Investors put climate crisis, human rights on Metro agenda

2023 is off to a great start for Canadian responsible investors. On January 24, at Metro's annual meeting, shareholders will be asked to vote on two proposals submitted by the Shareholder Association for Research and Education (SHARE), one on fighting climate change and the other on the human rights of migrant workers. The debates surrounding these proposals, which are opposed by the company's management, will certainly be interesting. This is an event you don't want to miss!

            For a more ambitious response to the climate crisis

The first proposal, filed on behalf of the Régime de retraite de l’Université de Montréal (RRUM), calls on the company to adopt short- and long-term greenhouse gas (GHG) emission reduction targets, including Scope 3 emissions from its entire value chain, and to make appropriate emission reductions by 2030. These targets must be science-based and aligned with the Paris Agreement's goal of limiting global average temperature rise to 1.5 degrees Celsius, which requires zero net emissions by 2050 or earlier. In addition, they must be made public, follow the advice of advisory groups such as the Science-Based Targets initiative, and be supported by a company-wide climate action plan outlining the steps that will be taken to achieve carbon neutrality.

The proposer recalls that, by Metro's own admission, the physical risks linked to climate change "could impact our supply chain network, resulting in increased food and energy prices, as well as supply chain disruptions." In addition, there are significant operational, financial, regulatory and reputational risks. However, the measures taken by Metro to respond to the climate emergency appear insufficient. The proponent notes that while the company has set targets to reduce its Scope 1 and Scope 2 emissions by 37% by 2035, it has not aligned with the Paris Agreement's 1.5-degree Celsius goal. In addition, the Group's commitments regarding its Scope 3 indirect emissions remain modest and do not cover its entire value chain. Yet these emissions are likely to be its greatest contribution to climate change. Finally, Metro is lagging behind its competitor, Loblaw. For example, unlike the company, Loblaw's ambition is to be carbon neutral by 2040 for its Scope 1 and Scope 2 emissions, and by 2050 for its Scope 3 emissions, including those generated by its suppliers.

GHG Emissions Levels Quick Reference Guide

The Greenhouse Gas Protocol, launched in 2001 by the World Business Council for Sustainable Development and the World Resources Institute, established three levels of GHG emissions:

Scope 1 emissions: direct emissions from sources owned or controlled by the company.

Scope 2 emissions: indirect emissions generated by the consumption of the purchased energy (electricity, heating, cooling).

Scope 3 emissions: indirect emissions not included in Scope 2, such as those arising from the supply chain, the final use of the company's products or those related to the transport of employees and customers. They make up the largest share of a company's carbon footprint, although the proportion depends on the industry.

            For a better protection of migrant workers

The second proposal, submitted on behalf of the Atkinson Foundation, calls for Metro to release a report outlining the results of an independent human rights impact assessment defining and assessing the actual and potential impacts of its operations and supply chain in Canada on the human rights of migrant workers.

The proponent recalls that "migrant workers are the backbone of the Canadian food system", with more than 61,000 migrant workers who were at work in this sector in 2021. However, their working and living conditions often turn out to be unacceptable, precarious, and dangerous. Over the past two years, there have been media reports that their situation in Canada has worsened during the COVID-19 pandemic. For example, the Migrant Workers Alliance for Change has documented a range of abuses experienced by migrant workers, including racism, overwork, wage theft, overcrowded and inadequate housing, lack of food, hot water, rest and personal protective equipment. An academic study has also shown that the precarious housing provided to many of them may be a factor in their deaths. As for the economist Jim Stanford, he said to Equal Times that "migrant workers in Canada face exploitation, terrible working and living conditions, and risk of deportation. These issues became especially acute during the Covid-19 pandemic."

The proponent believes that despite the seriousness of the alleged human rights violations in the Canadian agricultural sector, Metro does not have sufficient policies and commitments to mitigate the key risks faced by migrant workers. Among other things, he criticizes the company for not disclosing how its supplier code of conduct is applied or the effectiveness of its control systems.

As a reminder, to mitigate the financial, legal, exploitation and reputational risks, and even boycotts and divestments that can result from the discovery of serious human rights abuses in their supply chain, companies must not only have a credible, comprehensive supplier code of conduct that complies with internationally recognized standards, but they must also ensure compliance through the use of qualified independent auditors. In addition, they must implement a due diligence process to effectively identify, assess, prevent and mitigate actual and potential adverse human rights impacts that they may have or contribute to through their operations or supply chain, as required by the United Nations Guiding Principles on Business and Human Rights.

Sources: Thilelli Chouikrat, "Conditions de vie des travailleurs migrants : les autorités tardent à agir", Radio-Canada, August 29, 2022, ref. January 13, 2023, Conditions de vie des travailleurs migrants : les autorités tardent à agir | Radio-Canada.ca ; Loblaw Companies Limited, Loblaw takes action on climate change with net-zero commitment, March 23, 2022, ref. January 13, 2023, Loblaw takes action on climate change with net-zero commitment ; Agence QMI, "Travailleurs étrangers secourus : impayés et vendus à d’autres agriculteurs", Le Journal de Montréal, December 5, 2021, ref. January 13, 2023, Travailleurs étrangers secourus : impayés et vendus à d’autres agriculteurs | JDM (journaldemontreal.com) ; Carla Christina Ayala Alcayaga, Jorge Frozzini et Rosalinda Hidalgo, "Les droits bafoués des travailleurs agricoles étrangers", Le Devoir, May 25, 2021, ref. January 13, 2023, Les droits bafoués des travailleurs agricoles étrangers | Le Devoir ; Megan Kinch, "Covid-19 makes a bad situation worse for agricultural migrant workers in Canada", Equal Times, April 23, 2021, ref. January 13, 2023, La situation des travailleurs agricoles migrants au Canada aggravée par le pandémie - Equal Times ; Nicolas Haddad, "COVID-19 : un rapport accablant sur la situation des travailleurs agricoles étrangers", Radio-Canada, June 8, 2020, ref. January 13, 2023, COVID-19 : un rapport accablant sur la situation des travailleurs agricoles étrangers | Coronavirus | Radio-Canada.ca ; Greenhouse Gas Protocol, A corporate Accounting and Reporting Standard, revised edition, March 2004, ref. January 16, 2023, ghg-protocol-revised.pdf (ghgprotocol.org)