Palm oil is found in many everyday items, from lipstick to chocolates and even pet food. Economically, it is an important commodity, especially to smallholder farmers in Southeast Asia. However, the sector has faced concerns in the past over its environmental impact.
Musim Mas, one of the largest integrated palm oil companies in the world, has been at the forefront of responsible palm oil production. It believes that sustainability and palm oil can indeed go hand-in-hand. As a pioneer in this field, its plantations in Indonesia are certified under sustainability standards that also ensure a zero-waste policy. In 2019, Musim Mas became the first and only Southeast Asian company to attain verification through the Palm Oil Innovation Group (POIG).
With sustainability a core value shared by UOB, the Bank recently extended Green Trade Financing to Musim Mas as an endorsement of its continuous efforts. UOB’s Green Trade Financing framework identifies markers of how sustainable a client’s business is and fast-tracks access to green financing.
Watch on to find out about how companies like Musim Mas can benefit from green financing, and how this in turn can help various parts of the industry’s value chain adopt more sustainable practices.
Olivier Tichit (Director of Sustainable Supply Chain, Musim Mas):
Sustainability is part of Musim Mas’ DNA. It is present at every level, in every unit and every role in our company.
Musim Mas Group is headquartered in Singapore. We are one of the largest integrated companies in palm oil and we are present in every step of the supply chain.
Our products are found in industrial uses but also in the food and personal care sectors.
Leong Yung Chee (Head, Corporate Banking, UOB):
Musim Mas Group is a pioneer in the field of sustainable palm oil and one of the world’s largest fully integrated palm oil producers.
By extending Green Trade Financing to them, we achieve two things.
First, it complements their effort in the propagation of sustainable practices throughout their ecosystem.
Second, and equally important, is that we demonstrate how palm oil can be sustainably financed.
Musim Mas is a founding member of the Roundtable on Sustainable Palm Oil, or RSPO in 2004.
We are also the first and only Southeast Asian major to attain Palm Oil Innovation Group (POIG) verification in 2019.
All our plantations in Sumatra and Kalimantan and their integrated palm oil mills are RSPO certified.
Leong Yung Chee:
UOB is a key member of the Singapore Green Finance Industry Taskforce.
We have developed frameworks that help qualify whether a client’s business is sustainable or not, and processes to fast-track access to green financing.
UOB extending Green Trade Financing to us has been an endorsement of the work done by Musim Mas so far.
And it is also a green light to do more.
This allows Musim Mas to allocate more resources into furthering our work on our supply base. And in particular, on smallholders who form about 30-40 per cent of our supply base.
Smallholders are the key to the future of our industry.
We need better farmers – farmers who are more aware of the positive impacts they can have, and they should have.
Leong Yung Chee:
We invest considerably to understand the implications of sustainability practices across a wide range of industries, including palm.
This knowledge informs our sustainable financing frameworks which simplify the process of accessing sustainability financing for our clients.
We are a business, but as a business we also have a responsibility to support the realisation of the UN’s Sustainable Development Goals so that we and the future generations can enjoy a better and more sustainable world.