Sustainability Report – Panera Bread Company (2014)

Outcome: Successfully withdrawn following a commitment from the company to publish a sustainability report by December 1, 2015. Panera will conduct a materiality assessment in 2014 in order to identify and prioritize issues that are material to the company.

Managing and reporting environmental, social and governance (ESG) business practices helps companies compete in a global business environment characterized by finite natural resources, changing legislation, and heightened public expectations. Reporting allows companies to publicize and gain strategic value from existing sustainability efforts and identify emerging risks and opportunities. ESG issues can pose significant risks to business, and without proper disclosure, stakeholders and analysts cannot ascertain whether the company is managing its ESG exposure.
The link between strong sustainability management and value creation is increasingly evident. A 2012 Deutsche Bank review of 100 academic studies, 56 research papers, two literature reviews, and four meta-studies on sustainable investing found 89% of studies demonstrated that companies with high ESG ratings also show market-based outperformance, and 85% of the studies indicated that these companies experienced accounting-based outperformance.
More than 1,200 institutional investors managing more than $33 trillion have joined “The Principles for Responsible Investment,” and publicly commit to seek comprehensive corporate ESG disclosure and incorporate it into investment decisions.
The majority of large corporations also recognize the value of sustainability reporting. As of December 2012, 53% of the S&P 500 and 57% of the Fortune 500 published a corporate sustainability report; and 63% of S&P 500 reporters utilized the Global Reporting Initiative (GRI) Guidelines. According to a 2011 KPMG report, 80% of Fortune Global 250 companies produce GRI-based sustainability reports.
Industry peerslike Darden Restaurants, Dunkin Brands, and Starbucks have identified relevant ESG factors and address them through sustainability reports. In contrast, Panera does not report details on its sustainability efforts.
Shareholders request Panera issue an annual sustainability report describing the company’sshort- and long-term responses to ESG-related issues. The report should include objective quantitative indicators and goals relating to each issue where feasible, be prepared at a reasonable cost, omit proprietary information, and be made available to shareholders by October 2014.
The report should address relevant policies, practices, metrics and goals on topics such as: greenhouse gas emissions, pesticide use management, water management, waste minimization, energy efficiency, and other relevant environmental and social impacts.
We recommend Paneraconsider using the GRI Sustainability Reporting Guidelines to prepare the report. The GRI is an international organization developed with representatives from business, environmental, human rights and labor communities. The Guidelines cover environmental impacts, labor practices, human rights, product responsibility, and community impacts. The Guidelines provide a flexible reporting system which allows the omission of content irrelevant to company operations.
We also recommend Panera consider drawing on the expertise of the Equitable Food Initiative (EFI). The EFI is a collaborative effort of retailers, workers and growers focused on reducing risks in food supply chains. Its standard was adapted to reduce duplication of other industry-leading certifications and has attracted Costco and Bon Appetit as project partners.

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