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Investors in PRI’s palm oil group call on producers to adhere to sustainable criteria

Intervention from $2trn investor coalition

A $2trn group of investors that are members of the Principles for Responsible Investment’s Palm Oil Working Group have called on producers to adhere to the industry’s newly revised sustainability code following recent forest fires in Indonesia.
The investors want palm oil companies to adhere to the Roundtable on Sustainable Palm Oil’s (RSPO) newly introduced Principles and Criteria. This code, originally launched in 2007, was revised earlier this year.
Investors involved include APG, Aviva Investors, Christian Super, First State Investments, Generation Investment Management, Hermes Equity Ownership Services, PGGM, MN Services and Trillium Asset Management.
They expect all palm oil companies to adopt sustainable agricultural practices, become members of the RSPO and adopt timetables to certify all their plantations.With just 15% of production certified as sustainable, investors in palm oil companies – and their supply chains – are “exposed to significant financial, legal and reputational risk” the PRI says in a statement.
The PRI notes that forest fires have been burning out of control in Sumatra in the past two weeks, leading to record levels of pollution, forcing an apology from the Indonesian government.
“Investors have an important role to play in restricting the supply of capital to those who do not adhere to such principles of sustainability,” said Mark Mills, the Generation IM partner who chairs the 25-member working group at the PRI.
“The damage to the brand and reputation of companies implicated in this transgression is potentially enormous”.
The Working Group plans write to plantation owners, refiners, traders, processors, buyers and others in the supply chain to “encourage” them to take responsibility.