Food giant Kellogg’s has committed to buying palm oil exclusively from sources that guarantee the protection of labor rights and critical tropical forests.
Palm oil is one of the most widely used food commodities. According to Green Century Capital Management it can be found in almost half of all packaged foods. Its popularity comes from the fact that its production requires only half the land that other oils need. It also maintains its properties at very high temperatures.
However, the rapid expansion of palm oil plantations, particularly in Malaysia and Indonesia, has had serious environmental consequences. The UN’s Environmental Program (UNEP) predicts that 98% of Indonesia’s forests may be destroyed within the next decade, largely due to palm oil production. Among other consequences, this deforestation is pushing the world’s Orangutan population to the brink of extinction. Furthermore, many palm oil plantations allegedly submit their workers to unjust and dangerous labor practices.
In reaction to these harmful trends, Green Century Capital Management, which owns stock in Kellogg’s, submitted a shareholder proposal requesting for the corporation to ensure that its products contain only palm oil from environmentally harmless sources.
In reaction to the proposal, Kellogg’s has announced that by December 31, 2015, all of its suppliers will have to be able to trace the palm oil they use back through the supply chain to plantations that can be independently verified as compliant with principles protecting forests and labor rights.
A company of Kellogg’s size has considerable power in the supply chain. This proposal will force many suppliers and plantations to take a close look at their practices. Smaller companies cannot afford to lose such a large customer. This case also demonstrates the positive changes that a green fund can bring about with only a small (<1%) portion of shares.