RSPO’s update has no impact on Sime Darby, IOI Corp
KUALA LUMPUR: The Roundtable of Sustainable Palm Oil’s (RSPO) update on its Principles and Criteria (P&C) is not likely to impact three of four Moody’s Investors Service rated palm oil producers, which include Malaysia’s Sime Darby Plantation Bhd (Baa1 stable) and IOI Corporation Bhd (Baa2 stable).
This is due to the fact that they have already implemented sustainability policies that incorporate the updated RSPO requirements.
The RSPO is an association of palm oil industry stakeholders that promotes the growth and use of sustainable palm oil products. Key elements of the updated criteria relate to halting deforestation, protecting peatlands and strengthening labour rights.
“The three rated issuers, Sime Darby Plantation Bhd (Baa1 stable), IOI Corporation Bhd (Baa2 stable) and Sawit Sumbermas Sarana Tbk (P.T.) (B1 stable), have adopted sustainability policies that include no deforestation, no peatland development and no labour exploitation.
“Therefore, they are likely to be in compliance with the revised RSPO requirements ahead of the 12-month grace period companies have to adopt the requirements,” the rating agency said in a statement yesterday.
Amid growing awareness and demand for sustainable palm oil production, Moody’s expect companies that have RSPO certification to be better positioned to benefit from the favourable long-term outlook for palm oil demand.
According to Oil World, an independent global research firm on oilseeds, global palm oil consumption will rise to around 85 million tonnes by 2025 from 62 million tonnes in 2016.
“Among our rated issuers, Sime Darby Plantation is best positioned for sustainability practices. It is the largest producer globally of certified sustainable palm oil, producing 20 per cent of global output, and one of the founding members of the RSPO.”
IOI Corporation, another RSPO founding member, has enhanced sustainability practices. Last month, the RSPO officially closed its complaint from 2016 in recognition for IOI’s continued commitment to a number of practices2, including no development in high conservation value areas.