• Using Environmental, Social and Governance (ESG) Disclosure to Mitigate Risk in Palm Oil Investments

    Moritz Koenig    Clara Melot
    15 Dec 2016

    Operational and reputational risks are likely to arise from investments in commodity production especially where production activities may lead to deforestation or land conflicts. Palm oil companies are a case in point as oil palm plantations have driven deforestation in Indonesia and Malaysia and concession agreements are frequently challenged by affected communities. With changing consumer demands and the tightening of regulation in South East Asia, palm oil producers have come under enormous scrutiny which may affect investments in them. We argue that the use of ESG analysis and company engagement can help mitigate these risks. The Zoological Society of London (ZSL) has developed the Sustainable Palm Oil Transparency Toolkit (SPOTT) to enhance the transparency of palm oil companies and support bottom-up ESG research. SPOTT assesses 50 prominent palm oil companies against 54 best practice indicators on a bi-annual basis. In this blog post we present some notable developments from the latest round of assessments and demonstrate how SPOTT can help investors go beyond RSPO certification in their ESG research.