Kellogg Palm OIl 2014
|Filer||Green Century Capital Management|
|Sector||Food and Beverage|
|Subject(s)||Climate Change; Palm Oil|
|Resolved Clause Summary||Palm OIl Policy Implementation Report|
Whereas: As one of the world’s largest food processing companies, Kellogg uses palm oil in a variety of its branded products. The environmental and social impacts of palm oil production make it highly controversial.
Approximately 85% of palm oil is grown in Indonesia and Malaysia, and is a leading driver of deforestation in those areas. Due to high levels of deforestation and conversion of carbon-rich peatlands, Indonesia was, by a 2007 World Bank estimate, ranked the 3rd largest emitter of GHGs globally. The palm oil industry is also listed as one of the most notorious for using child and forced labor, according to the U.S. Department of Labor.
Companies that fail to uphold strong environmental and social values throughout their supply chains have faced reputational damaged and consumer rejection of their products.
Kellogg’s is currently the public target of consumer campaigns for sourcing palm oil from suppliers, including major partner Wilmar, engaged in illegal deforestation in national parks and human rights violations. Although Kellogg’s claims to source palm oil from members of the Roundtable for Sustainable Palm Oil (RSPO), the RSPO has never decertified a member grower for poor performance despite documented violations, and is widely recognized by organizations including founding member WWF as insufficient for enforcing supplier compliance and preventing deforestation. Furthermore, Kellogg’s reliance on GreenPalm ‘offsets’ allows for purchases from uncertified suppliers engaged in deforestation.
Proponents are concerned that absent a transparent system for tracing sourced palm oil to legally licensed suppliers verified as not contributing to deforestation or human rights abuses, Kellogg may be exposed to significant brand and reputational risks related to its supply chain impacts on deforestation and human rights.
Major companies such as Nestle and Mondelez have pledged to develop such traceable, deforestation free palm oil supply chains. This raises the bar for the entire sector, heightening the risk of inaction to companies who fail to take responsibility for their supply chains impacts.
Therefore, be it resolved that: Shareholders request that the Board prepare an annual public report, at reasonable cost and omitting proprietary information, by October 1, 2014, providing metrics and key performance indicators demonstrating the extent of progress on the Company’s stated commitment regarding “minimizing the carbon footprint of our palm oil supply chain…and to respecting human rights including no forced or child labor, slavery or human trafficking.”
Supporting Statement: Proponents believe that meaningful indicators would include:
- Percentage of sourced palm oil traceable to known suppliers, reported annually;
- Percentage of palm oil traceable to suppliers verified by credible third parties as not engaged in (1) expansion into peatlands, High Conservation Value or High Carbon Stock forests, or (2) human rights abuses such as child or forced labor;
- Percentage of palm oil sourced from GreenPalm ‘offsets’; and
- An explicit commitment to work toward strengthening third-party certification programs, where necessary, to achieve compliance with the company’s responsible palm oil policy.