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Activists, Shareholders Continue to Rail Against Companies Lagging on Sustainable Palm Oil

This week, stakeholders continued to take action to pressure companies into turning over a new leaf when it comes to their sourcing practices — around what has become known as Conflict Palm Oil.

This week, stakeholders continued to take action to pressure companies into turning over a new leaf when it comes to their sourcing practices — around what has become known as Conflict Palm Oil.

On Tuesday, Green Century Capital Management — which manages the first family of diversified responsible fossil fuel free mutual funds — announced that Archer Daniels Midland (ADM), the third-largest supplier of agricultural commodities globally, has agreed to a precedent-setting policy to end deforestation across its global supply chains, with a particular focus on soy and palm oil production. As a result, Green Century and the New York State Common Retirement Fund have therefore withdrawn their shareholder proposal, which outlined the investment risks associated with deforestation. ADM’s policy is scheduled to be officially announced at the Company’s annual meeting in May.

Soy and palm oil production are leading drivers of rainforest destruction in South America and Southeast Asia, respectively, and thus have been the focus of a variety of NGOs and shareholder advocacy groups interested in protecting long-term investments. Deforestation is primarily caused by burning trees and clearing land to produce agricultural commodities like soy and palm oil, and contributes significantly to climate change, species extinction, soil erosion, and declines in local rainfall patterns. ADM’s profits have taken a hit in recent years due to ongoing droughts and extreme weather in key areas of its supply chain.

“Clearing forests to grow food destroys the very ecosystems that agriculture depends on, and is a short-term business model that poses long-term threats to global food security and our climate,” stated Lucia von Reusner, Shareholder Advocate for Green Century Capital Management, the environmentally responsible mutual fund company that persuaded ADM to adopt this new policy. “ADM’s new policy aims to de-link food production from the crude practice of destroying forests, and sets the precedent for a new model of agricultural production that protects the environment and our food supply,” stated von Reusner.

ADM is a leading supplier of raw ingredients to many of the world’s biggest food and consumer goods companies. In the past year, Green Century also has persuaded major companies including Kellogg’s, Smuckers and ConAgra to only purchase palm oil from deforestation-free sources, due to the risks associated with purchasing from suppliers engaged in rampant deforestation. Responding to pressure from investors and customers, top palm oil suppliers representing approximately 96 percent of globally traded palm oil have adopted No-Deforestation policies for the palm oil they trade.

“ADM’s commitment to using only sustainably sourced palm and soy products validates our message that strong environmental policies make economic sense,” said New York State Comptroller Thomas P. DiNapoli. “We will continue to engage our portfolio companies on multiple fronts to improve their environmental practices. Business practices that destroy the environment and foster climate change can not only harm the public, but can damage corporations’ reputations, their bottom line and their investors.”

ADM has a joint venture and strong business partnership with Wilmar, the world’s largest palm oil supplier, which set the stage for a revolution in the agricultural commodity industry with its No-Deforestation policy last year.

Also on Tuesday, two dozen activists descended on a City Target in downtown San Francisco, engaging shoppers and rebranding shelves filled with Quaker (a PepsiCo brand) products containing palm oil. The “flash mob” was part of a month-long wave of grocery store actions across the country against the use of Conflict Palm Oil. The activists — who traveled to the Bay Area from across the US to attend the Palm Oil Action Leaders Training Summit, a four-day skills training in leadership development hosted by Rainforest Action Network (RAN) — dressed in orangutan costumes and affixed stickers and placards on the store’s food aisles to warn grocery store customers that they may be feeding their family Conflict Palm Oil.

In May, PepsiCo announced a commitment to zero-deforestation palm oil sourcing that several NGOs applauded as an important first step but ultimately found underwhelming. RAN’s campaign against the company took a high-profile turn recently, in the form of a spoof Super Bowl ad that targeted another PepsiCo brand — Doritos — over its connection to rainforest destruction and human rights violations.

RAN says PepsiCo consumes more than 450,000 metric tons of palm oil annually for its snack food brands including Quaker and Doritos, and its consumption of palm oil is on the rise.

“PepsiCo is starting to take these issues seriously, but it is lagging behind its peers as it lacks a truly responsible palm oil policy. It needs to take immediate action to eliminate Conflict Palm Oil from the products it sells across the globe,” said Gemma Tillack, Agribusiness Campaign Director for RAN. “For PepsiCo to meet consumer expectations, it must adopt a binding, time-bound policy with an action plan that includes full traceability of palm oil back to its source and verifiable safeguards for human rights, forests and peatlands.”

RAN says that over the next month, activists in dozens of cities and towns across the U.S. plan to take their own creative actions to demand that PepsiCo takes stronger action to prevent rainforest destruction, climate pollution and human and workers rights violations.

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