Demand for palm oil has increased rapidly over the past decade due to dietary changes and the fact that it is now also used as biofuel. Global palm oil production is predicted to be double the 2000 level by 2030 and triple by 2050.
Growth of the palm oil industry has positive economic benefits, especially for Asian countries seeking entry to global markets. However, the production of palm oil raises environmental and social challenges.
Deforestation for palm oil plantations (which is sometimes illegal) destroys habitats and threatens extinction of some species as well as contributing to damaging greenhouse gas emissions. As well as raising environmental concerns, the creation of massive monoculture plantations creates conflicts with local communities including involuntary resettlement and violation of land rights.
To address these concerns and promote sustainable palm oil production, Deutsche Bank introduced a set of guiding principles for palm oil industry transactions in 2012. As a minimum, clients active in this sector are required to provide a certification plan for their plantation or mill in accordance with the Roundtable on Sustainable Palm Oil (RSPO) criteria.
The RSPO standard was established in 2004 and is widely supported by international consumer goods manufacturers and financial institutions. The bank also engages with clients during the certification process when requested.
We have also collaborated with other banks to explore how we can support efforts by the consumer goods industry to drive deforestation out of companies’ supply chains. This initiative goes beyond palm oil and covers soft commodities such as timber, soy and beef which together account for about 50 percent of global deforestation.