BlackRock accused of ESG inconsistency over Indonesian palm oil

BlackRock accused of ESG inconsistency over Indonesian palm oil

BlackRock should “make time-bound and detailed requests to the company . . . and commit to divesting if the requisite changes are not forthcoming”, Cuvelier added. “It’s incoherent that BlackRock is pushing P&G to clean up its value chain while simultaneously continuing to profit from this same value chain,” said Lara Cuvelier, sustainable investments campaigner at Reclaim Finance, an investor lobby group. Wilmar’s probe into Astra Agro Lestari stemmed from a request made in October by Wahana Lingkungan Hidup Indonesia, an environmental group, to P&G to look into claims that three subsidiaries of the palm oil company were involved in land grabs from local farmers. The alleged seizures took place in seven villages in Central Sulawesi, a remote part of Indonesia.

If investors want to be consistent, they should challenge palm oil producers to improve Rights groups and sustainable investment advocates have turned their attention to BlackRock, which is a significant shareholder in Astra International, the parent company of Astra Agro Lestari. According to Bloomberg data, the US fund group is Astra International’s third-largest investor, with a holding worth almost $350m. It also has a small direct holding in Astra Agro Lestari.

Green finance groups said that BlackRock has been inconsistent in its approach to ESG considerations by not openly pressing Astra over its environmental record. The $8.7tn fund house has come under increasing pressure to live up to its 2020 pledges regarding ESG and sustainable investing. P&G has since asked its Singapore-based supplier Wilmar International to investigate Astra Agro Lestari, a palm oil subsidiary of Indonesian conglomerate Astra International that activists have accused of seizing land from local farmers among other poor environmental standards.

P&G said that Astra Agro Lestari sells palm materials to Wilmar, one of the consumer goods group’s suppliers. “We asked Wilmar to take steps to investigate further with their supplier Astra Agro Lestari and address the case,” P&G said. Wilmar, which has disclosed the allegations through its reporting processes, said Astra Agro Lestari had so far been “forthcoming and open” in its investigation and was awaiting supporting evidence from environment groups. There are an estimated 767 Tapanuli orang-utans left in the wild © Aditya Sumitra for Image Dynamics/Mighty Earth Astra International did not respond directly to the allegations but said it was working with its subsidiaries on sustainability and the livelihood of local communities. “Astra Agro Lestari has in place a comprehensive sustainability code . . . and has been working with independent experts to further strengthen its sustainability performance,” Astra International said.

Astra International is majority-owned by Hong Kong trading house Jardine Matheson through its Singapore-listed unit, Jardine Cycle and Carriage. BlackRock’s shareholding, which has gradually increased over nine years, is mostly held through mutual funds and ETFs, according to Bloomberg data. Larry Fink, BlackRock chief executive, has previously said that ‘sustainable investing is the strongest foundation for client portfolios’ © Bloomberg

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