Deforestation for an oil palm plantation in Malaysian Borneo. Photo by Rhett A. Butler.
A coalition of investors and asset managers is urging stakeholders in the palm oil industry to adopt policies that exclude deforestation and human rights violations from their supply chains.
The call, coordinated by Green Century Capital Management, was issued in the form of letters sent to 40 major palm oil producers, financiers and buyers.
“Fueling deforestation is bad business for any company seeking to position itself as a responsible, sophisticated global player,” said Lucia von Reusner of Green Century, a company that offers “environmentally responsible” mutual funds, in a statement. “As consumers become increasingly concerned about palm oil’s role in driving deforestation and climate change, the industry will continue to face escalating pressure to provide truly sustainable palm oil that does not destroy forests, displace endangered species and speed global warming.”
The letters, signed by a coalition of investors who represent roughly $270 billion in assets under management, said that many stakeholders are failing uphold commitments on cleaning up the palm oil industry. The campaign notes that the current leading initiative for improving the sustainability of palm oil — the RSPO — isn’t receiving enough support while simultaneously falling short on protecting forests, peatlands, and endangered species.
“In past months… the RSPO and companies that claim to support only RSPO certified palm oil development have come under fire for failing to enforce supplier compliance and prevent deforestation,” said Green Century in a statement. “Consequently, the industry is facing pressure to go beyond RSPO certification by adopting policies to only purchase, finance, and grow palm oil that is verified as not contributing to deforestation, development on peat, or exploitation of peoples and communities.”
Several companies and NGO’s recently established the Palm Oil Innovation Group (POIG) to establish standards that go beyond the RSPO. Those companies — Agropalma, a Brazilian producer; DAABON, a Colombian producer; New Britain Palm Oil, a producer in Papua New Guinea — were on the campaign’s list, along with long-time targets of environmentalists, including Wilmar, Cargill, and Kuala Lumpur Kepong, among others.
The initiative also targets major financiers of the palm oil industry — including HSBC, JP Morgan Chase & Company, Barclays, and Morgan Stanley — as well as big buyers like General Mills, Kellogg, Dunkin Donuts.
Rob Berridge of Ceres, a nonprofit organization that tries to mobilize businesses to adopt environmental policies, says that companies put their brands at risk by failing to exclude controversial palm oil from their supply chains.
“The investors we work with are asking the industry to eschew forced labor, habitat destruction and accelerating greenhouse gas emissions in favor of developing and operating palm plantations responsibly. The more damaging path is not sustainable and puts shareholder value at risk,” he said in a statement. “In the internet age, there is no place to hide these practices; and experts agree that sustainable palm oil production is highly feasible.”
Top 10 oilseeds ranked by 2012 production according to the FAO
Palm oil is the most widely produced oilseed in the world. Last year some 50 million metric tons of palm oil was produced globally, outpacing soybean oil (41 million tons), canola or rapeseed oil (22 million tons), and sunflower oil (15 million tons).
Palm oil is most commonly used as cooking oil and as an ingredient in processed foods, cosmetics, and cleaning agents.
The letters:
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