Organization: Kraft Foods Inc.

Year: 2015

Description: Whereas:

Kraft Foods Group is one of the largest consumer packaged food and beverage companies in North America, with a diversified line of brands including Oscar Mayer, Lunchables, Athenos and Country Time. Palm oil, soya, sugar, beef and paper are used in a variety of Kraft products.  Global demand for these commodities is fueling deforestation and human rights violations, including child and forced labor.

Approximately a third of recorded large-scale land acquisitions globally since 2000 involve investment in cash crops such as sugar cane, palm oil, and soy. Many of these acquisitions involve evicting traditional land holders, through coercion or fraud ("land grabs").  
The Consumer Goods Forum, a global industry network, has recognized that “Deforestation is one of the principal drivers of climate change, accounting for 17% of greenhouse gases today. The consumer goods industry, through its growing use of soya, palm oil, beef, paper and board, creates many of the economic incentives which drive deforestation.” (Consumer Goods Forum press release, 11/29/10).

Negative impacts from deforestation and poor forest management can be reduced through increased use of recycled materials, independent third party certification schemes, and monitoring of supply chains.

CDP asks global corporations to report how their activities and supply chains contribute to deforestation and how those impacts are managed.  Kraft has not responded to CDP’s forestry survey, which is backed by 240 investors managing $15 trillion.

Kraft discloses little information on how its purchases of palm oil, soya, paper, beef and sugar are impacting forests and human rights, or how the company is managing these risks. Meaningful indicators would include:  

•    A company-wide policy on deforestation, with reference to the key commodities driving deforestation;
•    The percentage of each of these commodity purchases that Kraft has traced back to its source;
•    The percentage of these commodity purchases that are sustainably sourced, with goals for each commodity;
•    Whether Kraft and its suppliers have adopted a zero tolerance policy on “land grabs”;
•    Results of supplier audits to verify compliance with Kraft’s forestry goals;
•    Identification of certification systems and programs that Kraft uses to ensure sustainable sourcing of each of these commodities; and
•    An assessment of how Kraft’s purchases impact deforestation and human rights, including rural communities’ land rights.

Proponent believes Kraft faces reputational and operational risks by failing to adequately disclose its approach to managing deforestation and related risks. Cadbury, a former Kraft brand, faced public controversy over use of palm oil in its Dairy Milk bars in New Zealand.  Rainforest Action Network claims Kraft’s products are “at high risk of contamination” with palm oil associated with human rights violations (Rainforest Action Network, “Conflict Palm Oil” 9/12/13). Union of Concerned Scientists notes Kraft has made “no commitments” on palm oil (Palm Oil Scorecard).

RESOLVED:  Shareholders request the Board to prepare a public report, at reasonable cost and omitting proprietary information, by December 1, 2015, describing how Kraft is assessing the company’s supply chain impact on deforestation and associated human rights issues, and its plans to mitigate these risks.