Palm oil is widely used for cooking, in food products, healthcare, detergents, cosmetics, and increasingly, biofuels. It is also a very productive crop and the palm oil sector provides a livelihood to millions of people in developing countries. Indonesia and Malaysia are the largest producers and exporters of palm oil globally. However, its production, if not integrated with good ESG practices, can result in negative impacts to the environment, economy and people.

While our credit exposure to growers and processors of palm oil is not material, accounting for <1% of total loans and advances to customers as at end 2019, we recognise that we can play a role in promoting a sustainable palm oil sector by being discerning in our lending practices to this sector. In this regard, we seek to support responsible companies in the palm oil sector that undertake good ESG practices. For all our lending relationships, we require customers to demonstrate alignment with No Deforestation, No Peat, No Exploitation (“NDPE”) policies that are increasingly being adopted in the palm oil sector. DBS recognises that NDPE commitments may pose a challenge to smallholders. We encourage customers to apply NDPE standards throughout the supply chain. Besides NDPE commitments, DBS also accepts certification under Roundtable on Sustainable Palm Oil (“RSPO”) as demonstration of good industry practices. We request customers to achieve full RSPO certification within a timeframe and the time-bound action plan is communicated to DBS.

We will not consciously finance companies that are involved in conversion of High Conservation Value (“HCV”) and High Carbon Stock (“HCS”) forests, planting on peat, or planting without securing both the legal right and community support to use all the land involved (this can be achieved through a free, prior, informed, consent (“FPIC”) process, and any open burning. We adopt a zero-tolerance approach to burning.

We require that traders who trade primarily in fresh fruit bunches, crude palm oil, palm kernel oil to work towards becoming RSPO members. Traders are encouraged to develop a process to ensure traceability of the palm oil they trade. This could be achieved through supplier selection based on environmental and social criteria.

We will continue to monitor the sector closely and ensure that our policies reflect changes in societal expectations and new standards in the sector.