Friday, 9 October 2015

Haze-linked products pulled off shelves in Singapore

Supermarkets in Singapore pull plug on haze-linked firm's products
By Jessica Lim, The Straits Times, 8 Oct 2015

Supermarket chains NTUC FairPrice, Sheng Siong and Prime Supermarket have pulled all Asia Pulp and Paper (APP) items off their shelves, including popular brands such as Paseo.

The Dairy Farm group, which operates chains such as Guardian, 7-Eleven, Cold Storage and Giant, has also stopped replenishing APP stock. It will continue to sell existing items till they run out.

FairPrice was the first to make the announcement on Wednesday (Oct 7) morning, followed by the others later in the day.

Their actions came after the Singapore Environment Council (SEC) temporarily suspended the green label of APP's exclusive distributor in Singapore, Universal Sovereign Trading.



On Sept 30, the SEC had also asked 17 firms, including FairPrice, to sign a form to declare that they do not carry products from five companies, including APP, which are under probe over their possible link to the haze-causing forest fires. The form also asks firms to state that they have not been convicted in any court in relation to the haze.


Why It Matters: Boycotting haze-causing firmsCan consumers in Singapore make a difference if they really want to? http://str.sg/ZukV
Posted by The Straits Times on Friday, October 9, 2015


On Wednesday, the SEC sent the same form to Prime, Dairy Farm, Sheng Siong, Ikea, Unity Pharmacy and Watsons.

Ikea said it does not buy from the firms under probe. Unity signed the form on Wednesday, while Watsons is still working with its suppliers and will make a decision soon.

FairPrice carries two housebrand goods supplied by APP and 16 other APP-related products including the Paseo, Nice and Jolly brands.

All these items were pulled off the shelves at its over 290 outlets, including Cheers convenience stores, by 5pm yesterday.

Late last month, the National Environment Agency began legal action against APP and four Indonesian firms it believes to be behind the burning. The haze from forest fires in Kalimantan and Sumatra has spread to Thailand after blanketing the skies and affecting the air quality in parts of Indonesia, Singapore, Malaysia and the Philippines in recent weeks.

FairPrice chief executive Seah Kian Peng said the chain took some time to decide to pull APP's products and sign the declaration because "as a fair business partner, we reserved taking action pending further information and investigation by the authorities".

The final decision was made after SEC temporarily restricted APP's green label certification. Mr Seah said APP's products would be reinstated if the firm is found to be innocent and gets back its green label.

The move to pull APP's products, he said, cost the chain "millions". "It does hurt us financially... but this goes beyond just the financial impact. I think it is the right thing for us to do, it is the responsible thing for us to do," said Mr Seah.

Dear friends of FairPrice,We will withdraw all paper products sourced from Asia Pulp and Paper Group (APP) from all...
Posted by NTUC FairPrice on Tuesday, October 6, 2015


APP's managing director of sustainability Aida Greenbury said the firm "is firmly against forest fire" and that it deployed 2,900 firefighters and fire suppression helicopters to deal with the situation.

"We understand why FairPrice feels the need to take urgent action... but accuracy is just as important," she said. "The fire situation is complex and both the Singapore and Indonesia governments and authorities are still investigating the situation."

Mr Loh Weiwen, 33, an in-house legal counsel, hailed the supermarkets' move. "It is a very prompt response that is surprising to many shoppers in a good way. I hope other retailers follow suit ."

Additional reporting by Francis Chan and Jalelah Abu Baker




SEC and CASE step up engagement efforts by getting leadingsupermarkets, pharmacies, furniture retailers to declare that theirwood, paper and/or pulp materials are procured from sustainablesources
Posted by Singapore Environment Council on Wednesday, October 7, 2015





Green labels in the spotlight following haze in the region
Companies in Singapore must meet stringent requirements before they are issued such labels, which are an endorsement of a company's environmentally-friendly claims.
By Imelda Saad, Channel NewsAsia, 8 Oct 2015

Green labels are now in the spotlight following the haze that is engulfing the region. In Singapore, companies must meet stringent requirements before they are issued such labels, which are an endorsement of a company's environmentally-friendly claims.

The Singapore Environment Council (SEC), which administers the scheme, on Thursday (Oct 8) made this point amid questions over the rigour of the certification process.

Asia Pulp and Paper Group (APP), which carries the Singapore Green Label, had its certification temporarily restricted, following investigations into the company's role in starting foreign fires in Indonesia. APP is one of five Indonesian companies that National Environment Agency (NEA) is taking action against over the haze pollution.



There are about 3,000 products sold in Singapore which carry the Singapore Green Label. These include paper products from APP, which have since been taken off the shelves by two major supermarket chains in Singapore.

APP was issued the green label five years ago, and the certification has to be renewed every year.


Singapore Green Labelling Scheme’s stringent criteria sets the benchmark for green products. Find out more here.
Posted by Singapore Environment Council on Thursday, October 8, 2015


According to SEC, APP met all the requirements at the point of submitting its green label application. Said SEC's executive director, Mr Edwin Seah: "In the case of paper products, we require them to provide evidence that their raw material has been sourced sustainably, so one of the documentations is they must have a Forest Stewardship Council (FSC) certification.

“However beyond that, we also look at their energy usage, the bleaching that they use and the colouring that they use. Included also are third-party accredited test lab reports that they have to submit to us."

Once the green label is issued, the Council conducts quarterly mystery audits and picks random products for tests. There has not been an issue with APP, until recently.

Said Mr Seah: "Given the current haze situation and them being one of the companies named by NEA, we took the step to decide that it might be in the consumer's interest for us to put a temporary restriction on the use of the green label."

It was that move that led to at least two supermarket chains - NTUC FairPrice and Sheng Siong - pulling out all APP-related products off the shelves. The Indonesian company, which has a branch in Singapore, has cried foul saying the move was premature, since investigations are ongoing.

However, the Council remains firm in its stance. Mr Seah said: "It is not premature because the companies in question have already been identified by the NEA as possibly causing the haze. So, I think it is only right that we, together with CASE (Consumers Association of Singapore) and some of these major retailers, take the necessary actions to protect, not just consumers but Singaporeans in general, from irresponsible manufacturers that in the first place brought about the haze."

The suspension of the green label is temporary, pending the completion of both the Council's and NEA's investigations. Depending on the results, the certification could either be reinstated or revoked.

Earlier this week, SEC reached out to 17 companies which have products certified under the Singapore Green Labelling Scheme. They were asked to declare that they have not procured or used any wood, paper or pulp material from the five companies currently under investigation by the Singapore Government for starting the forest fires in Indonesia.

Now, out of the 17 companies, 14 have sent in their declaration forms. The three that have not have had their Singapore Green Label certification temporarily restricted. The three companies are PT Indah Kiat Pulp and Paper, PT Pabrik Kertas Tjiwi Kimia and Universal Sovereign Trading.





More firms on board for 'haze-free' declaration
Apart from wood, paper makers, SEC plans to work with others such as palm oil industry
By Jessica Lim, Consumer Correspondent, The Straits Times, 8 Oct 2015

Even as more firms signed a declaration that their products are free of raw materials from companies being investigated for forest fires in Indonesia, many noted that it was hard to pinpoint an item's source.

Tissue paper distributor Tipex and printer paper supplier Mukim Fine Papers signed on Tuesday. FairPrice, Unity Pharmacy and Malaysia Newsprint Industries did so yesterday, bringing to 15 the number of firms that have signed.

Tipex said in a statement to The Straits Times that it does not own plantations and mills, and so does not make paper products itself.

"Rather, these are sourced from various suppliers, internationally," said its spokesman Cindy Lim. "Due to the involvement of many parties in the process, companies may not be privy to one another's internal business and work processes."

Mukim Fine Papers simply stopped ordering from Asia Pulp and Paper (APP) - one of the five firms under probe - altogether.

Said its business development manager Ben Chua: "We cannot trace what is happening at APP so it's best that we just stop selling its products."

On Monday, the Singapore Environment Council (SEC) released a list of firms that had signed the declaration. It has so far sent the form to 23 firms that manufacture or sell wood and paper products.

SEC's plan is to also start working with other industries known to contribute to the haze and deforestation - for instance, palm oil product manufacturers and retailers.

Errant pulpwood plantation owners typically burn land to clear it quickly after logging season, said experts. Many also burn adjacent forests to open up new land to expand their plantations. Wayward oil palm plantation owners are also known to clear land this way.

Culprits are difficult to trace as supply chain processes are muddied by factors such as a lack of land ownership information in Indonesia.

World Wide Fund for Nature Indonesia's Global Forest and Trade Network Coordinator Aditya Bayunanda said that for palm oil, for instance, mills - which extract crude palm oil - are supplied by hundreds of plantations.

Traders, he said, go round to small independently-owned oil palm farms, collect the fruit, then supply it to a main supplier, which trucks it to mills.

This, said Associate Professor Tan Yan Weng, head of SIM University's logistics and supply chain management programme, causes "everything to get mixed up".

There are other complications, said SEC's head of eco-certification Kavickumar Muruganathan. Retailers here typically obtain the rights to sell a product from distributors, which then arrange with overseas manufacturers to import the stock.

"Manufacturers might own plantations, but some strike deals with landowners on the side to use their land. Some also ask other suppliers to sell the fruit to them on an ad hoc basis if demand spikes," he said, adding that errant firms pay farmers to use their land for oil palm.

On paper, the land is owned by the farmer and the firm is not implicated. There is also no map of land ownership available, making the task of pinpointing the owners of a plantation difficult.

However, Nanyang Technological University's Professor Ang Peng Hwa, who co-founded the Haze Elimination Action Team volunteer group, urged retailers to stop "putting up a smokescreen".

"It is true it can be difficult. But retailers have to ask suppliers to show them certification," said Prof Ang. "Consumers also have a role to play to demand higher standards."

The Forest Stewardship Council (FSC), an international organisation, has certified 111 companies here to use its trademarks on products. FSC's Asia-Pacific regional director Alistair Monument said that every player in the supply chain for these products is audited yearly.

Paper mills involved, for instance, have to keep records of inputs and outputs so that the origin of the fibres can be checked.





Many will boycott products from haze-causing firms: Poll
Some believe such a move can be effective in penalising the culprits, and that such efforts can make a difference
By Jalelah Abu Baker and Yuen Sin, The Straits Times, 9 Oct 2015

Many people will boycott products from companies that are contributing to the ongoing haze, according to a street poll of 50 people by The Straits Times yesterday.

The reasons they gave included wanting to penalise the companies for causing the haze by decreasing demand for their products and to send a message that they are not happy with the companies' actions.

Out of the 50 people surveyed, half said they will not buy products from such companies.

Another 19 believed that boycotting these goods would have no effect, while the rest sat on the fence.

"If they have not taken care in what they are doing, and are affecting the lives of a big part of the region, they should be penalised," said financial planner Daniel Tay.

The 45-year-old said that the haze has become something "out of control" and believes that Singapore has the clout to influence these firms despite being a small country.

Housewife Dawn Wee, 49, said: "They should bear some responsibility for their actions - making profits at the expense of people's health."

Tutor Angeline Tan, 44, said it did not matter even if she were the only one to boycott these companies, adding that "it starts from one".

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, echoed her sentiment. "If every one of us plays a part, it will certainly send a strong signal to the companies. If we combine all our efforts, we will be a formidable force," he said.

He added that he has reached out to the regional office of Consumer International in Kuala Lumpur to inform consumer bodies to put pressure on companies to stop slash- and-burn practices that cause the haze.

Last month, the National Environment Agency began legal action against five companies, including Asia Pulp and Paper, which are believed to be behind the burning.

In the poll yesterday, nearly 20 felt that boycotting products from the firms involved will not help.

Mr Neo Heng Wei, 20, a student, said: "It doesn't address the root problem, which is the fact that burning the trees is the fastest method of clearing the forest. Educating these workers is most important."

Others sat on the fence, saying that their decision to boycott the products depended on how essential the products were to them, and whether there were alternatives.



Top 3 reasons to boycott or not

YES

• Need to penalise companies economically for causing the haze.

• It is a way of decreasing supply of products by decreasing demand.

• Sends a message that they are unhappy with the companies' actions.


NO

• Does not address the root cause of the haze.

• Singapore is too small and lacks the economic clout needed to influence companies' behaviour.

• They are not affected by the haze.





Joint press statement: List of companies declared to have their wood, paper and/or pulp materials procured from sustainable sources not contributing to the haze
Posted by Singapore Environment Council on Wednesday, October 7, 2015




10 firms declare their paper products sold in Singapore are from sustainable sources
By Lee Min Kok, The Straits Times, 5 Oct 2015

Ten companies which manufacture paper products sold in Singapore have pledged that they do not use raw materials from the five Indonesian firms believed to be responsible for the ongoing forest fires.

A joint press release by the Singapore Environment Council (SEC) and the Consumers Association of Singapore (CASE) on Monday (Oct 5) said that all 10 firms, which are certified under the Singapore Green Labelling Scheme (SGLS), have signed declarations forms.

SEC and CASE also revealed that they were awaiting declaration forms from seven other third-party manufacturers.

The list of all the companies which have signed will be updated regularly on both agencies' websites.

SEC is also encouraging other paper companies which have not participated in the SGLS to contact it for certification.

However, certified firms which are found purchasing wood, paper or pulp products from companies suspected to be involved in the haze pollution are bound by the declaration to inform SEC. They will then be removed from the list.

SEC and CASE Joint Statement
Look out for the Green Label to buy products that are sustainably sourced.
Posted by Singapore Environment Council on Tuesday, October 6, 2015


Meanwhile, CASE has issued a reminder urging consumers not to support companies using such products unless they have pledged to be socially responsible.

"This will send a strong signal to the errant companies that consumers' goodwill should not be taken for granted and consumers will not support companies which are environmentally irresponsible and/or have contributed to the environmental disaster year after year," it added.

Last month, Singapore started legal action against five companies that it believes are among the culprits behind Indonesia's pollution fires.

Four are Indonesian companies which have been told to take measures to extinguish fires on their land, not to start new ones, and submit action plans on how they will prevent future fires.

The remaining one is Singapore-listed firm Asia Pulp and Paper. It has been served a legal notice to supply information on its subsidiaries in Singapore and Indonesia, as well as measures taken by its suppliers in Indonesia to put out fires in their concessions.





'Half of supermarket products here contain palm oil'
By Jessica Lim, Consumer Correspondent, The Straits Times, 9 Oct 2015

Paper products may just be the tip of the iceberg: Many grocery items here could come from plantations that contribute to the haze.

In an exclusive interview with The Straits Times yesterday, Mr Stefano Savi from the Roundtable on Sustainable Palm Oil (RSPO) said about half of products on supermarket shelves here contain palm oil - from toothpaste and cosmetics to bread and frozen fries. Mr Savi, the global outreach and engagement director of RSPO, a palm oil certification body, added that as much as 80 per cent of global palm oil is uncertified.

"While we are sure about the origins and the sustainability criteria under which 20 per cent of global palm oil is produced, we are not able to claim the same for the other 80 per cent," he said, adding that the 1,400 fires that occurred in Indonesia in the whole of last month were within oil palm plantations.

Errant oil palm plantation owners set fire to adjacent forests to open up new land for growing. Some also use this method to clear their plantations after a crop cycle.

The culprits are difficult to trace as supply chain processes are muddied by factors such as a lack of land ownership information in Indonesia and bulk processing, in which fruits from hundreds of small plantations are trucked to a central mill where they are mixed up.

There are 19 firms in Singapore with RSPO certification, including instant-noodle maker Tat Hui Foods and consumer products company Proctor & Gamble. RSPO does not track products of its certified organisations but Mr Savi, who is based in RSPO's headquarters in Kuala Lumpur, reckons only a handful of products here have its mark.

The low take-up rate could be due to several reasons, he said. Palm oil typically makes up a small part of the formulation of a product, so few firms think it necessary to use sustainable supplies. Distributors who want to sell RSPO-certified products also need to get supplies from RSPO-certified mills and growers.

"Also, in certain markets, palm oil is not perceived positively, so companies won't want to emphasise that palm oil is in their products at all," he added.

About a fifth of the world's palm oil is now certified by RSPO.

The Singapore Environment Council (SEC), which has awarded its green label to over 3,000 products here, does not certify palm oil-based products here, but plans to do so by early next year.

"Not many firms here have RSPO certification, so we are looking to move into that sector because palm oil is used in so many products," said SEC head of eco-certification Kavickumar Muruganathan.

Mr Kim Stengert, World Wide Fund for Nature Singapore director of communications, said a range of certified sustainable palm oil products is not yet available here.

"At this stage, if all the non-certified palm oil products were taken off the shelves, we would have very empty supermarkets," he said.

"Consumers need to be able to express their preference for sustainable palm oil through their purchasing decisions."





SPH: Newsprint not from firms under probe for fires
The Straits Times, 9 Oct 2015

In response to media queries, Singapore Press Holdings (SPH) confirmed yesterday that it does not purchase any of its newsprint supplies from the five companies under probe for links to the forest fires in Indonesia.

Late last month, the National Environment Agency began legal action against Singapore-based firm Asia Pulp and Paper and four Indonesian companies it believes to be behind the burning.

The haze from forest fires in Kalimantan and Sumatra spread as far as Thailand after blanketing the skies and affecting the air quality in parts of Indonesia, Singapore, Malaysia and the Philippines in recent weeks.

SPH said it purchases its newsprint supplies for its newspapers from diversified sources in Europe, North America and the Asia-Pacific.

Said Mr Alan Chan, chief executive officer of SPH: "A very high percentage - some 80 per cent - of the newsprint is derived from recycled paper.

"Only the remaining 20 per cent is from virgin pulp and this comes from certified sustainable sources. None of the virgin pulp is sourced from Indonesia."

The certifications include the Forest Stewardship Council certification, Programme for the Endorsement of Forest Certification, ISO 14001, certification by the South Korean Board of National Technology and Quality and the EU Ecolabel.

SPH said that as a leading media organisation in South-east Asia and a responsible corporate citizen, it strongly supports sustainability and aims to remain at the forefront of corporate social responsibility.





Green panel to tighten rules on paper products
By next year, makers, distributors will need Forest Stewardship cert to get Green Label
By Jessica Lim, Consumer Correspondent, The Straits Times, 10 Oct 2015


The Singapore Environment Council (SEC), which awards the Singapore Green Label to companies, is tightening its criteria for paper products here.

By early next year, the 17 paper product makers and distributors here with the right to use the mark on their goods must all have certification from the Forest Stewardship Council (FSC) - the most credible forest certification scheme now, going by a recent assessment by the World Wide Fund for Nature.

Currently, only two green-label holders for paper goods - Asia Pulp and Paper (APP) exclusive distributor Universal Sovereign Trading and PT Indah Kiat Pulp & Paper Tbk Perawang Mill - provide certification from another body, the Programme for the Endorsement of Forest Certification (PEFC), instead. That will soon be dropped.

"We will no longer be accepting anything else but FSC certifications, which are more stringent and have specific standards," said SEC's head of eco-certification Kavickumar Muruganathan. "We hope to have the change in place by early next year."

He added that the FSC has the support of many environmental groups and has a system of tracing, verifying and labelling timber and wood products.

The PEFC, in contrast, is made up primarily of representatives of the forest products industry, Mr Kavickumar said.

The SEC's move comes on the back of the temporary suspension of Universal Sovereign Trading's green label due to its connection with APP - one of five firms under probe for possible connection to the forest fires causing the haze.

This led to several supermarket firms pulling APP products off their shelves on Wednesday.

The SEC's tightening will mean that APP could lose its green label for good, even if the firm is found not linked to the fires.

It also had its FSC certificates revoked in 2007.

FSC's Asia-Pacific regional director Alistair Monument said the firm's certificates around the world were pulled after information came to light "that APP was involved in destructive forestry practices", such as forest clearance and illegal logging.

When contacted, APP did not respond to queries on how SEC's move would affect it.

On the revoking of the FSC certificates, an APP spokesman said there have been many developments since 2007, one of them being working with the FSC on an action plan to potentially get its certification back.

Mr Steven Goh, who runs retail consultancy SG Retail Network, said the SEC's move is a positive one.

It is probably also due to the council's need to protect the reputation of its green label.

"Here you have a company that could be linked to forest fires with the green mark on it. That's not a good thing. The new criteria will also give consumers the confidence that its mark is still solid."

Fitness trainer Georgina Chua, 32, said: "When I buy something with the green label on it, I can be assured that it is sustainable. It is important that we can continue to trust such marks."





Green certification systems worldwide
By Jessica Lim, The Straits Times, 10 Oct 2015


Singapore Green Label

• Awarded by the Singapore Environment Council. Launched in 1992.

• Over 3,000 products across 45 categories bear the stamp. They have environment-friendly credentials.

• Applicants must provide valid test reports, relevant certification and, in some cases, make declarations.

Forest Stewardship Council (FSC)

• A Germany-based organisation founded in 1993, it has its own certification system to ensure paper and other forest products come from well-managed forests.

• 111 companies in Singapore and 30,000 globally carry its stamp.

• Every player in the supply chain, from plantation owners to distributors, are audited by independent bodies annually.

• Considered by many environmental groups to be the most rigorous assessment.


Programme for the Endorsement of Forest Certification (PEFC)

• The Switzerland-based group gives its stamp to timber/forests certified by other countries, like the Indonesian Forestry Certification Cooperation (IFCC) and the Sustainable Forestry Initiative (SFI).

• Last year, over 260 million ha of forests globally were PEFC-certified and over 16,000 companies had certification.

• In June, Greenpeace called the IFCC and SFI schemes "weak forest certification systems".


Roundtable on Sustainable Palm Oil (RSPO)

• Founded in 2004 and based in Malaysia.

• Has certified 283 palm oil mills, 54 growers and 1,499 companies.

• Independent auditors make sure they adhere to all RSPO environmental and social practices , including a strict no-burning policy.


GreenPalm

• The first GreenPalm certificates were registered and sold in 2008. The programme is based in Britain.

• Products with its label support certified sustainable palm oil.





Banks get guidelines for responsible lending
By Wong Wei Han, The Straits Times, 9 Oct 2015

Banks have been given new guidelines to encourage them to take extra care when lending to firms that might disregard environmental or corporate governance standards.

The framework released by the Association of Banks in Singapore (ABS) yesterday wants banks to highlight in their annual reports from next year how they plan to prevent lending to companies with irresponsible practices.

The banks should then implement these rules by the end of 2017.

The ABS guidelines provide broad principles on what banks need to do when dealing with firms in eight industries, including forestry, agriculture, mining and energy.

But they do not specify actual lending policies and do not carry any penalty.

ABS is not a regulator and will not dictate the actions of member banks, said ABS director Ong-Ang Ai Boon. The aim of the guidelines is to provide a framework for individual banks to form their own internal rules.

"But they will not be the silver bullet to solve the haze problem. It will not be the short-term solution to the issue, but will shape long-term changes in the practices of bank customers," Mrs Ong said.



The ABS announcement came as Singapore banks are under increased scrutiny over claims that they may be financing companies suspected of causing the forest fires in Indonesia.

The three local banks have declined to discuss specific clients due to confidentiality issues but their spokesmen said that they are ready to "reassess" their relationship with any client found to have breached environmental, social and governance regulations.

"In recent weeks we had engaged a few of our palm oil plantation customers to reaffirm their zero burning policies," DBS added, while OCBC said it had turned down opportunities to finance companies with questionable practices.

Despite the ambivalence, the guidelines are a step in the right direction, said Dr Lawrence Loh, director of the Centre for Governance, Institutions and Organisations at the National University of Singapore.

"Solving the haze crisis will require an all-round approach, not just actions by any single industry. We already saw supermarkets withdrawing products. If other areas also send out the same message, it will supplement the diplomatic actions that have so far been ineffective," he said.

Meanwhile, more can be done by the Monetary Authority of Singapore (MAS), said Ambassador-at- Large at the Ministry of Foreign Affairs Tommy Koh yesterday.

Professor Koh said in a lecture: "I'm hoping that MAS will require all the financial institutions in Singapore to join the Roundtable for Sustainable Palm Oil," referring to a non-profit group set up to develop environmental standards for the palm oil industry.





Good credit rating, but did you pollute the earth?
Guidelines by the Association of Banks in Singapore aim to get banks to look beyond financial health of borrowers, to companies' environmental and ethical practices.
By Yasmine Yahya, Assistant Money Editor, The Straits Times, 4 Nov 2015

As the haze thickened over Singapore skies in the last two months, netizens began circulating social media posts calling for a boycott of products made by companies accused of slash-and-burn tactics that cause the annual pollution.

What started as an online movement has crystallised into action on the ground, with several supermarkets having withdrawn goods made by companies linked to the haze.

Imagine the double whammy such companies would face if, even as their sales were hurt, their source of funding also dried up.

Last month, the Association of Banks in Singapore (ABS) appeared to be aiming to deliver just such a blow, by encouraging banks to lend responsibly. The ABS issued guidelines to get banks to take extra care when lending to firms that might disregard environmental or corporate governance standards.

Cynics may note that the guidelines have no teeth. ABS is not a regulator - it is a body made up of the banks themselves - and so it cannot enforce the recommendations it has set out. However, the move is in line with global trends which call on banks to self-regulate in this area.

For example, 81 financial institutions in 36 countries have voluntarily adopted the Equator Principles, a framework for determining, assessing and managing environmental and social risk in projects.

Banks that have adopted the Equator Principles, such as Barclays, HSBC and Standard Chartered, promise to develop and implement best practices in responsible lending and disclose their policies on their websites.

The ABS guidelines, which reflect much the same principles, are a step in the right direction that, with enough public awareness and support, could garner some real results.

THE GUIDELINES

According to the ABS guidelines, responsible lenders take into consideration a company's environmental, social and governance practices. So, for example, a bank assessing a new client would look at factors such as its reputation, whether its practices cause deforestation or pollution and how it treats staff and engages with the community it operates in.

The guidelines highlight eight industries with "elevated risk" that banks should keep in mind when developing their responsible financing policies. These include forestry, infrastructure, mining, chemicals, agriculture and energy.

They provide three broad principles for banks to adopt. The first principle is disclosure - banks have to state in their annual reports and on their websites their commitment to responsible financing and their policy framework in supporting responsible financing, by the end of 2017.

The second is governance - banks should allocate resources to implement a responsible lending framework and ensure internal controls. This means having a separate set of responsible financing policies and procedures or embedding responsible financing practices into their existing policies and procedures.

The third principle calls for capacity building - banks are to raise staff awareness and build management capacity on responsible financing.

To help the banks in this area, the ABS will work with the relevant international organisations, regulatory bodies, civil societies and non-governmental organisations to conduct seminars for bank staff .

By the end of 2017, banks have to have implemented a policy framework to support responsible lending and publish the framework in their annual reports and on their websites.

THE LIMITATIONS

However, the guidelines stop short of suggesting actual practices that banks could adopt to ensure responsible lending; nor do they include any penalties for banks to mete out on clients that have been caught engaging in bad behaviour.

Rather, it is left to the banks to decide what "responsible" lending really means to them and how they would like to go about making it happen. So it remains to be seen, at the end of 2017, what policies the banks will come up with to strengthen their lending processes.

A look at what banks that have signed on to the Equator Principles have done could provide some clues as to what we can expect.

Take the Australia and New Zealand Banking Group (ANZ).A simple declaration on its website states that "ANZ... will not provide project finance or project-related corporate loans to projects where the customer will not, or is unable to, comply with the Equator Principles".

The bank also issues an annual corporate sustainability review which provides more details about the efforts it made in the past year to promote sustainable development, challenges it faced and areas where it can improve.

In its last report published in December last year, ANZ noted that "if prospective or existing customers do not meet our standards and they are not willing to adapt their practices, we decline funding or exit the relationship".

In some cases, such as high-impact mining activities, the bank says it appoints a technical expert to provide advice.

Different banks present their policies and efforts in different ways.

Visitors to HSBC's website can download documents detailing the bank's policies with regard to seven high-risk industries.

The document on forestry notes, for example, that the bank's policy is not to knowingly provide financial services to customers involved directly, or indirectly, in activities such as illegal logging or deforestation.

ANZ adopted the Equator Principles in 2006. HSBC, Standard Chartered and Credit Suisse, alongside others, committed themselves to the principles even earlier, in 2003.

For Singapore banks, though, it is still better now than never. The addition of Singapore banks to this global movement bodes well for sustainable development in the region over the long term.

Of course, for the ABS guidelines to be truly impactful, local banks will have to form a unified front. They must all commit to financing only ethical and environmentally sensitive companies, and cut off funding to irresponsible clients.

This ideal may take some years to be realised, given the slowing economy that will surely put pressure on bank margins.

Even then, it might still not be very effective, noted Mr Jungkiu Choi, a financial services partner at A.T. Kearney.

"If only Singapore banks do it, what about Malaysian, Indonesian or Thai banks? Those companies could simply go to a different country to get funding," he noted, adding that there would be little incentive for regional banks to boycott such clients too.

"With Singapore banks out of the picture, it reduces competition so those banks in other Asean countries could charge higher lending rates to polluters and unethical firms, and profit more off them."

STILL A GOOD STEP IN THE RIGHT DIRECTION

However, this is not to say that the ABS guidelines will have no impact at all.

Singapore is, after all, a regional financial hub. Many regional firms obtain trade and project financing in Singapore or from Singapore-based banks. They may not like to be assessed on more than financial terms when applying for a loan, but they would find it tough to bypass Singapore's financial industry altogether, without hurting their own businesses.

The fact that the ABS has come up with this list of guidelines is a positive sign that banks here are aware of the important role they can play in influencing the behaviour of the companies they finance.

In fact, smart banks dealing with a company with questionable ethics or environmental standards can work towards building a solid relationship with it over time, with an eye towards nudging its managers to adopt better practices. That way, the client does not simply run to a competing bank.

The move to issue the guidelines publicly is also a clear sign that banks recognise how one of their most-prized possessions - their reputation - can be tarred by association with a company caught behaving badly.

When Asean governments first signed the Agreement on Transboundary Haze Pollution in 2002, few believed that it would achieve much, especially since Indonesia did not sign it. But with social media spreading news and views faster than ever before, and members of the public putting ever more pressure on their governments to act, corporate culprits are now being named and shamed, quickly leading to product boycotts.

So it is in the banks' best interests to start working with their riskier clients today to get their practices ship-shape or risk being named and shamed themselves if they are someday found to be funding a big polluter or human rights abuser.

As Mr Choi quipped: "Once people start asking, 'Do you want to put your money in a bank that lends to polluters?', there will be trouble."





Yet to watch IQ's interview with APP's Aida Greenbury? Here's a highlight reel on the important issues raised during yesterday's interview. For IQ's coverage on the haze, visit www.iq.sg
Posted by Inconvenient Questions on Thursday, October 22, 2015











Haze crisis: Are other firms escaping shame, blame?
APP, under fire over supposed haze links, has shared information while other companies have not
By Audrey Tan, The Straits Times, 4 Nov 2015

More companies in Singapore have distanced themselves from Asia Pulp and Paper (APP) over its supposed links to the haze. As of yesterday, 114 had declared that they were not using products of firms such as APP, which has been accused of having fires on its concessions.

APP suggests it is paying a price for being too open.

It has made available all of its suppliers' concession maps to the Washington-based World Resources Institute (WRI) "as part of our commitment to transparency", APP managing director of sustainability Aida Greenbury told The Straits Times.

Since other pulp and paper producers and oil palm and agricultural firms do not share such information, observers say it is hard to nail them if there are fires on their concessions. It also gives the "incorrect impression that APP has the most fires on its suppliers' concessions", Ms Greenbury added.

APP - Indonesia's largest pulp and paper firm - came under the spotlight last month, when the National Environment Agency (NEA) served it a notice under the Transboundary Haze Pollution Act, to request that it provide information on its subsidiaries and measures taken by its suppliers in Indonesia to put out fires on their concession lands.

Of the firms against which NEA acted then, APP was the only one with a presence in Singapore.

The notice sparked a chain reaction. The Singapore Environment Council suspended the use of its green label on APP products, and supermarkets such as FairPrice and Giant pulled APP products off their shelves.

There were also calls for people to boycott APP products, which range from Paseo brand toilet rolls to FairPrice brand facial tissue.

So has APP been made a scapegoat for being transparent, and are other culprits getting away?

Singapore Management University law don Eugene Tan said that there may well be other culprits who are escaping the shame and the blame. "But what the likes of APP cannot avoid (acknowledging) is that the land that they own or have control over is on fire," he said.

TRANSPARENCY

Still, the situation on the ground is murky. Concession maps are key to fighting the haze crisis, as they could help to identify the culprits whose lands are on fire.

The government in Jakarta has added to the difficulty. In August, the Indonesian government said concession maps are classified information and it is a breach of law to disclose them even on a government-to-government basis. Singapore has also made repeated requests for the Indonesian government to share information on errant companies to no avail.

The WRI runs Global Forest Watch Fires, an online forest monitoring and fire alert system that provides detailed mappings and analyses of forest fires around the world.

The platform uses satellite data, wind direction data as well as maps of land cover, protected areas and concession areas for commodity production, some of which are submitted by companies directly, while others are shared as part of public government data sets.

A spokesman for WRI said APP has shared online not just its own concession maps, but also those of its suppliers. "Other companies, including APP's competitors, have not been so transparent and we hope these companies will be more forthcoming to help all find a solution to the crisis," he added.

Nor is the government in Jakarta helping. Environmental group Greenpeace told The Straits Times: "RSPO (Roundtable on Sustainable Palm Oil) member palm oil companies - which indicated they planned to release concession maps to the public and to organisations such as WRI - were threatened with legal consequences by the Indonesian Ministry of Agriculture if they released such information."

WHERE'S THE FIRE?

It depends on who you ask.

Ms Greenbury cited WRI data showing that only 16 per cent of fire alerts between July 1 and Oct 8 this year were from pulpwood plantations. For the same period, 20 per cent of fire alerts were on palm oil concessions, 8 per cent on logging concessions and 56 per cent from outside concessions, she said.

The implication: Why blame APP when pulpwood plantations were responsible for so few of the fires?

But wait. Citing longer-term data from Jan 1 to Oct 22 this year, WRI said that while 12 per cent of fire alerts in Indonesia had occurred on pulpwood concessions, the picture was different when one zoomed in on Sumatra, which is responsible for pushing much of the haze towards Singapore. In Sumatra, 30 per cent of fire alerts came from pulpwood concessions.

In Kalimantan, on the other hand, more fires occur in oil palm concessions (23 per cent) than pulpwood (8 per cent) ones, the data showed.

Data from Eyes on the Forest, a World Wide Fund for Nature (WWF) collaboration, showed the Sinar Mas Group/APP corporate group has had the highest number of hot spots this year. APP is a unit of the Sinar Mas Group.

WWF Singapore director of communications Kim Stengert pointed out that Sinar Mas Group/APP had 39 per cent of all high-confidence hot spots in Sumatra, and 53 per cent of high-confidence hot spots on Sumatra's peat this year.

So does that make APP the big culprit? Greenpeace said that, as it is the biggest concession holder in Indonesia with a legacy of deforestation, and the only one that released accurate concession maps, it is not surprising that APP hosted most of the hot spots.

But it added: "We cannot tell you how bad the situation is for other companies because none of them volunteered the same level of information. It makes you wonder, what do they have to hide?"

PEATLAND FIRES

At the heart of the problem are the fires in Indonesia's peatland.

Greenpeace South-east Asia researchers looked at 112,000 fire hot spots recorded from Aug 1 to Oct 26 this year. Almost half the fires were on peat soils, which make up only 10 per cent of Indonesia's land mass.

"There can be no question that the root cause of the fire crisis is decades of forest and peatland destruction by pulp and palm oil companies," said Indonesia forest campaigner at Greenpeace South-east Asia Teguh Surya.

The organisation is demanding an immediate ban on further development in the peatland and an end to clearing forests there. It even wants critical peatland areas re-flooded to reduce the risk of more fires.

Interestingly, it is the much- maligned APP - which Greenpeace says has a legacy of deforestation in Sumatra - that recently implemented a peat policy and action plan to start protecting and restoring peatlands across its suppliers' operations.

Ms Greenbury also told The Straits Times that APP brought in two amphibian water-bombing planes, each with a 12,000-litre water capacity, to help fight fires in South Sumatra and beyond.

While companies like APP have acted, observers say that it will require strong political will to get other culprits to do the right thing.

Said SMU's Prof Tan: "Once you have political will, then the issues that come with enforcement will be avoided. Until then, even our efforts to enforce our Transboundary Haze Pollution Act are crippled without the cooperation of the Indonesian authorities.

"It is not that there are no laws, or that the laws are inadequate in Indonesia. It's just that they are not being enforced."

Dr Jonatan Anderias Lassa from Nanyang Technological University's S. Rajaratnam School of International Studies added that governments have a role to play in reducing the risk of haze. "And one of the measures is to control the burning of the peatland," he said.

So are firms which are less forthcoming with their concession maps getting away with it?

For now, perhaps.

But as Singapore's Minister for the Environment and Water Resources Masagos Zulkifli indicated, there are moral as well as physical consequences to this.

He told the media: "I hope these people will sleep well... Over time, they will see the damage they have done to people, animals, land. It's horrendous... If you are humane and human, these things will (prick at) your conscience."



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