Pepsi Deforestation 2014
|Filer||Domini Impact Investments LLC|
|Sector||Food and Beverage|
|Subject(s)||Forests; Supply Chain; Biodiversity|
|Resolved Clause Summary||Report on deforestation impacts in supply chain|
|Status||Withdrawn; Company will address|
PepsiCo is one of the world’s largest consumer products companies, with a diversified line of brands including Frito-Lay and Quaker. Palm oil, soya, sugar and paper are used in a variety of PepsiCo products. Globally, demand for these commodities is fueling deforestation.
Only about 20% of the world’s original forests remain undisturbed. The Intergovernmental Panel on Climate Change (IPCC), the leading international network of climate scientists, has concluded that global warming is “unequivocal” and that land use, mainly deforestation, is the second major source of human-caused CO2 emissions. The U.S. Environmental Protection Agency has determined that greenhouse gases threaten Americans’ health and welfare.
Climate change impacts from deforestation and poor forest management can be reduced through increased use of recycled materials, independent third party certification schemes, and monitoring of supply chains.
As a member of the Consumer Goods Forum (CGF), PepsiCo recognizes that “Deforestation is one of the principal drivers of climate change, accounting for 17% of greenhouse gases today. The consumer goods industry, through its growing use of soya, palm oil, beef, paper and board, creates many of the economic incentives which drive deforestation.” (Consumer Goods Forum press release, 11/29/10) The CGF has committed to mobilize resources to achieve zero net deforestation. Pepsi has failed to provide specific information in this area.
Forest Footprint Disclosure, backed by 184 financial institutions managing over $13 trillion, asks corporations to report on how their activities and supply chains contribute to deforestation and how those impacts are being managed. Although PepsiCo responded in 2013, that report is not public.
PepsiCo discloses some information on its purchases of certified palm oil, but provides no information on the impact on forests of its soya, paper and sugar purchases. Even with its limited disclosure on palm oil, proponents believe that PepsiCo faces potential reputational and operational risks. PepsiCo faced public controversy over use of what has been deemed “conflict palm oil” by a non-governmental organization. Nestle, Mars, and Mondelez have established policies to ensure their palm oil supply chain is traceable and does not contribute to deforestation, heightening the risk to companies that fail to take action.
Meaningful indicators of how PepsiCo is managing deforestation risks would include:
- A company-wide policy on deforestation
- The percentage of purchases of palm oil, soya, sugar and paper that are traceable to suppliers verified by credible third parties as not engaged in deforestation, expansion into peatlands or natural forests, with clear goals for each commodity
- Results of audits to ensure raw materials in its supply chain are traceable and verified as not contributing to deforestation
- Identification of certification systems and programs that the company uses to ensure sustainable sourcing of each of these commodities.
RESOLVED: Shareholders request the Board to prepare a public report, at reasonable cost and omitting proprietary information, by November 1, 2014, describing how PepsiCo is assessing the company’s supply chain impact on deforestation and the company’s plans to mitigate these risks.