The next battleground for Socially Responsible Investing: PALM OIL

Introduction: 

Previously, I wrote about all the successes, both historical and modern, of SRI.  These included aiding the end of Apartheid in South Africa as well as shareholder activism that has been able to "nip in the bud" company wrong-doings before they became huge issues.  

Going forward, I believe the damage to jungles related to ever expanding Palm-Oil plantations is a large and growing challenge for SRI investors.

The Next Battleground:
The Palm tree is a beautiful, elegant species. Palm oil is made by extracting the oil from its fruit. Palm oil is considered more healthy than cooking (and baking) oils (and butter) that are commonly called "trans fats", but not as healthy as certain vegetable oils. However, it's much cheaper than other cooking oils and can also be used as a biofuel, lubricant and soap products. The Palm oil industry is growing rapidly and is said to be over $44bn. It may double by 2020 and triple by 2050 according to the FAO (United Nations).

The main issue is that countries (Indonesia, Malaysia, Thailand) are cutting down rain forests to plant palm trees. This has a three-fold effect by:

• endangering Orangutangs (and tigers) that live in the jungle. In the last 10 years, their population dropped 50% !
• increasing Green House Gases
• some of the lands have been used without consulting or compensating indigenous peoples
• some owners have also utilized weak employment practices including child-labor 

 

It has been difficult for investors to assess companies' use of palm oil due to:

• Palm oil does not need to be labeled
• Certified Sustainable Palm Oil is expensive and demand is lacking
• While most food companies use Palm Oil they are not required to disclose whether their oil is 100% certified sustainable.

A Wall Street Journal story highlighted  a 22 year old man from Bangladesh who was told that for $2,000 he could travel on a boat to Malaysia with good meals and drinks. He was conned by human smugglers that were essentially running a slave-trade.  Food was scarce, several migrants died from starvation, disease and beatings. The deceased stomachs' were slashed so they couldn't float, and they were thrown overboard. He was then sent to camps to work on the huge plantations of Felda for no wages. Felda is the leading member of certified Sustainable Palm Oil!  Hence, this will be an uphill battle!

What can you do:
You can, as I have, sign petitions supporting rain forests, as well as encouraging companies to disclose not only their use of palm oil, but their largest ingredients. Another practical approach is to eat whole foods, and shop at environmentally friendly stores such as Trader Joe's.


I'll leave you with some wise words from Mohandas Gandhi:

 "You must be the change you wish to see in the world.  It's the action, not the fruit of the action, that's important. You have to do the right thing. It may not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean you stop doing the right thing. You may never know what results come from your action. But if you do nothing, there will be no result.”