March 30--Some Oreo and Chips Ahoy packaging isn't recyclable and often ends up in the ocean where it harms marine life, according to a shareholder activist group pushing manufacturer Mondelez International to take action and phase out all nonrecyclable material.
Come May 18, at the company's annual meeting in suburban Lincolnshire, Mondelez shareholders will vote on a proposal introduced by As You Sow, a California-based nonprofit that challenges corporations on social and environmental issues. The group has brought similar proposals to Mondelez investors for the last three years, receiving about 28 percent support last year.
On the bright side, as the activists see it, it received about 28 percent support.
That's enough to give hope that their call to action is resonating with some mainstream shareholders, and that the company may respond favorably to another vote with similar or better results. The company's board of directors remains opposed, saying Mondelez already has a sustainability plan in place focused on reducing waste.
"We are sending a message here that's slowly catching on," said Conrad MacKerron, senior vice president of As You Sow. "We'll see what happens."
Oreo and Chips Ahoy cookies are "increasingly packaged in flexible film or other plastic packaging, such as pouches, that are not recyclable," according to As You Sow's proposal.
Such packaging often ends up in waterways and is swept out to sea, broken down into smaller particles and ultimately consumed by bird or marine mammals that mistake it for food, the proposal said.
As You Sow is requesting a report that would assess the environmental impact and financial risks of using nonrecyclable packaging and set a timeline for phasing out such materials.
From the Mondelez perspective, the company already has "ambitious goals" in place on sustainability, including reducing the overall amount of packaging used, according to the company's response in a proxy statement. From 2010 to 2014, Mondelez eliminated more than 44,000 tons of packaging from the supply chain, the company said.
In its response, Mondelez says it's already taking other measures to reduce waste so that less packaging ends up in the landfill, and ultimately, the oceans. There are also food safety concerns with using recycled materials for packaging that comes into direct contact with food, the company said.
It remains to be seen whether Mondelez studies recyclable packaging further. A proposal that gets more than 25 percent of shareholder support "needs to be paid attention," particularly if support has grown over multiple years, said Paul DeNicola, managing director at PwC's Governance Insights Center
"Companies have to respond on a case-by-case basis," DeNicola said. "There's no one-size fits all."
DeNicola said the shareholder proposals on environmental, social and governance issues have increased in recent years, representing about 40 percent of all proposals over the past three years.
As You Sow doesn't typically buy shares of a given company directly, instead partnering with like-minded shareholders who sign off on the group representing their interests, MacKerron said.
In recent years, the organization has floated similar packaging proposals to shareholders of Dr. Pepper Snapple Group, Kroger and Kraft Foods, among others. Among the recyclable packaging successes touted by the group, As You Sow worked with McDonald's to phase out Styrofoam cups in favor of recyclable cups.
"Over the years, McDonald's has engaged in constructive dialogue with As You Sow on a variety of topics, such as a multistakeholder project to address supply chain working conditions in Chinese toy factories and general conversations with updates on McDonald's packaging," McDonald's spokeswoman Lisa McComb said in an email.
This brand of shareholder activism can be a long game played out over numerous years, as massive corporations weigh the benefits of social do-gooding against the bottom line.
The proposals are intended to "forestall harm, create value for the company or hopefully both," said Danielle Fugere, president and chief counsel of As You Sow. And even shareholder proposals that receive very little support can start a conversation within a company.
"It's an important process no matter what the outcome is in a given year," Fugere said.
gtrotter@tribpub.com
