BlackRock accused of ESG inconsistency in Indonesian palm oil

BlackRock is accused of inconsistencies in its sustainable investment approach with its support for Procter & Gamble’s shareholder protests against the purchase of palm oil.

The world’s largest investment group Ambitious promise Compliance with environmental, social and governance standards, joined in October P&G’s investor rebellion Extending in the consumer goods group’s wood pulp and palm oil supply chain Enter Indonesia.

Procter & Gamble later asked its Singapore supplier Wilmar International to investigate Agro Lestari, the palm oil subsidiary of Indonesian conglomerate Astra International. Activists accused it of doing other bad things. Capture land from local farmers in accordance with environmental standards.

Rights groups and sustainable investment advocates turned their attention to BlackRock, which is an important shareholder of Astra International, the parent company of Astra Agro Lestari. According to Bloomberg data, the US fund group is the third largest investor in Astra International, with assets valued at nearly US$350 million. It also has a small direct holding in Astra Agro Lestari.

The green finance organization stated that BlackRock has not publicly asked Astra for its environmental records, so there have been inconsistencies in its handling of ESG issues.A fund company worth 8.7 tn is here Under increasing pressure Fulfill its 2020 commitments on ESG and sustainable investment.

Lara Cuvelier, a sustainable investment activist at the investor lobby group Reclaim Finance, said: “BlackRock is pushing P&G to clean up its value chain while continuing to profit from the same value chain. Inconsistent.”

BlackRock should “provide time-limited and detailed requirements to the company… Cuvelier added that if there are no necessary changes, it will commit to divestment.”

Wilmar’s investigation of Astra Agro Lestari originated from Claim Manufactured by the environmental organization Wahana Lingkungan Hidup Indonesia to Procter & Gamble in October to investigate claims that the palm oil company’s three subsidiaries were suspected of looting land from local farmers. The seized drugs allegedly occurred in seven villages in a remote area of ​​Indonesia in central Sulawesi province.

BlackRock CEO Larry Fink has previously stated that “sustainable investment is the most solid foundation for a client’s portfolio” © Bloomberg

Astra International is controlled by a Hong Kong trading company Jardine Matheson Through its Singapore-listed subsidiary Jardine Bikes and Carriage. According to Bloomberg data, BlackRock’s shareholding has gradually increased in the past nine years, mainly through mutual funds and ETF holdings.

Astra International did not directly respond to these allegations, but said it is working with its subsidiaries on sustainability and the livelihoods of local communities. “Astra Agro Lestari has developed comprehensive sustainability guidelines… and has been working with independent experts to further enhance its sustainability performance.” Astra International said.

Procter & Gamble said that Astra Agro Lestari sold palm raw materials to Wilmar Group, one of the suppliers of the consumer goods group. Procter & Gamble said: “We ask Wilmar to take steps to investigate further with supplier Astra Agro Lestari and resolve the case.” Wilmar has disclosed the allegations through its reporting process. He said that so far, Astra Agro Lestari is “preparing to open” during the investigation and is awaiting support from environmental groups.

It is estimated that there are about 767 tapanuli orangutans left in the wild ©Aditya Sumitra, responsible for image dynamics/powerful earth

BlackRock stated that it is “very aware” of these concerns and has “continuous engagement” with the company on sustainability. The fund manager said: “When we believe that the company does not have sufficient speed and urgency, the most common action we take is to vote against its re-election and require directors to take responsibility.”

At Astra International’s 2020 annual meeting, BlackRock voted against the proposal regarding board changes and directors’ compensation for disclosure issues.

Benjamin McCarron, managing director of Asia Research and Participation, said: “If investors want to be consistent, they should challenge palm oil producers and ask them to make improvements.”

Another environmental movement organization, Mighty Earth, has also put pressure on United Tractors, a subsidiary of Astra International engaged in thermal coal, to invest in the Martabe gold mine in Indonesia. According to Mighty Earth, the mine located in Sumatra overlaps with the habitat of the endangered Tapanuli orangutan.

Astra Agro Lestari is not a member of the Sustainable Palm Oil Roundtable. The organization is committed to making the company meet sustainable standards.

Capital Group, the second largest shareholder of Astra International, declined to comment. The US-based fund manager has previously stated that ESG considerations have been “integrated” into his investment methods.

UBS and Vanguard Group also hold shares in Astra International, but both declined to comment.A department of the Norwegian Central Bank, the Bank of Norway, is responsible for managing the country’s sovereign wealth fund and holding stocks. The company has placed Astra International in Exclude watch list In 2015 due to risks Severe environmental damage.

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