Indonesia is one of the world’s biggest emitters of greenhouse gases, driven by deforestation and land-use change.
Slow progress in sustainable palm oil
We heard similar comments during an engagement meeting with Bank Mandiri, one of the largest financiers of the palm oil industry. The meeting, attended by representatives from the credit risk and wholesale banking units, capped a very successful year of engagement with the bank on palm oil financing activities. We are glad to report that it is in the process of implementing a stricter approach to palm oil financing, in line with its new Sustainable Finance Action Plan announced in August 2019, whilst assessing ways to use its leverage as a key participant in the industry to drive more sustainable practices. However, the bank has shied away from requiring its clients obtain RSPO certification (it encourages them instead) because there is no commercial imperative to do so.
Without significant pressure from end consumers or buyers of palm oil in Asia, the road ahead for sustainable palm oil remains unclear. Despite the challenges, we will continue to engage with producers, buyers and banks to call for more sustainable agricultural practices, including adherence to RSPO standards.