McDonald’s* Refuses to Address Shareholder Concerns about Deforestation, Exploitation
Contact: Lucia von Reusner, Green Century Capital Management, 617-482-0800, email@example.com
May 21, 2015: Concerned about McDonald’s refusal to address shareholder concerns about the reputational and business risks caused by the deforestation and community exploitation likely taking place across the company’s palm oil supply chain, a group of environmentally responsible investors are attending McDonald’s annual shareholder meeting today. McDonald’s is facing pressure from environmental and consumer groups over its weak palm oil sourcing policy, and has treated shareholders’ concerns about this controversial issue with hardball bargaining instead of open and transparent dialogue. McDonald’s shareholders will be voting on a shareholder proposal filed by Green Century Capital Management, together with First Affirmative Financial Network and the Sustainability Group of Loring, Wolcott & Coolidge, urging the company to curb deforestation and community exploitation.
“How are shareholders to be assured that McDonald’s is addressing brand risks when the company shuts down the conversation?” said Leslie Samuelrich, President of Green Century Capital Management, the environmentally responsible mutual fund company that filed the proposal with the fast food giant. McDonald’s would only share information if the investors signed a confidentiality agreement—something even the company admitted was not standard. When shareholders opted for open negotiations, direct communications about any and all details of a potential policy stopped. “Without transparency or specifics, the company has left investors little choice but to voice our concerns publicly,” stated Samuelrich.
McDonald’s is among the top 10 palm oil consuming companies globally, using palm oil to fry or par-fry everything from French fries to chicken nuggets. Palm oil has become highly controversial because it is often produced by burning down valuable tropical rainforests— driving climate change, species extinction, and conflicts with local communities. As a result, major companies have adopted sourcing policies that ensure their suppliers are not contributing to these controversial issues. Green Century worked closely with Kellogg’s,* Smuckers,* and ConAgra* to develop time-bound plans for only purchasing palm oil from deforestation-free sources, and also convinced Archer Daniels Midland*—the third largest supplier of agricultural commodities globally—to adopt a precedent-setting commitment to end deforestation across its global palm oil and soy supply chains. Of the top 10 palm oil consuming companies, McDonald’s is the last holdout that has not announced a plan to halt deforestation across its palm oil supply chain.
“As more companies respond to consumer and investor concerns about controversial practices taking place in their palm oil supply chains, McDonald’s stands out as dragging its feet in demonstrating a commitment to ensuring its suppliers aren’t destroying the rainforest or exploiting local workers and communities to make McDonald’s Happy Meals—putting its global brand and reputation at risk,” noted Lucia von Reusner, Shareholder Advocate for Green Century Capital Management.
While McDonald’s recently announced its intent to curb deforestation across its global supply chains, it has not released commodity-specific plans or timelines for when customers and suppliers can expect this commitment to go into effect. The only timeline that McDonald’s includes is an overarching goal to achieve this vision by 2030, which is over ten years later than the 2015 or 2020 timelines that the rest of the industry is working towards. The company furthermore refused to agree to a meeting with the shareholder groups to discuss when or whether these more specific plans would be released, according to Green Century.
“With McDonald’s having generally pledged to a move in the direction of a no deforestation policy, we believe its shareholders can’t afford the risk of its not following through with a plan to really accomplish this. If they drop the ball, their statement will amount to green-washing, which would harm their reputation with consumers and investors alike,” commented Ken Jacobs of First Affirmative Financial Network, a network of socially conscious financial advisors.
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Green Century Capital Management is the investment advisor to the Green Century Funds and offers two environmentally and socially responsible funds, the Green Century Equity Fund and the Green Century Balanced Fund. Green Century works to curb climate change through fossil fuel free investing, reinvestment in sustainable companies, and advocating with companies to improve their environmental policies and supply chains. Green Century also is the only U.S. mutual fund company owned by environmental non-profits, the Public Interest Research Groups (PIRGs).
*As of March 31, 2015, McDonald’s Corporation, Kellogg Company, and The JM Smucker Company comprised 0.00% and 1.27%, 0.00% and 0.24%, and 0.49% and 0.16% of the Green Century Balanced Fund and the Green Century Equity Fund, respectively. Other securities mentioned were not held in the portfolios of the Green Century Funds as of March 31, 2015. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
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