Dollar General hasn't investigated worker conditions despite shareholders' demands, an investor says in a new letter to company

• Dollar General hasn't provided updates on a shareholder-endorsed audit of worker safety at its stores, an investor group says.
• Now, the investor who proposed the audit is calling for action in a letter to the retailer's board of directors.

Dollar General appears to have made little progress investigating working conditions at its stores after shareholders asked for an audit five months ago, according to the investor who proposed it.

In May, Dollar General shareholders approved a proposal asking the company to audit worker safety at its stores. Domini Impact Investments presented the proposal at the company's annual meeting. The proposal passed with the support of 67.7% of Dollar General investors. Founded by investment advisor Amy Domini, the fund invests in and pushes companies to consider their impact on society.

But since the vote, Dollar General hasn't released any updates or even confirmed that it's begun the audit, Domini says in a letter to the company and shared exclusively with Insider.

"It is our understanding that Dollar General has not yet provided any explicit information, either publicly or to the proponents of the proposal, about the company's plans to conduct the audit and implement the majority-supported proposal," Mary Beth Gallagher, Director of Engagement at Domini, wrote in the letter this week to Michael Calbert, chair of Dollar General's board of directors. The letter was also signed by 33 other shareholders.

The shareholders' requests "to meet with members of the Board of Director or management to discuss the company's plans for implementation of the proposal have been denied," Gallagher added.

A Dollar General spokesperson said it has "a strong, ongoing shareholder engagement program and a well-documented track record of responsiveness to shareholder feedback."

Dollar General has met with Domini, "including multiple calls with members of executive leadership," the spokesperson said.

Domini and other investors are asking Dollar General to complete the audit that shareholders approved

Domini has been asking Dollar General about what it's doing to improve worker safety at its stores for over a year, Gallagher told Insider in an interview. But the answers that it has gotten weren't satisfactory to the fund, she said, even as there were public signs that the situation was getting worse.

Since 2017, Dollar General has attracted millions of dollars in fines from US Occupational Safety and Health Administration, or OSHA, only a fraction of which it has actually paid. The issues that OSHA has found at the company's stores range from blocked emergency exits to an incident in North Dakota when Dollar General didn't give employees adequate protective equipment as they cleaned up a chemical spill.

The issues were so numerous that Dollar General earned the "severe violator" designation from the Department of Labor in March, according to the New York Times.

The Dollar General representatives that Domini met with were dismissive of the "severe violator" label in meetings, Gallagher said. "It was almost as if they felt that they didn't belong on the OSHA list, or that the scrutiny was misplaced," she said.

Domini's letter makes several recommendations to Dollar General for the audit. Among them: The retailer should pick an independent firm to conduct the audit, designate a board member to oversee it, "faciliate meaningful participation of employees," and make its findings and next steps public once the audit is complete.

"As we have shared with Domini and other shareholders, the Company plans to be responsive to the majority-supported shareholder request to 'commission an independent third-party audit on the impact of the company's policies and practices on the safety and well-being of workers' and publish a report on our website," a Dollar General spokesperson said.

"The Company has engaged a third-party with relevant expertise to conduct the audit, which is underway, with an expectation that the audit will be completed in sufficient time to publish a publicly available report prior to the 2024 annual shareholders' meeting," the spokesperson's statement continued. The spokesperson did not name the auditor.

If Dollar General doesn't make progress on the audit, Domini would consider supporting board candidates who want to make the audit a priority at the company's 2024 annual meeting. "When we're voting on board members next year, we can think about 'Have they met our expectations for those of us who supported the proposal?'" she said.

Dollar General's stores contain numerous hazards for workers, from blocked emergency exits to rodent infestations.

Insider has previously reported on safety hazards at the retailer's stores. Some Dollar General stores had aisles so cluttered with unpacked merchandise that they were closed temporarily by fire marshals for blocking emergency exits and making it harder to evacuate in an emergency, Insider reported in February.

One Dollar General in Texas had a rat problem, with rodents chewing through bags of pet food and leaving fecal matter on the storage room. A local health inspector suspended the store's food permit, citing the "strong odor of decay" at the location, until management took care of the issue.

And in August, one Dollar General employee and two patrons, all black, were killed by a white gunman with a swastika on his firearm in Jacksonville, Florida. Domini's letter cites the killings as an example of the "frequent incidents of violence" at Dollar General's stores.

At Dollar General's annual meeting, store employee David Williams cited rat infestations and threats of gun violence among the dangers he faced while working at one of the company's stores. Williams introduced Domini's resolution on behalf of the fund during the meeting.

Dollar General is taking millions of dollars in inventory write-downs and sending special teams of employees to clean up the most merchandise-logged stores, executives said during the company's latest earnings call. There was no mention of direct efforts to improve safety for employees.

The lack of action on safety at the chain's stores is a concern for many Dollar General shareholders, Gallagher told Insider. Many investors were persuaded to vote for an audit in light of the mounting citations from OSHA, she said. "The financial risk that's associated with that is also significant," she said.

Investors saw the state of worker safety as an impediment to Dollar General's growth plans. The retailer is close to opening its 20,000th store and has at least one location in each of the 48 contiguous states. By the end of 2023, it plans to open 990 new stores.

But some communities are fighting Dollar General's planned stores, and working conditions are among the reasons.

"If they want to continue to grow, they need to be welcome in communities," Gallagher said of the chain.

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