Overlooked soft commodities - How Chinese palm oil companies manage deforestation risks
China is a major importer and consumer of palm oil worldwide. According to customs data, China's total imports of palm oil products have reached 8.49 million tons in 2019. However, palm oil companies are facing physical, reputational and market, and regulatory risks due to deforestation. Chinese companies in the downstream of palm oil may face increased production costs due to physical risks, while mid Chinese companies in the downstream of palm oil may face physical risks resulting in increased production costs, while midstream companies may face market access risks due to buyers' zero-deforestation policies.
As a result, a growing number of investors and financial institutions are calling on companies to decouple deforestation from palm oil production and sourcing, and to integrate forest issues and sustainability into their business models and strategies. Such a move would not only allow companies to mitigate and effectively manage the risk of deforestation, but it also offers tremendous opportunities. These opportunities come from, among other things, the growing demand for green and sustainable consumption and strong support from investors and financial institutions for sustainable development policies.
