The owner of some of the world’s most recognisable health and household brands is facing stiff opposition at the board level from environmental groups.
Procter and Gamble (P&G) owns 65 brands, including well-known names like Gilette, Pantene, Head & Shoulders, Febreeze and Ariel laundry detergent.
Now, critics want the firm to turn its back on its CEO by a cohort of environmental lobby groups in the name of sound environment, social and governance principles.
What’s going on?
CEO and company veteran Jon Moeller’s reappointment as chair of the P&G board is being contested by three environmental lobby groups.
They are the National Resources Defence Council (NRDC), the global advocacy giant Friends of the Earth, and the Rainforest Action Network – focusing on conservation efforts in Latin America and Southeast Asia.
In a filing with the US corporate watchdog, the Securities and Exchange Commission (SEC), the trio recommended investors vote against Moeller’s reappointment. They also said the same about two members of P&G’s governance and public responsibility committee, Angela Braly and Patricia Woertz. Braly is also chair of this committee.
In Moeller’s place, the groups want an independent chair that would likely align more with their values.
Why have they opposed reappointment?
Mainly in the name of the environment, social and governance principles – particularly the “E” component, because P&G invests heavily in forestry for palm oil and wood for paper products.
The company processed 1.69 million air-dried metric tonnes of wood pulp and over 518,000 metric tonnes of palm oil in 19/20 alone.
P&G has publicly announced steps to make this activity more environmentally friendly, but critics say this goes nowhere near far enough.
In the SEC filing, the groups said the Procter and Gamble team “lacks the skills, perspectives and experiences” required to make a sustainable green impact.
“P&G’s actions have been insufficient to mitigate deforestation,” it concluded.
For its part, the NRCD has expressed minimal confidence in a P&G under Moeller. It highlighted that investors had been calling for more transparency and sustainability in P&G forestry for some time.
“Two years later, they’ve done basically nothing,” concluded Jennifer Skene, an NRDC policy manager, in a recent Reuters interview.
Why is this big news?
It showcases two things:
- Investors’ increasing level of attention to ESG values and the targeted nature of this attention for P&G. Investors know the organisation relies heavily on forestry, and they want to see a change here.
- It also highlights an organised and refined effort to hold a significant corporation to account. With the backing of certain investors, the advocacy groups have been taking positions against the board of P&G for years now, and they are not giving up.
Will the efforts work?
A representative from P&G had previously told Reuters that Moeller and the other board members had the backing of 90% of investors in 2021. How much that figure has changed in a year will soon become apparent, but the chance of it going below 50% would seem low.
That said, changes in corporate legislation in the United States, combined with the continuing shift in investor opinion, mean that ESG activists have more sway over corporate appointments.
So, in essence, while advocates might not be the deciding factor in this upcoming vote, their influence is almost certain to continue increasing.