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Groups use leverage as shareholders to urge attention for human rights
Oxfam, the AFL-CIO, Trillium Asset Management and several other investors today filed a formal shareholder resolution urging PepsiCo to account for land rights violations in its supply chain. A recent investigation by Oxfam revealed that companies supplying sugar to PepsiCo and its franchisees have been implicated in violent land grabs, pushing small farmers off their land and undermining their livelihoods.
33 investors representing more than $1.4 trillion in assets have issued a statement to companies in support of Oxfam’s Behind the Brands campaign and more than 250,000 people have already signed petitions urging PepsiCo to declare zero tolerance for land grabs. This month, Coca-Cola responded to the campaign by declaring “zero tolerance” for land grabs and committing to steps to prevent land conflicts in its supply chain. So far PepsiCo and Associated British foods have yet to address the issues highlighted by Oxfam’s report, Nothing Sweet About It.
“The pressure is only increasing on PepsiCo to address the realities of its supply chain,” said Judy Beals, campaign manager for Oxfam’s Behind the Brands Campaign. “The company is leaving itself open to immense risks if it fails to tackle land conflicts in areas where it sources ingredients. Coca-Cola has already identified these risks and made promises to address them. The question investors should ask is: why is PepsiCo so far behind?”
“As shareholders we want to know what PepsiCo is doing to ensure its suppliers are behaving responsibly and preventing land conflicts from undermining its reputation and operations,” said Beals. “We need a better understanding of how PepsiCo is managing supplier performance and risks that could have damaging impacts for the company and communities alike.”
The shareholder resolution will receive a formal vote at PepsiCo’s annual general meeting in early 2014. This week, Oxfam supporters delivered the more than 250,000 petitions to PepsiCo bottling plants and facilities in the US in order to build greater attention among company employees of the issues in its supply chain.
Email PepsiCo now: tell them to make sure their sugar doesn’t lead to land grabs.
Behind the Brands: Ranking of food and beverage companies
Notes to editors
Full text of the shareholder resolution
SHAREHOLDER PROPOSAL REGARDING REPORT ON LAND RIGHTS
Since 2000, over 885 large-scale land acquisitions covering approximately 79 million acres globally have been recorded. Approximately a third of the deals involve investment in cash crops such as sugar cane, palm oil, and soy. Many of these large-scale land acquisitions involve evicting traditional land holders, through coercion or fraud ("land grabs").
Land grabbing primarily affects small-scale farming communities in developing countries and has been linked to loss of livelihoods, hunger, and violence. PepsiCo’s sources of sugar include suppliers that have been linked to land grabs, which poses risk to the company and shareholder value; PepsiCo must urgently recognize this problem and take steps to ensure that land rights violations are not part of its supply chain.
By preparing an annual report regarding land rights and applying the results as part of its supply chain management, PepsiCo would strengthen its ability to assess its own and its suppliers’ performance on this important issue and hold its suppliers accountable; enable shareholders to better understand and assess potential reputational and operational risks; and, consistent with the principle that “what gets measured gets managed,” prompt more responsible business practices by suppliers.
There is a clear and growing consumer interest in understanding the impacts made by the supply chains of the brands they purchase. Improved transparency by PepsiCo regarding policies and practices that secure future commodity supplies and reduce social and environmental risks are a part of the process of building a sustainable business model for the company and its shareholders.
As one of the world’s largest food and beverage companies, PepsiCo through its global supply chains is positioned to be a leader in promoting respect and support of land rights, fair resolution of land conflicts, and sharing of investment benefits; PepsiCo also has a unique opportunity to encourage government and the wider food industry to do the same. Indeed, PepsiCo’s membership in Bonsucro serves as an acknowledgement of land rights violations as a sustainability issue resulting from sugar production.
Shareholders request that the Board of Directors cause PepsiCo to publish by November 1, 2014, and on an annual basis thereafter, a report focused on the issue of land rights along the company’s supply chains. Among other important disclosures, the report should (i) disclose from whom and where PepsiCo sources its sugar cane, palm oil, and soy, and whether PepsiCo and its suppliers have adopted a zero tolerance policy on land rights violations and (ii) provide an objective assessment of how PepsiCo’s supply purchases impact rural communities’ land rights. The report should be prepared at reasonable cost, omitting proprietary information, and using a phased, tiered, or other approach that PepsiCo deems reasonable and practical.
Annual reporting would strengthen PepsiCo’s ability to assess its own and its suppliers’ performance on the issue of land rights, to hold its suppliers accountable, and enhance shareholder value by enabling shareholders to better understand and assess potential reputational and operational risks.
LIST OF CO-FILERS:
- Benedictine Sisters of Virginia
- Benedictine Women of Madison
- Catholic Health East
- Congregation of Benedictine Sisters
- Fresh Pond Capital
- Maryknoll Sisters
- Mercy Investment Services
- Missionary Oblates of Mary Immaculate
- Newground Social Investments
- Socially Responsible Investment Coalition
- Trillium Asset Management
- Zevin Asset Management