P&G investors set to oppose Angela Braly on P&G board
Written with the strong support of Melissa Denchak
Days before Procter & Gamble’s (P&G) annual meeting of shareholders, the NRDC issued an investor notice urging shareholders to oppose Angela Braly’s re-election to the company’s board of directors. The brief cites the failure of company management – and Braly, in particular, as chairman of P & G’s governance and public accountability committee – to take meaningful action on a P&G 2020 shareholder proposal that called on the company to address its links to deforestation and intact forest degradation, particularly with respect to its supply of wood pulp from Canada’s boreal forest and palm oil from Southeast Asia. The 2020 resolution was passed with the support of 67% of voting shareholders, the first time a forest loss proposal has been passed in company history.
As the brief explains, a year after the adoption of the proposal, P&G has neither fundamentally reduced the impact of its supply chains on forests nor addressed the business, regulatory, operational and reputational risks posed by its unsustainable forestry practices. In response to the proposal, P&G issued a Environmental, social and governance platform for investors, a report on its forestry practices and additional documents describing its procurement methods; it also updated its procurement policies. Unfortunately, it is largely cosmetic measures that do little to reform P & G’s forestry operations or to mitigate their adverse impacts on communities, biodiversity or the global climate. In fact, the company has doubled down on several of its long-standing approaches over the past year.
Much of the responsibility for P & G’s inadequate response to the shareholder proposal lies with Braly. The brief explains that as chairman of the board of directors of the company Governance and Public Accountability Committee, its role is to guide the recommendations of the Board of Directors on matters of social responsibility, including those relating to sustainability and human rights. P & G’s failure to adopt policies that substantially address these issues reflects Braly’s lack of leadership, which the Concept Notes say is not without precedent. In 2012, Braly was forced to resign as CEO of insurance company WellPoint Inc. (now Anthem) by investors who cited mismanagement. In 2020, as a member of the board of ExxonMobil, ExxonMobil’s largest shareholder, BlackRock, opposed his re-election to the board of directors of the company that year because they judged his response. to insufficient climate risks.
The investor’s brief calls into question how Braly, a figurehead at one of the world’s largest fossil fuel companies, can credibly guide P & G’s response to sustainability concerns. It also details the supply chain issues that continue to pose a substantial risk to shareholder investments under Braly’s oversight:
- P&G continues to source wood pulp from climate-critical primary forests. The 2020 shareholders’ resolution called on P&G to redouble its efforts to eliminate deforestation and intact forest degradation from its supply chain. Despite this, P&G has said it will not eliminate sourcing from the unspoiled forest landscapes of Canada’s boreal forest. Instead, it has increased its purchases of domestic pulp by 15 percent while continuing to rely on deceptive government claims that downplay the damaging effects of Canada’s logging operations on forests. And while P&G says it is monitoring its suppliers to ensure it is sourcing fiber from sustainable sources, analysis of Canadian forestry companies indicates that P&G sources wood and pulp from factories. who engage in large-scale and unsustainable logging practices responsible for the destruction of critical areas of the boreal forest. , including intact forests. Another recent report documented that major pulp suppliers in Canada, including those that supply P&G, do not incorporate basic environmental and social safeguards into their policies. In Indonesia, P&G continues to rely on palm oil suppliers complicit in the deforestation of intact forest landscapes, including critical habitats for endangered species.
- P&G does not sufficiently address human rights violations. Although P&G says it protects human rights across all of its operations and suppliers, its updated policies provide little assurance that the company is in a position to determine whether human rights violations occur. human rights have taken place, let alone apply consequences or provide reparations to those raped. P&G does not explicitly state, for example, that suppliers must prove that they have obtained free, prior and informed consent, which allows indigenous and local communities to grant or deny authorization for a potentially project. to have an impact on them or the land they own. P&G also continues to use palm oil suppliers linked to forced labor and other human rights violations in Southeast Asia.
- P&G remains too dependent on third-party certification systems to verify the sustainability of its supply chains. P&G has made it clear that it will rely heavily on third-party certification systems to measure its success in protecting forests and human rights. But not all certification systems offer the same guarantees of sustainability in the supply of pulp and palm oil, and some contain glaring loopholes that undermine sustainable forestry practices. P&G has yet to adopt due diligence practices that would provide additional protection against these challenges.
- P&G remains exposed to significant reputational, market, regulatory and operational risks. As the 2020 shareholder proposal highlighted, companies that fail to adequately mitigate deforestation and forest degradation in their supply chains are vulnerable to a myriad of systemic and material financial risks. P&G has been criticized for not distancing itself from pulp and palm oil suppliers linked to destruction of climate-critical forests and violation of human rights in Canada and South Asia -East. to $ 41 billion, or 14% of equity. Meanwhile, the company continues to cede a competitive advantage to peers like Kimberly-Clark and Unilever who have chosen to adopt and implement more stringent forest procurement policies, and its supply chains remain exposed. to potential losses due to disruptions due to regulatory actions and the enforcement of human rights. violations, illegal deforestation and destruction of the habitat of species at risk.
As the document makes clear, a year after investors urged P&G to assume its role in endangering primary forests, human rights and the global climate, corporate leadership under the leadership of Braly failed to defend policies that would create a truly sustainable and ethical sourcing. channels that investors expect. By voting against Angela Braly’s re-election to the board, shareholders have the opportunity to show that they demand real solutions, not rhetoric, from P&G executives.
Tell Procter & Gamble CEO David Taylor that you want P&G to stop clearing our forests.