Investors worth $6.7 trillion call for stronger standards on palm oil
A group of leading investors has weighed in on the issue of sustainable palm oil.
91 investors with assets under management worth $6.7 trillion has written to the certification body Roundtable on Sustainable Palm Oil (RSPO) about the issue.
The group, including CalPERS, Hermes and Aviva, is calling for wider, more stringent standards, to cover more areas of forestry production and workers’ rights.
“Our investment portfolios include companies that have significant exposure to deforestation risks and therefore, have made robust no-deforestation policies and strong commitments to sourcing sustainably certified palm oil,” the investors wrote.
RSPO is preparing to release its latest guidance on sustainable palm oil in November, which will direct production over the next five years.
Currently, 19 per cent of the world’s palm oil is certified by the body, but the group points out that its draft standards do not contain sufficient protections for peatlands, high carbon stocks and worker rights.
"Strengthening the RSPO standards is vitally important,” said Beth Richtman, CalPERS managing investment director, sustainable investments. “Without stronger standards, deforestation and land rights abuses could continue in palm oil production leading to financial risks for investors. Without stronger standards, companies trying to lower their risk and improve the sustainability of their supply chains are operating in the dark. RSPO needs to be the bright light that incentivizes and guides the palm oil industry into one that is truly sustainable in all meanings of the word.”
The production of palm oil is now a global industry worth $37 billion, according to the non-profit organisation, Ceres. It is now a main ingredient in a whole range of widely used products, from cosmetics to processed foods.
Julie Nash a director at Ceres commented that companies need assurances that their supplies will be free from deforestation.
“Without that, their businesses are vulnerable to reputation and market risks. This new guidance has the opportunity to help companies implement no-deforestation pledges, but it must meet industry norms for zero deforestation,” she added.
News published on Climate Action Programme
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