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Trillium and FAFN Successfully Withdraw Palm Oil Proposal with Yum!

APRIL 1, 2015: Following an extensive engagement with Trillium Asset Management (Trillium) and our colleagues at First Affirmative Financial Network (FAFN), in the first quarter of 2015 Yum! Brands (NYSE: YUM*) publicly committed to sourcing 100% of its palm oil from responsible and sustainable sources by 2017.

Yum, the world’s second largest fast food corporation and one of the largest purchasers of palm oil in the world, had been particularly slow to address the critical environmental and social issues raised by palm oil.

The company’s recent commitment, one of the strongest in the industry, followed a palm oil focused shareholder proposal filed by Trillium and FAFN in the fall of 2014.

Approximately 85% of palm oil is grown in Indonesia and Malaysia, where the industry is the leading driver of deforestation. Primarily due to forest and peatland conversion, Indonesia was ranked the third largest emitter of greenhouse gases globally, despite being the world’s 16th largest economy. The palm oil industry is also notorious for using child and forced labor, according to the U.S. Department of Labor .

For these reasons, during the engagement Trillium and FAFN were very focused on the specifics of Yum’s policy and exactly what Yum is committing to. Through our active dialogue with the company we worked through those details and arrived at a commitment to source, by 2017, palm oil only from suppliers whose operations meet the following principles:

• No development on High Conservation Value landscape or High Carbon Stock forests.
• No development on peatlands and use of best management practices for existing plantations on peat.
• Prevention and resolution of social and/or land conflicts consistent with the principle of free prior and informed consent.
• Traceability to the extraction mill and validation of fresh fruit bunches.
• Not employing underage children or forced laborers and prohibiting physical punishment or abuse – Compliance with country laws and regulations and our supplier code of conduct.

This commitment, along with annual progress reporting, represents an important success not only for Yum, but for our global effort to resolve this critical environmental and social problem. While it is not possible at this time to determine how much CO2 emissions will be avoided as a result of this commitment, as a way to provide some context, one of the largest palm oil suppliers, Wilmar, made a similar commitment that is projected to eliminate more than 1.5Gt CO2 emissions total between now and 2020. http://www.climateadvisers.com/the-climate-impact-of-wilmars-no-deforestation-no-peat-no-exploitation-policy/

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For more information: Randy Rice, Trillium Asset Management, (617) 515-6889, rrice@trilliuminvest.com

Important Disclosure: The views expressed are those of the authors and Trillium Asset Management, LLC as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the authors on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.

*In addition to engaging with our core portfolio companies, Trillium also conducts advocacy on selected companies (identified with an “*”) that are not in our core portfolios but are held as legacy positions in client portfolios. These are companies that may not meet our minimum social and environmental criteria, but that we still seek to improve. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable.

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