August 14, 2014: In response to a shareholder proposal filed by Green Century Capital Management, Inc. (Green Century) and the New York State Common Retirement Fund (the Fund), packaged food giant ConAgra Foods has agreed to eliminate any palm oil supplier engaged in deforestation by December 2015. Palm oil production is a leading driver of deforestation– the cause of 20% of greenhouse gas emissions.[i] As one of North America’s largest food manufacturers, ConAgra is estimated to be the fifteenth largest palm oil consumer globally, according to MSCI analysis.[ii]
“The rampant deforestation for palm oil has captured public attention, creating real reputational risks for companies that use the ingredient in their branded products,” noted Lucia von Reusner, Shareholder Advocate at Green Century Capital Management, “With this commitment, ConAgra has sent a strong signal to its investors, suppliers and the market at large that destroying tropical forests for palm oil is unacceptable business practice.”
The majority of palm oil is grown in Indonesia, which now has the highest rate of deforestation globally[iii] and is ranked the third largest greenhouse gas emitter in the world due to deforestation, according to the World Bank.[iv] Companies that use palm oil harvested from unsustainable sources have faced public campaigns, boycotts, and loss of consumer trust in recent years.
“Companies are on the hot seat to reduce their carbon pollution if they want consumer and investor support,” stated Leslie Samuelrich, President of Green Century Capital Management. ConAgra is the latest in a growing number of companies that includes Kellogg’s,* Smuckers,* and General Mills* that Green Century has worked with to secure pledges to source deforestation-free palm oil. “We hope and expect more companies to follow suit and build sustainable supply chains and protect the environment upon which their businesses and all of us depend,” stated Samuelrich.
ConAgra brands are found in 99 percent of American households, according to the company. Several of the company’s signature brands, including Peter Pan Peanut Butter, Orville Redenbacher’s popcorn, and Act II Microwaveable Popcorn contain palm oil. Under its expanded policy, ConAgra will, by December 2015, only source palm oil that can be traced back to suppliers independently verified as not developing on High Carbon Stock or High Conservation Value forests, peatlands, or engaged in human rights abuses.
In its agreement with Green Century and the Fund, ConAgra stated, “Over the past several years, we’ve become increasingly aware of the potential environmental and social risks associated with the cultivation, harvesting and processing of palm oil, and we have taken steps to improve the sustainability of our palm oil supply chain.”
The company also said it would suspend or eliminate a supplier that “is seriously violating the stated principles and if that supplier does not acknowledge and immediately move to acceptably remediate the concern.”
Just days before ConAgra finalized the agreement with Green Century and the Fund, ConAgra’s major supplier Cargill*—the largest importer of palm oil into the United States— announced that it would no longer buy palm oil from suppliers engaged in deforestation.[v] Cargill’s commitment comes in response to the growing demand for deforestation-free palm oil from companies like ConAgra and Kellogg’s, and follows years of pressure from environmental groups.
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Green Century Capital Management is an investment advisory firm that manages the first family of responsible and diversified fossil fuel free mutual funds. Founded in 1991 by a network of non-profit organizations, the state Public Interest Research Groups (PIRGs), Green Century leads an effective shareholder advocacy program to convince companies to establish and implement environmental policies that protect our land, water and air.
*As of June 30, 2014, Kellogg Company, The JM Smucker Company, and General Mills, Inc. comprised 0.26% and 0.00%; 0.16% and 1.24%; and 0.49% and 0.01%; of the Green Century Equity Fund and the Green Century Balanced Fund, respectively. Other securities mentioned were not held in the portfolios as of June 30, 2014. The holdings of the Green Century Funds may change due to ongoing management of the Funds. References to specific investments should not be construed as a recommendation of a security by the Funds, their advisor, administrator, or distributor.
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