Engagement with banks
Many banks in Asia play a key role in financing palm oil production in the region. As such, by linking the cost of and conditions to access loan capital to science-based sustainability criteria, these banks have the power to facilitate the adoption of more sustainable palm oil production practices. To support banks in leveraging this power, investors are currently using our Knowledge Partners’ research to engage with portfolio banks in key palm oil-producing countries, to enhance their lending requirements for sustainable commodities production.
For example, WWF's Sustainable Banking Assessment (SUSBA) is a tool which enables investors to see exactly how ASEAN's banks are integrating environmental and social issues into their lending policies and processes. By looking at banks' performance on specific sub-indicators most relevant to issues in palm oil production, such as deforestation and labour rights, investors can gain deep insights into where engagement has the greatest potential to drive change.
Beyond sustainable lending related to palm oil, asset managers globally are also engaging with portfolio banks on other ESG-related topics, such as climate change. In 2017, more than 100 investors with nearly US $2T AUM signed a letter, calling for portfolio banks to issue more robust and relevant climate-related disclosures. ShareAction's "Banking on a Low-Carbon Future" and Boston Common Asset Management's "On Borrowed Time: Banks and Climate Change" are two useful reports highlighting banks' progress, as well as and ongoing gaps.