Investors worth $6.7 trillion advocate for better palm oil standards
Roundtable on Sustainable Palm Oil faces pressure to strengthen its certification standards from more than 90 institutional investors.
More than 90 institutional investors representing over $6.7 trillion in assets under management have written to the Roundtable on Sustainable Palm Oil (RSPO) calling on it to strengthen its green certification standards for palm oil production.
In a letter sent last month to the RSPO and made publicly available this week, investors raised concerns over the "relevance and effectiveness" of the multi-stakeholder certification body, which aims to boost sustainability standards across the palm oil industry.
Around 19 percent of the world's palm oil, a key ingredient found in almost half of all packaged goods, is certified by the RSPO, as the industry seeks to address fears it is exacerbating deforestation and biodiversity loss.
But the letter published this week highlights a "disconnect" between leading palm oil sustainability commitments from some corporates and perceived weaker standards set out in the RSPO's own criteria. It also outlines a series of recommendations to help "bridge the gap" and make the RSPO standards more robust.
The RSPO is preparing to update release new guidance in November covering the next five years, having faced mounting pressure in recent years to strengthen its standards. The sustainability guidelines are reviewed every five years in line with ISEAL best practices.Around 19 percent of the world's palm oil is certified by the RSPO, as the industry seeks to address fears it is exacerbating deforestation and biodiversity loss.
However, the investor group letter claims the body's current draft standards still do not include sufficiently robust protections for peatlands, high carbon stock forests and labor concerns, such as children's 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 letter stated. "As such, both investors and companies rely on the RSPO to ensure reliable supplies of verified sustainable palm oil."
The letter was coordinated by U.S. environmental nonprofit Ceres, which said the $37 billion palm oil industry was a major driver of rainforest and peatland destruction, and highlighted deforestation as being responsible for 10 percent of global greenhouse gas emissions.
Julie Nash, director of food and capital markets at Ceres, said companies needed assurance that their palm oil supplies were deforestation-free. "Without that, their businesses are vulnerable to reputation and market risks," she said. "This new guidance has the opportunity help companies implement no deforestation pledges, but it must meet industry norms for zero deforestation."Ceres said the $37 billion palm oil industry was a major driver of rainforest and peatland destruction, and highlighted deforestation as being responsible for 10 percent of GHG emissions.
Signatories to the letter include Aviva Investors, Aegon Asset Management, the New York State Common Retirement Fund, Robeco, Hermes EOS, EdenTree Investment Management Ltd and the Environment Agency Pension Fund.
Adam Kanzer, managing director of corporate engagement at another signatory — Domini Impact Investments LLC — stressed that investors and businesses wanted the RSPO to succeed as they benefit from "a single gold standard for sustainable palm oil."
"We look forward to working with the RSPO and its members to help ensure the market receives the reliable assurance it requires," he added.
In response, the RSPO said it welcomed diverse input from members and stakeholders on the forthcoming update to its guidelines, adding it has received more than 10,000 comments during a recent consultation process.
"The membership and the Principles & Criteria Taskforce of the RSPO aim to create a system that is feasible in field, equitable to all countries with palm oil industries, addresses the concerns of civil society and helps make sustainable palm oil the norm," RSPO said in a statement. "To do that, we must collaborate with and gain consensus from our stakeholders, NGOs, growers, manufacturers and all others alike. In addition to reviewing the comments submitted related to our no deforestation standards, we are currently in active discussions with the High Carbon Stock Approach."
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