A deeper look into major palm oil groups operating in Indonesia
In this report, Sarah Lake and Matt Piotrowski look at five companies — Batu Kawan, Astra Agro Lestari, IJM Plantations, Indofood Agri, and Anglo Eastern Plantations — that have not taken the step toward greater transparency and sustainability by joining or complying with the Roundtable on Sustainable Palm Oil (RSPO), an industry certification body.
Harmful effects: Despite a recent decline in deforestation, palm oil companies operating in Southeast Asia have ongoing links to land clearing, biodiversity destruction, and labor violations.
Fiscal motivation: Non-certified palm oil growers have taken major financial hits likely linked to sustainability issues and are significantly underperforming compared to their peers that sell certified palm oil.
Bad connections: These laggards that are not certified are less susceptible to change because they have dominant investors that are majority shareholders.
Financial responsibility: Western asset managers that own shares in non-certified companies could send strong signals to the companies and the industry through engagement and divestment over deforestation risks
System loopholes: Even though major buyers have cut off non-certified growers, they can still sell unsustainable palm oil through other outlets.
This report was developed as a pilot for Lucida’s initial research into palm oil producers and financiers to inform the ongoing work of the initiative.