Partners in Advocacy: Green Century Capital Management
By Holly Testa, Director, Shareowner Engagement
First Affirmative’s shareowner advocacy program does not stand alone. Many of the asset managers we use in client accounts are also our partners in advocacy—and they have powerful stories to share. In this first installment, we talk with Leslie Samuelrich, President of Green Century Capital Management.
Green Century places an emphatic emphasis on the E in ESG. Their advocacy work is focused on an array of environmental issues including hydraulic fracturing, toxics and antibiotics, but their overriding devotion to combating climate change is apparent both from their “fossil-free” approach to investing and their aggressive—and successful—advocacy work with their portfolio companies.
Green Century is not owned by corporate interests or individuals, but by nonprofit advocacy organizations, the state Public Interest Research Groups (PIRGs). Leslie points out that “Ownership by the PIRGS makes advocacy work a central part of the mission rather than an add-on. Environmental advocacy is integrated into everything we do. One hundred percent of profits made by the management firm belong to the PIRGs and their campaigns, such as the ‘Go Solar’ campaign designed to build support for clean energy projects.”
A Case Study in Leadership: Palm Oil
Tackling climate change requires choosing your battles and focusing on concrete goals. Green Century recently embarked on a remarkable investor campaign to help transform the palm oil industry from destructive to sustainable. The progress has been nothing short of remarkable. Two years ago only 5% of palm oil production was produced under a zero deforestation policy. Now, 95% of production is covered by this policy.
How did this happen? Leslie shared insights into the Green Century team’s decision-making progress and tactics.
Why palm oil?
“Deforestation is a huge driver of climate change—the burning required to clear the land releases carbon and the loss of rain forest habitat prevents CO2 reduction. Palm oil, soy, and a host of other commodities drive deforestation. One reason we chose palm oil to start with is that changing growing practices is very doable. There was already growing public awareness, an existing NGO campaign, and palm can thrive on existing land sources without cutting down more rainforest.”
Where did you begin?
“We approached Starbucks first, asking them to establish a sustainable palm oil policy, and they agreed. This quick win provided proof of concept and let us to roll out a campaign to other consumer facing companies. After Starbucks, we filed shareholder proposals that secured deforestation-free commitments from other companies.”
What was the tipping point?
Leslie explains that these consumer goods companies are not the key. Only the international palm oil suppliers are in the position to make the change on the ground… and they are a much harder audience to reach. The Kellogg negotiations proved to be the tipping point.
“Green Century pressed consumer-facing companies like Kellogg to generate pressure on international palm oil suppliers to make the change and to create the demand for deforestation-free palm oil. After a long negotiation, Kellogg agreed to implement a zero deforestation policy within a very tight timeline-by the end of December, 2015. The timeline was a crucial point in the negotiations and we stuck to it. By staying firm in our strategy, it paid off.”
“This agreement opened the door to the suppliers. After Kellogg, Wilmar, which controls 45% of the palm oil market, partnered with Unilever to announce their groundbreaking zero deforestation policy.”
“Wilmar was then perceived by other producers as having a competitive advantage. Many consumer-based companies had committed to source from companies committed to zero deforestation, and Wilmar’s competitors could not supply it. The Wilmar agreement became a launching pad for changes across the entire industry. Wilmar’s commitment alone will avoid 1.2 gigatons of carbon pollution, which is equivalent to the carbon emission from all of South and Central America.”
According to Glenn Hurowitz, Lead NGO negotiator with Wilmar and Campaign Director, Climate Advisors, “Green Century didn't just launch the issue of deforestation onto Wilmar's agenda; it helped seal the deal too. Green Century is able to get forest protection on the agenda of Fortune 500 CEO's like no one else.”
“This past spring, Green Century mobilized investors representing over $600 billion in assets under management to get four other leading palm oil producers to drop their previous adamant opposition to this policy and adopt an immediate moratorium on deforestation. This progress built the momentum for new commitments that were announced at the Forest Leaders Summit in New York City this past September, where thirty companies joined thirty heads of state and civil society to pledge to cut forest loss in half by 2020, and end it by 2030.”
Commitments are good, but how do you measure success?
A policy is useless without implementation. As the hard work on the ground begins, Green Century’s work continues.
According to Leslie, “Wilmar has started implementing the policy, with letters going out to their suppliers outlining expectations. Even better, their policy was not limited to palm, but covers soy, sugar and other commodities. Green Century will be checking in periodically with companies to track their progress. The “final deliverable” is due in December, 2015. The Forest Trust will be partnering with companies to implement the policies. I like to think of it is setting the company up for success. The Forest Trust provides technical assistance, but they are also a watchdog.”
Green Century plans to expand the campaign to other resources intensive commodities such as soy and sugar, and is working on a wide array of other issues. Click here for the latest information about Green Century advocacy initiatives.
Final words, Leslie?
“Advocating for the environment, social concerns, and governance issues is part of the Green Century’s DNA and we won’t and don’t stop until we win.”
NOTE: 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: January 26, 2015