Constellation Brands Inc: Producer Responsibility for Plastic Packaging

WHEREAS: The growing plastic pollution and packaging waste crises pose increasing risks to Constellation Brands. Corporations could face an annual financial risk of approximately $100 billion should governments require them to cover the waste management costs of the packaging they produce.[1] Laws to this effect have significant momentum, having been recently adopted in four U.S. states, with additional introduced at the state and federal level.[2] The European Union has already enacted a $1 per kilogram tax on all non-recycled plastic packaging waste.[3] Additionally, consumer demand for sustainable packaging is increasing.[4]

Moreover, plastic pollution generates climate risk. A circular economy, whereby packaging is designed for reuse or recycling, keeping it in the economy and out of the environment, is critical to a net-zero emissions world. The Recycling Partnership (TRP), the leading recycling organization, has found that spending only $17 billion to modernize and expand recycling infrastructure would save the equivalent of 710 million metric tons of CO2 over ten years.[5]

Constellation states it is committed to emissions reductions, yet has taken virtually no action to ensure the circularity of its product packaging,[6] despite the fact that its sold products and packaging contribute significantly to Scope 3 emissions at their end-of-life (EOL).[7]

By contrast, more than 100 leading companies embrace circular packaging by acknowledging financial responsibility for the collection, sorting, and recycling of packaging at EOL, a policy known as Extended Producer Responsibility (EPR) and a key component of a circular economy.[8] TRP has encouraged companies to support EPR and to make voluntary financial contributions to recycling infrastructure.[9]

Competitors Diageo, Heineken, Molson Coors, and at least 26 other major companies make voluntary contributions to expand recycling infrastructure.[10] Constellation is not known to support EPR or voluntarily contribute financial resources to help ensure its packaging never becomes waste. Constellation earned an “F” grade on a recent As You Sow report evaluating corporate packaging sustainability.[11]

In 2023, more than 25% of Constellation shares voted were in favor of an investor proposal to support a circular economy for packaging.[12] Constellation announced plans to improve packaging design but has made no commitment to improve collection and recycling of packaging at EOL.[13]

Constellation could avoid regulatory, environmental, and competitive risks by adopting a circular economy approach to packaging, embracing EPR, and contributing to recycling infrastructure.

RESOLVED: Shareholders request that the Board issue a report, at reasonable expense and excluding proprietary information, describing opportunities for Constellation to support a circular economy for packaging.

SUPPORTING STATEMENT: The report should assess, at Board discretion:

The reputational, financial, and operational risks associated with failing to promote a circular economy for packaging; and
Opportunities to develop policies or goals to support extended producer responsibility and determine an appropriate level and frequency of voluntary financial contributions to recycling infrastructure.

[1] https://www.pewtrusts.org/-/media/assets/2020/07/breakingtheplasticwave_report.pdf, p. 9

[2] https://www.packworld.com/news/business-intelligence/article/22861621/extended-producer-responsibility-legislation-emerging-in-us

[3] https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/2021-2027/revenue/own-resources/plastics-own-resource_en

[4] https://www.shorr.com/resources/blog/the-2022-sustainable-packaging-consumer-report/

[5] https://recyclingpartnership.org/paying-it-forward/

[6] https://www.asyousow.org/report-page/plastic-pollution-scorecard-2021/data-visualization

[7] https://ghgprotocol.org/scope-3-technical-calculation-guidance

[8] https://ellenmacarthurfoundation.org/extended-producer-responsibility/overview?_ga=2.194255722.613184023.1673367048-710010554.1662564816&_gl=1*18c5mjb*_ga*NzEwMDEwNTU0LjE2NjI1NjQ4MTY.*_ga_V32N675KJX*MTY3MzM2NzA0OC4xNC4wLjE2NzMzNjcwNDguNjAuMC4w

[9] https://recyclingpartnership.org/residential-recycling-report/?_hsmi=289383278&_hsenc=p2ANqtz-8qWDL8qooeMMtx_ukI50HJYIg84JObV3BoNLzIgQ4QaDliA-s_RS7M2vU-jAzp-fjzjBUknyi-_WxsdRf7gMG8UDIKFw, p. 46

[10] https://www.asyousow.org/report-page/plastic-pollution-scorecard-2021/, p. 17

[11]https://www.asyousow.org/report-page/plastic-pollution-scorecard-2021/data-visualization

[12] https://www.asyousow.org/resolutions/2022/02/03-constellation-producer-responsibility-packaging