Swedish investor AP7 to back study on Mondelez Russia business

By Thomson Reuters May 15, 2024 | 12:18 PM

By Jessica DiNapoli

NEW YORK (Reuters) – At least one Mondelez investor, Swedish pension fund AP7, will back a resolution calling for the Oreo cookie maker to conduct an independent study of the risks of continuing to do business in Russia, which faces a vote at the company’s annual meeting this month.

McDonald’s and Starbucks are among the brands that departed Russia after its 2022 Ukraine invasion, while others such as Nestle remained there. Food does not fall under international sanctions.

AP7, which holds roughly 1.7 million Mondelez shares as of May, will support the resolution, said Johan Floren, the firm’s chief environmental, social and governance and communication officer, in an email. AP7 is one of Mondelez’s top 75 shareholders, according to LSEG data.

The non-binding resolution, filed by investor Wespath, is the first on Mondelez’s business in Russia since Russia’s full-scale invasion. The meeting is scheduled for May 22.

Mondelez’ Russian sales in 2023 accounted for about $1 billion or 2.9% of overall net revenues.

The Chicago-based company last year faced corporate boycotts in the Nordic region over its Russian business and then pledged to make that business stand-alone with a “self-sufficient supply chain” before the end of 2023.

“There is a lack of consistency and transparency in Mondelez’s actions,” Floren said.

The resolution requests that the study assess if the company should take steps to reduce the risks of doing business in Russia and other conflict-affected areas. Such risks include a Russian order that requires companies to facilitate the conscription of staff and consumer backlash, the resolution states.

In a statement, Mondelez said its human rights standards, policies and disclosures to shareholders make an additional report unnecessary. The company’s board recommends shareholders vote against it.

Wespath, a pension fund for The United Methodist Church, had discussed the Russia business with the company, said Jake Barnett, a managing director for sustainable investment strategies at the firm, in an email.

“These engagements did not leave us with confidence that the company is adequately disclosing how they are addressing the various risks,” Barnett said.

Proxy advisory firm Institutional Shareholder Services (ISS) backed the resolution, saying that investors would benefit from an independent review.

“It is not clear from the company’s reports or

statements that it has conducted heightened due diligence in Russia and Ukraine,” ISS said.

(Reporting by Jessica DiNapoli in New York; Editing by Rod Nickel)