WHEREAS: Archer Daniels Midland Company (ADM) utilizes soy, palm oil, and pulp/paper in its business. These commodities are leading drivers of deforestation globally.

Deforestation contributes to climate change, biodiversity loss, soil erosion, disrupted rainfall patterns, land conflicts, and forced labor. Commercial agriculture drives two-thirds of tropical deforestation and is the second largest driver of greenhouse gas emissions. There is growing consensus that deforestation and the climate crisis must be addressed.

Companies that do not adequately address and mitigate exposure to deforestation in their supply chains are vulnerable to operational, reputational, and competitive risks, and, in turn, to financial damage.

As one of the largest suppliers of agricultural commodities globally, ADM both contributes to and is severely impacted by the consequences of deforestation and climate change on agricultural production. Current scientific research projects devastating drops in agricultural production—driven, in part, by deforestation—in the areas where ADM operates. ADM identified fluctuating availability and prices of commodities due to changes in weather and climate as risk factors in its 2018 10-K. 

Deforestation has attracted significant negative attention from civil society, business, government, and major media outlets, including The New York Times and Bloomberg. A growing number of current and potential customers have committed to eliminate deforestation in their supply chains. In light of shifting societal and market expectations for sustainable production, companies with stronger deforestation practices and policies could substantially outperform industry laggards.

ADM is falling behind industry peers in regard to the scope of its supply chain sustainability policies, processes for monitoring supplier compliance, and disclosure of progress toward no-deforestation goals.

In contrast to peers Cargill and Bunge, ADM both lacks a timeline for full implementation of its no-deforestation policy and lacks emissions reductions targets for its supply chains. Despite ADM's monitoring efforts, the Company has failed to publicly disclose any problems, despite third party identification of violations among ADM's suppliers. In order for clients to be able to meet their own no-deforestation commitments, they need to be able to reliably source commodities that align with their own commitments.

Without such metrics disclosure, investors lack the necessary data to understand and analyze how a company is mitigating its risks and meeting its public commitments.

Failure to meet shifting market expectations and to keep pace with industry peers could expose the company to significant business risks, including restricted market access, supply chain disruption, and loss of goodwill.

RESOLVED: Shareholders request that the Board of Directors issue a report to investors by October 30, 2020 at reasonable expense and excluding proprietary information, on metrics regarding its supply chain impacts on deforestation, demonstrating any progress toward reducing such impacts.

Supporting Statement: Proponents defer to management’s discretion, but believe meaningful indicators in such disclosure could include:

• Assessing how ADM could increase the scale, pace, and rigor of its efforts to mitigate deforestation and supply chain greenhouse gas emissions;
• Reporting quantitative progress toward no-deforestation policies for all relevant commodities; and
• Reporting evidence of proactive implementation efforts, such as time-bound plans, verification processes, and non-compliance protocols.