CINCINNATI — One week away from Procter & Gamble Co.’s annual meeting of shareholders, descendants of the company’s founders have escalated their campaign for environmental reforms at Cincinnati’s biggest global company.
They’re asking shareholders to vote against four of P&G’s 14 board nominees, including Chairman and CEO Jon Moeller.
Two large investors - the New York Pension Fund and Green Century Capital Management - have voiced support for the effort.
The descendants of William Procter and James Gamble, who are also P&G shareholders, claim the company hasn’t done enough to respond to a 2020 vote in which 67% of shareholders called on P&G to “increase the scale, pace, and rigor of its efforts to eliminate deforestation and forest degradation from its supply chains.”
The WCPO 9 I-Team detailed the family’s concerns in a three-part series in July. In a series of filings with the U.S. Securities and Exchange Commission since Sept. 8, the descendants and the company traded barbs with each other, each side citing the I-Team’s coverage to support their claims.
P&G described the descendants as “several company shareholders claiming to hold ‘unique and historic perspective,’” while calling their grievances “familiar – and occasionally circular.”
The family “cites with concern ‘recent negative press’ but fails to note that several of the signatories and other NGO representatives provided key interviews and materials as fodder for those stories,” P&G wrote in a Sept. 20 filing that footnotes an I-Team story. “Even then, one reporter was left to conclude: What it would take for P&G to satisfy its critics, descendants of the founders can’t say.”
Descendants responded with a Sept. 29 filing that added 30 signatures of P&G descendants to the nine who signed their initial filing.
“P&G says they don’t know what they could do to satisfy us, so we would like to make it quite clear,” they wrote. “P&G could deliver a credible policy and time-bound plan to eliminate deforestation, primary forest degradation, and human rights violations from its supply chains, applied at the corporate group level, and paired with a robust non-compliance protocol.”
Board elections are normally a rubber-stamp procedure for public companies, where directors often get more than 90% shareholder support. P&G hasn’t encountered serious shareholder opposition to its directors since 2017, when activist investor Nelson Peltz won a seat on the board with the most expensive proxy fight in U.S. corporate history.
This opposition is nowhere close to a campaign of that scale. It's also an advisory vote, which isn't likely to lead to the ouster of any board members.
But it bears watching because a vote tally below 90% support could increase pressure on P&G to revamp its supply chain, said Annie Sanders, director of shareholder advocacy at Green Century Capital Management.
“This level of engagement and back and forth on the proxy is relatively rare,” Sanders said. “I don’t necessarily think that will attract the support of larger institutional investors, but I think it will get some support and succeed in raising the visibility of this issue.”
Green Century is a Boston-based operator of socially responsible mutual funds. It authored the 2020 shareholder resolution on deforestation and will vote against P&G’s entire board next week.
“The company’s efforts, while positive and in the right direction, in our view have been incomplete and insufficient,” Sanders said.
The New York Pension Fund said today that it will vote its shares against all seven members of P&G's governance committee "because the company has failed to adequately respond to shareholder concerns regarding deforestation issues."
The fund owns nearly 4 million shares, which is about 0.2% of P&G's total outstanding shares.
The Natural Resources Defense Council joined the “no vote” campaign with a Sept. 11 filing that criticized P&G for removing the words “forest degradation” from its deforestation policy. P&G said it revised its policy because different groups opposing degradation can’t agree on a definition.
“P&G’s competitor Unilever defines degradation in its policy and uses that definition in enforcement,” wrote Shelley Vinyard, manager of NRDC’s campaign to save the boreal forest in Canada, in the SEC filing. “In addition, scientists have established that there are undisputed categories of forest degradation - including practices that P&G’s sourcing continues to drive.”
In an interview, Vinyard said NRDC has briefed the SEC on its November 2022 complaint alleging P&G is misleading investors on its deforestation efforts. P&G denies that claim, saying it plants two trees for every one cut down by its suppliers. NRDC is one of several environment groups who’ve been working with descendants since the 2020 shareholder vote.
“We hoped to see the company really reckoning with the impacts of their supply chain,” Vinyard said. “And instead what we’ve seen is a lot of vague language, misleading claims and pretty much a continuance of the status quo.”
So, NRDC joined with the descendants in asking shareholders to vote against CEO Jon Moeller, lead director Joe Jimenez, and two members of P&G’s governance and public responsibility committee: Angela Braly and Patricia Woertz. Each of them received more than 90% support from shareholders last year, even though Friends of the Earth asked shareholders to vote no on Moeller, Braly and Woertz.
“Our shareholders and stakeholders represent different perspectives or specialized concerns and hold views that conflict with one another,” P&G wrote in its Sept. 20 filing. “In the interest of all our long-term shareholders, we must necessarily consider these diverse perspectives as a component of the total mix of stakeholder feedback we integrate into our strategy, programs, and policies. We do not believe it benefits our shareholders or stakeholders broadly for the company to give outsized weight or influence to a shareholder group focused on a single issue that is only one aspect of our larger global supply chain, compliance, and risk management approach.”
