Blog: Katy AskewShareholder pressure prompts ConAgra palm oil commitment

Katy Askew | 27 August 2014

ConAgra Foods has responded to investor criticism of its palm oil usage by committing to source 100% sustainable palm oil by December 2015.

A shareholder activism campaign spearheaded by Green Century Capital Management and The New York State Comptroller's Office had tabled a proposal on palm oil to be raised at the group's annual stockholder meeting, scheduled to take place later next month.

In exchange for the withdrawal of the proposal, ConAgra said it will adopt a new policy on palm oil as part of its 2014 corporate responsibility report.

"Over the past several years, we've become increasingly aware of the potential social and environmental 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," ConAgra said. "Though ConAgra is a relatively minor user of palm oil, to help ensure our purchases do not contribute to deforestation of the world's rainforests or negatively impact the comunities that depend on them, we will source 100% of out palm oil from responsible and sustainable sources by December 2015."

While it is commendable that ConAgra has made some concrete commitments on palm oil sourcing, one is left wondering what took so long. Why did it take investor activism to jolt the company into action?

ConAgra is playing catch-up to a number of its industry peers, many of whom have pledged to source sustainable palm oil by the end of this year.

Earlier this year, Mars Inc said that it would build a "fully traceable" palm oil supply chain by the end of 2014, following in the footsteps of the likes of Kellogg, Unilever and General Mills. For its part, Nestle has implemented a policy that "goes beyond" RSPO requirements since 2012. 

Ingredients and commodities suppliers have also moved to address the issue. Palm oil supplier Wilmar International has pledged to supply palm oil that has no links to deforestation, Archer Daniels Midland has made progress on using segregated sustainable palm oil for products made at its cocoa ingredients plants, while B2B chocolate group Barry Callebaut has responded to growing demand by ramping up its RSPO-certified offering

It is good news that ConAgra is committing to sustainable palm oil. The negative impact that cultivation can have on the environment and local communities has been well documented.

Any other laggards of the food sector should act quickly to catch up with best in practice standards adopted by industry leaders. Businesses should no longer require a wake up call - be it shareholder activism or criticism from environmental groups - to get the ball rolling and implement measurable policies on palm oil sustainability.

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