Deena Shanker
Thu, May 23, 2024
(Bloomberg) -- Roughly 30% of Mondelez International Inc. shareholders voted in favor of a proposal on the company’s human rights policy in Russia and Ukraine, sending a clear signal to management that investors want the snack maker to provide more clarity on its business practices in the warring countries.
The proposal didn’t pass, so the company isn’t required to fulfill the request. But the support passed a key threshold that can often get executives to take requests seriously, and it adds more scrutiny to Mondelez’s continued presence in Russia after the withdrawal of many other Western companies.
“When support reaches 20-25%, companies are generally paying attention and willing to discuss implementing the proposal, even if only partially,” said Susana McDermott, communications director of the Interfaith Center on Corporate Responsibility.
The proposal from shareholder Wespath Benefits and Investments said that the maker of Oreo cookies and Alpen Gold chocolate needs to increase disclosures so investors can better assess its performance on human rights in conflict zones, specifically naming Russia and Ukraine. (The filing contains an error, listing another resolution twice. The company has confirmed to Bloomberg that item number 8 includes the totals for the vote on human rights and an amendment will be filed.)
“The significant investor support for this resolution demonstrates that a substantial portion of Mondelez’s shareholders feel that human rights risk is a material issue that deserves heightened attention, especially as it relates to the company’s operations in conflict-affected and high-risk areas,” Wespath Managing Director of Sustainable Investment Strategies Jake Barnett said in an email. Wespath is “open to further engagement” on the issue, he added.
Mondelez, which didn’t comment, has previously said that it’s complying with sanctions while setting up the Russia business to operate independently, and that abandoning the country would risk giving its operations to another party that could use the full proceeds. Chief Executive Officer Dirk Van de Put also told the Financial Times earlier this year that investors don’t “morally care” about Mondelez’s ongoing presence in Russia.
Rich Stazinski, executive director of Heartland Initiative, a nonprofit research organization that promotes human rights in conflict areas, said the results show that perception is mistaken.
“We were reminded today that many Mondelez shareholders don’t share his myopic view and care deeply about the moral and material risks of irresponsibly operating in a state that’s waging war on its democratic neighbor,” he said in an email.
Ukrainian activists, who are lobbying for Western companies to “drop the keys and leave” Russia as a way to starve the country of funds, said they hope the result leads to more engagement from Mondelez. “Our numerous attempts to engage Mondelez on this issue have fallen on deaf ears,” a spokesperson from the group, B4Ukraine, said in a statement to Bloomberg. “Will the company’s leadership also ignore the calls from its investors?”
Mondelez has been a central focus of B4Ukraine, which is also calling for renewed sanctions including a European ban on Russian liquefied natural gas imports.
When Russia invaded Ukraine in 2022, US companies including McDonald’s Corp., Kellogg Co. and Starbucks Corp. moved to exit Russia. Mondelez, along with large multinationals such as PepsiCo Inc. and Nestlé SA stayed, despite criticism. Bloomberg News reported in February that Mondelez’s business had expanded in Russia by some measures, including higher imports of some goods, despite promises to pull back.
The proposal didn’t pass, so the company isn’t required to fulfill the request. But the support passed a key threshold that can often get executives to take requests seriously, and it adds more scrutiny to Mondelez’s continued presence in Russia after the withdrawal of many other Western companies.
“When support reaches 20-25%, companies are generally paying attention and willing to discuss implementing the proposal, even if only partially,” said Susana McDermott, communications director of the Interfaith Center on Corporate Responsibility.
The proposal from shareholder Wespath Benefits and Investments said that the maker of Oreo cookies and Alpen Gold chocolate needs to increase disclosures so investors can better assess its performance on human rights in conflict zones, specifically naming Russia and Ukraine. (The filing contains an error, listing another resolution twice. The company has confirmed to Bloomberg that item number 8 includes the totals for the vote on human rights and an amendment will be filed.)
“The significant investor support for this resolution demonstrates that a substantial portion of Mondelez’s shareholders feel that human rights risk is a material issue that deserves heightened attention, especially as it relates to the company’s operations in conflict-affected and high-risk areas,” Wespath Managing Director of Sustainable Investment Strategies Jake Barnett said in an email. Wespath is “open to further engagement” on the issue, he added.
Mondelez, which didn’t comment, has previously said that it’s complying with sanctions while setting up the Russia business to operate independently, and that abandoning the country would risk giving its operations to another party that could use the full proceeds. Chief Executive Officer Dirk Van de Put also told the Financial Times earlier this year that investors don’t “morally care” about Mondelez’s ongoing presence in Russia.
Rich Stazinski, executive director of Heartland Initiative, a nonprofit research organization that promotes human rights in conflict areas, said the results show that perception is mistaken.
“We were reminded today that many Mondelez shareholders don’t share his myopic view and care deeply about the moral and material risks of irresponsibly operating in a state that’s waging war on its democratic neighbor,” he said in an email.
Ukrainian activists, who are lobbying for Western companies to “drop the keys and leave” Russia as a way to starve the country of funds, said they hope the result leads to more engagement from Mondelez. “Our numerous attempts to engage Mondelez on this issue have fallen on deaf ears,” a spokesperson from the group, B4Ukraine, said in a statement to Bloomberg. “Will the company’s leadership also ignore the calls from its investors?”
Mondelez has been a central focus of B4Ukraine, which is also calling for renewed sanctions including a European ban on Russian liquefied natural gas imports.
When Russia invaded Ukraine in 2022, US companies including McDonald’s Corp., Kellogg Co. and Starbucks Corp. moved to exit Russia. Mondelez, along with large multinationals such as PepsiCo Inc. and Nestlé SA stayed, despite criticism. Bloomberg News reported in February that Mondelez’s business had expanded in Russia by some measures, including higher imports of some goods, despite promises to pull back.
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