Driving change through investor engagement
The business environment is changing. So, too, is the mindset of consumers and investors who want to know that companies are transparent and respect human rights and the environment. And there are few more effective means of driving change in corporate behavior than from investors.
Consumers are showing with their wallets that they care about where their products come from. An increasing number of investors also pay attention to sustainability performance and use benchmarks to assess corporate practices.
One of the world’s largest commodity traders, Bunge Limited faced a wave of concerns from investors and customers about the links of its operations to forest fires, and human rights abuses in the company’s soy and palm oil supply chains.
Working with Friends of the Earth U.S. and investigative advocacy organization Global Witness—I contributed to a brief for investors gearing up to vote at Bunge’s 2021 annual general meeting (AGM) about its approach to eliminating these issues in its soy supply chain.
The brief lays out the serious financial and reputational risks, among others, and potential legal liabilities to which Bunge’s investors are exposed to throughout its supply chains. It also simply explains the scale to which Bunge’s soy operations are linked to deforestation in the Cerrado region of Brazil – an area four fifths the size of Chicago – containing the world’s most biodiverse savannah.
At Bunge’s May AGM, an unprecedented 98% of Bunge’s shareholders endorsed a shareholder proposal calling for the company to take steps to strengthen its no-deforestation policy. The Board committed to evaluate and disclose its efforts to eliminate deforestation from its operations and supply chains.
Ambitious laws on deforestation, human rights, and mandatory due diligence are being drawn up and implemented across Europe and the United States that apply to a range of sectors and all their supply chains. Investors have an interest in seeing that the companies they hold are not the only ones keeping up. There are growing expectations that companies and their financiers take adequate steps to respect human rights and the environment.
Bunge’s decision followed those made by other major corporations such as Procter & Gamble, Archer Daniels Midland (ADM), and JP Morgan Chase signaling that urgent steps to address climate challenges are possible and make good business sense.