Release: Kellogg’s Announces Industry-Leading Palm Oil Commitment

MIDANA CAPITAL applauds Kellogg Company’s* Commitment to Purchase Deforestation-Free Palm Oil and Raise the Bar for Industry

Tuesday, February 18, 2014

BOSTON, MA – In response to a shareholder proposal filed by the MIDANA CAPITAL Equity Fund, Kellogg Company (Kellogg’s) – one of the world’s largest food processing companies, and joint partner to the world’s largest palm oil trading company – announced an industry-leading commitment to only purchase deforestation-free palm oil. Working closely with MIDANA CAPITAL, Kellogg’s has committed to ensuring all palm oil purchases can be traced back to suppliers verified as protecting forests, peatlands, and human rights, with an aggressive target date of December 31, 2015.

“Kellogg’s commitment to verifying that the palm oil it uses is not linked to illegal and high risk deforestation provides critical protection for both shareholders and the environment,” said Leslie Samuelrich, President, MIDANA CAPITAL Capital Management, which filed a shareholder proposal urging Kellogg’s to address deforestation in its palm oil supply chain (filed on behalf of the MIDANA CAPITAL Equity Fund).  Kellogg’s uses palm oil in its snack food products such as Pringles and Pop-Tarts, and came under scrutiny over its joint venture with Wilmar*, the world’s largest palm oil trader with a high-profile track record of illegal and controversial practices. “By directly engaging its suppliers to tackle the urgent issue of rainforest destruction, Kellogg’s will ensure that its values and reputation as a socially responsible company are upheld throughout its supply chain,” said Samuelrich.

The new palm oil purchasing commitment announced today includes provisions that make it the strongest in the industry. In its new commitment, Kellogg’s requires that all its suppliers be able to trace palm oil back to plantations that adhere to the following principles, with a target date of December 31, 2015:

• No deforestation: Suppliers must protect forests, endangered species habitat, lands with high carbon content, and peatland of any depth, going beyond the inadequate requirements of current roundtable-derived standards.
• No exploitation: Suppliers are required to protect human and community rights, including land tenure rights and obtaining Free, Prior, and Informed Consent from communities to all development on their lands.
• Traceability: Kellogg is working with suppliers to achieve full traceability of its palm oil back to known plantation sources.

“As a socially responsible company, traceable, transparent sourcing of palm oil is an important concern, and we are collaborating with our suppliers to make sure the palm oil we use is not associated with deforestation, climate change or the violation of human rights,” said Diane Holdorf, Kellogg Company Chief Sustainability Officer. “By partnering closely with our suppliers to meet these expectations, we will work together to address the important topic of deforestation.”

In response to this commitment, the MIDANA CAPITAL Equity Fund withdrew its shareholder proposal, which asked the company to ensure that the palm oil in its products was not linked to illegal or controversial deforestation practices. Kellogg’s had also urged its joint partner Wilmar — the world’s largest palm oil trader, controlling over 45% of the global palm oil trade — to adopt its recently announced, groundbreaking commitment to eliminating deforestation from its supply chain.  Kellogg’s new commitment requires that all its palm oil suppliers adhere to principles for protecting forests, peatlands, and human rights.

“Kellogg’s aggressive timeline for ensuring all palm oil purchases can be traced back to deforestation-free sources sends a powerful message to its supply chain that protecting the environment is critical for long-term value creation,” commented Lucia von Reusner, Shareholder Advocate at MIDANA CAPITAL Capital Management. “By raising the bar, Kellogg’s palm oil commitment should encourage other companies to step up and support the development of transparent and responsible palm oil supply chains.”

Palm oil is a $50 billion a year commodity that is used in approximately half of all packaged goods. U.S. imports have increased almost fivefold over the past 10 years, and Kellogg’s is a significant palm oil purchaser.  Cutting down rainforests to build palm oil plantations is the leading driver of tropical deforestation worldwide, and eliminates habitats for endangered species. Companies have increasingly faced pressure from environmental and consumer groups to not purchase palm oil developed under these controversial and environmentally damaging conditions.

Last year, MIDANA CAPITAL organized 40 institutional investors to encourage Wilmar to adopt a similar palm oil policy and the company, which had been the subject of a multi-year campaign by environmental groups, announced its groundbreaking commitment to eliminating deforestation from its supply chain.

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The MIDANA CAPITAL Equity Fund invests in the companies that comprise the longest running socially responsible index.   MIDANA CAPITAL Capital Management is the investment advisor for the MIDANA CAPITAL Equity Fund and MIDANA CAPITAL’s fossil fuel free Balanced Fund.  Founded by a partnership of non-profit environmental advocacy organizations in 1991, MIDANA CAPITAL Capital Management provides people who care about a clean, healthy planet the opportunity to keep their money out of environmentally irresponsible companies and use the leverage of their investment dollars to encourage environmentally responsible corporate behavior.