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P&G Investors, Heirs Pressure Bounty Maker Over Deforestation


Procter & Gamble Co. shareholders on Tuesday elected the company’s 12 director nominees to the board, including one member who environmentalists sought to unseat over the company’s handling of climate issues.

The Natural Resources Defense Council, Sierra Club and several dozen descendants of P&G’s founding families lobbied shareholders to vote against

Angela Braly,

who served as head of the board’s governance and public responsibility committee.

Ms. Braly, former chief executive of health insurer WellPoint Inc., has served on P&G’s board since 2009 and is a director at Exxon Mobil Corp., which has faced pressure to accelerate emissions reductions as its oil-and-gas rivals shift to renewable energy.

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Rarely do directors lose their seats in such votes, particularly when opponents aren’t pushing an alternate candidate; still, the percentage of negative votes can signal shareholder discontent.

P&G said each nominee—11 of whom were incumbents—received more than 90% support from shareholders, based on preliminary voting results from the annual investor meeting. Proxy advisory firms Glass Lewis and

Institutional Shareholder Services

recommended investors re-elect Ms. Braly.

Unseating Ms. Braly was part of a broader campaign that environmentalists have been waging against P&G to adopt more climate-friendly policies, including sourcing raw materials in ways they say are less harmful to the environment. Backing the efforts of environmental groups in the P&G vote were several generations of family members descended from P&G founders William Procter and James Gamble, who started the Cincinnati-based company more than 180 years ago.

Advocates for environmental groups scored a win against P&G last year when shareholders backed a proposal asking the maker of Charmin toilet paper and Bounty paper towels to report on its efforts to address deforestation. Roughly two-thirds of P&G shareholders, including large asset managers

BlackRock Inc.,


BLK -0.42%

Vanguard Group and

State Street Corp.


STT -0.37%

, voted in support of the measure.

The environmental groups argued that P&G—which lobbied for shareholders to vote down the proposal last year—is contributing to destruction of the Canadian boreal forest, from which the company sources some of its paper products. The woodlands cover 35% of Canada’s land mass and aid the earth’s environmental balance by producing oxygen and storing carbon.

P&G says its practices are sustainable and that it takes steps to ensure forests aren’t destroyed in the sourcing of its products. It says it replaces twice as many trees as it cuts down.

David Taylor,

P&G chairman and chief executive, said in a statement Tuesday that the vote signaled investor satisfaction with the company’s sourcing practices.

“We’ve made a set of industry-leading commitments we are confident will help to protect, grow, and restore forests globally,” he said.

After Tuesday’s vote, activists said they would continue to pressure P&G.

“Until P&G deals with its ties to forest destruction, the company will continue to face pressure from consumers and investors alike,” Shelley Vinyard, the Natural Resources Defense Council’s boreal corporate campaign manager. “We’re not going away.”

Shareholders at big companies have typically rejected efforts by special-interest groups to prod management to do more on social issues, from gender rights to climate change. That trend is starting to change as large asset managers such as BlackRock Inc. and Vanguard Group have started to challenge companies on proxy votes.

P&G has said it is shifting toward recycled material for packaging its products.



Photo:

Kristen Norman for The Wall Street Journal

Thomas Peterson,

shareholder advocate for the Green Century Equity Fund, said last year’s vote demonstrated dissatisfaction with P&G’s sourcing practices. He declined to say how the fund planned to vote on P&G directors.

Social and environmental issues are gaining traction in shareholder votes as fund managers are more willing to exert power in visible ways, and as other investors to follow suit.

Public-company shareholders have filed 90 climate-related shareholder proposals this year, up from 58 a year ago, according to proxy adviser ISS. Most were withdrawn after negotiations, leaving 26 proposals on ballots, compared with 10 in all of 2020. A record 11 climate-related proposals received support from a majority of voters this year, compared with five last year and none in 2019, ISS said.

In May, 99% of

Bunge Ltd.


BG -0.55%

shareholders voted for a proposal asking the agricultural trading giant to report on efforts to curb deforestation.

The Securities and Exchange Commission last month sent letters to dozens of public companies asking them to provide more information to investors about how climate change might affect their financial earnings or business operations.

Growing support is a sign that investors have higher expectations around transparency beyond purely financial matters, said

Enver Fitch,

ISS head of environmental and social proxy research. “Concurrently, a growing number of mainstream investors adopt the view that environmental and social issues are material to shareholder value,” he said.

Write to Sharon Terlep at sharon.terlep@wsj.com

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