Kraft Heinz Co. plans to vote on three sustainability-related shareholder resolutions at its annual meeting in Pittsburgh next month. And the company is opposed to every one of them.
Back in 2015, Kraft Foods Group merged with Heinz Co. to create one food and beverage company. The combined firm ranks as the third largest food and beverage company in North America and the fifth largest globally. In 2015, Credo Action launched a petition against the merger of Kraft and Heinz, stating that “combined, they are a threat to jobs, the environment, and affordable food.” It seems the concerns of Credo Action and others were well founded.
Emissions from “food distribution, processing, retail, and food services sectors combined are projected at nearly 1 million tons of CO2,” according to a report by Climate Smart Business. In other words, the food and beverage sector in general is responsible for a lot of carbon emissions. Deforestation caused by the palm oil sector in Indonesia is a big source of carbon emissions. Indonesia is the top producer of palm oil and is the fifth largest greenhouse gas emitter. The World Resources Institute attributes most of Indonesia’s GHG emissions to “the conversion of its forests and carbon-rich peatlands” for agriculture, including oil palm cultivation.
In one of the three shareholder resolutions, Domini Impact Investments and Calvert Investment Management asked Kraft Heinz to prepare a public report on how it is assessing its “supply chain impact on deforestation and associated human rights issues, and its plans to mitigate these risks” by Nov. 1. The resolution points out that palm oil, soy, sugar, beef and paper are “used in a variety of Kraft-Heinz products.”
The company lags behind other food and beverage giants — including Unilever, which Kraft Heinz recently expressed interest in buying — when it comes to addressing deforestation. Both companies ranked 8th and 10th out of 10 companies in a 2015 palm oil sourcing scorecard from the Union of Concerned Scientists.
Not much has changed since then. The Rainforest Action Network (RAN) describes Kraft Heinz as “a laggard company that lacks a responsible palm oil policy.” According to RAN, the company should “adopt a globally responsible palm oil procurement policy.” Since the merger in 2015, the company has not yet adopted any policies on palm oil. RAN lists the weaknesses of the company regarding palm oil, which include:
- Not having additional requirements for suppliers to stop destroying rainforests and peatlands, and end human and labor rights abuses.
- Lacking a requirement for palm oil to be traceable to the plantation level for for suppliers to comply across their entire operations.
Kraft Heinz recommended that shareholders oppose the deforestation resolution because the company has already “developed and implemented a global palm oil policy” that states it will source 100 percent sustainable palm oil. But that policy lacks a target date.
The other two resolutions ask for increased reporting from Kraft Heinz. An interfaith investment group asked the company to produce a comprehensive sustainability report “describing its environmental, social, and governance (ESG) performance and goals, including nutrition targets” and post it on its website by Nov. 1. The resolution acknowledges that sustainability reporting “is increasingly expected by company shareholders and stakeholders.” By issuing one, Kraft Heinz “can demonstrate its values, and can drive its practices and performance.” The resolution was filed by filed by Province of St. Joseph of the Capuchin Order (Midwest Capuchins), Sisters of the Holy Names of Jesus and Mary, US Ontario Province, Trinity Health and Mercy Investment Services.
In yet another resolution, As You Sow Foundation and Dignity Health asked Kraft Heinz to issue a report “assessing the environmental impacts of continuing to use non-recyclable brand packaging.” The filers claim a “significant amount” of the company’s “brand product packaging is not recyclable.”
In a proxy memo for the resolution, the filers argue that non-recyclable packaging represents “enormous waste and inefficiency” and the use of it “suggests management inattention to design for sustainability.” They further accuse management of not recognizing the “growing scientific data linking plastic packaging to threats to marine animals and potentially to human health” by continuing to use non-recyclable packaging.
Kraft Heinz opposed both reporting resolutions as well. The company said it believes the requested policies “would not be an effective use of our company’s resources nor in the best interests of our company or our stockholders.”
The big food giant states on its website that as a “socially responsible global food company,” it is “committed to reducing our environmental footprint and protecting the planet’s natural resources for future generations.” The trouble is that the company’s opposition to these three shareholder resolutions indicates the opposite.
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