Palm oil

It’s an image that has haunted the world – a distressed orangutan forced out of his forest home by palm oil developers. It symbolizes how consumption-driven human behavior is damaging wildlife and fragile ecosystems, while deforestation is contributing to global warming. But there is a sustainable way forward.

The ‘problem’ with palm oil is that it is so fantastically useful. It is an essential ingredient in a wide range of consumer goods, from chocolate to shampoo. Go into any supermarket and many of the products you see will contain palm oil. Furthermore, as the most land-efficient and versatile vegetable oil, its cultivation as a cash crop is highly profitable, providing much-needed income in emerging economies.

The solution lies in addressing the flipside by using investor power to stop unsustainable production. Robeco has been engaging with palm oil producers, traders and buyers on sustainability related issues since 2010. We lay down standards that companies must meet to be included in our investment universe, based on the proportion of their land that has been certified by the Roundtable on Sustainable Palm Oil.

We now even have a ‘spy in the sky’ to monitor production. A satellite that orbits above palm oil-growing areas can spot when land use is changed and identify any disreputable practices or deforestation. By using this combined approach of engagement on the ground and technology in the sky, we can work to make palm oil production more sustainable and allow our friends the orangutans to keep their homes.