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Avon Commits to Develop a Time-Bound Plan to Source Sustainable Palm Oil

Domini Social Investments announced today that Avon Products (Ticker: AVP) has agreed to review and revise its palm oil purchasing policies to address impacts on deforestation and human rights, in response to a shareholder proposal filed by the Domini Social Equity Fund (Ticker: DSEFX). The proposal was co-filed by the Appleseed Fund, in collaboration with Ceres.

“We were very pleased to withdraw our proposal in response to these new commitments from Avon,” said Adam Kanzer, Managing Director and Director of Corporate Engagement at Domini. “As investors, we are seeking to invest in good companies and make them better. Our proposal has helped to spur an internal dialogue about the impact of Avon’s palm oil purchases, encouraging the company to set the bar higher.”

Over the past several years, Domini has been encouraging companies in its Fund portfolios to adopt appropriate policies and procedures to address the impact of its commodity purchases on forests and human rights, including palm oil. According to WWF, “Large areas of tropical forests and other ecosystems with high conservation values have been cleared to make room for vast monoculture oil palm plantations – destroying critical habitat for many endangered species, including rhinos, elephants and tigers. In some cases, the expansion of plantations has led to the eviction of forest-dwelling peoples.”

Avon is a member of the Roundtable on Sustainable Palm Oil (RSPO), and has previously committed to purchase GreenPalm certificates equivalent to 100% of its palm oil supply. These certificates are used to finance sustainable palm oil production, but cannot guarantee that Avon’s actual palm oil purchases are produced sustainably.

Most of Avon’s palm oil purchases are in the form of products derived from palm oil (“palm oil derivatives”), further complicating the company’s ability to trace its purchases back to their source. Avon utilizes palm oil derivatives in a wide variety of products. About 60% of the palm oil consumed globally is in the form of derivatives.

Avon Commitments

In response to Domini’s proposal, Avon has committed to take the following additional steps:

  • Avon agrees to establish a cross-functional internal team to assess the Company’s palm oil sourcing and develop a recommendation for implementing a time-bound sustainable sourcing plan.
  • Avon will revise its palm oil policy to establish a time-bound plan to purchase certified Mass Balance or segregated sustainable palm/palm kernel oil, with full traceability back to the planation for all direct purchases and the majority of its palm oil derivatives purchases. “Mass Balance” is a term established by the RSPO to denote palm oil supply that contains a mix of certified and uncertified palm oil. “Segregated” refers to 100% certified sustainable palm oil that can be traced to its source. 
  • Avon commits to provide updates on its website about the development and implementation of these new palm oil commitments.
  • Avon commits to a good faith dialogue with Domini and Appleseed on the development, implementation and public reporting of Avon’s new policy commitments, including discussion of time-bound commitments with clear goals, and the inclusion of human rights standards.