How Kellogg Company* is Protecting Rainforests and Making a Sustainable Palm Oil Supply Chain
Green Century's Lucia von Reusner with Diane Holdorf, Chief Sustainability Officer for Kellogg Company at its annual stockholder meeting in 2014
In 2008, the Kellogg Company announced its first steps in the sustainable palm oil journey with the purchase of GreenPalm certificates. By 2011, the company was covering 100% of its palm oil purchases in this way, and moved in subsequent years to also incorporate Mass Balance and Segregated certified supply in its purchasing.
In early 2014, Kellogg Company announced its ground-breaking pledge to further clean up its palm oil supply chain, becoming one of the first companies to commit to protect Southeast Asian rainforests by only buying palm oil that does not cause deforestation.
Green Century's Leslie Samuelrich and Kate Kroll recently spoke with the Kellogg Company's team, including Chief Sustainability Officer Diane Holdorf, who was instrumental in working with Green Century to inspire adoption of the Kellogg Company's policy.
The company has made swift and significant progress — 92% of its palm oil can now be traced to suppliers following a zero-deforestation policy. Although the company is slightly behind its timeline (100% of its palm oil supply by December 2015), its commitment to achieving the goal may provide reassurance to its investors that it has addressed reputational risks and is meeting the expectations of its customers for a sustainable supply chain.
In addition to this quantifiable progress, Kellogg's recently publicly announced that it was cutting ties with a supplier that had continued to raze rainforests despite its claims to the contrary. The offending company is the Malaysian-based IOI* whose decimation of rainforests for at least the last six years was recently exposed by activists who took aerial photographs of the barren countryside. Kellogg's, along with Unilever* and Mars,* became an early mover on implementation by announcing that it was ending buying agreements with IOI.
While we celebrate the Kellogg Company's progress, we know there is more work to be done to curb climate change through stopping deforestation. A global supply chain for the world's most widely used vegetable oil cannot change overnight. That's why Green Century and other investors are holding implementation dialogues this year with companies that have made zero-deforestation pledges, pushing third party agents to strengthen their standards, and encouraging governments to support industry actions on this issue.
If we succeed, we will also benefit from decreased carbon pollution, protection of habitat for endangered species, and improved air quality for residents and visitors of Southeast Asia.
Green Century Capital Management is the investment advisor to the Green Century Funds and offers two environmentally and socially responsible funds, the Green Century Equity Fund and the Green Century Balanced Fund. Green Century works to curb climate change through fossil fuel free investing, reinvestment in sustainable companies, and advocating with companies to improve their environmental policies and supply chains. Green Century is also the only U.S. mutual fund company owned by environmental non-profits, the Public Interest Research Groups (PIRGs).
*As of March 31, 2016, Kellogg Company comprised 0.00% and 0.27%, and Unilever comprised 0.99% and 0.00% of the Green Century Balanced Fund and the Green Century Equity Fund, respectively. Other securities mentioned were not held in the portfolios of the Green Century Funds as of March 31, 2016. References to specific securities, which will change due to the ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, or the market as a whole and may perform worse than the market. Bonds are subject to risks including interest rate, credit, and inflation. The Funds' environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria.
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This information has been prepared from sources believed to be reliable. The views expressed are as of this date of writing and are those of the Advisor to the Green Century Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 6/16
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