GES, a leading service provider of engagement services to institutional investors globally, today welcomes the recent announcement from Indonesia’s President Joko Widodo suspending new palm oil plantation development in the country.

President Widodo vowed during and after global climate talks in Paris last year to improve Indonesia’s record on its rainforests and now has decided to issue a decree on the suspension of issuances of new oil palm plantation development in the country. The pressure on Indonesia to cut carbon has increased and the country’s CO2-emissions related to the palm oil sector received attention last year after the forest fires in Sumatra, Indonesia, which, at their height, emitted more C02 than the US economy combined per day. Despite the moratorium, the President believes that palm oil production can be doubled on existing land through improved agronomy and plantation management.

Nathalie Rasmussen, Head of Business Conduct Engagement at GES, and lead engagement manager at GES on its palm oil engagement, comments:

“Having engaged with over 30 palm oil producers and buyers for several years in the region, GES views the Indonesian moratorium on palm oil production as a positive development. If enforced, we believe that the moratorium will intensify attempts to improve rural livelihoods through changing agricultural practices and increasing average oil palm plantation yields.

“However, GES is concerned about the potential mixed messages that the Indonesian Government recently has been sending regarding palm oil production, forest conservation and cutting carbon emissions. For example, the Indonesian Government recently opposed the Palm Oil Pledge (IPOP), an industry-led initiative to enable and promote the production of sustainable palm oil. So, the announcement of the moratorium is potentially confusing for both producers and other stakeholders.

“But, action is needed. Global demand for palm oil is expected to grow strongly. The World Bank forecasts that an additional 6.3 million hectares of land will be required to meet global demands by 2020, with much of the land to be converted or developed in Indonesia. Ultimately, Government and companies, both in Indonesia and globally, must work together to cut their carbon emissions following the Paris Agreement.”

 

For more information, please contact:

Nathalie Rasmussen, Head of Business Conduct Engagement