Shareholders of Procter & Gamble (P&G) will vote on a proposal filed by Boston-based Green Century Equity Funds requesting the consumer goods multinational to report on how deforestation is being tackled in its supply chains. The AGM will be virtually held on 13 October.
Green Century is concerned about P&G’s “unfavorable” media coverage on its progress to meet its 2020 zero-deforestation palm oil goal, as well as the “negative attention” from NGOs for sourcing pulp from forests – which as global carbon sinks, offset C02 emissions.
“P&G current sourcing policies allow the Company to source from critical ecosystems, like Canada’s boreal forest” – Green Century Equity Funds
Some of those are Canada’s boreal forests from which P&G sources its toilet paper and tissue products, according to the Natural Resources Defense Council (NRDC).
Besides climate change, this has also consequences for Indigenous Peoples’ rights, furthering negative media attention – as documented by the NRDC’s report “The Issue with Tissue”.
The investor argued that P&G lists reputational damage from the impacts of its products as a risk factor in its 10-K annual filing. According to risk analysis consultancy Chain Reaction Research, reputational losses could be worth $41 billion, or 14% of equity, which “dwarfs the cost of solutions.”
Green Century also highlighted that P&G was rated below its peers by the Forest 500 initiative and by CDP Forest. In addition it is portrayed as “high risk” by the Soft Commodity Risk Platform, a risk analysis tool.
The investor said P&G lags on implementing its existing no-deforestation commitment. It has achieved certification from the Roundtable on Sustainable Palm Oil (RSPO) for only one-third of its palm oil supply, the investor said.
“P&G already provides stakeholders with significant reporting on our policies for managing our pulp and palm oil supply chains” – P&G board of directors
Green Century also complained that P&G has retained as its single largest palm kernel oil supplier a company with no fresh RSPO certification since 2016.
“Additionally, P&G lacks a comprehensive plan to mitigate exposure to deforestation and forest degradation throughout its operations; its current sourcing policies allow the Company to source from critical ecosystems, like Canada’s boreal forest,” the filer said.
P&G’s board recommended shareholders to vote against the proposal. It said that while not owning or managing commercial forests, the company recognises their key role through procurement and manufacturing practices. P&G said it remains committed to responsible sourcing and responsible practices in its supply chains.
“P&G already provides stakeholders with significant reporting on our policies for managing our pulp and palm oil supply chains, our commitments and goals for further improving our practices and reducing our impact, and our progress and opportunities against these goals. The proponent’s proposal would not substantially add to the Company’s reporting or to our progress.”
In 2020 Green Century Equity Funds have withdrawn similar proposals at Aramak, Tyson Foods, Archer Daniels Midland and Bloomin’ Brands after these companies committed to act on deforestation issues.
Please see this earlier video interview with Green Century’s President Leslie Samuelrich.