Shareholder demands driving commitments on deforestation, report finds

Shareholder resolutions are an increasingly viable way to drive company action on deforestation, with more than half of proposals to address risks leading to business commitments from the likes of Kraft, DuPont and Mondelez, according to new analysis.

Published on Monday (31 July) by English non-profit Global Canopy Programme, the research found that 52% of shareholder proposals between 2011 and 2017, put forward by members of the Ceres Investor Network – which collectively manages more than $17trn in assets – led to the formation of some sort of company action plan or commitment to tackle deforestation risks.

The analysis found that shareholder proposals are increasingly ambitious, and targeted around priority areas such as palm oil, soya, pulp and paper, timber and cattle products.

Global Canopy Programme’s senior sustainable finance associate Tom Bregman said: “It is really encouraging to see that investors are engaging with companies on the deforestation risks in their supply chains. Every day, tropical forests are being cleared to make way for commodity crops, impacting the climate, and the security of food and water supplies.

“Investor engagement can be the first step in improving policies – and practice – helping to reduce the threat to tropical forests from agricultural commodities.”

Put it to a vote

More than two thirds of the companies targeted by stakeholder resolutions are ranked by Global Canopy’s Forest 500 project as being in the top 250 most influential companies that can combat deforestation. The research found that more than 70% of companies assessed by Forest 500 – which identifies the top 500 ‘powerbrokers’ for stopping tropical deforestation – have commodity-specific policies in place to address deforestation in supply chains.

The majority of shareholder resolutions were withdrawn because companies agreed to make changes following preliminary engagement. Of the 50 proposals initially filed – the majority of which were linked to palm oil – only 23 went to a vote, with 52% of the votes leading to company commitments on the issues raised.

All of the resolutions were filed in the US, and targeted companies such as Kraft, DuPont and Mondelez – which has ensured that 100% of its palm oil is sustainably sourced since 2014.

Earlier this year, HSBC launched a new zero-deforestation policy following a Greenpeace investigation, which linked the banking corporation to organisations that have been destroying Indonesia’s rainforests.

Elsewhere, Pepsico, Unilever and Nestlé vowed to investigate supply chains after being accused of complicity in the destruction of Sumatran rainforests.

Matt Mace

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