Hormel uses beef, palm oil, soy, and fiber-based packaging in its products. These commodities are leading drivers of deforestation, forest degradation, and native vegetation conversion, which are responsible for approximately 15 percent of global greenhouse gas emissions and contribute to biodiversity loss and zoonotic disease spread.
Companies that do not eliminate deforestation from their supply chains are vulnerable to material risk. Deforestation directly impacts agricultural productivity by altering precipitation patterns and other ecosystem services. Research published in the Journal of Climate found that the deforestation of the Amazon could halve Sierra Nevada snowpack, dramatically reducing irrigation capacity in California’s Central Valley, which produces a quarter of America’s food. Companies sourcing products that drive deforestation must ensure that their supply chains are not contributing to these risks to agricultural productivity.

In its 2021 10-K Hormel notes that “failure to identify and react to changes in food trends such as sustainability of product sources” could result in reduced demand for its products. However, unlike peers such as Tyson, Hershey, and Cargill, Hormel has not made a time-bound commitment to eliminate deforestation from its supply chains. Further, while Hormel has adopted some palm oil sourcing policies, the company offers limited disclosure related to beef sourcing, which is likely its most material source of deforestation exposure. The first half of 2022 broke records for deforestation in the Brazilian Amazon, and cattle production drives 90 percent of deforestation in the region. Hormel sources beef from Brazil, but does not disclose what percent of its beef is of Brazilian origin, again contrasting with peers like Tyson.
Hormel has committed to setting 1.5°C-aligned emissions targets with the Science Based Targets initiative (SBTi), but limiting warming to 1.5°C will be nearly impossible without ending deforestation in this decade. Major standard-setting bodies including SBTi and the Accountability Framework initiative have therefore coalesced around 2025 as the date by which companies must achieve deforestation-free supply chains in order to align with a 1.5°C scenario. Hormel may be unable to deliver on its climate commitment if it does not eliminate supply chain deforestation by 2025.
At COP 26, financial institutions with nearly US$ 9 trillion in assets under management committed to eliminate agricultural commodity-driven deforestation from their portfolios by 2025. Hormel may become uninvestable for some asset managers if it does not eliminate deforestation from its supply chains by this date.