Procter & Gamble Shareholders Signal Discontent Over Forest Failures

At its October 10th annual shareholder meeting, many shareholders of Procter & Gamble (P&G) sent a clear message to the company that its leadership is not meeting their expectations, and it appears to be overwhelmingly because of P&G’s continued failure to address its role fueling deforestation and forest degradation.

Despite the company’s announcement that their director nominees received “strong shareholder support,” the results fall far below typical director votes for both P&G and some of its leading competitors. Both the board Governance & Public Responsibility Chair Angela Braly and longest-tenured board member Patricia Woertz received below 90% support, while P&G CEO and Board Chairman Jon Moeller received 90.6% support and Lead Director Joe Jimenez received 91.8% support.

In the weeks leading up to P&G’s annual shareholder meeting, many shareholders announced their intent to oppose these four members of the board because of the leadership’s failure to adequately address its impacts on forests and human rights globally. This included 39 descendants of P&G’s founders William Procter and James Gamble and the New York State Common Retirement Fund. Following the vote, Dutch asset manager PGGM announced that it too voted against those four board members.

To put this in context, it is highly unusual for corporate board members to receive anything less than 97-99% support in their election bids at annual shareholder meetings. Anything lower than that margin often signals significant shareholder dissatisfaction. It is particularly unusual for CEO Directors to experience shareholder dissent. The shareholders voting against CEO Jon Moeller held $32.8 billion in shares. Furthermore, in the instances where individual directors receive lower support, it is more often because of poor financial performance and/or corporate governance issues than ESG issues—although asset managers are increasingly frequently voting against corporate board members because of ESG issues.

For example, P&G competitor Unilever’s board of directors had just three occurrences in the last five years (all this year) where an individual director’s support was as low or lower than Mr. Jimenez’s vote tally (91.8%) in this year’s P&G board election. The results in Unilever's case appear to be due to shareholder dissatisfaction with executive compensation and poor management issues. Similarly, Kimberly-Clark (another P&G competitor) had just four instances since 2018 where board member support fell below Mr. Jimenez’s tally.

P&G’s board votes this year demonstrate that shareholder dissatisfaction is growing year over year with the company’s inadequate response to the growing regulatory, financial, marketplace, and reputational risks from its forest sourcing practices. Three years ago, two-thirds of shareholders called on the company to eliminate deforestation and forest degradation risk from their supply chain in 2020. Rather than meaningfully responding to these concerns, the company has offered its investors misinformation and greenwashing—as well as a bit of whiplash. P&G has recently come under fire because of its misleading claim to investors regarding the extent to which it was addressing forest degradation in its supply chain. This claim ultimately led NRDC to file a complaint with the U.S. Securities and Exchange Commission against P&G.

The board is seeing growing consequences. While Angela Braly, the board’s Governance Committee Chair, received 98.27% support in 2020, her support decreased every year since. In addition, the number of board members facing declining support has grown from 2021 to 2023, indicating that shareholders increasingly see the management problems as systemic.

All the while, P&G is fueling the loss of irreplaceable forests to make toilet paper and other tissue products, with devastating climate and biodiversity consequences.

It’s clear now more than ever that the solutions P&G must embrace are both urgent for the planet and its people, and that sound corporate management requires a far different approach than what P&G’s leaders have undertaken. It is in the company’s best interest to start taking these issues seriously if it wishes to give shareholders confidence in its leadership.