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Investor Engagement Prompts Aramark To Adopt No Deforestation Policy

Feb. 01, 2019 5:57 PM ETAramark (ARMK)


  • Green Century withdrawals shareholder resolution filed with Aramark.
  • No-deforestation policy should reduce both reputational and financial risks for the company.
  • Aramark's first major test of policy will occur in mid-2019 when it sources palm oil that is RSPO-certified.

Faced with investor pressure, food service provider Aramark (NYSE:ARMK) announced on January 23, 2019, that it plans to put into effect a no-deforestation commitment by 2025. As a result, Green Century Capital Management withdrew its shareholder resolution it had filed with Aramark. Aramark's commitment will likely reduce reputational and financial risks for the company.

The company, headquartered in Philadelphia, says it will implement a No Deforestation, No Peat, No Exploitation (NDPE) policy throughout its global supply chain. Its first action will include an assessment of its supply chain this year in all markets where it is operating in order to better understand where deforestation threats are. Aramark is seeking to curb both legal and illegal deforestation in the commodities it uses, which include soy, palm oil, beef, and pulp/paper. By June 30, 2019, Aramark plans to source palm oil from only suppliers that are certified by the Roundtable on Sustainable Palm Oil (RSPO).

Aramark, which serves two billion meals per year, sources supply from various markets including Latin America, where deforestation risks are high in key producer countries. In Brazil, for instance, the combination of rising soy exports to China and the new presidency of populist Jair Bolsonaro may lead to increased deforestation risks. On the other hand, the Cerrado Manifesto has gained momentum among key players. The Manifesto calls on soy producers, investors, fast-moving consumer goods (FMCG) companies, and retailers to commit to zero deforestation in the Cerrado. Some 70 downstream companies signed the Cerrado Manifesto Statement of Support, in addition to 50 investor signatories.

We have a long-standing commitment to advancing sustainable sourcing practices in a way that minimizes impacts to people, animals, and the environment; we are proud to announce our commitment to address deforestation in our supply chain by 2025"

- Aramark Vice President of Sustainability Kathy

This article was written by

Chain Reaction Research is a coalition of Aidenvironment, Climate Advisers, and Profundo funded by the public-sector to describe the material financial risks facing institutional investors from deforestation associated with agriculture commodities such as palm oil, soy, cattle, cacao, coffee, and pulp and paper. Chain Reaction Research's financial analysis is distributed globally free-of-charge to analysts and institutional investors to inform them of the material financial risks they face associated with deforestation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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