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Palm Oil Industry Transformation
By Holly Testa, Director, Shareowner Engagement

Announcements from companies producing and consuming palm oil are coming out at a rapid pace—promising ‘sustainability' across the supply chain. If promises become action, we may finally be at a turning point for good.

Deforestation Free Junk Food?

Menu options from leading doughnut chains Dunkin’ Donuts and Krispy Kreme are of questionable nutritional value, but the palm oil used to cook their core products may be getting healthier for the planet. These two companies are only the latest making commitments to sustainable palm oil this year. The growing list includes ConAgra, Cargill, Kelloggs, Mondelez International, Colgate Palmolive, and General Mills.

Commitments from the various companies are similar—working with suppliers to source palm oil that is 100% fully traceable to the mill.

Greening the Supply Chain

Change requires more than promises from buyers, who have limited influence on the ground. Real commitment from the major suppliers and producers will tip the balance. While Wilmar International, a company controlling 45% of the palm oil market, recently made a strong commitment to sustainable palm oil, other major palm oil firms resisted, signing onto their own  Palm Oil Manifesto that, while seemingly similar to the Wilmar commitment, was rightly criticized for not clearly setting deadlines, establishing exactly which forests were off-limits, or extending the commitment to partners and third party suppliers.

Fortunately, the manifesto group followed up with an announcement of a moratorium on clear cutting “high carbon stock” (HCS) forests, and most companies in the group have agreed to adhere to the stringent HCS definition established by The Forest Trust, Golden AgriResources, and Greenpeace. This was just a week after Green Century Asset Management sent a letter to member companies asking for just such a moratorium.

UN Climate Summit Creates Unique Coalition

The UN Climate Summit has become famous for lack of action, but this year the climate summit has produced an unusual partnership: Over 150 countries, companies, indigenous peoples groups, and non-governmental organizations endorsed the New York Declaration on Forests, committing to do their parts to halve deforestation from all sources by 2020 and end it by 2030. Over 30 companies were signatories, including palm oil giants Willmar International and Cargill. The Declaration also includes a commitment to restore hundreds of millions of hectares of forest land.

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: September 29, 2014