P&G learns climate rebuke is no longer glacial

P&G shareholders could take their claims a step further without upending the entire business model

  
The logo for Procter & Gamble Co. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018.

The logo for Procter & Gamble Co. is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018.

REUTERS/Brendan McDermid

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

NEW YORK  - Procter & Gamble is learning that climate-related shareholder proposals are no longer plodding at a glacial pace. Investors rebuked the $359 billion firm for stonewalling on a request to report more on how it’s saving the trees. Answering the demands should be easy enough, but it still gives investors a launching pad to push for more.

Green Century Funds issued a shareholder proposal that P&G do a better job disclosing efforts to eliminate deforestation especially around procuring pulp and palm oil. The consumer packaged goods company said it already is sourcing supplies in a responsible manner – though has missed previously stated climate goals – and is balancing the demands of consumers for products like Bounty paper towels. Yet, nearly 70% of investors that cast a vote, including institutional heavyweight BlackRock, backed the measure according to Green Century’s initial tally on Wednesday after P&G’s annual meeting.

That is no small feat. This year so far about 20 environmental proposals made it to corporate proxies from the likes of Chevron and Walmart, according to Proxy Monitor, with shareholders voting at most a bit over 50% in favor of such actions like disclosures related to climate lobbying. Even similar charges at Exxon Mobil, the fossil fuel producer that came under fire a few years ago, drummed up only around 60% of its votes in support of more disclosure.

The vote in favor of P&G doing more is nonbinding and other companies like Exxon have skirted around similar requests by offering just enough to appease shareholders without enacting real change. Yet for P&G’s investors, demanding more shouldn’t be as hard. After all, oil is still one of the biggest culprits for the drastic environmental changes over the decades, but producing fossil fuels is Exxon’s sole business. Conversely P&G’s degrading climate contributions are simply a dirty consequence of selling cleaning supplies.

P&G shareholders could take their claims a step further without upending the entire business model. Already competitors are moving in the right direction. Unilever has committed to a deforestation-free supply chain by 2023 while Kimberly-Clark is promising to reduce its purchasing of pulp from natural forests and instead seek out alternative materials. P&G has reasons to listen to its concerned owners. They just demanded to be heard.

CONTEXT NEWS

- Procter & Gamble shareholders voted in favor of a proposal calling for the consumer packaged goods company to issue a report regarding its efforts to eliminate deforestation. The proposal was submitted by Green Century Funds, which said on Oct. 13 that its resolution received 67% of the votes cast at P&G’s annual meeting on the same day.

- P&G had urged shareholders to vote against the proposal citing it already provides investors updates of its progress of managing pulp and palm oil supply chains.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Lauren Silva Laughlin and Amanda Gomez) ((jennifer.saba@thomsonreuters.com; Reuters Messaging: jennifer.saba.thomsonreuters.com@reuters.net))

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