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fires trigger pri action on palm oil

The group, which consists of signatories to the United Nations-backed Principles for Responsible Investment (PRI) initiative, called on firms to follow criteria set down by the Roundtable on Sustainable Palm Oil (RSPO) – a body established in 2004 to bring together food companies, the Malaysian Palm Oil Association and the World Wide Fund for Nature.

RSPO principles seek to discourage palm oil producers from using burning as a means of land preparation – an activity blamed for fires on the Indonesian island of Sumatra, which caused a blanket of smoke to drift over the nearby city-state of Singapore, as well as parts of Malaysia.

The PRI’s Sustainable Palm Oil Investor Working Group, which includes Dutch pension giants APG and PGGM, supported an RSPO instruction to member companies implicated in the fires, to submit maps of their plantations. It also endorsed a statement by RSPO secretary general Darrel Webber, which threatened strong measures against members who failed to provide such information.

Brand damage ‘enormous’

“Investors have an important role to play in restricting the supply of capital to those who do not adhere to such principles of sustainability,” wrote Mark Mills, chair of the PRI’s Sustainable Palm Oil Investor Working Group, and a partner at Generation Investment Management. “The damage to the brand and reputation of companies implicated in this transgression is potentially enormous”.

Actions by PRI members have shown signs of success in the past. As Expert Investor Europe reported in May, a study found that engagement by PRI signatories had helped reduce corruption risk at 16 global companies during the previous three years.

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