We recognise that mining, agriculture (particularly soft commodities) and forestry conducted in jurisdictions where land rights and land tenure are unclear, have the potential to give rise to improper land acquisition issues. These sectors are included in our sensitive sector and activity list.
We consider exposure to risk, including ESG risk, at both a lending portfolio and an individual customer level. At the customer level, ESG risk is assessed on a case-by-case basis as part of the credit risk assessment and due diligence process. We assess ESG risks associated with the activities that we are directly funding, as well as the indirect risks that we may be exposed to, through other activities a client may undertake.
In our Policy Statement on Improper Land Acquisition, we have committed to engage with our customers and work towards implementing risk processes by 2020, so that relevant lending and advisory clients whose operations include significant land acquisitions, can verify to us that their operations are appropriately considering land rights of local and indigenous communities, particularly in developing countries.
Since it was developed in 2015, we have shared our Policy Statement on Improper Land Acquisition with a range of customers involved in the soft commodities sector. This has included Wilmar International Limited (Wilmar).
As part of credit risk management, we annually review large clients like Wilmar, and assess potential ESG risks associated with their business and supply chain. In December 2013, Wilmar announced its ‘No Deforestation, No Peat, No Exploitation Policy (“Policy”). Wilmar operates an integrated multi-national agribusiness, with business activities including oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, specialty fat, oleochemical, biodiesel and fertiliser manufacturing and grain processing.
Wilmar recognises that while plantation development has contributed significantly to economic development, deforestation and other business-as-usual practices have an impact on people and the environment. For this reason, they are working closely with other growers, traders, processors, NGOs, end-user companies, financial institutions and other industry stakeholders to protect forests, peatlands, and human and community rights.
Wilmar started its supply chain mapping exercise in early 2014 to improve transparency and better manage risks in its supply chain. To help stakeholders understand the implementation progress of its Policy, Wilmar provides details of actions it is taking to manage sustainability risks in its supply chain in the Sustainability section of its website. This includes disclosure of suppliers and a grievance procedure mechanism that enables any stakeholders to raise concerns about Wilmar’s own operations and/or those of its third-party suppliers. Findings and progress on actions taken to address those concerns are reported on that platform. Wilmar has held a series of meetings to socialise its grievance process with both international and local NGOs.
We find it useful to be able to refer to the site, and Wilmar's quarterly update report on its No Deforestation, No Peat, No Exploitation Policy, to see how Wilmar is progressing on the certification and supply chain compliance fronts.