Joyce Lam | 29 May 2017 | London, UK.

As another hazy dry season looks set to loom across Southeast Asia, the latest SPOTT assessments find palm oil producers and traders varying in their commitments to combating fires and ensuring sustainability. While some companies are making positive progress in disclosing critically important information, many could be far more ambitious in making stronger and wider commitments to manage risks such as deforestation and human rights abuses.

ZSL’s SPOTT initiative conducts assessments for 50 of the world’s largest palm oil producers and traders, including big players such as Astra Agro Lestari, Sime Darby and Wilmar International. SPOTT assesses these companies against a revised framework of 125 indicators using publicly available data on environmental, social and governance (ESG) issues.

Each company receives a total percentage score based on the indicators that apply to their operations, along with scores breaking down performance against the following 10 categories:

 

As Indonesia enters its dry season, the polluting haze that sweeps over the region during this time is often attributed to fires started to clear land. Given estimates over 2.5 million hectares – 100 million tennis courts – of land burned in 2015, it is encouraging to see an increase in corporate “zero burning” policies and evidence of implementation. More widely, however, there is little evidence of companies monitoring and reporting on implementation of “zero deforestation” commitments, potentially placing valuable forests and carbon-rich peatlands at risk.

Companies also scored poorly on new biodiversity indicators, with many producers lacking commitments to protect habitats and endangered species, especially outside of conservation areas. Few companies have published time-bound plans on reducing their greenhouse gas (GHG) emissions, and even fewer have public commitments to manage water responsibly.

In response to user needs and feedback, SPOTT assessments now score companies in more detail on social and governance issues, including policies on the fair treatment of workers, anti-corruption and whistleblowing. In obtaining free, prior and informed consent (FPIC) from local and indigenous communities affected by development, company policies lack detail in describing customary rights and to whom they apply. Not all of the companies have grievance processes in place, and few give details on the steps towards remediation.

ZSL’s palm oil technical advisor, Izabela Delabre, said: “We revised SPOTT’s indicators to provide a more comprehensive and in-depth analysis of corporate progress on addressing ESG issues, and to give more weight to the implementation of commitments. After sending companies their draft assessments last month, we have seen many of them showing eagerness to engage with us, as well as making subsequent disclosures of important sustainability information. We are observing a demonstrable increase in buy-in from top management with regard to ESG issues, and willingness to progress.”

Recently shortlisted for a Responsible Investor award, SPOTT also highlights recent media reports relevant to the assessments, in order to provide evidence of policy implementation and hold the industry to account.