New York State Comptroller Thomas P. DiNapoli today announced that ConAgra Foods, Inc., one of the largest food manufacturers in the U.S., has committed to using only sustainably-sourced palm oil that is grown and harvested in ways that do not contribute to rainforest destruction. As a result of the company's new policy, the New York State Common Retirement Fund (Fund) has withdrawn its sustainable palm oil shareholder proposal, which it co-filed with Green Century Capital Management.
"ConAgra's commitment to sustainable palm oil helps enhance the company's long-term value," DiNapoli said. "Palm oil is in many of the products we enjoy every day, but too often suppliers produce it in ways that destroy rainforests and promote climate change. By taking the added step of committing to only buying from palm oil suppliers that do not contribute to deforestation, ConAgra is promoting better environmental practices and protecting the company and its investors from reputational harm."
ConAgra's brands are found in virtually every American household, according to the company. It has been estimated that 55 percent of the company's sales involve products containing palm oil, such as Orville Redenbacher's popcorn, Peter Pan Peanut Butter and Healthy Choice ice cream.
Harvesting palm oil has been linked to rainforest destruction. Forests are vital to the reduction of greenhouse gases by converting carbon dioxide into oxygen. In addition, deforestation that burns trees or even leaves them to decompose releases large amounts of carbon dioxide into the atmosphere. Any corporation linked to deforestation and the promotion of climate change risks damage to its operations and reputation.
As ConAgra stated in its agreement, "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."
"Companies that deal directly with consumers face increasing pressure to protect their brands against controversies taking place in their supply chains," said Lucia von Reusner of Green Century Capital Management, which co-filed the shareholder proposal with the Fund. "With this commitment, ConAgra has sent a strong signal to its suppliers and the market at large that destroying tropical rainforests for palm oil is unacceptable."
Under its new policy, by December 15, 2015, ConAgra will only source palm oil that is fully traceable back to suppliers who adhere to the following principles:
To use only legal sources that adhere to all relevant international, national and local legislation and regulation.
Not to develop land that should be conserved due to its significant environmental, socioeconomic, biodiversity, ecosystem, erosion control or landscape value or that contains high carbon stock (HCS) forests. Not to burn land in the preparation of new plantings, re-plantings, or other developments.
To comply with ConAgra's Supplier Code of Conduct which describes the company's expectations in matters including food safety and quality, forced labor, child labor, freedom of association and collective bargaining, discrimination and harassment, wages and benefits, work hours and overtime, health and safety, environment, and anti-corruption.
To respect 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.
ConAgra also committed to upholding the new standards by suspending or eliminating a supplier, if necessary, "if an audit or other highly credible source reveals or confirms that a supplier is seriously violating the stated principles and if that supplier does not acknowledge and immediately move to acceptably remediate the concern."
ConAgra's agreement letter is available here: http://www.osc.state.ny.us/press/releases/aug14/ConAgra_agreement.pdf
The Fund held 1,509,960 shares of ConAgra with a market value of $49,929,566 as of July 25. http://www.osc.state.ny.us/osdc/rpt7-2015.pdf