Lucia von Reusner, shareholder advocate for Green Century Capital Management, said: “Fuelling deforestation is bad business for any company seeking to position itself as a responsible, sophisticated global player. 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.”Rob Berridge, director of shareholder engagement at Ceres, a non-profit organisation mobilising business leadership on climate change, added: “The palm oil industry is at a crossroads. The investors we work with are asking the industry to eschew forced labour, habitat destruction and accelerating greenhouse gas emissions in favour of developing and operating palm plantations responsibly. The more damaging path is not sustainable and puts shareholder value at risk. In the internet age, there is no place to hide these practices, and experts agree that sustainable palm oil production is highly feasible. In fact, supply of certified sustainable palm oil currently exceeds demand by about 50%.”The request comes just weeks after the palm oil industry faced renewed public scrutiny over continued illegal deforestation in national parks, and rampant human rights violations including child and forced labour.Wilmar, as the world’s largest palm oil trader, has faced criticism from vocal forest protection groups for failing to uphold commitments to sustainable palm oil development.Many companies have pledged to only purchase or finance palm oil that had been certified by the Roundtable on Sustainable Palm Oil (RSPO).In recent months, however, 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.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.Approximately 85% of palm oil is grown in Indonesia and Malaysia, and is a leading driver of deforestation and biodiversity loss in those nations.Due to high levels of deforestation and conversion of carbon-rich peatlands, Indonesia was ranked by the World Bank as the third largest greenhouse gas emitter globally.The palm oil industry is also listed as one of the most notorious for using child and forced labour, according to a recent US Department of Labor report.Companies receiving the letter include Wilmar International, PT Musim Mas, Golden Agri Resources, Sime Darby, Felda Global Venture, Kuala Lumpur Kepong Bhd, Cargill, Asian Agri, Agropalma, Daabon, New Britain Palm Oil, HSBC, Barclays, JP Morgan Chase, UBS, Morgan Stanley, Credit Suisse Group, Standard Chartered, Rabobank, Deutsche Bank and 20 major snack food companies currently being targeted by environmental groups over their palm oil policies such as Dunkin Donuts, General Mills, Grupo Bimbo, Hillshire Brands, HJ Heinz, Hormel Foods, Kellogg Company, Kraft Foods, Krispy Kreme, Mars, Mondelez International, Nestle, Nissin Foods, PepsiCo, The Hershey Company, JM Smucker Company and Toyo Suisan Kaisha.The letter and some of the signatories can be found here. A coalition of institutional investors is urging major stakeholders in the palm oil industry to adopt policies that will ensure palm oil development does not contribute to deforestation, development on peatlands or human rights violations.The investor coalition sent letters to 40 major palm oil producers, financiers and consumers including Wilmar, Golden Agri Resources, Unilever and HSBC.The letters, coordinated by Green Century Capital Management and signed by more than 40 institutional investors from the US and Europe representing approximately $270bn (€199bn) in assets under management, call for the development of transparent, traceable, deforestation-free palm oil supply chains.Current palm oil production practices have significant impacts on communities and the environment, making palm oil companies controversial business partners.
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