Managing Palm oil risk (a Brief for financiers)

The Indonesian financial sector faces sizeable reputational, regulatory, and financial risks if it continues to support unsustainable palm oil companies. As such, it should join actions advanced by the Indonesian government, the global community, palm oil buyers, and international banks and investors in managing the detrimental environmental and social impacts caused by unsustainable palm oil practices.

These actions include the Indonesian government’s issuance of several moratoriums on development in primary forests, peatland, and further expansion of palm oil, and European countries committing to purchasing 100% certified sustainable palm oil by 2020. Many companies in the palm oil supply chain have also committed to producing and sourcing only from areas and producers that comply with No Deforestation, No Peat, and No Exploitation (NDPE) requirements and building their traceability and monitoring systems to full implementatio of such policies by 2020, a fast approaching target.