August 17, 2016

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In the wake of Indonesia’s recent ‘haze crisis’, brought on by fires set to clear land for the production of palm oil and pulpwood, the government has formalized President Joko “Jokowi” Widodo’s forest moratorium announced in April, 2015; declaring that it will remain in effect for five years and cover a vast amount of Indonesia’s forest zone. The moratorium will prohibit the issuing of new licenses to establish palm oil plantations and limit the negative impacts imposed on the archipelago nation’s environment and indigenous communities.

In 2015, Green Century Capital Management helped organize 60 investors with more than $2 trillion in assets under management (AUM) to issue a letter to President Jokowi supporting the moratorium. And, although this recent announcement favors the government’s efforts to strengthen the Indonesia Sustainable Palm Oil (ISPO) certification standards rather than the Indonesian Palm Oil Pledge (IPOP), a sustainability commitment signed by Indonesia’s largest palm oil exporters, we believe it is a giant step forward for advocates of sustainable palm oil and our work to limit deforestation.

Market forces, including consumer sentiment, will likely drive large exporters to maintain and improve zero-deforestation commitments. The moratorium, however, addresses the root of the issue and aims to improve the sustainability and competitiveness of the Indonesian palm oil industry. Unlike other voluntary initiatives such as IPOP and the Roundtable on Sustainable Palm Oil (RSPO), the ISPO system is mandatory and applies to all oil palm growers in Indonesia, including both large plantation companies and smallholders, which grow oil palm on small parcels of land.

The moratorium will help promote Indonesians’ health, environment, and access to Western markets by assisting small farmers and businesses that are working to protect forests and peatlands at the ground level. In fact, according to the environmental science and conservation news outlet, Mongabay, the moratorium has already spared 851,000 hectares (3,300 square miles) from plantation development.

Since receiving the investors’ letter in 2015, President Joko Widodo has also established the Peatlands Restoration Agency and launched the Peat Prize award program, which align with his firm commitment of zero tolerance for fires on peatlands in 2016.

We know that this is only one step towards zero deforestation and the sustainable sourcing of palm oil, but applaud President Jokowi and the Indonesian government on this recent announcement. It is our hope that the formalization of the forest moratorium will positively impact Indonesia’s forests, environment, and indigenous groups in the years to come and we look forward to what lies ahead.

To learn more about Green Century’s Sustainable Investment Strategy, advocacy efforts, and how you can make an impact with the power of your investments, please visit the Why Choose Green Century webpage or call 1-800-93-GREEN (934-7336).

 

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This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.  

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The Green Century Funds are distributed by UMB Distribution Services, LLC, 235 W. Galena Street, Milwaukee, WI 53212. 8/16