P&G Investors Should Oppose Angela Braly to P&G Board

Written with significant support from Melissa Denchak

Days before Procter & Gamble's (P&G) annual shareholder meeting, NRDC issued an investor brief urging shareholders to oppose the re-election of Angela Braly to the company’s board of directors. The brief cites the failure of company leadership—and Braly, specifically, as chair of P&G’s Governance & Public Responsibility Committee—to take meaningful action on a 2020 P&G shareholder proposal that called on the company to address its ties to deforestation and intact forest degradation, particularly in relation to its sourcing of wood pulp from Canada’s boreal forest and palm oil from Southeast Asia. The 2020 resolution passed with the support of 67 percent of voting shareholders—the first time a proposal related to forest loss passed in any corporation’s history. 

As the brief explains, one year after the passage of the proposal, P&G has neither fundamentally reduced the impact its supply chains have on forests nor addressed the market, regulatory, operational, and reputational risks its unsustainable forestry practices pose. In response to the proposal, P&G published an online Environmental, Social, and Governance Platform for investors, a report on its forestry practices, and additional materials that outline its sourcing methods; it also updated its procurement policies. Unfortunately, these are largely cosmetic measures that do little to reform P&G’s forestry operations or mitigate their detrimental impacts on communities, biodiversity, or the global climate. In fact, the company has doubled down on many of its longstanding approaches over the past year.

Responsibility for P&G’s inadequate response to the shareholder proposal lies in large part with Braly. The brief explains that as chair of the company’s Governance & Public Responsibility Committee, her role is to guide board recommendations on social responsibility issues, including those pertaining to sustainability and human rights. P&G’s failure to adopt policies that substantively address these issues reflects Braly’s poor leadership—which, the brief notes, is not without precedent. In 2012, Braly was pressured to resign from her CEO role of insurance company WellPoint Inc. (now Anthem) by investors who cited managerial blunders. In 2020, as an ExxonMobil board member, major ExxonMobil shareholder BlackRock opposed her reelection to the company’s board that year because they deemed her response to climate-related risks insufficient. 

The investor brief calls into question how Braly, a leading figure at one of the largest fossil fuel companies in the world, can credibly guide P&G’s response to sustainability concerns. It also details the supply chain issues that continue to pose a substantial risk to shareholder investments under Braly’s watch:  

• P&G continues to source wood pulp from climate-critical primary forests. The 2020 shareholder resolution called on P&G to increase its efforts to eliminate deforestation and intact forest degradation from its supply chain. Despite this, P&G has stated that it will not eliminate sourcing from intact forest landscapes in Canada’s boreal forest. It has instead increased its pulp purchases from the country by 15 percent while continuing to lean on misleading government claims that minimize the detrimental impacts Canada’s logging operations have on forests. And while P&G states that it reviews its suppliers to ensure it procures sustainably sourced fiber, an analysis of Canadian logging companies indicates that P&G sources wood and pulp from mills that engage in large-scale and unsustainable logging practices responsible for destroying critical regions of the boreal, including intact forests. Another recent report documented that major pulp suppliers in Canada, including those that supply to P&G, are failing to adopt basic environmental and social safeguards in their policies. In Indonesia, P&G still relies on palm oil suppliers complicit in the deforestation of intact forest landscapes, including critical habitat for endangered species. 
• P&G fails to sufficiently address human rights violations. While P&G states that it safeguards human rights across its operations and suppliers, its updated policies provide little assurance that the company is able to determine whether human rights violations have occurred, much less enact consequences or provide remedy to those violated. P&G does not explicitly state, for example, that suppliers must demonstrate proof of having obtained free, prior, and informed consent, which allows Indigenous and local communities to give or withhold permission for a project that may impact them or the land they own. P&G also continues to use palm oil suppliers tied to forced labor and other human rights abuses in Southeast Asia.
• P&G remains over-reliant on third-party certification systems to verify the sustainability of its supply chains. P&G has made clear that it will rely heavily on third-party certification systems to measure its success in protecting forests and human rights. But not all certification systems offer the same guarantees of sustainability in pulp and palm oil sourcing, and some contain glaring loopholes that undermine sustainable forestry practices. P&G has yet to adopt due diligence practices that would provide additional protection against these challenges.
• P&G remains exposed to significant reputational, market, regulatory, and operational risks. As the 2020 shareholder proposal outlined, companies that fail to adequately mitigate deforestation and forest degradation in their supply chains are vulnerable to myriad systemic and material financial risks. P&G has come under fire for not distancing itself from wood pulp and palm oil suppliers linked to destroying climate-critical forests and violating human rights in Canada and Southeast Asia, and it is estimated that P&G’s potential reputational losses related solely to its palm oil sourcing stand at $41 billion, or 14% of equity. Meanwhile, the company continues to cede competitive advantage to peers like Kimberly-Clark and Unilever that have chosen to adopt and implement stronger forest sourcing policies, and its supply chains remain exposed to potential loss from interruptions due to regulatory action and enforcement related to human rights violations, illegal deforestation, and the destruction of at-risk species habitat. 

As the brief makes clear, one year after investors resoundingly called on P&G to address its role in jeopardizing primary forests, human rights, and the global climate, corporate leadership under  Braly’s guidance has failed to champion policies that would create the meaningfully sustainable and ethical supply chains that investors expect. By voting against the re-election of Angela Braly to the board of directors, shareholders have an opportunity to show that they demand real solutions, not rhetoric, from P&G’s leaders. 

Tell Procter & Gamble CEO David Taylor that you want P&G to stop flushing our forests.