Helping banks and investors finance sustainable companies



WWF aids and advises financial institution industry platforms, such as the UNPRI, UNEP FI, The Equator Principles, CERES, SIRAN, and The Banking Environment Initiative (BEI).

Our work has ranged from helping investors develop frameworks to measure and manage water risks in agro-commodities supply chains to helping craft a global compact to eliminate tropical deforestation from banking portfolios.
 / ©: Jurgen Freund / WWF
Papua New Guinean worker harvests a ripe palm fruit to ready for the mill. This facility is owned and operated by New Britain Palm Oil Ltd. one of the first companies to be independently certified by the Roundtable on Sustainable Palm Oil (RSPO) as being a leader in the production of sustainable and ethical palm oil in the world. Kimbe Bay, West New Britain, Papua New Guinea
© Jurgen Freund / WWF
Palm oil is an important contributor to regional economic growth in South East Asia. Yet, it is also linked to the destruction of globally important tropical forests and the annual haze blighting the region.

Increasing evidence shows that environmental and social issues pose growing risks to economic growth and social stability.

Global banks and international institutional investors have begun to address these issues in their lending and investment decision-making processes. Global regulators have also provided supporting regulatory frameworks.

Unfortunately, findings from a WWF study reveal that regional ASEAN banks and investors are lagging on ESG issues.

For example, only four out of the 18 banks analysed disclosed the use of ESG as a tool in their credit processes and only one of these four had a forest commodity sector policy.

Of the 12 domestic investors, only two disclosed their corporate governance policy, and only one of these policies refers directly to ESG expectations for portfolio companies.

WWF calls upon these financial institutions to adopt ESG practices using a structured framework, to be transparent and report on their progress, and to join multi-stakeholder initiatives (e.g. certification schemes like RSPO) or industry collaborative platforms to access best management practice and support from peers.

Steve Waygood, Chief Responsible Investment Officer, Aviva Investors noted that “there are plenty of steps banks and investors can take now even without regulation, to ensure their investment and lending portfolios have taken into account sustainability risks and opportunities and are resilient in the face of impending crises and regulatory changes”.

In addition, the report finds that while there is a clear case for sustainable production, only a minority of listed palm oil companies disclose their policies and practices.

Only 19% of palm oil companies disclose time-bound targets to reduce GHG emissions, a glaring omission by an industry central to efforts to combat climate change due to deforestation and planting on peat, and that is vulnerable to weather changes and faces regulatory risk.

The poor disclosure is partly linked to the fact that in these 3 countries, stock exchange disclosure requirements on ESG issues are too general.

As such, the report calls on regulators to require the disclosure of statistical information, as is done in Hong Kong, and provide detailed sector guidelines.
 / ©: WWF
Only 19% of palm oil companies disclose time-bound targets to reduce GHG emissions, a glaring omission by an industry central to efforts to combat climate change due to deforestation and planting on peat, and that is vulnerable to weather changes and faces regulatory risk.
© WWF
Recommendations for regional banks, investors and companies
  • Adopt Environmental, Social and Governance (ESG) practices using a structured framework,
     
  • Strive to be transparent and report on progress
     
  • Join multi-stakeholder initiatives such (voluntary) certification schemes or industry collaborative platforms to access best management practice and support from peers such as the Roundtable on Sustainable Palm Oil (RSPO) 

Recommendations for regional regulators
  • Provide national guidelines on ESG integration for banks and mandatory reporting standards for listed companies.

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