The past year has seen some significant developments for SPOTT. SPOTT has expanded to feature assessments of timber and pulp producers against a new indicator framework to highlight best practice in the forestry industry. SPOTT currently assesses 24 timber, pulp and paper companies and will be expanding to assess a total of 50 companies in the coming months.
We revised our indicator framework for assessing palm oil producers to encompass more environmental, social and governance (ESG) issues across 125 indicators covering 10 different categories, such as community, land and labour rights, and governance and grievances. These comprehensive assessments also now assess companies on their operational disclosure relating to sustainability, and two traders have been added.
The 2017 palm oil assessments found that the number of companies scoring well against SPOTT indicators has increased significantly since SPOTT was launched in 2014. While the average score was less than 30% in June 2014, it reached 50.4% in November 2017, with 17 companies scoring over 65%. The first timber, pulp and paper assessments tell a different story, with a lower average score of only 37%. However, we expect to see relatively rapid progress during future assessments as the industry responds to the need for greater transparency.
There is a growing demand for ESG information, highlighted in SPOTT assessments, driven by investors and buyers, as they become more aware and sensitive to the financial, operational, and reputational risks posed by ESG issues in commodity production. ZSL works closely with these stakeholders who use our benchmarked company information to identify where palm oil and timber, pulp and paper companies are performing well and where concerns need addressing. We recently published a guide to the SPOTT indicator framework to help palm oil producers and their investors understand these risks and how they can be addressed. SPOTT was also shortlisted for a Responsible Investor Award in 2017, recognising our contribution to promoting and developing investment best practice.
In the last quarter of 2017, we commissioned an external consultant to conduct a scoping study to inform the expansion of SPOTT within existing, and to additional, commodities (soy, cattle, rubber etc). In addition to examining where opportunities exist, the consultant engaged with stakeholders and key SPOTT users on their views. In addition to the final report’s recommendations, we welcome any feedback to help develop our strategy on the future direction of SPOTT.
With ever-increasing concerns over the risks associated with unsustainable commodity production, ZSL looks forward to developing SPOTT further, to meet the growing demands of stakeholders for transparent ESG reporting, and helping to increase transparency in other industries.
