Kroger 2012 Annual Report Download - page 54

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SH A R E H O L D E R P R O P O S A L
( I T E M N O. 7 )
We have been notified by a shareholder, the name and shareholdings of which will be furnished promptly
to any shareholder upon written or oral request to Kroger’s Secretary at Kroger’s executive offices, that it
intends฀to฀propose฀the฀following฀resolution฀at฀the฀annual฀meeting:
Whereas: The social and environmental impact of palm oil production create important challenges for
companies฀trying฀to฀ensure฀more฀sustainable฀and฀lower฀risk฀supply฀chain฀practices.฀Because฀our฀Company฀has฀
not฀yet฀committed฀to฀procure฀certified฀sustainable฀palm฀oil฀for฀its฀products,฀we฀believe฀it฀opens฀itself฀to฀risks฀
to฀its฀reputation฀as฀well฀as฀risks฀to฀the฀long-term฀security฀of฀its฀palm฀oil฀supply.
The฀largest฀suppliers฀of฀palm฀oil฀for฀the฀United฀States฀are฀Indonesia,฀Malaysia฀and฀Papua฀New฀Guinea.
In the Philippines, it is estimated that almost 25% of palm labor production comes from child labor
(http://ctuhr.org/labor-groups-says-24-workers-in-palm-oil-plantations-are-children-calls-on-the-public-to-
combat-child฀labor/).฀The฀U.S.฀Department฀of฀Labor฀reported฀that฀child฀and/or฀forced฀labor฀contributed฀to฀palm฀
oil฀ production฀ in฀ Indonesia฀ and฀ Malaysia.฀ (http://www.dol.gov/liab/programs/ocft/PDF/2010TVPRA.pdf).฀
Many฀of฀these฀children฀are฀not฀part฀of฀family฀farms.฀Such฀labor฀practices฀may฀violate฀international฀codes฀of฀
human rights.
According to the Union of Concerned Scientists, palm oil plantations “are a disproportionately large
source of global warming emissions because they are often established on land converted from swamp
forests. When these wetlands are drained, their carbon-rich peaty soils decay, releasing large amounts of both
carbon dioxide and methane. Thus the expansion of plantations onto peat soils is an important source of the
emissions฀that฀cause฀global฀warming.”฀(Ucsusa.org,฀June฀2011).
Due in part to deforestation, Indonesia has been the 3rd฀ largest฀ emitter฀ of฀ greenhouse฀ gases฀ (GHGs)฀
globally฀(World฀Bank).฀The฀conversion฀of฀peatlands฀accounts฀for฀roughly฀half฀of฀Indonesia’s฀GHG฀emissions฀
buy฀only฀1%฀of฀its฀gross฀domestic฀product฀(Mongabay,฀January฀19,฀2010).
Palm oil plantations that are not sustainably managed have devastated habitats of endangered species,
such฀as฀the฀orangutan.฀Failure฀to฀manage฀reputational฀risk฀connected฀to฀palm฀oil฀in฀supply฀chains฀has฀been฀
disruptive฀for฀a฀number฀of฀major฀companies฀including฀Nestle,฀Mattel,฀and฀others฀who฀made฀palm฀oil฀contracts฀
in฀Indonesia฀that฀resulted฀in฀negative฀publicity฀(http://en.wikipedia.org/wiki/Sinar_Mas_Group).
To address the social and environmental concerns associated with palm oil production and to promote
sustainable palm oil products, the Roundtable on Sustainable Palm Oil was formed in 2004. Leading companies
have฀ committed฀ to฀ source฀ only฀ certified฀ sustainable฀ palm฀ oil฀ by฀ 2015฀ or฀ sooner,฀ including:฀ H.J.฀ Heinz,฀
SC฀Johnson,฀Wal-Mart,฀General฀Mills,฀McDonalds,฀Mars,฀Nestle฀and฀Unilever.฀Our฀company฀has฀not฀made฀such฀
a฀commitment฀and฀has฀not฀adequately฀addressed฀the฀risks฀described฀above.
Resolved: Shareholders request the board of directors adopt and implement a comprehensive sustainable
palm oil policy.
Supporting Statement:฀We฀believe฀such฀a฀policy฀should฀include:฀1)฀a฀target฀date฀for฀sourcing฀100%฀
Certified฀Sustainable฀Palm฀Oil฀or฀for฀purchasing฀GreenPalm฀certificates฀covering฀100%฀of฀sourced฀palm฀oil;฀
2)฀plans฀for฀independent฀verification฀of฀suppliers’฀compliance฀with฀the฀policy;฀3)฀support฀for฀a฀moratorium฀
on฀palm฀oil฀expansion฀in฀rainforests฀and฀peatlands;฀and฀4)฀a฀commitment฀to฀disclose฀publicly฀the฀company’s฀
progress on this issue.