Institutional Investors Press Palm Oil Producers to Stop Cutting Down Rainforest
September 8, 2014: Institutional investors representing over half a trillion dollars in assets under management today called on four major palm oil producers to adopt an immediate moratorium on deforestation and join the growing and unprecedented effort within the industry to establish traceable, deforestation-free palm oil supply chains. Led by Green Century Capital Management, investors called on Sime Darby Plantation,*, Kuala Lumpour Kepong Berhad*, IOI Corporation Berhad*, and Asian Agri* to cease their efforts to weaken the existing threshold for no-deforestation, a move widely criticized by environmental groups.¹
Palm oil is the most widely used vegetable oil in the world, and its production is one of the leading drivers of tropical deforestation– a primary driver of climate change and biodiversity loss. Due to its damaging impacts on the environment and local communities, palm oil has become one of the most controversial and highest risk ingredients for many companies.²
Over the past year, major corporations have made groundbreaking commitments to ensure that the palm oil they purchase is fully traceable back to sources independently verified as not developing High Carbon Stock forests or peatlands, and not violating worker and community rights. Companies that have made these commitments include several of the world’s top palm oil suppliers, including Wilmar* which controls 45% of global palm oil trade, and consumers, including Kellogg’s,* ConAgra,* Procter & Gamble,* and Mondelez.*
“Companies and their investors increasingly realize that destroying the rainforest for palm oil is a controversial and highly risky business practice,” stated Lucia von Reusner, Shareholder Advocate at Green Century Capital Management, which coordinated the letters and secured recent palm oil sourcing commitments from companies including Kellogg’s, ConAgra, and Smuckers*. “Companies that fail to demonstrate a real commitment to halting deforestation face damaged reputations, loss of consumer trust, and reduced access to markets attentive to these issues,” stated von Reusner.
The Palm Oil Manifesto Group (The Group) currently represents five palm oil growers that together produce around nine percent (9%) of the world’s palm oil.³ The Group has come under fire for its stated intent to redefine the threshold for what constitutes HCS that would be considered off-limits for development under recent company commitments to protect forests classified as HCS.
The letter supported by institutional investors representing over $600 billion in assets under management calls on publicly traded members of The Group to adopt an immediate moratorium on developing potential HCS forests as classified under the existing definition, and to adopt a time-bound plan for supplying only palm oil that is independently verified as protects forests, peatlands, and human rights.
The full text of the letter and list of signatories can be found here.
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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 Procter & Gamble Company, Mondelez International, Inc., and The JM Smucker Company comprised 0.26% and 0.00%; 3.15% and 0.00%; 0.95% and 0.00%; and 0.16% and 1.24% 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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