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Estee Lauder Palm Oil 2013

Resolved: Shareholders request the Estée Lauder Inc. board of directors adopt and implement a comprehensive sustainable palm oil sourcing policy.

Supporting Statement:
While this shareholder resolution’s proponents commend Estée Lauder for creating its 2012 Corporate Responsibility Report, we have concerns about its discussion regarding palm oil. The Report says: “We mainly use ingredients derived from palm kernel oil. We buy these derivatives from suppliers, so we cannot directly control the source of the palm kernel oil used to make the derivatives.” We believe such an admission opens the Company to possible reputational damage. Failure to manage reputational risk connected to palm oil in supply chains has been disruptive for a number of major companies including Nestle and Mattel (http://en.wikipedia.org/wiki/Sinar_Mas_Group).
 
The social and environmental impacts of palm oil production make it highly controversial. In the Philippines it is estimated that almost 25% of palm labor production comes from child labor. The U.S. Department of Labor reports that, in Indonesia and Malaysia, child and/or forced labor are endemic to palm oil production (www.dol.gov/ilab/programs/ocft/PDF/2010TVPRA.pdf)/
  
Due in part to deforestation for palm oil, Indonesia has become one of the largest global emitters of greenhouse gases (GHGs).  The conversion of peatlands accounts for roughly half of Indonesia’s GHG emissions but only 1% of its gross domestic product.  Palm oil plantations that are not sustainably developed and managed have devastated habitats of endangered species, such as the orangutan, and cause massive loss of biodiversity.  
 
To address these social and environmental concerns associated with palm oil production, the Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004.  Many companies, including some of our competitors, have committed to source 100% certified sustainable palm oil (CSPO) by 2015 or sooner, including:  Avon, Colgate-Palmolive, L’Oreal, Proctor & Gamble, The Body Shop, Unilever, Wal-Mart (private brands), and Nestle.  
 
According to the RSPO, the supply of CSPO exceeds demand by approximately 50%  (http://www.btimes.com.my/articles/20130425181653/Article/).
 
We recommend Estée Lauder’s palm oil policy include: a target date for sourcing 100% Certified Sustainable Palm Oil (or derivatives) or for purchasing GreenPalm certificates covering 100% of sourced palm oil (or derivatives) and a commitment to annually disclose the company’s progress.
 
In addition, we encourage Estée Lauder to strive to strengthen RSPO certification in the following ways.  For certification, RSPO should require growers to: 1) publicly report GHG emissions before the end of 2016; 2) set emissions reduction targets; 3) fully implement the RSPO New Plantings Procedure, which excludes cultivation on peatlands and clearing high carbon stock areas; 4) eliminate use of pesticides that are categorized as World Health Organization Class 1A or 1B, or that are listed by the Stockholm or Rotterdam Conventions, and paraquat; 5) not purchase fresh fruit bunches originating from land illegally occupied or that is within any designated or protected areas such as national parks.