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BlackRock has blamed the ESG inconsistency on Indonesian palm oil

BlackRock has been accused of inconsistency in its approach to sustainable investment, with Procter & Gamble backing a shareholder protest against the supply of palm oil.

The largest investment group in the world ambitious commitments Environmental, social and governance regulations were introduced in October investor revolt in P&G stretching wood pulp and palm oil supply chain of the stretching consumer goods group He entered Indonesia.

P&G has asked its Singapore supplier Wilmar International to investigate Astra Agro Lesta, a subsidiary of Indonesia’s conglomerate Astra International, an oil company that has accused local farmers of hijacking land among other bad environmental standards.

Rights groups and advocates for sustainable investment have turned their attention to BlackRock, a major shareholder in Astra International, the parent company of Astra Agro Lestari. According to Bloomberg data, the U.S. fund group is Astra International’s third-largest investor, with a holding of nearly $ 350 million. It also has a small direct stake in Astra Agro Lestaria.

Green financial groups said BlackRock disagreed with its views on ESG, not clearly hitting Astra on its environmental record. A $ 8.7 million home has arrived under increasing pressure To meet the 2020 commitments on ESG and sustainable investment.

“It is inconsistent to encourage BlackRock to push P&G to clean up its value chain while continuing to profit from the same value chain,” said Lara Cuvelier, the investment lobby campaign for Reclaim Finance’s investment lobby group.

BlackRock “should make time and limited requests to the company… And commit if there are no changes needed to divest,” Cuvelier added.

Wilmar’s drilling of Astra Agro Lesta a request in October Wahana Lingkungan Hidup Indonesia’s environmental group made a statement to P&G to investigate claims that three subsidiaries of the palm oil company were involved in local farmers ’land. The alleged hostages occurred in seven villages in Central Sulawesi, in the remote part of Indonesia.

Larry Fink, CEO of BlackRock, has previously said that ‘sustainable investment is the strongest foundation for customer portfolios’ © Bloomberg

Astra International is owned by the Hong Kong trading house Matheson Garden Through the Singapore-listed unit, Jardine Cycle and Carriage. According to Bloomberg data, BlackRock’s stake, which has been steadily increasing for the past nine years, is mostly done through investment funds and ETFs.

Astra International did not respond directly to the allegations, but said it is working with subsidiaries on sustainability and the lives of local communities. “Astra Agro Lestari has a comprehensive sustainability code. . . and has worked with independent experts to further enhance its sustainability performance, ”said Astra International.

P&G said Astra Agro Lestari sells palm materials to Wilmar, one of the suppliers of the consumer goods group. “We asked Wilmari Astra Agro Lestari to investigate further and take steps to address the case,” P&G said. Wilmar has complained about the allegations through his complaint processes, saying Astra Agro Lesta has so far been “open and open” to the investigation and is awaiting evidence from environmental groups.

Approximately 767 Tapanuli orangutans remain in the forest. © Aditya Sumitra Image Dynamics / Mighty Earth

BlackRock said it was “well aware” of the concerns and was “constantly” engaged with companies about concerns about sustainability. “In our view, as companies are not moving fast enough and urgently enough, our most common action will be to hold the directors accountable by voting against the election again,” the fund manager said.

At Astra International’s 2020 annual meeting, BlackRock voted against the motion on committee changes and the director’s remuneration for outreach issues.

Benjamin McCarron, CEO of Asia Research and Engagement, said: “If investors want to be consistent, they need to challenge palm oil producers to improve.”

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

Astra Agro Lesta is not involved in the table on sustainable Palm oil, it is an industry organization committed to sustainable standards.

Capital Group, Astra International’s second largest shareholder, has sought to resign. The U.S. fund manager previously said ESG’s considerations were “woven” into its investment approach.

UBS and Vanguard Group, which also own shares in Astra International, declined. A Norwegian central bank unit, Norges Bank, manages the country’s sovereign wealth fund and also owns shares, has positioned Astra International exclusion list Because of the risk in 2015 serious environmental damage.

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