Institutional investors representing over half a trillion dollars in assets under management are calling on four major palm oil producers to adopt an immediate moratorium on deforestation and join the growing effort within the industry to establish traceable, deforestation-free palm oil supply chains.
Led by Green Century Capital Management, investors called on Sime Darby Plantation, Kuala Lumpour Kepong Berhad, IOI Corporation Berhad, and Asian Agri to cease their efforts to weaken the existing threshold for no-deforestation.
The Palm Oil Manifesto Group (The Group) currently represents five palm oil growers that together produce around nine percent of the world’s palm oil. The Group has come under fire for its stated intent to redefine the threshold for what constitutes High Carbon Stock (HCS) that would be considered off-limits for development under recent company commitments to protect forests classified as HCS.
The letter supported by institutional investors representing over $600 billion in assets under management is calling on publicly traded members of The Group to adopt an immediate moratorium on developing potential HCS forests as classified under the existing definition, and to adopt a time-bound plan for supplying only palm oil that is independently verified as protects forests, peatlands, and human rights.
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Palm oil is the most widely used vegetable oil in the world, and its production is one of the leading drivers of tropical deforestation — a primary driver of climate change and biodiversity loss. Due to its damaging impacts on the environment and local communities, palm oil has become one of the most controversial and highest risk ingredients for many companies.
Over the past year, major corporations have made major commitments to ensure that the palm oil they purchase is fully traceable back to sources independently verified as not developing HCS forests or peatlands, and not violating worker and community rights. Companies that have made these commitments include several of the world’s top palm oil suppliers, including Wilmar which controls 45 percent of global palm oil trade, and consumers, including Kellogg’s, ConAgra, Procter & Gamble, and Mondelez.
“Companies and their investors increasingly realize that destroying the rainforest for palm oil is a controversial and highly risky business practice,” stated Lucia von Reusner, Shareholder Advocate at Green Century Capital Management, which coordinated the letters and secured recent palm oil sourcing commitments from companies including Kellogg’s, ConAgra, and Smuckers.
“Companies that fail to demonstrate a real commitment to halting deforestation face damaged reputations, loss of consumer trust, and reduced access to markets attentive to these issues,” added von Reusner.
In March, UCS released a scorecard grading the palm oil sourcing commitments of 30 top companies in the packaged food, fast food and personal care sectors, which shows 24 of these household brands have inadequate commitments or lack commitments altogether.
The scorecard rated the 10 largest US companies in each of the three sectors and found that the majority do not have commitments in place to fully protect forests or peatlands.