PepsiCo Inc.: Disclosure of Pesticide Use Reduction in Supply Chain
WHEREAS: PepsiCo’s Quaker Oats brand has been in the media spotlight recently in connection with the controversial pesticide ingredient Glyphosate.[i] Glyphosate is classified as a probable human carcinogen by the World Health Organization (“WHO”) and a known carcinogen by California.[ii] Research links glyphosate-based herbicides to chronic toxic effects – such as kidney damage and endocrine disruption – even at low levels. Evidence is also mounting for indirect consequences from glyphosate use including reduced effectiveness of antibiotic treatments[iii] and increased mortality among honey bees.[iv] Use of glyphosate as a desiccant has become especially commonplace for cereal grains like oats, which leads to higher levels of glyphosate residue on final consumer products.
PepsiCo’s reliance on glyphosate-based weed-killers and other toxic chemicals creates legal, reputational, and regulatory risks for the company. A recent jury verdict finding that glyphosate-based Roundup caused one man’s terminal cancer has led to thousands of lawsuits,[v] and a recent report suggested a ban on the use of organophosphates, an entire class of commonly used agricultural pesticides.[vi]
Regulatory attention on glyphosate, specifically, is growing.[vii] Jurisdictions in 25 countries have adopted policies to ban or restrict glyphosate use or are considering such action.[viii] A group of major U.S. non-governmental organizations and food companies petitioned the Environmental Protection Agency to sharply reduce the federal allowable amount of residual glyphosate on oats and to expressly prohibit the use of glyphosate as a pre-harvest drying agent.[ix]
PepsiCo does not currently disclose information allowing investors to understand whether the Company’s suppliers use controversial pesticides on their farms. The Company asserts it is “document[ing] continuous improvement” of environmental impacts from its supply chain through a Sustainable Farming Program. PepsiCo however does not measurably track or report the use of toxic pesticides to shareholders.
Other food companies have committed to tracking and reducing pesticide use:
Unilever phased out WHO Class 1 pesticides for tea production and intends to phase out Class 2 pesticides by 2020.
Sysco’s Integrated Pest Management Program reports on the quantity of pesticides avoided.
Ben and Jerry’s ice cream brand has committed to prohibit pre-harvest glyphosate use in its entire supply chain by 2020.
To demonstrate to shareholders that the company is adequately addressing the risks associated with the use of chemical pesticides on supplier farms, it is vital that PepsiCo increase its disclosures to shareholders.
BE IT RESOLVED: Shareholders request that PepsiCo disclose, at reasonable expense and omitting proprietary information, quantitative metrics demonstrating measurable progress toward the reduction of synthetic chemical pesticide use in the Company’s supply chain.
SUPPORTING STATEMENT: We recommend the report include:
An assessment of the operational and reputational risks posed to the company by the current use of pesticides in its supply chain.
Metrics tracking the portion of supply chain crops treated with synthetic chemical pesticides.
Metrics demonstrating success in increasing the portion of supply chain crops grown with integrated pest management practices