Sprouts Farmers Market - 1792 Exchange

Rating Overview

Sprouts Farmers Market is Medium Risk.

Sprouts Farmers Market, Inc. is Medium Risk. The company often yields to political activism in shaping corporate governance, potentially alienating consumers, dividing employees, and harming shareholders. The company implements race and identity-based policies that replace merit, excellence, and integrity with preferential treatment and outcomes. The company occasionally embraces corporate initiatives that redirect its central focus from business goals to partisan policies and divisive issues at times. This approach fails to safeguard free exercise, free speech, and free enterprise.

Rating Criteria

Corporate Weaponization Risk Levels
Criteria	Risk Level
Cancellations	Medium Risk
Discriminatory Philanthropy	Lower Risk
Employment Protection	High Risk

Corporate Weaponization ⓘ

Corporate Governance and Public Policy Risk Levels
Criteria	Risk Level
Advocacy Bias	Medium Risk
Funding	Lower Risk
Political Actions	No Data

Corporate Governance and Public Policy ⓘ

Rating Criteria Detail

Criteria Risk Level Rationale

Corporate Weaponization

Criteria:

Has canceled customers, suppliers, or vendors due to their political views or religious beliefs OR corporately boycotts, divests, or sanctions regions, people groups, or industries.

Risk Level:

Medium

Rationale:

Sprouts integrates ESG into its business practices. The company stated “ESG factors are embedded into our company’s long term strategy, and our Board considers the performance of our executive leadership responsible for driving the success of our strategic initiatives when making compensation decisions” (1). However, in 2023, the company removed ESG language and policies from its “Impact” Report. To date, the company has not publicly addressed these changes, leaving shareholders without clarity regarding the company’s reasoning or future direction (2). Sprouts ties interest rates to diversity and sustainability-linked metric thresholds. From its 2026 Proxy Statement: “Loans under the Credit Agreement will initially bear interest, at the Company’s option, either at the Term SOFR (with a floor of 0.00%) plus a 0.10% SOFR adjustment and 1.00% per annum or base rate (with a floor of 0.00%) plus 0.00% per annum. The interest rate margins are subject to upward adjustments pursuant to a pricing grid based on the Company’s total net leverage ratio as set forth in the Credit Agreement and to upward or downward adjustments of up to 0.05% based upon the achievement of certain diversity and sustainability-linked metric thresholds, as set forth in the Credit Agreement.” (3). Sprouts has not publicly canceled customers, suppliers, or vendors based on political views or religious beliefs (4).

Criteria:

Charitable giving (including employee matching programs) policies or practices discriminate against charitable organizations based on views or religious beliefs.

Risk Level:

Lower

Rationale:

Sprouts does not discriminate against charitable organizations based on views or beliefs (1)(2).

Criteria:

Employment policies fail to protect against viewpoint or other discrimination and/or are ideological in nature.

Risk Level:

High

Rationale:

Sprouts appears to prioritize diversity over merit in its hiring and promotions. From its 2021 ESG Report: ” We make hiring and promotional decisions
that consider the inclusion of underrepresented team
members, and we ensure diverse candidate slates
are presented to our hiring managers” (1). However, in 2023, the company removed ESG/DEI language and policies from its “Impact” Report. To date, the company has not publicly addressed these changes, leaving shareholders without clarity regarding the company’s reasoning or future direction (2). The Company appears to prioritize diversity over merit in its leadership composition. From its 2024 Impact Report: ” In evaluating
director candidates, the committee
considers ethnic and gender diversity” (3). Sprouts does not provide viewpoint protections for its employees (4).

Corporate Governance and Public Policy

Criteria:

Uses corporate reputation to support causes, organizations, or policies hostile to freedom of expression.

Risk Level:

Medium

Rationale:

Sprouts supports ESG within its business practices. The company stated “Our ESG goals and initiatives are integrated throughout our business strategy, and strong oversight by our executive leadership team and Board of Directors ensures that the long-term interests of our stakeholders are factored into our decision making” (1). However, in 2023, the company removed ESG/DEI language and policies from its “Impact” Report. To date, the company has not publicly addressed these changes, leaving shareholders without clarity regarding the company’s reasoning or future direction (2). In 2024, Sprouts rebranded its “ESG” reports to “Impact” reports. Otherwise, Sprouts has not supported ideological causes or policies; however, it remains unclear whether the underlying divisive corporate policies materially changed following the rebrand (3).

Criteria:

Uses corporate funds to advance ideological causes, organizations, or policies hostile to freedom of expression.

Risk Level:

Lower

Rationale:

Sprouts has not used corporate funds to advance ideological causes, organizations, or policies (1).

Criteria:

Uses corporate political actions and/or financial contributions for ideological, non-business purposes.

Risk Level:

N/A

Rationale:

Sprouts does not operate a PAC or engage in lobbying at this time (1)(2)(3).