PETALING JAYA: Investors who worry about whether their money is going into palm oil businesses that are truly sustainable or not may not have to worry anymore.
The Zoological Society of London (ZSL) has developed a new interactive online tool that uses satellite mapping technology — with performance assessments — to monitor and provide information on listed palm oil companies’ best practices in operations.
The tool, titled Sustainable Palm Oil Transparency Toolkit (Spott), has 48 performance assessment indicators, which are framed as direct questions to ferret information from a company on whether it has sustainable policies like zero-burning, water management plans, and a time-bound commitment to reduce greenhouse gas emissions — and if so, how comprehensive they are.
The toolkit, launched two weeks ago, is based on a set of criteria underlined by the Roundtable for Sustainable Palm Oil and various other sustainable policies.
It helps palm oil companies be more transparent in their business and operations and aid investors and financial institutions in making bankrolling decisions, ZSL business and biodiversity manager Elizabeth Clarke told The Edge Financial Daily in an interview last week.
“The main issue at the moment with sustainable palm oil is people are going, ‘Well, I don’t want to buy sustainable palm oil because I can’t see any evidence that it is really sustainable as you say’. But we can actually start to generate that information,” she said.
ZSL aims to create a monitoring tool that will not only help ensure sustainability is practised, but also create a healthier working environment with palm oil companies.
“We want to make sustainable palm oil to become the norm and we want to make sure sustainable really means sustainable.
“Quite a few growers have been linked to a fire or a negative news story about deforestation and there may be valid reasons that aren’t connected to them, or they may say yes, we knew that happened [caused] by an employee we have since fired but there is no avenue for them [to show] how they have managed [it],” said Clarke.
That is why Spott also aims to serve as a standardised, central platform where companies can divulge information on their sustainable operations.
“We put that information in a place that is easy to use and online, an interactive resource. If you’re an investor looking to invest in a company, you can go on the tool and see a certain company’s sustainable practices. Maybe they did well with certain criteria but not so well with zero-burning. You can click on that and see why they haven’t done so well,” she added.
ZSL palm oil transparency manager James Horne said the information collected is updated every three months.
The 25 largest palm oil companies in the world today, including local conglomerates Sime Darby Plantation Sdn Bhd, IOI Corp Bhd, New Britain Palm Oil Ltd, Genting Plantations Bhd, Kuala Lumpur Kepong Bhd, Kulim Bhd, United Plantations Bhd and Wilmar International Ltd, have opted to be measured by ZSL’s sustainable tool after being approached.
Each of them gets a score for every category that is measured, with a combined score for overall performance. This helps identify key areas for improvement and measures a company’s transparency in disclosing information, said Horne, adding that companies chosen by ZSL are based on market capitalisation.
He said ZSL has a technical advisory group which oversees the toolkit, comprising stakeholders that are made up of investors like Generation Investment Management LLP and the Principles for Responsible Investment, as well as corporate companies like Unilever.
The tool will come in handy as several large corporations are looking at ways to use certified sustainable palm oil in their products. One of them is Unilever, the world’s biggest consumer of palm oil at 1.5 million tonnes annually, which has already pledged to only use traceable sustainable palm oil in its products beginning this year.
This article first appeared in The Edge Financial Daily, on November 24, 2014.