Organization: Avon Products Inc.

Year: 2015

Description:

Whereas,

Palm oil derivatives are used in Avon products. The production of palm oil has attracted high-profile scrutiny for its role in deforestation and human rights abuses. 

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 16^th largest economy. The carbon stored in Indonesia’s peatlands is equivalent to 67% of the oil reserves of the U.S., Saudi Arabia, Canada, Russia, and Venezuela. The palm oil industry is notorious for using child and forced labor, according to the U.S. Department of Labor.

Companies that fail to uphold strong environmental and social standards throughout their supply chains may face 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 Procter & Gamble, Johnson & Johnson, L’Oreal, Unilever, Nestle, and palm oil suppliers representing over 75% of palm oil produced, including Cargill, Wilmar, Golden Agri-Resources, and IOI Loders Croklaan. 

By contrast, Avon has yet to take similar steps. Avon’s “Palm Oil Promise” commits to address the impacts of its palm oil supply through the purchase of Round Table on Sustainable Palm Oil (“RSPO”) GreenPalm certificates. These certificates support sustainable agriculture, but do nothing to ensure that Avon is actually purchasing palm oil from sustainable sources. Further, while Avon expresses support for a “moratorium on conversion of…peatlands into palm oil plantations”, its sourcing practices permit planting on peat. Additionally, the company has not submitted an RSPO Annual Communication of Progress, which would provide greater detail about Avon’s purchases.  

Proponents are concerned that Avon may be exposed to 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 Avon is curtailing the impact of its palm oil supply chain on deforestation and human rights.

Supporting Statement

Proponents believe a meaningful response to this proposal could include:

 

• 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
• A percentage breakdown of palm oil purchased by sustainability certification scheme.