Investors urge greater sustainability commitments from palm oil producers
LONDON, 2 June 2014
In the lead-up to the Roundtable on Sustainable Palm Oil (RSPO) meeting in London on 4 June, a coalition of signatories to the Principles for Responsible Investment (PRI) have renewed calls for improvements in practices and commitments by palm oil producers with the aim of decoupling palm oil production from deforestation.
The PRI’s Sustainable Palm Oil Investor Working Group (IWG) calls on all palm oil producers to make strong public commitments to cease deforestation, development on peat lands, and violations of human rights. The IWG notes and commends major producers including Wilmar International and Golden-Agri Resources that have made strong commitments to this effect, and looks forward to the ongoing implementation of their associated policies.
The group also supports other large producers who are understood to be working with major palm oil purchasers on similar commitments based on the tripartite “no deforestation”, “no development on peat” and “no exploitation of people, land and communities”. The IWG encourages rapid development of policies to support these commitments, including development of a scientifically credible definition and industry standard for “high carbon stock areas” and plans that will ensure that such commitments are applied to all company operations including joint ventures.
Alongside the above, the IWG continues to support the Roundtable on Sustainable Palm Oil (RSPO) as the central body for governance of sustainable palm oil production. The group views commitments released by companies, in addition to their RSPO commitments, as beneficial in providing confidence in management’s ability to mitigate long-term risks and in turn maintain investment returns.
Mark Mills, Partner at Generation Investment Management and chairman of the IWG said “The significant growth and accompanying globalisation of the palm oil industry means that producers must once and for all put aside the slash and burn mentality of their early years. They must now adhere to environmental, social and governance practices which will ensure their license to operate and safeguard the capital provided by the industry’s increasingly global investors”. Mills continued, “Commitments such as those made by Wilmar provide a positive signal and direction for the rest of the industry. However these statements by no means replace the need for adherence to the RSPO principles and criteria”.
About the PRI Sustainable Palm Oil Investor Working Group (IWG):
The IWG was established in 2010 and has grown steadily, with 28 member organisations and assets of approximately US$2.8 trillion. It supports the development of sustainable practises in the palm oil industry as being critical to the achievement of long-term investment returns. In its first three years the IWG engaged primarily with the buyers of palm oil to encourage them to purchase only Certified Sustainable Palm Oil. In 2013 it began an engagement programme with the suppliers of palm oil to adhere to the principles and criteria established by the Roundtable of Sustainable Palm Oil.
More background about the group’s work can be found in this position paper.
Sustainable palm oil is one of 15 priority engagement topics that the PRI is supporting signatories on over the 2012-15 period. Further details are available here.