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Sysco Palm Oil Sourcing

Sysco uses palm oil in a number of its Sysco Brand products.  As the most widely used vegetable oil on earth, the environmental and social impacts of palm oil production make it highly controversial.  Approximately 85% of palm oil is grown in Indonesia and Malaysia, where its production is a leading driver of deforestation.  The palm oil industry, which is expanding rapidly into other countries, is notorious for using child and forced labor, according to the U.S. Department of Labor.
 
Companies with palm oil sourcing policies similar to Sysco’s have suffered strong public criticism related to deforestation, human rights abuses and orangutan extinction.  Although Sysco has a goal to source palm oil certified as sustainable by the Roundtable for Sustainable Palm Oil (RSPO), the RSPO is now widely recognized by key organizations, including founding member World Wildlife Fund, as insufficient for enforcing supplier compliance and preventing deforestation. 
 
A growing number of institutional palm oil purchasers, including potential Sysco customers, demand palm oil produced according to standards that go beyond RSPO’s, including no deforestation, no conversation of peat lands and stronger procedures for addressing human rights violations..  
 
Recently, palm oil producers and traders representing approximately 55% of global supply, as well as consumer brand companies, including General Mills, Kellogg’s, Johnson and Johnson, Mars, Panera Bread and Pepsi, have pledged to develop transparent, deforestation free palm oil supply chains.  These organizations have palm oil policies that are stronger than Sysco’s and pledge to implement them by 2015, whereas Sysco’s goal for implementation is 2020.  This trend indicates that sourcing sustainable palm oil is feasible, and raises the bar for the entire food and beverage sector, heightening risks and opportunities to Sysco. 
 
Resolved
Shareholders request that Sysco report annually (initially by March 1, 2015) at reasonable cost and omitting proprietary information, on key performance indicators demonstrating the extent to which the company is curtailing the impact of its palm oil supply chain on deforestation and human rights.
 
Supporting Statement
Key indicators that stakeholders often use to publicly assess company palm oil sourcing include:
The company has a time-bound policy committing to: 
o No Deforestation (including protection of High Carbon Stock forests, peatland of any depth, and High Conservation Value areas); 
o No Exploitation (including protection of human rights, fair treatment of workers, and recognizing community land rights); 
o 100% RSPO certification; 
o A transparent and legal supply chain; and 
o An explicit procedure for suppliers who demonstrate non-compliance.
The company reports regularly on progress made in implementing its policy – including metrics such as percentage volume:
from suppliers with deforestation-free sourcing policies;
traceable to mill and plantation;
RSPO certified (including % GreenPalm, mass-balance, and/or segregated;
from suppliers working toward compliance with company policy;
from suppliers compliant with Sysco’s policy or with low risk for non-compliance.