Yum Brands! – Sustainable Agriculture / Palm Oil Policy (2015)
Outcome: Successfully withdrawn after the the company publicly committed to sourcing 100% of its palm oil from responsible and sustainable sources by 2017.
Yum! Brands (Yum) foods contain palm oil, a commodity that has attracted high-profile scrutiny for its role in deforestation and human rights abuses. Yum’s website suggests that palm oil is used as cooking oil in 30% of its 39,000 restaurants.
Approximately 85% of palm oil is grown in Indonesia and Malaysia, where it is the leading driver of deforestation. Primarily due to forest and peatland conversion, Indonesia was ranked the 3rd largest emitter of greenhouse gases globally, despite being the world’s 16th largest economy. The palm oil industry is also notorious for using child and forced labor, according to the U.S. Department of Labor.
Companies that fail to uphold strong environmental and social values throughout their supply chains have faced significant reputational damage and consumer rejection of their products.
Many companies are already addressing these concerns. Palm oil purchasers and major suppliers have recently adopted robust and time-bound commitments to eliminate deforestation and human rights abuses from their palm oil supply chain and achieve full traceability. These commitments have been made by a group of over 20 consumer brands such as Mondelez, Dunkin Donuts, and Nestle, and palm oil suppliers representing over 60% of palm oil produced, including Cargill, Wilmar, Goldenagri Resources, and IOI Loders Croklaan.
Yum scored a 0 out of 100 on a 2014 palm oil sourcing scorecard by the Union of Concerned Scientists, below McDonald’s and Subway. Burger King, a member of the Roundtable on Sustainable Palm Oil (RSPO), committed to source only certified sustainable palm oil and palm olein.
By contrast, Yum has yet to adopt a comparable commitment. In fact, it is not clear whether the company has any environmental standards for the palm oil it purchases. Proponents are concerned that Yum may be exposed to significant brand and reputational risks from supply chain impacts on deforestation and human rights.
Therefore, be it resolved that: Shareholders request the Board prepare an annual public report, at reasonable cost and omitting proprietary information, providing metrics and key performance indicators demonstrating the extent to which Yum is curtailing the actual impact of its palm oil supply chain on deforestation and human rights.
Proponents believe a meaningful response to this proposal could include, amongst other company responses:
• A “no deforestation, no peat clearance, and no exploitation” policy;
• Percentage of palm oil traceable to suppliers and verified by credible third parties as not engaged in (1) physical expansion into peatlands, High Conservation Value or High Carbon stock forests, or (2) human rights abuses such as child or forced labor;
• A time-bound plan for 100% sourcing consistent with those criteria;
• An explicit commitment to strengthen third-party certification programs to prevent development on high carbon stock forests and peatlands; and
• Percent of Palm Oil RSPO certified (including percentage GreenPalm, Mass Balance and/or Segregated).