1. What is Deutsche Bank’s position in respect to the palm oil sector?
Growth of the palm oil industry has had positive economic benefits, especially for Asian countries seeking access to global markets. However, the production of palm oil can raise environmental and social challenges if not conducted responsibly.
2. How can Deutsche Bank ignore the negative impact of the current approach of the palm oil industry?
Deforestation of tropical forests for palm oil plantations destroys habitats, threatens extinction of some species, contributes to greenhouse gas emissions and climate change and creates land conflicts with local communities.
To reflect these concerns and promote more sustainable palm oil production, Deutsche Bank introduced a set of guiding principles for transactions in this sector 2012. As a minimum, clients are required to provide a certification plan for their plantation or mills 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.
3. What does Deutsche Bank undertake to contribute to an improvement of the situation in the palm oil sector?
To broaden our understanding of challenges associated with the palm oil sector, we engage with experts e.g. research institutions active on the ground in Asia. We are also in dialogue with the German Forum for Sustainable Palm Oil.
In addition, Deutsche Bank has developed, with a number of other banks, the so-called “soft commodities compact” to support the objective of major consumer goods companies to achieve zero net deforestation in their supply chains by 2020. This initiative covers palm oil and other commodities such as timber, soy and beef, which together account for about half of global carbon emissions arising from deforestation. The compact sets minimum standards for bank lending policies that align with the Consumer Goods Forum (CGF) sustainable procurement standards for the priority soft commodities. For palm oil, the minimum standard is based on RSPO criteria.
The compact also encourages banks to work with clients toward sustainable financing solutions. As a result, Deutsche Bank contributed to the development of the “Sustainable Shipment Letter of Credit”. This is a letter of credit for goods that attaches a certification document (such as RSPO certified) to standard documentation. This will allow trade finance banks to differentiate between conventional and ‘Sustainable Shipments’. Our Trade Finance business is ready to work with consumer goods companies and support them in their effort to reduce deforestation.