards.

Partnerships Fair Trade USARainforest AllianceFair for LifeFairtrade International

Stakeholders:

Certifiers

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Defining Employees: Employees are one of the primary stakeholder groups in the Whole Foods CSR framework, working in Whole Foods grocery stores around the US and the world.

Gain-sharing

Shared FateCompensation limited to nineteen times the average total compensation of all full-time Team Members in the company.• CEO John Mackey has set his annual salary at $1 and receives

no stock options or cash bonuses.

Philosophy of Egalitarianism

Decentralized team leadership structure

CSR Shortcomings: Unionization

Stakeholders:

Employees

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

“”

Don’t take our word for it.The people who know Whole Foods best are the employees. To the right are the three most recent employee reviews on Glassdoor.com, a crowd-sourced employment rating service.

Stakeholders:

Employees

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Defining Shareholders: Shareholders are investors in the Whole Foods brand, not necessarily direct consumers, producers, or employees, but stakeholders in the success of the company nonetheless.

Stewardship“We are stewards of our shareholders' investments and we take that responsibility very seriously. We are committed to increasing long term shareholder value.”

Profits“We earn our profits every day through voluntary exchange with our customers. We recognize that profits are essential to creating capital for growth, prosperity, opportunity, job satisfaction and job security.”

Stakeholders:

Shareholders

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Defining Customers: Customers are Whole Foods’ shoppers and direct contacts on a daily basis in stores. They are in many ways the most important part of the stakeholder network, and the Whole Foods platform is targeted to attract a specific type of conscientious person. Quality StandardsSeafood QualityMeat and Animal WelfareUnacceptable IngredientsWhole Body QualityOrganic Body CarePremium Body CareOrganic Food

“Satisfying and Delighting”EducationMeaningful ValueRetail Innovation

AdditionalGMO LabelingReusable BagsEco-Scale Ratings

CSR Shortcomings: Cost

Stakeholders:

Customers

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Local CommunitiesLocal Producer Loan ProgramStore food donationsCommunity giving days (5% days)

Global EnvironmentOrganic agricultureNon-GMO ProductsWild-caught sustainability

Defining Communities: Whole Foods’ stakeholders in terms of communities are two-fold. They include local communities that are directly impacted by stores, and the global community in terms of mutual, cross-cultural concerns.

CSR IN ACTION: Whole Kids Foundation

Global Community Whole Planet Foundation micro-lendingAquacultureCertifier Program

CSR IN ACTION: Green Mission

Stakeholders:

Communities

Metrics for Valuation of Corporate Social Responsibility

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

ActivenessActive vs. Passive

CentricityStakeholder-centric

RelevanceConnectivity between industry and practiced responsibility

MSCI’s Environmental Social Governance Index

Y Overall: 4

G Environment: C8/M5

G Customers: C5

G Human Rights & Community: C10/M7

Labor Rights: C4/M3Y

G Governance: C10/M7

Kroger & Tesco: 2

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

IN ACTION, NOT IN WORDSSECTION 3

CSR IN ACTION, CSR SHORTCOMINGS

Corporate Social Responsibility in Action, Not Words

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

CSR IN ACTIONWhat is Whole Foods done right?

Whole Planet Foundation

Whole Kids Foundation

Green Mission

CSR SHORTCOMINGSWhat has Whole Foods done poorly?

Unionization

Cost

CSR IN ACTION:

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

By Our CountRelevant: Directly works with Whole Foods offshore producers and suppliers therefore stays within its industry.

Shareholder-centric: Specifically centralized around the producer/supplier stakeholders

Active: Strong foundation that Whole Foods plans on propelling forward, continuing the social responsibility that Whole Foods has towards their stakeholders in developing countries.

G Human Rights & Community: C10/M7

Program SummaryA private, nonprofit organization founded by Whole Foods with the purpose of alleviating poverty in communities that Whole Foods depends on for supplies and products through microcredit.

Whole Planet Foundation

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

By Our CountRelevant: Health and Nutrition parallel with the food industry as a whole.

Shareholder-centric: The Whole Kids Foundation directly targets and benefits their communities as stakeholders.

Active: Whole Kids Foundation is a hands-on and sustainable program that Whole Foods plans to permanently continue into the future.

G Human Rights & Community: C10/M7

Program SummaryThrough partnerships with organizations, schools and educators, the Whole Kids Foundation strives to end the childhood obesity epidemic through support, education, and engagement in schools throughout the U.S., Canada and the U.K.

CSR IN ACTION:Whole Kids Foundation

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

By Our CountRelevant: Dedication to the 3 r's and renewable energy benefit Whole Foods as a company within the scope of their industry.

Shareholder-centric: Benefit to all stakeholders based on mutual interest in environment

Active: Green Mission actively and permanently contributes to the sustainability of the environment.

Environment: C8/M5G

Program SummaryWhole Foods pledges to reduce, reuse and recycle throughout all facets of their company as part of their core mission they succeed to do so.

CSR IN ACTION:Green Mission

CSR SHORTCOMINGS:

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Labor Rights: C4/M3Y

Affects “Employees” stakeholder group

Unionization as an issueLabor is a CSR issue because a company cannot fulfill its responsibilities to society if it cannot meet its commitment to the employeesIssue Summary• Company voices it’s opposition towards

unionization of their workers• Union reports that Whole Food employees

earn less than industry standards

Whole Foods’ Response• Company asserts that

productivity bonuses bring wages in line with standards

• Whole Foods believes unions aren’t in line with their work environment

• Average CEO compensation at large US companies is 243x that of the average US worker - multiple is 19x at Whole Foods

Unionization

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

G Customers: C5

Independent Consumer Analysis

Affects “Customers” stakeholder group

Cost as an issueCost is a CSR issue because a company that unduly sacrifices cost for quality or specialized products is not fulfilling its responsibilityIssue Summary• Nicknamed “Whole Paycheck”• High prices in comparison to some

competitors

Whole Foods’ Response• Strategy of “Price

Perception”• Taking cuts as a company to

keep grocery prices lower

CSR SHORTCOMINGS:

Cost

EVALUATIONSECTION 4

REVISITING METRICS, +/- ASPECTS

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Snapshot: Measuring Whole Foods’ Program

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

MSCI ESG Takeaways• MSCI’s ESG confirms intuition -

grocery industry is relatively safe• Larger competitors undoubtedly

have larger barriers in achieving high ESG scores and they all have room for improvement

• Only yellow ratings in labor management

• Overall “4” rating (4/10)

MSCI Intangible Value Assessment – IVA Takeaways• 93rd percentile for Raw Material

Sourcing, 100th percentile for Nutrition / Health, 70th for Corporate Governance.

• Worst scores in Labor Management and Product Carbon Footprint

• Overall AA rating (AA/AAA)

Competitors• Whole Foods’ Market share isn’t

huge for groceries, much larger for organics.

• Kroger & Tesco - “2” rating in ESG

• Competitor programs are not relevant, active, or stakeholder-centric

Our Metrics• We’re looking for a company

that recognizes its responsibilities, and a CSR Program that is:• Relevant• Stakeholder-centric• Active, not passive

Pro/Con of the Whole Foods CSR Program

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

PROS• Programs meet the

standards we created (active, relevant, stakeholder-centric)

• The program is sustainable, growing in step with profit

• Highly rated working environment by employees

• Exceptional environmental conscientiousness

• Network of partnerships, i.e. suppliers, certifiers

CONS• Low rated working

environment by objective reviewers

• Higher prices than some competitors because of CRS efforts

• Corporate model untested in non-western cultures

CONCLUSIONSECTION 5

WHY WE SAY YES TO WHOLE FOODS

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Why Investing in Whole Foods is the Right Move for You

Everything that Whole Foods does is connected to their Conscious Capitalism philosophy

The negatives in the presentation are legitimate concerns, but Whole Foods has provided principled responses in both cases, proving themselves open to concerns

Whole Foods is not just accountable to you as a shareholder, but ALSO as a member of local and global communities you are a part of.

Remember: It’s all interactive, it’s all connected together; there’s no separation.

Presentation Notes

INTRODUCTION | CSR ISSUES | EXAMPLES | EVALUATION | CONCLUSION

Presenter Information:• Rory Slatko

rs5108a@student.american.edu

• Samantha Cohen sc6730a@student.american.edu

• Lauren Cederstrom lc9876a@student.american.edu