Kellogg Co. has agreed to buy palm oil only from suppliers who can prove they don’t damage rain forests, the strongest move yet by a public food manufacturer to stop the practice, according an environmental group that pressured the maker of CornFlakes and Rice Krispies.
Starting in 2016, palm oil - a vegetable oil used to cook everything from Pop-Tarts to Pringles - will be sourced through supply chains that are deemed “environmentally appropriate,” states a new policy posted on the Battle Creek, Mich .-based company’s website. Suppliers must trace the oil to plantations that are independently verified as legally compliant, Kellogg’s Chief Sustainability Officer Diane Holdorf said in an email.
“Kellogg’s aggressive timeline for eliminating deforestation from its supply chain raises the bar for the entire industry and represents a tipping point in developing a responsible palm-oil supply chain,” Lucia von Reusner, an activist for Boston-based Green Century Capital Management Inc., which filed a shareholder proposal asking for policy changes, said in an interview.
Kellogg is the latest target of environmental groups looking to stop the plowing of Southeast Asian rain forests to farm palm oil, an industry Green Century pegs at $50 billion a year. The ingredient is the most widely used vegetable oil in the world, von Reusner said. Its production is the leading cause of global deforestation, endangers wildlife and contributes to human-rights abuses of workers, she said.
Von Reusner ramped up pressure on the world’s largest cereal maker in August when she asked Chief Executive Officer John Bryant on a conference call what he planned to do about allegations that a China partner, Wilmar International Ltd., had contributed to the destruction of rain forests. Green Century, which owns less than 1 percent of Kellogg stock, followed up with a shareholder resolution in November that it has since withdrawn.
“We take the whole area of sustainability of palm oil very seriously,” Bryant said in an interview in August, after von Reusner’s questions. “We buy sustainably sourced palm oil, and where it’s not available, we buy the green certificates to cover it.”
Such certificates, purchased from certified palm-oil producers and traded on specialized exchanges, allow companies to claim they have supported the sustainable production of palm oil, according to trading platform GreenPalm.
Lobbying by Green Century and Kellogg prompted Wilmar, the world’s largest palm-oil trader, to adopt a similar policy in December prohibiting palm oil development in carbon-rich rain forests and peatlands, von Reusner said.
“We are pleased to see the progress Wilmar is also making in this area, having recently announced a policy to protect forests, peatlands and human and community rights,” Holdorf said.
Iris Chan, a spokesman for Singapore-based Wilmar, didn’t return an email seeking comment.
Green Century Capital said it was founded by nonprofit environmental advocacy groups to invest in socially responsible companies, and profits help fund the groups’ priorities. Green Century Capital holds Kellogg as part of a passive index fund, von Reusner said.
SumOfUs, a Web-based U.S. environmental group, also pressured Kellogg with a petition demanding that the cereal maker get tough with Wilmar or end its supply and distribution joint venture with the company.
Business, Pages 29 on 02/15/2014