Humane Society Makes Strategic Stock Purchase in Major Fast Food Chain

In recent years, advocacy organizations like Greenpeace, PETA, and others have been able to leverage the stakeholder engagement trend and the power of social media to focus public attention on their key issues and put pressure on companies to take action. Recent news from The Humane Society of the US (HSUS) reveals that these organizations have added yet another influencing tactic to their wheel houses.

The HSUS recently purchased shares of Apollo Global Management, the parent company of CKE Restaurants, which operates the popular fast food chains Carl’s Jr. and Hardee's. The animal welfare organization plans to use its shareholder position in the company to put pressure on the restaurants to improve how animals are being treated by their suppliers.

The idea is to encourage them to purchase eggs from cage-free hens and more humanely-treated pork in an effort to increase the availability of these products so that other companies can take advantage of the larger supply. HSUS food policy director Matthew Prescott told TakePart, “Our shareholder advocacy has helped generate numerous improvements in farm animal welfare policies at major companies, which influences other companies to make similar changes.”

According to The Humane Society, more than 90 percent of egg-laying hens and 70 percent of breeding sows in the US are confined in cages and crates. And almost all breeding pigs and hens used by Hardee's and Carl's Jr.'s are confined so that they can't move more than a few inches for most of their lives. Matthew Prescott says, "Hardee’s and Carl’s Jr. allows its suppliers to permanently confine animals in cages so small they can barely move. It’s time the companies aligned themselves with the public’s expectations and values.”

There is evidence that the public is starting to expect companies that use animal products to treat their animals better. Consumer demand for more ethically produced meat products is increasing. In an analysis conducted by food industry organization, Technomic, restaurant goers rated animal welfare as their third most important social issue above the environment. Governments are also starting to enact regulations banning this type of confinement for certain animals. A new European Union law banning the use of battery cages for egg production came into effect on January 1st and eight US states have also passed animal welfare legislation.

Despite the headway being made in efforts to limit shareholder primacy in corporate decision-making, there is still a need to push more traditional corporations to go beyond profits and address their social and environmental impacts. Given last year's impressive increase in shareholder resolutions in support of these types of issues, this new tactic has the potential to be very effective for advocacy groups that can gain a position of influence by becoming a shareholder.