Cargill icg case_study

Largest Private Company in US
MinJae LeeCase Study of 2019 International Corporate Governance class, SNU Law School

I. Introduction
II. History of Cargill
III. Current Business of Cargill
IV. Corporate governance of Cargill
V. ESG challenges for Cargill
Agenda

4
1. World’s top producers and distributors of agricultural products
Cargill homepage
Introduction
International agriculture Conglomerate based in Minnetonka, Minnesota
Animal Nutrition
and Protein
Food Financial and
Industrial
Agriculture
I.

5
2. The largest private company in US
1) Cargill annual report 2019, 2) https://www.mightyearth.org/wp-content/uploads/Mighty-Earth-Report-
Cargill-The-Worst-Company-in-the-World-July-2019.pdf
Cargill and MacMillan(Son-in-law of founder William Cargill) family own 88% of the company’s share
Rest of the share is owned by management, and workers. There is no other investors
Cargill is the largest private company in US, and the largest Agribusiness company by revenue
A family-owned private company
Enormous business size1)2)
114
60.8
49.2 45.8
38.3
Revenue of 2018
<The world’s largest agribusiness companies>
US Billions, $
IntroductionI.
114 110
81.7
60.5 56
Revenue of 2018
<Largest Private companies in US><2019 Performance>

7
Founder William Cargill & his son in law, John MacMillian
https://www.companieshistory.com/cargill/,
https://www.cargill.com/about/cargill-timeline
William Wallace Cargill
Edna Clara Cargill John Hugh MacMillian
Samuel CargillJames Cargill
William S. Cargill
Mary S.
MacMillian
W. W. Cargill began his grain business
in Conover, Iowa
1865
1875
Cargill relocates his business to La
Crosse, Wisconsin
William, James, and Sam Cargill form
Cargill Brothers.
1888
1895
Edna Clara, W. W. Cargill’s daughter,
marries John MacMillan
Willaim Wallace Cargill died
1909
1912
John MacMillian forced out W. S.
Cargill and took control of the firm
1. Early yearsII. History of Cargill

8
Rule of MacMillans until the World War 2
1922
1929
1936
1909 - 1939
When brokers from Albany, New
York, began to bypassing Cargill as a
middleman, Cargill opened an office
in New York.
Cargill opened a permanent office
in Argentina to secure immediate
information on Latin American
wheat prices.
the Cargill Elevator Company
merged with other Cargill firms to
become Cargill, Incorporated
John MacMillan, Jr., became
president of Cargill in 1936
During the Great Depression, Cargill
invested heavily in the storage and
transportation of grain. By doing so,
Cargill reaped maximum benefit
after crisis
1. Early yearsII. History of Cargill

9
Expansion during World War2
1940
1943
1945
1947
By 1940, 60% of Cargill's business
involved foreign markets, which
suffered a lot during WW2
Cargill entered the soybean
processing business through the
purchase of plants in Cedar Rapids
and Fort Dodge, Iowa, and
Springfield, Illinois
Cargill purchased Nutrena Feeds, an
animal-feed producer, thereby
doubling its capacity in poultry and
animal feeds
After the end of WW2, Cargill
reopened their South American
Offices
2. Expansion and DiversificationII. History of Cargill

10
Global expansion until 80’s
1953
1955
1960
1981
To explore expansion into Europe,
Cargill established a separate
company, TRADAX. For Asian
markets, Cargill acquired Kerr
Gifford, a US grain dealer based on
the Pacific Coast.
Cargill scientist Julius Hendel
introduces scientific methods into
the firm’s businesses, leading to the
development of a centralized
Research Department
Erwin Kelm becomes the first
president appointed outside the
Cargill and MacMillan families, after
the death of John MacMillian, Jr.
Because of massive sales of grain to
communist countries and
diversification(poultry, malting,
cotton), Sales increased from $2.2
billion in 1971 to $28.5 billion in
1981
Diversification
grain,
feed, seeds,
oilseeds,
corn milling,
chemicals,
cocoa,
coffee,
cotton, eggs,
fertilizer,
financial
services,
flour, juices,
malt, meat,
molasses,
peanuts,
petroleum,
pork, poultry,
rubber, salt,
steel, turkey
and wool.
2. Expansion and DiversificationII. History of Cargill

11
Turmoil and Reorganizing in 90’s
1990
1993
1995
1997
To bring fresh ideas into the firm,
Cargill's board of directors was
overhauled to include 5 members
from management, 6 family
shareholders, and 6 outside
directors.
This structure allowed the board to
mediate between family members
and management
As the firm reinvest 80% of earnings,
Cargills and MacMillans claimed a
way to monetize their share.
Instead of IPO, the firm purchased
17% of share through employee
stock ownership plan
Ernest S. Micek succeed the role of
CEO from Whitney MacMillan, the
last CEO from owner families
Cargill’s commodity and ingredient
business suffered from 1997 Asian
Financial Crisis. And financial unit
lost hundreds of millions dollar in
1998, due to the Default of Russia
1998
Cargill
earned only
$468M on
revenues of
$51.42B in
fiscal 1998
1998, Cargill acquired the worldwide
grain storage, transportation, export,
and trading operations of its chief rival,
Continental Grain Company
Cargill sold its North American seed
operation in late 2000 to Dow Chemical
Company for an undisclosed sum
In early 1998 Cargill and Monsanto
formed a biotechnology joint venture.
in October 1998 Cargill sold its foreign
seed operations to Monsanto for about
$1.4 billion
3. Seeking new opportunitiesII. History of Cargill

12
Expansion with New businesses & Technologies
2000
2003
2008
2011
Cargill and Dow Chemical
announced that a 50-50 joint
venture called Cargill Dow Polymer
would begin construction of a
manufacturing plant where a new
kind of plastic made from plants
would be produced
For the first time in history, Cargill’s
earnings surpassed
US $1 Billion
Cargill introduces Truvia natural
sweetener, a zero-calorie
sweetener made from rebiana
Cargill completed the acquisition of
Provimi, a global animal nutrition
company for Euro 1.5 B ($2.1 B US)
Present
Cargill spun off financial unit and
sold other unprofitable business to
focus its effort on core business
sector
3. Seeking new opportunitiesII. History of Cargill

III. Current Business of
Cargill

14
9 Business sectors with countless brands
Food
ingredients
Fertilizer
Grain and
Oil seeds
Animal
nutrition
Meat and
Poultry
Ocean
Transportation
Bio
Industrial
Salt
Financial risk
management
US’s largest
fertilizer producer.
Cargill’s subsidiary
More than 20 brands
around the world
Ordinary animal food
Microbial fermentation
Aqua fish food
Zero calories
sweetener
11 product categoriesMain business
III. Current business of Cargill 1. Diversification

15
Global diversification of business
Cargill annual report 2019
North America
34%
Europe, Middle
East, and Africa
24%
Asian Pacific
29%Latin America
13%
Diversification of revenue
Diversification of labor
57,500 employees 46,500 35,000 21,000
III. Current business of Cargill 1. Diversification

16
Basic Financial performance
Result of 2019 fiscal year
Is it a decent result as the company’s financial statement has argued?
III. Current business of Cargill 2. Financial information

17
Notable features in financial statements
Five – year Financial summary
Average net income margin is only
2%. Because of low profitability of
agribusiness
High noninterest-bearing liabilities
due to the huge working capital
As Cargill had a long history of
reinvest 80% of its earnings, debt is
not a major source of its asset

18
Hardship in recent years
101,308
119,469
133,859 136,654 134,900
120,400
107,200 109,700
114,700 113,500
2,068 2,693 1,175 2,312 1,870 1,580 2,380 1,840 3,100 2,821
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Revenue Net Income
Million, $
0
17.9 12.0
2.1 -1.3
-10.7 -11.0
2.3 4.6
16.4
0
30.2
-56.4
96.8
-19.1 -15.5
50.6
-22.7
68.5
-9.0
-80
-60
-40
-20
0
20
40
60
80
100
120
revenue profit
% , change
< Revenue and profit for 10 years > < % change of Revenue and profit >
Revenue and profit has been stagnated due to the
saturated agribusiness market
Cargill showed High volatility of profit,
due to the fluctuation of revenue in 2010th

IV. Corporate Governance
of Cargill

20
Overview of Cargill’s unique corporate governance
1) https://www.forbes.com/profile/cargill-macmillan-1/#56909f323b6c
Private company owned by family members Adoption of professional management
88%
Cargill & MacMillan
family members
Cargill’s employees
(including management)
12%
< Stakeholders of Cargill1) >
Cargill is completely controlled by Cargill and
MacMillan families, composed of at least 100 family
members. Rest of the shares are given to
employees and management for stock option.
Although some member of Cargill and MacMillan
families took position in board of
directors( including president), CEO and other top
management team has been filled with non-family
members since 1995.
< CEOs of Cargill >
Owner family
members
Professional
management
Founder
2013 -
present
1865 -
1909
1909 - 1936 1936 -1960
1960 - 1977
1977 - 1995
1995 - 1999 1999 - 2007 2007 - 2013
IV. Corporate Governance of Cargill 1. Overview

21
Enormous wealth of Cargill-MacMillan clan
1) https://www.businessinsider.com/richest-billionaire-families-america-2018-7#9-the-hearst-family-20.
2) https://www.forbes.com/profile/cargill-macmillan-1/#28f74d1f23b6
4th richest family in the United States1)
Family with the largest number of billionaires
$38.8 billion $72 billion $107 billion $169.7 billion
There are 14 Billionaires among more than 100 shareholders from Cargill–MacMillan family2).
As most of the super-rich families are composed of shareholders who are just one or two generations below its founders,
they usually have less than 10 major shareholders. In contrast, Cargill’s founder W.W. Cargill have passed away in 1909
and there are at least 100 Cargill-MacMillan family members. Shareholders of Cargill are W.W. Cargill’s great
grandchildren and their children. Because of relatively long history of Cargill and its huge business size, Cargill-MacMillan
have more billionaires than any other families
(David Koch has passed away recently)
IV. Corporate Governance of Cargill 2. Family-owned Private firm

22
However, each family members can’t easily enjoy luxurious life
Steady growth of Cargill over 150 years Clan members can’t easily monetize share
Agribusiness is a traditional business that usually
show low fluctuation of the industry. As a typical
agribusiness conglomerate, Cargill show slow and
steady growth for more than 150 years.
During this long history, many Cargill-MacMillan
family members were born. Consequently, the
ownership of share have dispersed into more than
100 family members.
As Cargill stick to private company structure,
shareholders can’t monetize their share by selling it
to financial or strategic investors .
Cargill has reinvested 80% of its profit for market
expansion and R&D to continue its growth
(otherwise it should conduct IPO or issue great
amount of debt to finance enough capital)
although family members are super-rich according to the book value of Cargill, they have
limited access to cash due to dispersed ownership and low dividend ratio

23
Beginning of Employee Stock Ownership Plan
1) https://www.companieshistory.com/cargill/
2) https://www.company-histories.com/Cargill-Incorporated-Company-
History.html
complaints of shareholders Demand for IPO increased
Tensions arose with the company’s
private shareholders, as Cargill
typically put 80% of earnings back into
the business.
By the early 1990s, members of the
Cargill and MacMillan families became
upset that their shares in the company
were only giving back mediocre
dividends1).
Demands rose for an initial public
offering to turn the company public.
Along with the request of family
members, there was a need for
external capital to conduct M&A and
R&D that the firm needed.
In early 1990th, rumors spread that
Cargill will finally conduct IPO2)
Result: Employee stock plan
The company responded with an
employee stock ownership plan, and
in 1993 reportedly purchased 17% of
the firm’s share for $730 million from
72 Cargills and MacMillans.
It used that stake to begin the
employee stock plan. About 20,000
Cargill employees in the US were
eligible to receive the resulting stock,
ending a long history of ownership
exclusively by Cargills and
MacMillans2).

24
Spinoff of Mosaic Company – Death of the founder’s Granddaughter
Cargill’s family affair,
https://archive.fortune.com/2011/10/25/news/companies/mosaic_cargill_spinoff.fortune/index.htm
Margaret A. Cargill is granddaughter of founder W. W. Cargill. She was
childless and unmarried when she died in 2006 . She had been Cargill’s
largest shareholder who owned 17% of the company’s share.
Death of Margaret A. Cargill1
Margaret A. Cargill foundation2
Margaret’s share was inherited to a Trust whose chief beneficiary is
Margaret A. Cargill foundation. It is a philanthropic organization for
protection of environment and cultural diversity.
Foundation’s request for liquidation3
To continue its charity work, Margaret A. Cargill foundation noticed
Cargill that it want to liquidate the share it owned

25
Spinoff of Mosaic Company – solution: the ‘Spinoff’
Corporate Governance of Cargill 2. Family-owned Private firm
What is spinoff?
A spinoff is the creation of an independent company, through the sale or
distribution of new shares of an existing business or division of a
parent company. It is a type of divestiture.
A corporation usually creates a spinoff by distributing 100 percent of its
ownership interest in that business unit as a stock dividend to existing
shareholders. It can also offer its existing shareholders a discount to exchange
their shares in the parent company for shares of the spinoff. Spinoffs tend to
increase returns for shareholders because the newly independent companies
can better focus on their specific products or services.
And how it works?
IV.

26
Spinoff of Mosaic Company – overview of Mosaic
Mosaic was formed in 2004 from the merger of Cargill’s crop nutrition unit with IMC Global, creating a giant in fertilizer
production and leaving Cargill with a 64 percent stake
incorporation of Mosaic company1
Mosaic is the world’s second-largest potash producer, behind Potash, and owns more than a third of Canpotex, the
Canadian entity that controls that country’s exports of the material.
About the time of spinoff, Market Capitalization of Mosaic was $37.9 billion
Position of Mosaic company in the market2
- A major component of Cargill’s earnings, Mosaic reported about $8.5 billion in revenue and $1.9 billion in profit for
year 2010( Cargill’s revenue and profit was $100 billion and $2 billion each)
- Mosaic’s fertilizer is an essential raw material for Cargill’s major business in agriculture.
Importance of Mosaic company for Cargill3

27
Spinoff of Mosaic Company – actual Spinoff process
IR of Mosaic. Mosaic and Cargill Complete Transaction to Split-Off and Distribute Cargill's Stake in Mosaic.
286 million common share owned by Cargill
160 million
Common share outstanding
Recapitalization of Mosaic’s total share
64% 36%
160 million
Common share outstanding
115 million
Common share
113 million
Class B Common
share
58 million
Class A
Common
share
Majority of share owned by Cargill since the incorporation of Mosaic Shares that are freely traded in NYSE
Class B has 10 vote right for
election of directors
Share that are subject to transferability
restrictions and will not be publicly traded
immediately after the recapitalization
Every share have 1 economic rights and 1 vote right on all matter

28
Spinoff of Mosaic Company – actual Spinoff process
1) IR of Mosaic. Mosaic and Cargill Complete Transaction to Split-Off and Distribute Cargill's Stake in Mosaic.
2 https://www.marketscreener.com/MOSAIC-CO-11900095/news/Mosaic-Co-Mosaic-to-Buy-Cargill-Trusts-
Shares-17589335/
58 million
Class A
Common stock
113million
Class B
Common stock
115 million
Common Stock
107.5 million
share to pay off
Cargill’s $6.8B
debt
63.5 million
Shares for
Cargill’s other
shareholders
115 million
Share for
Margaret’s Trust
Secondary Offering1)
Sold to the public, just after
the recapitalization.
At first it was 100 million, but
underwriter exercise 15%
over-allotment option
43 million share that Mosaic
repurchase from Margaret’s
trust in 20132)
128 million Shares
that are still
controlled by Cargill-
Macmillan family
members
Monetization of Mosaic’s share

29
Spinoff of Mosaic Company – result of the Spinoff
Satisfiable solution for every stakeholders
Financial advisor:
Legal counsel:
Financial advisor:
Legal counsel:
Financial advisor:
Legal counsel:
17% of
Cargill’s share
115M(25.8%) of
Mosaic’s share
(Common, class A,
Class B)
43M mosaic’s share
Unknown amount of cash
(about $1.9B in market price)
115M(25.8%) of
Mosaic’s share
(Common share)
$9B cash to pay
down Cargill’s debt
- Cargill evaded its own IPO and give
enough cash to shareholders
- It maintained good relationship with
Mosaic through concentrated director
voting right of Class B
Mosaic management used the spinoff
to take firm control of the company
through share buyback from
Margaret’s foundation
Margaret’s foundation was able to
change its share into enough cash to
continue its charitable activities
1 2
3
Secondary
offering of
115M shares
Investors
Cash

30
Need for Separation of Ownership and Control
1) R. Carlock, J. Ward , When Family Businesses are Best: The Parallel Planning
Process for Family Harmony and Business Success, Springer, 2010
Founder
W. W. Cargill
Complete separation of Ownership
and Control
John Hugh MacMillan, Cargill’s son
in law, took control of Cargill
Adopting professional management
After the Death of founder W.W. Cargill in 1909, John Hugh MacMillan, W.W. Cargill’s son in law,
took control of Cargill. and MacMillan has dominated the firm thereafter
Animosity among Cargills and MacMillans has arose. Many Cargill family member believed that
their family business had been ‘stolen’ from them. On the contrary, MacMillans felt
unappreciated despite having ‘saved’ the business from financial ruin1)
Cargills and MacMillans agreed on adopting professional management for protection of the
firm from family strife, and for better performance1). And Cargill established inhouse executive
education system to foster talent. family members compete with non-family executive for
promotion based on qualification and performance.
After Whitney MacMillan had retired in 1995, no family member became CEO of the firm, and
most family members does not have a career in Cargill
IV. Corporate Governance of Cargill 3. Separation of Ownership & Control

31
Changes in the Board and Executive team
1960
1990
2015
2017
Erwin Kelm becomes the first president appointed
outside the Cargill and MacMillan families, after the
death of John MacMillian, Jr.Cargill's board of directors was overhauled to
include 6 outside directors for the first time. (with 5
executives and 6 family members). This structure
allowed the board to mediate between family
members and management
Cargill replaced a sprawling two-tier system with
current single executive team to speed decision
making
After the retirement of Todd Hall, a board member
and EVP, Cargill did not nominate new board
member from Executive team. Therefore, only 3
executives have a seat in Board of directors
Board of Directors Executive Team
Well functioning Board of Directors and Executive Team, with distinctive role
Retirement of Whitney MacMillan, the last CEO
from owner families. No Cargill-MacMillan clan
member have become Chief executive of the firm
since then
1995

32
Current Executive Team Structure
CEO
& Chairman
David MacLennan
Agricultural Supply
Chain & EVP
Marcel H.M. Smits
Chairman of Asian
Pacific & EVP
Marcel H.M. Smits
Food & Bio-industrial
ingredients
Frank van Lierde
Animal Nutrition &
Health
David Webster
Corporate Trading
Strategy
Gert-Jan van den Akker
Protein & Salt
Brian Sikes
Chief Transformation
Officer
Julian Chase
Chief Human Resource
Officer
LeighAnne Baker
Chief Financial Officer
Davis Dines
Chief Compliance
Officer
Anna Richo
Chief Sustainability
Officer
Ruth Kimmelshue
Leaders of Major Business Sectors
Functional Executives
Leader of Cargill’s core business Potential & distinctiveness of
Asian-Pacific market
Regional Executive

33
Composition of Current Board Members
https://www.world-grain.com/articles/9315-watson-elected-to-cargill-board-of-directors,
https://www.cargill.com/2016/joe-stone-elected-to-cargill-board-of-directors
Cargill-MacMillan family member7
Executive Management team3
Independent Directors7
• David W. MacLennan Chairman and Chief Executive Officer
• Marcel H.M. Smits Executive Vice President and Chairman of Asian-Pacific
• Joseph J. Stone Executive Vice President and Leader of Agricultural Supply Chain
• Richard H. Anderson President and CEO of Amtrak(U.S Railroad transportation)
• Stephen Hemsley executive chairman of UnitedHealth Group(Medical service)
• Louis R. Chênevert retired Chairman and CEO of United technologies(Tech)
• Arthur D. Collins Jr. retired Chairman and CEO of Medtronics(Medical device)
• Bernard Poussot retired chairman, CEO, President of Wyeth(Pharmaceutical)
• Trudy Rautio retired president, CEO of Carlson(Construction)
• John S. Watson retired Chairman and CEO of Chevron Crop(Oil & Gas)
• Brandon Graham
• Andrew C. Liebmann
• John H. MacMillan IV
• David D. MacMillan
• John C. MacMillan
• Anne Pedrero-MacMillan
• Richard A. Cargill

34
Summary of Cargill’s Governance Structure
Board of DirectorsExecutive Team
Cargill -
MacMillan clan
Does not interfere
with management
Functional Executives
CFO, CRO, etc
Leaders of Major
business sectors
MacMillans Cargills
Business
partners
Major suppliers,
customers, or
strategic partners
Incumbent Executives of
related firms
Retired Executives of related
firms
Through the separation of Ownership & Control, and the distribution of role among Executive
and Directors, Cargill successfully managed the firm over 100 years after the Founder’s death
Employees
Most of them work
for Cargill
throughout their life
Top Executives CEO,
Chairman of
Asian-Pacific,
Leader of
Agricultural
supply chain
Internal Talent
development program
IV. Corporate Governance of Cargill 4. Summary

36
Cargill has been criticized severely for ESG issues
1) https://www.mightyearth.org/wp-content/uploads/Mighty-Earth-Report-
Cargill has argued that it values Sustainability a lot
1. It has Chief Sustainability Officer
2. It releases sustainability report every year
But…

37
Cargill has been criticized severely for ESG issues
1) https://www.mightyearth.org/wp-content/uploads/Mighty-Earth-Report-
Environmental organization ‘Mighty Earth’
picked Cargill as ‘the worst company in the world’1)
Speculative tradingContamination
GMO issues Child laborDeforestation
Pollution

38
Deforestation by the Cargill’s suppliers
1) Personal comment made to David Gilbert by Cargill's Procedure Assurement Officer at PT
Harapan Sawit Lestari, Indonesia. July, 2009.
2) Arie Rukmantara, "Government to sue firms over forest fires," Jakarta Post, Sept 2, 2006.
3) Mighty-Earth-Report-Cargill-The-Worst-Company-in-the-World-July-2019.pdf
Deforestation of rainforests
Cargill’s passive attitude toward stopping deforestation has been blamed a lot
Cargill’s unkept promises
Deforestation in Indonesia & Papua New Guinea for
palm oil plantation
1 In UN Climate summit 2014, Cargill promised to eliminate
deforestation from agribusiness by 2020
1
- All 83,000h of Cargill’s 5 directly owned oil palm plantations were
carved out of lowland rainforests. Cargill cleared forest in Borneo in
2009, without an environmental impact assessment, required by law1).
- Cargill purchased palm oil from rainforest destroyers whom violated
Indonesian law by burning rainforests2).
- All 83,000h of Cargill’s 5 directly owned oil palm plantations were
carved out of lowland rainforests. Cargill cleared forest in Borneo in
2009, without an environmental impact assessment, required by law1).
- Cargill purchased palm oil from rainforest destroyers whom violated
Indonesian law by burning rainforests2).
Deforestation of Amazon for soybean3)2
- Since Cargill had built a Santarém port, deforestation of Amazon rain
forest increased as farmers have cleared land to make way for crops
- Cargill tried to diminish deforestation by local farmers. However,
Mighty Earth’s 2017 report showed that Cargill was one of the two
largest customers of industrial scale deforestation
Until 2019, there is no sharp decrease of deforestation2
Since the signing of the Declaration, Cargill has continued to drive the
destruction of pristine landscapes, remaining one of the worst actors on
the world stage, and one of the greatest threats to native ecosystems
across the globe3).
V. ESG challenges for Cargill 1. Environmental

39
Lagoon Breach Fish Kill
A lagoon breach at the
Cargill plant in Beardstown,
Illinois spilled 29 million
gallons of hog waste. State
biologists who arrived 10
days later counted 64,566
dead fish in Muscooten Bay
and linked waterways.
50,000 fish killed
Cargill paid $1.5 million for
illegally dumping hog manure at
its facility near Martinsburg,
Missouri. Killed more than
50,000 fish. Plant managers
were sentenced to five months
in prison
Pollution from Cargill’s plant
Mighty-Earth-Report-Cargill-The-Worst-Company-in-the-World-July-2019.pdf
Toxin Chemicals from plants Illegal dumping of toxic materials
More dead fish
Cargill violated water pollution laws,
spilling 218,000 gallons of toxic brine into the marshes along
San Francisco Bay near Fremont, California, killing fish and
plants in the Don Edwards San Francisco Bay National
Wildlife Refuge. This was Cargill’s sixth such spill - totaling
more than half a million gallons in or around the bay in as
many years. Cargill had previously sold 16,500 acres in the
area for $100 million to state and federal agencies to
expand wildlife refuges. It was fined $228,000 for the spill.
V. ESG challenges for Cargill 1. Environmental

40
Child Labor & Slave Labor of suppliers
1) Mighty-Earth-Report-Cargill-The-Worst-Company-in-the-World-July-2019.pdf 2)
https://www.confectionerynews.com/Article/2018/10/25/Child-slavery-lawsuit-against-Nestle-and-Cargill-allowed-to-proceed
Child & Slave Labor around the world1)
Côte d’Ivoire1 Indonesia2
Uzbekistan3
Forced Child Labor
In July 2005, the International
Labor Rights Forum filed suits
against Cargill, Nestle and
Archer Daniels Midland on
behalf of Malian children
alleging they were trafficked
into Côte d’Ivoire and forced
to work 12 to 14 hours a day
with no pay, little food and
sleep, and frequent beatings
on farms producing cocoa
beans for Cargill.
Child Slavery Lawsuit Moves Forward
Court ruled that Cargill may be sued in the US by
former slaves for aiding and abetting child slavery
to get cheap cocoa. According to reports from the
Courthouse News Service, the six plaintiffs “were
kidnapped from Mali as children in the 1990s and
forced to work on Ivory Coast cocoa plantations for
up to 14 hours per day, six days per week. They say
they were given only scraps of food to eat and
beaten and whipped with tree branches. Children
who tried to escape were forced to drink urine or
had their feet cut open and pepper rubbed into the
wounds, they say. They also claim Nestle and
Cargill representatives visited the farms several
times each year and knew the farmers used child
slave labor.”
Palm Oil from Child and Slave Labor
Schuster Institute Senior Fellow E. Benjamin Skinner, supported by
a team of journalists traced Cargill’s purchase of Indonesian palm oil
to Kuala Lumpur Kepong (KLK). The report, published by Business
Week found extensive evidence of workers, many of whom were
children, being defrauded, abused, and held captive by KLK’s labor
management subcontractor.
Uzbeki Slavery
The Environmental Justice Foundation identified
Cargill as a major buyer of Uzbek cotton, which
produced uncompensated workers, including
children.
- Children who had kidnapped and forced to work on Ivory Coast cocoa plantation for up to 14 hours per day, 6 days per week sued
Cargill and Nestle, saying that their representatives knew the usage of child slave labor. US appeals court for the 9th circuit has
allowed this lawsuit against Nestlé and Cargill to proceed2).
- Cargill was also sued by International Labor Rights Forum for similar child trafficking and slave labor case in 2005
Child Slavery Lawsuit against Cargill
V. ESG challenges for Cargill 2. Social

41
Contaminated food
Mighty-Earth-Report-Cargill-The-Worst-Company-in-the-World-July-2019.pdf
Deadly Listeria Outbreak
Sliced turkey from a Cargill processing plant in Texas was found to be the source of a 10-state outbreak of Listeria
monocytogenes, a pathogenic bacteria. The company recalled 16 million pounds of turkey after reports of infection that
eventually included seven deaths and 29 illnesses. Three miscarriages or stillbirths were associated with the contaminated turkey
Fecal Contamination
Cargill provided meat to Sizzler restaurants linked to an outbreak of E. coli illnesses that killed a 3-year-old
girl and sickened 140 others. The plant had been cited numerous times for fecal contamination of meat.
Salmonella outbreak
Antibiotic-resistant Salmonella found in Cargill ground beef. The CDC reported one fatality, 47 illnesses and
17 hospitalizations linked to consumption of the ground beef A record 2.8 million pounds of potentially
contaminated ground beef are recalled.
20,000 Pounds of Ground Beef Contaminated
Beef Packers, Inc., owned by Cargill, recalled over 20,000 pounds of ground beef contaminated with a drug-resistant strain of
Salmonella Newport. The company issued an earlier recall in August, 2009, due to contamination of ground beef with the same
strain of Salmonella Newport This contaminated ground beef was produced in September and was distributed to Safeway grocery
stores in Arizona and New Mexico
181 Cases of Salmonella Across 37 States
In 2011 local, state, and federal public health and regulatory agencies traced an outbreak of 136 cases of Salmonella Heidelberg
across 34 states associated to ground turkey produced by Cargill Meat Solutions. Thirty-seven people were hospitalized. There
was one death. Cargill was forced to recall 36 million pounds of contaminated meat.
V. ESG challenges for Cargill 2. Social

42
Companies should seriously deal with ESG issues
1) US SIF Foundation
Investors require more rigorous ESG standard
CEO Larry Fink emphasized ESG in his 2018 letter to CEOs:
"To prosper over time, every company must not only deliver
financial performance, but also show how it makes a positive
contribution to society. a company’s ability to manage
environmental, social, and governance matters demonstrates
the leadership and good governance that is so essential to
sustainable growth, which is why we are increasingly
integrating these issues into our investment process”
He also said in 2019 that within 5 years, all investors will be
using ESG (environmental, social, and governance) metric.
1.49
1.88 2.03
2.48
4.04
4.73
5.61
2005 2007 2010 2012 2014 2016 2018
<Growth of ESG assets controlled by nearly
500 institutional investors1)>
US trillions, $
V. ESG challenges for Cargill 3. ESG matters!
World’s largest asset management firm

43
Companies should seriously deal with ESG issues
Environmental concerns have exploded among people
Customers care about environmental issues more than any time
Rapid Deforestation of Amazon rainforest1
After the election of far-right president Bolsonaro, Brazil has
stopped protecting the Amazon rainforests. Therefore, forest
fire swept vast range of Amazon
Advent of young activist, Greta Thunberg2
This 16 years old Swedish girl has successfully spurred
public’s attention on global climate issues, along with other
environmental activists

44
Conclusion: For its future, Cargill must be responsible for ESG issues
Customers
(debt)
Investors
Cargill’s corporate clients are facing criticism
from general public for buying food and
ingredients that are raised in environmentally &
socially Unacceptable condition
Although Cargill is free from intervention of
outer capital investors, it still have to attract
funding from debt investors, who care about
ESG issues more than any time
Cargill, the largest Agribusiness firm who is notorious for destruction of
environment and slave labor, needed big change for its own survival

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