“How to eliminate the deforestation risks of palm oil imported to China?”, 24 June 2020

… CDP’s [a non-profit working on environmental information transparency] new report, The Hidden Commodity: how China’s palm oil imports can help halt deforestation reveals that, globally 146 firms report they used palm oil directly in 2019, or that it was used in their supply chains. Of these, 63% (92 firms) identified forest-related risks with the potential to have a substantive financial or strategic impact on their business…  

Ranked by nation, China is the world’s second-largest importer and third-largest consumer of palm oil, and relies entirely on imports for its supply… Although China is a vast market, but in 2019, only 3 Chinese firms reported palm oil-related information, 2 of these identified forest-related risks.

… firms in the middle of the value chain could see market access risks due to buyers instituting zero-deforestation policies. For example, many international buyers of Chinese products containing palm oil (such as French supermarket group Carrefour) have put such policies in place and promised that by the end of 2020 they will only buy palm oil products certified as sustainable by the Roundtable on Sustainable Palm Oil (RSPO). If Chinese suppliers do not comply with these policies, they may see contracts terminated and business lost…

More than 70% of Chinese consumers already have an awareness of sustainable consumption, according to a 2017 survey by China Chain Store & Franchise Association. Meanwhile, investors are encouraging companies to implement sustainable development policies… Many financial advisors are already seeing investing in ESG funds as a Covid-19 recovery tool…

… China has issued a series of policies in recent years requiring companies to manage the environmental risks of their operations. That regulatory pressure is encouraging more and more Chinese firms to tackle the physical and transitional risks arising from climate change (as well as deforestation), and to improve transparency.

More transparency is crucial if companies are to manage and remove deforestation risks from their supply chains…

… China’s “Green Belt and Road” and the recent inclusion of certified sustainable palm oil in a new draft list of projects eligible for green bond could further close the gap between Chinese and international standards, and promote interaction between Chinese companies and producer-nation suppliers…