Resource Sector

Indonesia Finds One-Fifth of Palm Oil Plantations Are Illegal (10 – 11 Oct)

Last year President Joko Widodo issued a ban on new permits for palm plantations for three years, aiming to protect the country’s forests. The order also gave the government authority to review existing licenses, and revoke them if the area has not yet been cleared. Prabianto Mukti Wibowo, forestry governance official at Indonesia’s Coordinating Ministry for Economic Affairs, said 5.8 million hectares of forest area has been licensed out for palmplantations but 1.4 million hectares of that has not yet been converted to plantations and still has good tree cover. This investigation found that about 19% of the country’s total oil palm plantations, are operating without permits in forest areas. Authorities are in the process of identifying the owners of the unlicensed plantations and are seeking legal advice on how to deal with them.

Sources: Bloomberg, The Star Online

Malaysia to raise transboundary haze issue at ongoing Asean meeting (9 Oct)

Malaysia will raise the issue of transboundary haze at the Asean Ministerial Meeting on Environment which is being held in Cambodia, said its environment minister. The item is on the agenda for the four-day meeting that started on Tuesday (Oct 8), said Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin. She reiterated that the Indonesian government should take action against any party responsible for the fires.

Sources: The Straits Times, The New Straits Times,

Could the EU’s ban on palm oil in biofuels do more harm than good? (30 Sept – 8 Oct)

In an era where trade wars and tariffs are commonplace, it is often the case that developing countries are held to double standards by Western nations. Commodities are among the pawns of political trade wars – and palm oil is no different. While palm oil is controversial from a sustainability perspective, the EU’s plans to ban its use in biofuels by 2030 is part of the problem.

The International Union for the Conservation of Nature has warned that a ban on palm oil would lead to increased consumption of land-intensive rapeseed, soy and sunflower oils to keep up with rising demand. The EU is the world’s second-largest importer of palm oil, after India. Considering that the EU is a major producer of rapeseed oil and sunflower oil, it could be seen that the Delegated Act is an effort to encourage the growth of domestic vegetable oils, particularly those two. The ban will simply reduce competition for the EU’s own oilseed production in countries such as France, Germany, Poland and the UK.

Source: The Asia Times, World Economic Forum

Palm oil from illegal Indonesia plantation sold to Golden Agri, Musim Mas (30 Sept)

A Rainforest Action Network (RAN) investigation showed Asia-based palm oil traders Golden Agri-Resources (GAR) and Musim Mas Group bought oil from two mills that sourced palm fruit from a small, privately-owned plantation on Sumatra island. Palm oil from an illegal plantation inside an Indonesian rainforest home to endangered orangutans has found its way into the supply chains of major consumer brands including some of the world’s biggest consumer goods firms, include Nestlé, Mars, PepsiCo, Mondelêz, General Mills, Kellogg’s and Hershey’s. The plantation is inside the protected Rawa Singkil Wildlife Reserve, in a high-priority conservation area and critical wildlife habitat, dubbed the “orangutan capital of the world”.

Sources: The Straits Times, Eco-Business

Green Finance

In counterweight to China, EU, Japan sign deal to link Asia (27 – 28 Sept)

The European Union and Japan signed an infrastructure deal to coordinate transport, energy and digital projects linking Europe and Asia, as a counter to China’s Belt and Road strategy. The accord formalises Japan’s involvement in a new EU-Asia “connectivity” plan that is expected to be backed by a 60 billion euro ($65.48 billion) EU guarantee fund, development banks and private investors. EU officials said they are concerned about what they see as a Chinese investment model which lends to countries for projects they may not need, making them dependent on China once under way. The EU-Japan agreement calls for “transparent procurement practices, the ensuring of debt sustainability and the high standards of economic, fiscal, financial, social and environmental sustainability”.

Sources: Reuters, Channel NewsAsia, The Business Times, Financial Times, The Japan Times

World’s largest banks lagging in sustainable finance: report (3 Oct)

New findings by Washington-based World Resources Institute revealed that the majority of the 50 largest banks globally have not made sustainable finance commitments to respond to the risks of climate change and continue to finance fossil fuels. WRI further noted that many of the banks that pledged sustainable commitments have unclear accountability methods. Terms for defining sustainability criteria also vary by bank and 30 percent of banks that have made pledges have not included specific timelines. Given the variable definitions and financial services deployed, comparisons based solely on the amount pledged are unreliable and do not reflect the level of commitment by each financial institution.

Sources: Reuters, Newsweek

Japanese coal assets at risk from cheaper renewables, researchers say (7 Oct)

A report Land of the Rising Sun and Offshore Wind found that as much as $71 billion of Japanese coal assets could be at risk as the economic viability of plants is undermined by cheaper renewable energy, namely onshore and offshore wind and large-scale solar photovoltaics (PV). Of this amount, $29 billion could be avoided if the Japanese government reconsidered the development of planned and under construction capacity straight away, according to the report by the University of Tokyo, Carbon Tracker and the Carbon Disclosure Project. In a long-term emission reduction strategy adopted in June, Japan said it aims to cut its dependency on coal-fired power generation to the “lowest possible levels”, but stopped short of giving a specific target.

Sources: Thomas Reuters Foundation, The Business Times, Yahoo! Finance

StanChart in Singapore offering ‘sustainable deposit’ with 1.9% interest rate to retail customers (8 – 9 Oct)

Standard Chartered Bank (Singapore) launched its sustainable deposit offering for both corporate and retail clients in Singapore, said to be Asia’s first. Liquidity raised will be referenced against sustainable assets supported by the United Nations’ Sustainable Development Goals (SDGs) and can be used to finance climate-friendly projects, small and medium-sized enterprises in developing countries, undertake microfinance and provide funds for various sustainable projects. While green deposits – dedicated to renewable energy – are increasing in popularity, this is the first time any bank has launched a deposit product linked to sustainability and the SDGs. This move follows StanChart’s earlier launch of its sustainable deposit in the UK in May 2019, but it was available only to corporate investors.

Sources: The Straits Times, The Business Times