MEMORANDUM. Summary of arguments in favor of proposal

Transcription

1 MEMORANDUM Panera Bread Co. Shareholder Resolution Adopt a sustainable palm oil policy Panera Bread Company Symbol: PNRA Vote For Shareholders request that Panera Bread adopt, implement and monitor a comprehensive sustainable palm oil sourcing policy. This policy should be communicated publicly within six months of the annual meeting. Summary of arguments in favor of proposal 1. Failure to adopt a sustainable palm oil sourcing policy poses a serious risk to Panera s reputation. a. Panera uses palm oil in many of its products. b. Palm oil production can be associated with significant environmental degradation and human rights violations. c. NGO campaigns and media continue to produce damaging publicity for companies that have not adequately addressed palm oil sustainability. d. Panera is particularly vulnerable to NGO criticisms due to its Live Consciously, Eat Deliciously campaign. e. Many Food and Beverage companies have adopted sustainable palm oil policies. 2. Sustainable palm oil is available a. Palm oil production can expand efficiently in response to increased demand without causing deforestation and human rights abuses. b. The majority of palm oil produced and traded globally is under sustainable palm oil commitments. c. Palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) is oversupplied in the global market. d. Sustainable palm oil derivatives and fractions are on the market. 1. Failure to adopt a sustainable palm oil sourcing policy poses a serious risk to Panera s reputation. a. Panera uses palm oil in many of its products. i. Certain products sold by Panera in the following categories contain palm oil: specialty breads, scones, sweet roles,

2 brownies, cookies, and bagels. 1 This information is accessible to customers. b. Palm oil production can be associated with significant environmental degradation and human rights violations. i. Palm oil is the most produced vegetable oil in the world by volume; more of it is consumed in the United States than butter and margarine combined; and it is a versatile material for industrial and personal care applications. Thus, its production practices have widespread consequences. 2 ii. In Indonesia alone, the expansion of palm plantations wipes out a forested area equal to the size of Rhode Island every year. 3 Much of that deforestation occurs on peat soils, which are nearly 8 times as carbon- intensive as forest; peat clearing in Indonesia and Malaysia is responsible for 4% of global annual greenhouse gas emissions. 4 5 iii. Additionally, according the U.S. Department of labor, the production of palm oil is often associated with forced labor in Malaysia and with child labor in Indonesia. 6 c. NGO campaigns and media continue to produce damaging publicity for companies that have not adequately addressed palm oil sustainability. i. The impacts of unsustainable palm oil development have received media and regulatory attention, raising consumer awareness. For example, the E.U. market recently mandated labeling for all products containing palm oil. 7 In a high- profile speech in Jakarta, U.S. Secretary of State John Kerry emphasized the significant effect of deforestation in Indonesia on global climate change. 8 Prominent media sources including the New York Times, Reuters, the Associated Press, BBC, The Economist, Time Magazine, and Forbes have all run articles on palm oil sustainability. Some, such as BusinessWeek, include extensive, detailed documentation of human rights violations Spreads/Panera- Breads- Cinnamon- Crunch- Bagel- 45- oz/22943; pinterest.com/pin/ /; Sweets/Panera- Breads- Pineapple- Upside- Down- Mini- Bundt- Cake- 6- oz/23130; etc. 2 page _Driving_deforestation_- _the_ills_of_palm_oil_production.pdf retailers/retailers/legislation- and- voluntary- commitments/ 8 kerry- on- climate- change/; rspo- vs- greenpeace- palm- oil- deforestation.html /indonesias- palm- oil- industry- rife- with- human- rights- abuses

3 ii. NGO s use sophisticated publicity tactics to criticize companies sourcing unsustainable palm oil. For example, in 2010, Greenpeace launched a mock video advertisement for Nestle Kit Kat, criticizing the company for unsustainable sourcing. The video was featured in numerous media sources and was watched over 300,000 times on its first day alone. 10 iii. These campaigns have can significantly damage brands. For example, after NGO pressure on palm oil sourcing, Cadbury New Zealand fell from the #1 most trusted brand for six consecutive years to the #36 th most trusted brand. 11 d. Panera is particularly vulnerable to NGO criticisms due to its Live Consciously, Eat Deliciously campaign. i. Panera is spending an estimated $70 million on a campaign to improve the public image of Panera s values. 12 A public NGO campaign linking Panera with deforestation and human rights abuses could significantly undermine this effort. e. Many Food and Beverage companies have adopted sustainable palm oil policies. i. Starbucks, Dunkin Donuts, Subway, McDonalds, Kellogg, and General Mills are among the many U.S. companies that have palm oil policies Sustainable palm oil is available. a. Palm oil production can expand efficiently in response to increased demand without causing deforestation and human rights abuses. ii. The government of Indonesia, the world s largest producer of palm oil, has stated that it can easily meet its goal of doubling palm production by 2020 by planting on degraded land instead of replacing forests. 14 iii. With regard to human rights, avoiding community conflicts is a financial imperative for successful palm oil companies. For example, since harvested fresh palm fruit bunches spoil within 48 hours of harvest, one four- day road block would cause a $1 million loss for a 10,000 hectare plantation. 15 Ensuring functional community and labor relations is therefore an essential investment regain- trust- cadbury to- advertise- its- social- consciousness- advertising.html?_r= free- palm- oil- scorecard.pdf; 14http:// almoil.pdf 15http://awsassets.panda.org/downloads/profitability_and_sustainability_in_palm_oil_production u pdate_.pdf

4 b. The majority of palm oil produced and traded globally is under sustainable palm oil commitments. 16 iv. Wilmar, which controls 45% of the world s palm oil 17, and Golden Agri- Resources, the world s second largest palm oil plantation company, have both made company- wide zero- deforestation commitments, including strong protections for human rights. 18 c. Palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) is oversupplied in the global market. v. More than 620 factories and facilities worldwide now offer RSPO certified sustainable palm oil. vi. The volume of certified sustainable palm oil produced has increased 5- fold since However, nearly 50% of certified oil is currently purchased as uncertified. 19 d. Sustainable palm oil derivatives and fractions are on the market. vii. Wilmar and other palm oil companies offer a wide variety of sustainable palm oil derivatives and fractions. 20 viii. Many companies that use palm derivatives and fractions have comprehensive sustainable palm policies. See section 1. e. 3. Conclusion While pressure from NGOs 21 and consumers is rapidly ramping up reputational risks for palm oil purchasers, a supply of sustainable and responsible palm oil is available and plentiful. Therefore, companies that lack sustainable palm oil sourcing policies have an imperative to source palm oil responsibly. Panera, which is actively promoting its image as a responsible company, would lose customers if the public were to associate Panera products with slavery, child labor, dead orangutans, clear- cut rainforests and massive greenhouse gas emissions. We encourage investors to help protect Panera s brand and support this resolution. 16http:// tment_over_half_worlds_palm_oil_could_now_be_ 17 wilmar- zero- deforestation.html 18 international; 19 Available for download at ng/palm_oil_buyers_scorecard_2013/ 20 international.com/our- business/merchandising- processing/palm- laurics/; american- brands- deforestation html

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