Islamic financial institution singled out for deforestation

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  • 01 May 2018 12:00 AM
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Malaysian Islamic Financial Institution Singled Out for Deforestation in Indonesia

New research into the activities of a major Malaysian financial institution has raised questions over the efficacy of major brands’ policies against buying from firms engaged in deforestation. In a recent report by climate coalition Chain Reaction Research, Lembaga Tabung Haji, whose publicly traded palm oil firm TH Plantations (THP) controls 32 estates in Indonesia and Malaysia, was accused of actively clearing forest and peatland. The report’s authors amassed evidence that THP had cleared hundreds of hectares of forest at its plantations in 2017, in violation of some of its buyers’ commitments not to source palm oil linked to the destruction of forests and peatlands or to the exploitation of workers – known collectively as “no deforestation, no peat, no exploitation,” or NDPE, policies. Chain Reaction Research estimates that THP’s compliance with NDPE policies could lead it to lose almost a fifth of its market cap, placing 43 percent of its equity value in jeopardy and creating “major risks for all financiers.”

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