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Deforestation: shareholders get response to resolutions

Investors are increasingly pushing some of the world’s biggest companies to commit to reducing their impact on the global forests, according to an analysis of shareholder resolutions put forward at US AGMs. The report was published by the Global Canopy Programme, a think tank aiming to accelerate a transition to a deforestation free economy.

Deforestation shareholder resolutions

Companies respond to investors demands to act on deforestation

Analysis of the shareholder resolutions put forward by members of the Ceres Investor Network on Climate Risk, between 2011 and 2017, found that over half (52%) of shareholder proposals to address ‘deforestation risks’ in the companies’ supply chains led to some form of commitment from the company. These resolutions targeted high profile companies such as Kraft, DuPont and Mondelez, which are exposed to deforestation risks through their reliance on the production of soya, palm oil, and timber or the raising of cattle.

More than two thirds of the companies targeted are ranked by Global Canopy’s Forest 500 project as being among the 250 most influential companies with the power to end tropical deforestation.

Tom Bregman, Senior Sustainable Finance Associate at the Global Canopy Programme said: “It is really encouraging to see that investors are engaging with companies on the deforestation risks in their supply chains. Every day, tropical forests are being cleared to make way for commodity crops, impacting the climate, and the security of food and water supplies.

“Investor engagement can be the first step in improving policies – and practice, helping to reduce the threat to tropical forests from agricultural commodities.”

The analysis also found that the shareholder resolutions are becoming increasingly ambitious and targeted, asking companies to address deforestation risks in all priority supply chains – including palm oil, soya, pulp and paper, timber and cattle products, which are the main drivers of tropical deforestation globally. Many detail the kinds of ecosystems to be protected and requesting time-specific implementation plans. The report found that most of the shareholder proposals analysed resulted in commitments from the company to address the issue and were withdrawn before being put to a vote at the annual general meeting.

Of the proposals which went to a vote, 52% were followed by a company commitment to address the forest issue raised.  For example, Archer Daniels Midlands (ADM) introduced a ‘no deforestation’ policy for soybeans and palm oil with stronger, time-bound commitments, following a shareholder resolution in 2015.

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