Major Palm Oil Growers Agree to Moratorium on Deforestation, Following Letter from Investors
Contact: Lucia von Reusner, Green Century Capital Management, 617-482-0800, email@example.com
This press release was originally sent on September 19, 2014.
September 19, 2014: Following a letter coordinated by Green Century Capital Management and signed by institutional investors representing over $600bn in assets under management,¹ the world’s five largest growers of palm oil—Sime Darby,* Asian Agri,* IOI Corporation,* Kuala Lumpur Kepong Berhad,* and Musim Mas*—agreed today to halt the clearance of high carbon stock (HCS) forests while they conduct a yearlong study aimed at defining the threshold for forest protection. The announcement comes at a critical time, as major companies like Kellogg’s* and ConAgra* that use palm oil are working to rapidly implement their recently announced ‘zero deforestation’ palm oil policies, and leaders from around the world are gathering in New York City next week to announce ambitious commitments to combat climate change.
“Companies and investors increasingly understand the urgency of climate change, and recognize deforestation as a highly risky business practice,” stated Lucia von Reusner, Shareholder Advocate for Green Century Capital Management. “A unified approach towards protecting forests in the palm oil supply chain is absolutely critical as the market shifts rapidly away from deforestation and towards climate solutions.”
The letter, sent September 8 and signed by major institutional investors from around the world calls on these growers, which are members of the Palm Oil Manifesto Group, to adopt an immediate moratorium on clearance of HCS forest or else risk losing access to markets increasingly sensitive to concerns around deforestation. Full text of the letter is available here.
“Climate change is risky business—for people, the planet, and investors,” commented Leslie Samuelrich, President of Green Century Capital Management. “Investors expect companies to build sustainable supply chains that protect the environment upon which their businesses and all of us depend,” stated Samuelrich.
Questions still remain about what definition of HCS forests these companies will use to implement their moratorium. Major suppliers including Wilmar,* Cargill,* Golden Agri-Resources (GAR),* and Asia Pulp and Paper* all use an approach that was developed in 2010 by GAR, The Forest Trust (TFT), and Greenpeace, and has been field trialed in years since then by several other companies. Asian Agri announced that it would use the TFT/GAR/Greenpeace approach at least until the industry-funded study is completed.
Over the past few months, Green Century has secured commitments from top palm oil consuming companies including Kellogg’s, Smuckers,* and ConAgra to only purchase palm oil from suppliers that adhere to ‘no deforestation’, as defined by no clearance of High Carbon Stock and High Conservation Value forests. Other companies that have recently adopted zero-deforestation palm oil commitments include several of the world’s top palm oil consumers such as Procter & Gamble,* Unilever,* Mondelez,* Colgate-Palmolive,* ConAgra, and Kellogg’s. Responding to the demand from these companies, several of the world’s largest palm oil traders including Wilmar, Golden Agri-Resources (GAR), and Cargill, which together trade over 60% of the world’s palm oil, have committed to ensuring zero deforestation across all of their supply chains.
The Palm Oil Manifesto Group, whose members are producers that grow palm oil used by many of these companies, has come under fire for refusing to accept the existing threshold for no-deforestation, and continuing to clear high carbon stock forests as they worked to establish their own definition in a yearlong industry-funded study.
Next week, global leaders will come together at the UN Climate Summit in New York City to announce ambitious commitments to address climate change. A special session of forests will be held for leaders to elaborate on and unveil ambitious commitments around forests and addressing deforestation.
Green Century Capital Management is an investment advisory firm that manages the first family of responsible and diversified fossil fuel free mutual funds. Founded in 1991 by a network of non-profit organizations, the state Public Interest Research Groups (PIRGs), Green Century leads an effective shareholder advocacy program to convince companies to establish and implement environmental policies that protect our land, water and air.
Visit greencentury.com for more information.
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*As of June 30, 2014, Colgate-Palmolive Co., Kellogg Company, Mondelēz International, Inc., Procter & Gamble, Co., and Unilever plc comprised 0.00% and 0.93%, 0.00% and 0.26%, 0.00% and 0.95%, 0.00% and 3.15%, and 1.14% and 0.00% of the Green Century Balanced Fund and the Green Century Equity Fund, respectively. Other securities mentioned were not held in the portfolios as of June 30, 2014. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
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