Sustainable Palm Oil Goes Mainstream
By Holly Testa, Director, Shareowner Engagement
Following the recent announcement by the largest palm oil producer in the world, Wilmar, to adopt sustainable practices, the Kellogg Company has committed to purchasing “deforestation free palm oil”, setting a new standard for the industry.
Green Century Asset Management worked closely with Kellogg’s after the firm’s Equity Fund filed a shareholder proposal at the company about the issue. The resolution was filed in the wake of concerns over Kellogg’s 50/50 joint venture with Wilmar to expand the company’s reach into the vast market in China. This partnership was subject to controversy when a World Wildlife Fund investigation reported that Wilmar was trading illegally grown palm oil from Indonesia.
“Kellogg’s aggressive timeline for ensuring all palm oil purchases can be traced back to deforestation-free sources sends a powerful message to its supply chain that protecting the environment is critical for long-term value creation,” commented Lucia von Reusner, Shareholder Advocate at Green Century Capital Management. “By raising the bar, Kellogg’s palm oil commitment should encourage other companies to step up and support the development of transparent and responsible palm oil supply chains.”
Kellogg's will require that all its suppliers be able to trace palm oil back to plantations that adhere to the following principles, with a target date of December 31, 2015:
- No deforestation: Suppliers must protect forests, endangered species habitat, lands with high carbon content, and peat land of any depth, going beyond the inadequate requirements of current roundtable-derived standards.
- No exploitation: Suppliers are required to protect human and community rights, including land tenure rights and obtaining Free, Prior, and Informed Consent from communities to all development on their lands.
- Traceability: Kellogg is working with suppliers to achieve full traceability of its palm oil back to known plantation sources.
If the world’s largest palm oil producer and Kellogg’s adhere to their new standards, the outcome will surely mean a more sustainable palm oil supply chain.
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Posted: April 9, 2014