ConAgra Foods is now the latest large food company to adopt a more sustainable palm oil policy. The $13 billion giant, whose packaged food brands include Healthy Choice, Slim Jim, Marie Callendar’s and Libby’s, has agreed to use only sustainably-sourced palm oil in its products.
Soon after the company announced its new policy late last week, the US$177 billion New York State Common Retirement Fund announced it would withdraw a sustainable palm oil shareholder proposal it had filed with Green Century Capital Management.
While ConAgra previously stated it was committed to the development of sustainable palm oil, and is a member of the Roundtable on Sustainable Palm Oil, its stance did not go far enough to satisfy a wide range of environmental activist groups. Critics accused the company of focusing more on purchasing “GreenPalm Credits” instead of working harder to prevent purchasing palm oil from suppliers that were responsible for deforestation, most of which is occurring in southeast Asia.
ConAgra’s decision to be more proactive on sustainable palm oil is an example of how transparency and disclosure do not always go far enough. With palm oil production ramping up worldwide—due to the growing demand for biofuels and shift away from hydrogenated oils—the result has been more environmental degradation as more rainforest has been cut down in favor of plantations growing this coveted fruit. The increased production has opened a Pandora’s Box of problems, including increased human rights violations, land tenure abuses, and a host of environmental woes resulting from the loss of mangroves and peatlands.
To that end, ConAgra has agreed to source oil from suppliers that have been vetted as not procuring palm oil from such affected areas by December 2015. The company also said it will immediately suspend any supplier violating its policy. ConAgra follows its largest palm oil supplier (and largest importer to the U.S.), Cargill, which recently announced a more rigorous palm oil sourcing policy. Unilever, Starbucks and Kellogg’s are among the list of global firms promising a more responsible stance on this ingredient that is found in countless food products worldwide.
As a result of the pressure—including the fact the New York State Retirement Fund owns over 1.5 million shares of ConAgra stock with a market value of almost US$50 million—ConAgra sent the Fund a letter outlining the new policy, which in turn suspended the proposal. Hence another lesson for companies moving too slowly to meet similar stakeholder demands: While shareholder proposals in general are difficult to pass, one large pension fund or investment firm can shake a cage enough to prompt action.
Image credit: Wikipedia (Tyrone)