Palm oil is the most widely used vegetable oil in the world. A commodity that is worth $50 billion per year, it is found in over half of all packaged goods. Palm oil is also “a key driver of deforestation that accounts for more than 15 percent of worldwide carbon emissions,” according to Ceres. “At least 30,000 square miles of tropical forest...has been cleared to accommodate palm oil plantations in the past two decades.”
Sustainable investors have been engaging with the consumer goods industry for years, over the issue of ensuring that palm oil is being sourced from suppliers that do not contribute to deforestation. “When it is not sourced sustainably, palm oil is known to have devastating impacts, including deforestation and forced child labor,” Sr. Sue Ernster of the Franciscan Sisters of Perpetual Adoration stated when the Interfaith Center on Corporate Responsibility (ICCR) announced in June the withdrawal of a shareowner resolution filed with Panera Bread.
Another resolution, filed with J.M. Smucker, was withdrawn this week by co-filers Clean Yield Asset Management and Green Century Capital Management when the company agreed to stringent guidelines on the sourcing of palm oil.
The resolution observed that Smucker’s has declined requests to report to CDP on business risks associated with deforestation. Also, the resolution continued, “Rainforest Action Network has publicly targeted Smuckers’ for using palm oil in its products that are ‘at high risk of contamination’ with palm oil associated with human rights violations.”
The agreement, the investment firms stated, means that Smucker's will go beyond current Roundtable on Sustainable Palm Oil (RSPO) standards, which, they assert, “are insufficient for preventing high risk and controversial environmental and human rights impacts in the palm oil supply chain.” In response to growing criticism, the RSPO has undertaken a five-year program to quantify its metrics and create “confidence in RSPO certified palm oil for users, investors and the public.”
The company’s new policy as outlined in its corporate social responsibility (CSR) report includes, the investors said, “a time bound commitment for ensuring that purchased palm oil can be traced back to plantations that are independently verified as meeting the following criteria:
• No development in high carbon stock forest areas or high conservation value areas;<
• No burning to clear land for new planting or re-planting;
• No new development on peat lands, and the application of best management practices for existing plantations on peat lands, including restoration when feasible; and
• Including smallholders into the supply chain and respecting land tenure rights, including the rights of indigenous and local communities to give or withhold their free, prior, and informed consent to all new development or operations on lands to which they hold legal, communal, or customary rights.”
“The company has joined the ranks of many of its industry peers who recognize that they must also go beyond RSPO’s standards to ensure that their purchases do not result in mass deforestation and labor abuses in the supply chain,” said Shelley Alpern, Director of Social Research and Shareholder Advocacy at Clean Yield.
“By pledging to secure deforestation-free palm oil, Smucker is not only protecting the environment, but its brand and shareholder value as well,” Lucia von Reusner, Shareholder Advocate at Green Century, said. “We urge the company to rapidly implement its commitment to help end deforestation for palm oil.”