Posted on 29 April 2012
- WWF is urging investors to do more to
promote sustainable palm oil, backed by
findings from a new survey released during
a high-level meeting of investors and producers
in Singapore.
WWF’s first-of-its-kind Palm Oil Investor
Review 2012 surveyed 35 key palm oil sector
investors to assess how they are managing
the challenges associated with sustainable
palm oil and outlines the role they can
play in moving the industry toward greater
sustainability.
“Investors are uniquely
placed to influence investee companies to
adopt sustainable practices through active
engagement and exercise of proxy voting
rights, and through directing their investment
capital towards sustainable palm oil producers,
” said WWF’s Jeanne Stampe, co-author of
the report.
Key recommendations
The review recommends that investors incorporate
environment, social and governance (ESG)
issues into ownership polices and engage
more actively with investee companies across
the supply chain to get them to make commitments
to certified sustainable palm oil (CSPO).
Investors and the Roundtable on Sustainable
Palm Oil (RSPO) should also develop much
deeper engagement to realize mutual benefits.
In addition, investors should pressure stock
exchanges to mandate minimum reporting requirements
for high impact sectors like palm oil.
“Understanding the dynamics
at play is key to harnessing the power of
investors to shape the palm oil industry.
Given the strong link between sustainability
and investment success, investors need to
highlight to investee companies that integrating
sustainability into the core strategy and
operations allows them to derive business
benefits, access a broader pool of capital
and deliver better investment performance,”
said Stampe.
The review also calls for the RSPO to support
investors by educating its financial members
about the palm oil sector and the costs
and benefits of RSPO certification. This
includes helping them develop and share
best practice tools as well as publishing
uniform data on how palm oil supply chain
companies are performing against ESG issues.
The sustainable palm
oil challenge
More than 50 million
tonnes of palm oil are used worldwide each
year in everyday products including food
and cosmetics. From 2010 to 2020, this volume
is projected to increase by over 65%. The
growing demand for palm oil has resulted
in rapid and poorly managed expansion of
production, causing deforestation, species
loss, greenhouse gas emissions and social
conflicts with local communities.
Breaking down the barriers
Investors can help mitigate these problems.
However, the survey shows there are hurdles
to overcome as investors face internal organizational
and capacity constaints in addressing ESG
risks. Investors also need more disclosure,
transparency and access to ESG research
in order to have productive engagement with
their investee companies on sustainability
issues. The review recommends potential
solutions to these hurdles.
WWF support
WWF has been active in the palm oil financing
arena for the past five years, and will
continue to support the financial sector
to drive sustainability in palm oil production
by providing information and guidance through
tools, research updates, and workshops with
finance sector partners.
“The palm oil sector
presents an attractive growth proposition
for investors, but ESG issues and the lack
of company disclosure still cloud the ability
of many to invest,” said Jeanne Stampe.
“”If we all – investors, the RSPO and stakeholders
such as WWF – work together, we can ensure
that the palm oil industry expands in a
sustainable way, so that long-term investment
returns are enhanced and emerging economies
benefit from sustainable development.”
