CVS Mum on Consumer Harm from RILA Sustainability Prog

by David Almasi

Woonsocket, RI / Washington, D.C.   The National Center for Public Policy Research plans to question CVS Caremark's Chief Executive Officer Larry Merlo about the drug store chain's push for costly sustainability efforts at the company's annual shareholder meeting in Woonsocket, Rhode Island.

CVS Caremark is a member of the Retail Industry Leaders Association (RILA) - one of the country's largest trade organizations, representing more than 200 companies and many of the largest American retail chains.  "RILA and its member companies are trying to advance a European-style green program into every aspect of the retail industry," said National Center General Counsel Justin Danhof. "Efforts to extend so-called 'sustainability' ratings into every aspect of the retail world would place an undue burden on manufacturers, suppliers and ultimately consumers," said National Center General Counsel Justin Danhof. "These sustainability standards will increase production costs as suppliers and manufacturers are forced to reduce energy usage, switch to recyclable materials, increase compliance staffs and reconfigure packaging. This will lead to sticker-shock in many retail stores as these new costs are borne by consumers in the form of increased prices."  RILA is pressuring its membership to adhere to the association's new sustainability policy.

"Customers will ultimately bear the burden of RILA's sustainability policy. While RILA executives look good to radical environmentalist special interests, the Average American is going to be paying more for the same goods and services," said Danhof. "This is like Hollywood celebrities who purchase carbon offsets to do their part for the environment. They want to feel good about helping the environment, but they just don't want to diminish their lavish lifestyles. The same goes for these large retailers. Thy want to pretend to care about environmentalism and become part of the green movement, but they will pass the high-cost of these decisions onto their customers."

This policy directs retailers to reduce their "carbon footprint" through reduced "greenhouse gas" emissions. It also sets up adherence to sustainability standards that involves the possible redesign and rating of products. To learn more about RILA's sustainability push, read here.

Danhof asked CVS Caremark's Chief Executive Officer Larry Merlo if he was concerned that these increased costs would be passed onto consumers and may drive some smaller suppliers out of business. "Merlo said that sustainability is very important to CVS Caremark. Regarding his company's membership in RILA, he said that he hoped to work with suppliers on sustainability issues and that the company continually assesses its memberships in associations, and will only work with those groups that promote the values of CVS Caremark," said Danhof.
 

"Merlo did not address my concern that RILA's advocacy may increase the price of CVS Caremark's consumer products. While unemployment remains stubbornly high and many macro-economic indicators are trending downwards, it is disappointing to see CVS sticking with an extreme environmental policy that will increase the costs for consumer goods at the checkout counter and may cause small employers to go out of business," said Danhof.

There may be another unintended consequence to RILA's "greenwashing" efforts: the death of many small manufacturers, as retailers demand new green designs and labeling, producers will bear the costs associated with this new hurdle. And small producers that cannot afford the additional design and compliance staff necessary to get these products to market may go under.

"Small businesses are the backbone of the American economy. CVS and other RILA members should reconsider this sustainability effort and work towards free-market reforms that promote small businesses and keep consumer prices low," said Danhof.

According to Adam Siegel, RILA vice president of sustainability and retail operations, "retailers are working to incorporate sustainability into their strategy, operations, workforce engagement, and connection to consumers and communities." "Nice-sounding words," added Danhof, "but higher prices, shuttered small businesses and decreased competitiveness are what those words lead to, and they don't sound nice at all."

A copy of Justin Danhof's question, as prepared for delivery, can be found here. 

The National Center for Public Policy Research is a CVS Caremark shareholder.