Commerzbank’s reaction to Palm Oil and sustainable Trade Finance

Trade Financing Matters welcomes this response to yesterday's post on sustainable palm oil from Ruediger Senft, Head of Corporate Responsibility at Commerzbank

The problems associated with the trade of palm oil are certainly real and ones that Commerzbank has been aware of for a number of years. As such, we have done our utmost to push sustainable trade forward, for example, by establishing strict sustainable lending criteria.

In 2007 we entered into direct talks with the relevant market entities and a code of conduct for the supply of palm oil was jointly devised. Later, in August 2014, Commerzbank became the first German bank to join the Roundtable on Sustainable Palm Oil (RSPO). As a member of the RSPO we are committed to achieving greater transparency, more long-term orientated economic activities, and more responsible dealing with respect to the environment, natural resources and affected individuals and communities in the palm oil market.

Furthermore, any palm oil supplier with whom Commerzbank is involved must also be a member of the RSPO. Suppliers must provide information (such as certification) proving the extent to which sustainable palm oil production is already carried out within their process chain, or about their targets for ensuring sustainable production. If suppliers fail to meet any of these criteria, Commerzbank will not finance the supply of palm oil. We take this incredibly seriously.

Of course, we accept that this alone will not completely eradicate the environmental issues associated with the trade of palm oil. For it to really become sustainable, some banks will have to become more selective about the transactions they finance, even if that is to the detriment of their short-term profit. Overcoming the significant challenges will also require more collaboration, both among banks, as well as corporations, governments, policy makers, non-governmental organizations and the academic world, in order to establish and fulfil basic sustainability standards.

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