Investors take aim at palm oil production

Christian Super, First State Investments and Local Government Super are among a cohort of Principles for Responsible Investment (PRI) signatories to call on palm oil companies to adhere to the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria.

The PRI Sustainable Palm Oil Investor Working Group, which manages more than $2 trillion, has called on all companies involved in the palm oil supply chain to become members of the RSPO, comply with its standards and submit digital maps of plantations affected by fires in Sumatra and Kalimantan, Indonesia.

Approximately 20 per cent of the recent forest fires in Indonesia have occurred on palm oil plantations or concessions, according to the World Resources Institute, which said gaining information about the fires' locations could have implications for the companies and government agencies involved.

The RSPO includes a commitment to transparency and long-term economic viability, use of appropriate best practice throughout the supply chain and adherence to applicable laws, responsible development and a commitment to continuous improvement.

Mark Mills, PRI's Sustainable Palm Oil Investor Group partner, General Investment Management, said investors should restrict supplying capital to companies which did not adhere to sustainable practices. He warned of the potential damage to brands and reputations caught up in environmental, social and governance transgressions.

"Our members are invested in all parts of the palm oil value chain and are making it clear to our investee companies that we believe long-term investment returns will be enhanced and risks reduced by committing to and implementing sustainable practices as outlined by the RSPO," he said.

The working group consists of 25 PRI signatories and is currently engaging 20 companies on improvements in policies and processes that support a sustainable palm oil industry.

The group's next phase involves writing to plantation owners and others in the supply chain to encourage responsibility and accountability.

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