A week after releasing undercover footage showing the mistreatment of chickens at a supplier to Costco Wholesale (COST), the Humane Society of the United States is stepping up its campaign to get the retail giant to switch to cage-free eggs.
Allegations of animal abuse can impact a company's bottom line, the Humane Society argued in a shareholder proposal, which calls on Costco to disclose any risks facing investors and the company as a result of what the non-profit group called "animal abuse issues within its grocery division's supply chain."
"Costco has a track record with animal mistreatment," said Matthew Prescott, senior food policy director at the Humane Society, which can submit shareholder proposals by virtue of the roughly 106 shares it owns in Costco.
"When hens are confined in cages, they have zero ability to engage in natural behaviors like spreading their wings, laying eggs in nests or dust bathing -- flapping around in the dirt and dust to make a hole, which birds do as a way to stay clean. When you lock hundreds of thousands of birds in cages, it's a breeding ground for suffering and disease," Prescott said.
Concerns for the well-being of animals, as well as for consumers, were cited by the European Union when it banned battery cages in 2012, with multiple studies finding that housing hens in particularly close quarters, or battery cages, heightens the odds of salmonella poisoning.
Those safety concerns were echoed by Sen. Richard Blumenthal, a ranking member of the Senate Commerce Subcommittee on Consumer Protection, who recently called on Costco to halt sales of eggs from facilities where hens are caged. The Connecticut Democrat cited the increased risk of salmonella outbreaks posed to Costco customers by what he described as the company's "inhumane and unhealthy practices."
Costco declined comment on the animal rights group's latest move. But the warehouse club did defend its egg supplier, Hillandale Farms of Gettysburg, Pennsylvania, in the aftermath of the Humane Society video, which showed chickens living in cramped cages, some alongside decaying or mummified chicken corpses.
Its inspections "confirmed for us that Hillandale is behaving appropriately," the company said in an email. "Hillandale has identified some areas in which it believes it can improve, including process improvement and more training for its employees."
For its part, Hillandale in a statement blamed the trouble on an activist hired as an employee, saying that the person disregarded company procedures.
Prescott dismissed that explanation. "It's a very strange claim for a company to make, and completely false," he said.
In a letter to Costco CEO Craig Jelinek, Blumenthal said the egg supplier had been "at the center of a major multistate outbreak of salmonella in 2010, so Costco should have been particularly on guard in its audits of their facilities."
A Hillandale facility in Iowa was one of several linked to a 2010 outbreak of salmonella that sickened more than 1,600 people and prompted the recall of 550 million eggs, according to the Des Moines Register.
Costco has for years faced controversy related to its sourcing of food. A six-month probe by The Guardian last year found that shrimp sold by retailers including Costco was tied to slave labor in Thailand, with Costco telling the newspaper it was requiring its suppliers of Thai shrimp "to take corrective action to police their feedstock sources."
Costco said in 2007 that it planned to move to cage-free eggs, but didn't provide a timeline for achieving that goal, with both Blumenthal and the Humane Society urging the company to follow up on that promise.
After the release of a video by another animal welfare group in 2012, Costco committed to phasing out gestation cages for pigs in its pork supply by 2022. Following the release of a yet another video, this one showing veal calves being mistreated by a supplier, the company said in 2010 that "Costco is in the process of developing a more definitive written policy to make clear its long-standing position that any type of cruel treatment of animals is unacceptable."
Although Costco is seemingly not ready to budge on the issue, it may be swimming against the tide.
Three major food-service companies -- Sodexo, Aramark and Compass Group -- each recently announced that they will use only cage-free eggs by 2020 or earlier. Unilever, the maker of Hellmann's/Best Food mayonnaise and other egg-heavy brands, also plans to have transitioned to cage-free eggs by 2020.
Costco could also find itself under pressure from consumers. Shoppers' focus on the treatment of animals by suppliers is growing, according to an annual report from the Food Marketing Institute, (FMI) an industry trade group that advocates on behalf of the food retail industry. The number of consumers who say it is important that their grocery store practice animal welfare has grown to 21 percent from 17 percent in 2013, FMI found, citing a survey of more than 2,200 grocery shoppers conducted in the first quarter.
"Among consumer expectations of retailers, when it comes to attributes beyond those that render personal benefits, shoppers prioritize animal welfare second only to employment practices," the group said.