PRESSURE by Co-operative Insurance is having a positive impact on the approach UK companies are taking to the complex issue of unsustainable palm oil production.
CIS says that, as a result of its representations, many companies in which it invests are now working with their suppliers to reduce the environmental impact of palm oil production.
Whilst high street names such as the Co-op, Boots, Sainsburys, Marks and Spencer, BP and ICI have joined the Roundtable for Sustainable Palm Oil (RSPO) others such as Tesco, Greggs, Pepsi and Procter & Gamble refuse to join.
The RSPO is an organisation set up to bring together members representing all stages of the palm oil supply chain to determine how palm oil can be produced sustainably and to work towards making that a reality.
Palm oil is a hidden ingredient in a huge number of everyday products, including: margarine; chips; crisps; peanut butter; lipstick; moisturiser; soap; detergents; paint and candles.
Global demand for palm oil has surged over the past decade leading to a massive increase in the area of land devoted to its production and the need for it is set to increase still further in the future, as palm oil is a cheap source of biodiessel.
In both Malaysia and Indonesia large areas of rainforest have been cleared to make way for palm oil plantations. The rainforests in these countries provide rich, biodiverse habitat for orang-utans, Sumatran tigers and Asian elephants as well as for numerous tribes of indigenous people who have used the land for thousands of years.
Ian Jones, Head of Responsible Investment at CIS, said: "Companies that use or sell products containing palm oil which has been produced irresponsibly are in danger of damaging their reputation and their brands which in turn could harm the investments of CIS.
"Increasingly, consumers have high expectations of the way in which companies manage the impact of their business. Campaigns like the one to raise the awareness of the environmental damage caused in some parts of the world by palm oil production will hurt companies who do not trade responsibly. We are delighted that following pressure from us, as an institutional investor, some of the companies in which we invest have agreed to join the Roundtable.
"However, we think all companies involved in palm oil supply chain should become a member of this important voluntary body."