ESG progress following investor pressure

By Daniela Esnerova

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Nov 09, 2018

Roundtable on Sustainable Palm Oil members will vote next week on bringing in stricter criteria for companies seeking RSPO certification.

Earlier this year, more than 90 global institutional investors, including Aegon Asset Management, Aviva Investors or M&G Prudential, urged the RSPO to strengthen its draft certification standards.

In a letter to the RSPO Secretariat, investment firms expressed concern the companies in their investment portfolios are adhering to higher sustainable palm oil commitments than those requested by the RSPO, creating a “disconnect between leading corporate policy commitments and the RSPO standard.”

The joint statement says: “Our investment portfolios include companies that have significant exposure to deforestation risks and therefore, have made robust no-deforestation polices and strong commitments to sourcing sustainably certified palm oil.”

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Zoological Society of London’s SPOTT assesses commodity producers and traders on the public disclosure of their policies, operations and commitments related to environmental, social and governance issue. It scores tropical forestry and palm oil companies annually.

If the new standards are passed, ZSL says its 2018 SPOTT assessments show many companies will need to improve their policies and implementation to meet RSPO requirements.

The assessment of 70 palm oil companies found zero-deforestation commitments risk being undermined by a lack of monitoring. Though 49 of these companies made a zero-deforestation pledge, the lack of on-the-ground verification limits the prospect of assessing that commitment.

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ZSL Palm oil technical advisor Michael Guindon says: “Without companies monitoring deforestation on the ground and extending their commitments to their entire operations, company pledges to be deforestation-free carry little weight.

“With just two years remaining to meet 2020 deforestation commitments, palm oil producers – and companies along the entire supply chain – must act now.”

Aviva Investors’ senior SRI analyst, Eugenie Mathieu, says: “A recent report from the United Nations Intergovernmental Panel on Climate Change sounded the alarm about the perilous lack of time we have to halt runaway climate change, with the resulting higher risk of drought, flooding, extreme heat and poverty for hundreds of millions of people.”

She adds: “Acting to stop deforestation is one of the most effective steps companies can take to prevent this climate breakdown.”

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