ESG Viewpoint: Are Indonesian companies waking up to climate risk?

We travelled to Indonesia to meet major palm oil and coal industry companies.

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  • We travelled to Indonesia to meet major palm oil and coal industry companies and press them for stronger climate change strategies
  • Progress is slow, with companies citing strong demand from their Asian customer base for non-certified palm oil and for coal
  • We argued for a more proactive approach, highlighting the potential for future demand shifts – particularly in coal, where some Asian countries are now adopting more aggressive decarbonisation strategies
  • More intensive co-ordinated investor engagement with Indonesian companies is urgently needed to achieve faster progress

Indonesia is one of the world’s biggest emitters of greenhouse gases, driven by deforestation and land-use change. With palm oil, rubber, sugar and coal being vital to the country’s economic growth and trade balance, calls to address the climate impacts of their production and use face significant hurdles. Meanwhile, the intense monsoons and rain of January 2020, which left tens of thousands of people displaced, were a stark reminder of the country’s vulnerability to climate risks.

We travelled to the country to meet with companies in those industries to better understand their current practices and encourage a more strategic approach to managing the risks and opportunities that climate change will have on their businesses.

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Risk Disclaimer 

The value of investments and any income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. Investing in emerging markets is generally considered to involve more risk than developed markets.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time. 

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