A Case Study for the Palm Oil Sector

ACCOUNTING FOR BIODIVERSITY: A CASE STUDY FOR THE PALM OIL SECTOR

Maite Vanden Bulcke Student number: 01410059

Promotor: Prof. Dr. Ignace De Beelde

A dissertation submitted to Ghent University in partial fulfilment of the requirements for the degree of the Master Business Economics

Academic year: 2019 – 2020

Confidentiality clause

I declare that the content of this Master’s Dissertation may be consulted and/or reproduced, provided that the source is referenced.

Name student: Maite Vanden Bulcke

Preamble

At the beginning of 2020, different measures were taken to diminish the further spread of the Covid- 19 virus. All the information needed for this master dissertation could be found online, so the research was not affected by the Covid-19 virus. This preamble is drawn up in consultation between the student and the supervisor and is approved by both.

Foreword

In this master dissertation I explored the extent to which companies in the oil palm sector take accountability for their impact on biodiversity. The last decade, the use of palm oil has been under a lot of pressure as being unsustainable and one of the main causes of deforestation. Palm oil is present in an extensive range of products and some voices were raised to ban the use of palm oil. After reading a lot of information on this topic, I can conclude that I do not believe that banning palm oil would be a good solution. Instead, I believe we need to ensure to produce sustainable palm oil, in which certification and accountability can play a key role. Because of my curiosity and interest in this topic, I was highly motivated to investigate the scope of accounting for biodiversity in the palm oil sector and compare my findings with previous research. I have broadened my knowledge on this controversial product and I am confident that I developed a well substantiated opinion.

I would like to thank Professor Dr. De Beelde to give me the opportunity to investigate this subject. I appreciated the freedom he gave me in exploring this topic. Also, when necessary, he made time to provide me with useful feedback.

I also would like to thank my family and friends for all their support. It pleases me to have people around me who believe in me and let me chase my dreams.

III

Abstract

In how far palm oil companies incorporate accounting for biodiversity has only been investigated to a limited extent. Nevertheless, the palm oil sector has with its business operations a direct impact on biodiversity. Production takes place in tropical areas, regions that are typically occupied by moist tropical forests which are particularly rich in biodiversity (IUCN, 2018). In this master dissertation the annual and sustainability reports of 53 listed companies active in the palm oil sector are analysed on biodiversity disclosure. Based on quantitative and qualitative analysis, the extent to which palm oil companies report and account for biodiversity-related information is investigated. From 2015 to 2019 an upward trend of sustainability and biodiversity reporting was noticeable. Nevertheless, in 2018, still 7 of the 53 analysed companies (13,2%) did not mention biodiversity at all. In general, large differences in disclosure on biodiversity were found. One quarter of the investigated companies indicated biodiversity as a key material issue and mentioned they were aware that their business formed a threat for biodiversity. However, the content of the biodiversity disclosures was rather limited, indicating that palm oil companies still have a long way to go to incorporate biodiversity into their accounts. To be able to account for their impact on biodiversity, palm oil companies will need to monitor and assess the status of species affected by their operations, assess the performance and costs of actions taken to conserve biodiversity and report this information transparently.

Samenvatting

In hoeverre palmoliebedrijven hun impact op biodiversiteit in rekening brengen is slechts in beperkte mate onderzocht. Desalniettemin heeft de palmoliesector door haar activiteiten een directe impact op biodiversiteit. Productie van palmolie gebeurt namelijk in tropische regio’s, die gekenmerkt worden door een hoge biodiversiteit (IUCN, 2018). Voor deze masterproef werden de jaar- en duurzaamheidsrapporten van 53 beursgenoteerde bedrijven actief in de palmoliesector geanalyseerd op de mate waarin ze informatie met betrekking tot biodiversiteit rapporteerden en dit gebaseerd op een kwantitatieve en een kwalitatieve analyse. Van 2015 tot 2019 werd een stijgende tendens in zowel duurzaamheids- als biodiversiteitsrapportering waargenomen. Echter vermelden in 2018 nog 7 van de 53 geanalyseerde bedrijven (13,2%) geen woord over biodiversiteit. Over het algemeen werden grote verschillen gevonden in rapportering tussen de onderzochte bedrijven. Eén vierde van de bedrijven gaf aan biodiversiteit als een materiële kwestie te zien en rapporteerde dat ze zich bewust waren dat hun activiteiten een bedreiging vormden voor biodiversiteit. Nochtans was de inhoud van de rapportering over biodiversiteit eerder beperkt. Dit geeft aan dat palmoliebedrijven nog een lange weg te gaan hebben om hun impact op biodiversiteit in rekening te brengen. In de toekomst zal meer gerapporteerd moeten worden over de status van de aanwezige soorten in de omgeving, de acties die ze ondernemen om biodiversiteit te beschermen en de resultaten en kosten van deze acties.

Content

1 INTRODUCTION ...... 1

2 LITERATURE REVIEW ...... 2

2.1 Introduction...... 2

2.2 Biodiversity: definition, importance and threats ...... 2 2.2.1 What is biodiversity? ...... 2 2.2.2 Importance of biodiversity ...... 3 2.2.3 Threats to biodiversity ...... 4

2.3 Accounting and biodiversity ...... 5 2.3.1 Accounting as a tool to protect biodiversity ...... 5 2.3.2 National biodiversity accounting ...... 6 2.3.3 Biodiversity accounting in business ...... 8

2.4 Organisations and approaches related to biodiversity accounting ...... 11 2.4.1 International organisations focusing on biodiversity accounting ...... 11 2.4.2 Practical tools for biodiversity accounting ...... 12

2.5 Problems underlying accounting for biodiversity ...... 15 2.5.1 Valuing biodiversity ...... 15 2.5.2 Scientific uncertainty ...... 15 2.5.3 Normative uncertainty ...... 15 2.5.4 Impression management ...... 16

2.6 An alternative for biodiversity accounting: extinction accounting ...... 16

2.7 Biodiversity and the palm oil sector ...... 16 2.7.2 Global palm oil use ...... 17 2.7.3 Palm oil cultivation and the consequences for biodiversity ...... 17 2.7.3 The importance of sustainability disclosure in the palm oil sector ...... 18

3 OBJECTIVES ...... 21

4 METHODS ...... 22

4.1 Data collection ...... 22 4.1.1 Annual and sustainability reports ...... 22 4.1.2 Other company specific data ...... 22

4.2 Analysis of the reports ...... 23 4.2.1 Theme codes...... 23 4.2.2 Quantitative analysis ...... 25 4.2.3 Qualitative analysis ...... 25

4.3 Data analysis ...... 26 4.3.1 Processing of the company specific data ...... 26 4.3.2 Quantitative data analysis ...... 26 4.3.3 Qualitative data analysis ...... 26

5 RESULTS ...... 27

5.1 Description of the dataset ...... 27

5.2 Quantitative biodiversity assessment ...... 28 5.2.1 A first exploration of the dataset...... 28 5.2.2 Ratios on quantitative biodiversity and sustainability reporting ...... 29

5.3 Qualitative biodiversity assessment ...... 30 5.3.1 Certification ...... 30 5.3.2 Qualitative biodiversity disclosure ...... 31

6 DISCUSSION ...... 35

6.1 Reporting on biodiversity ...... 35

6.2 Accounting for biodiversity ...... 36

6.3 Possible explanations for limited biodiversity reporting and accounting ...... 37

6.4 Other ways of biodiversity conservation commitment ...... 38

7 CONCLUSION ...... 40

8 STRENGTHS AND LIMITATIONS ...... 42

9 REFERENCES ...... X

10 APPENDIX ...... XV

Appendix 1: Overview of the general information of the different companies ...... XV

Appendix 2: Data of the quantitative biodiversity analysis ...... XIX

Appendix 3: Data of the qualitative biodiversity analysis ...... XXV

VII

List of abbreviations

BAP Biodiversity Action Plan BBOP Business and Biodiversity Offsets Programme CBD Convention on Biological Diversity CISL Cambridge University for Sustainability Leadership GDP Gross Domestic Product GRI Global Reporting Initiative HCV High Conservation Value IPCC International Panel on Climate Change IPM Integrated Pest Management ISCC International Sustainability and Carbon Certification ISPO Indonesian Sustainable Palm Oil IUCN International Union for Conservation of Nature MSPO Malaysian Sustainable Palm Oil RSPO Roundtable on Sustainable Palm Oil SAN Sustainable Agriculture Network SDG Sustainable Development Goal SEEA System of Environmental-Economic Accounting SEEA-EEA System of Environmental-Economic Accounting Experimental Ecosystem Accounting SNA System of National Accounts

SPOTT Sustainability Policy Transparency Toolkit

STAR Species Threat Abatement and Recovery

UN United Nations

UNEP-WCMC UN Environment Programme World Conservation Monitoring Centre

WBCSD World Business Council for Sustainable Development

WWF World Wide Fund for nature

VIII

List of tables and figures

Table 1: The relationships between business and biodiversity (Source: Cambridge Institute for Sustainability Leadership, 2015) ...... 8

Table 2: Threats and opportunities when producing (un)sustainable palm oil (Source: Spencer et al., 2019) ...... 18

Table 3: Overview of the pre-determined themes, topics and their explanations (Based on Grabsch et al., 2012) ...... 23

Table 4: Overview of the publication and content of annual and sustainability reports over the period 2015-2019 ...... 28

Table 5: Quantitative reporting on biodiversity and sustainability for the years 2018 and 2019. For every year the minimum, mean and maximum over all the reports is given...... 29

Table 6: Amount of companies certified with RSPO, MSPO, ISPO and ISCC certification in the years 2018 and 2019 ...... 30

Table 7: Overview of the different biodiversity topics and how many companies discussed them in their annual and sustainability reports ...... 31

Figure 1: Components of biodiversity: ecosystem diversity, species diversity and genetic diversity (Source: Houde, 2007) ...... 3

Figure 2: Pyramid of hierarchical criticality to measure changes in biodiversity (Source: Jones, 1996) . 9

Figure 3: The mitigation hierarchy (Source: BBOP, 2018 (adapted from Rio Tinto & Govt of Australia)) ...... 10

Figure 4: Biodiversity disclosure as percentage from the annual reports ...... 29

1 Introduction

Through human activities extinction rates have become at least 100 times higher compared to natural extinction rates (Rawat & Agarwal, 2015). Among others, land use changes, overexploitation and climate change form huge threads for biodiversity. Concerns are raised regarding the consequences of biodiversity loss. In addition to its aesthetic value, biodiversity is important for ecosystem services, food security and the health of human populations. Conservation of biodiversity is more and more seen as a critical part of sustainability and companies receive increasing pressure to take measures to manage biodiversity. Especially companies working with natural resources - like palm oil plantations - have business operations which significantly and directly impact ecosystems and local biodiversity.

Most researches on this topic have investigated general sustainability reporting and only a few studies focused on reporting and accounting for biodiversity. Especially in the palm oil sector, this subject is underexplored. However, palm oil has been under a lot of pressure by NGO’s for being unsustainable and is often seen as an important cause of deforestation and biodiversity loss. In this context, this master dissertation explores to which extent palm oil companies report on biodiversity and incorporate accounting for biodiversity.

A first objective is to determine the quantitative reporting on biodiversity. Do palm oil organisations report on biodiversity and how much attention do they give biodiversity in comparison with other sustainability issues? For the second research question more attention is given to the content of the biodiversity reporting. Is the disclosed information relevant and to which degree do palm oil companies account for their impact on biodiversity?

The master dissertation starts with a literature study in which an overview is given of the concept biodiversity, existing accounting methods and the relation between biodiversity and the palm oil sector. For the practical part, the annual and sustainability reports of companies in the palm oil sector were investigated to explore the extent to which they reported and accounted for biodiversity. The results of the study were compared with previous research in this field and the master dissertation is closed with a general conclusion and the discussion of its strengths and limitations.

2 Literature review

2.1 Introduction

Biodiversity conservation forms a huge challenge all around the world. Higher demand for resources, a more and more global community and changing climate conditions lead to high pressures on natural capital. As a response on the losses of biodiversity we face, questions raise how we can diminish negative effects on nature and protect biodiversity. In this master dissertation, the use and potential of accounting for biodiversity in the oil palm sector is investigated. The first chapters of the literature review handle a description of the definition and use of biodiversity, and some threats to biodiversity are discussed. In the next part the concept of accounting for biodiversity and existing initiatives supporting this are explored. Also attention is given to some problems faced by biodiversity accounting and an alternative method is presented. The literature review finishes with an analysis of the palm oil sector, in which the effects of oil palm cultivation on biodiversity and the existing certification systems in the sector are discussed.

2.2 Biodiversity: definition, importance and threats

2.2.1 What is biodiversity?

Different definitions of biodiversity exist, often re-defined according to the purpose and context of the author (Swingland, 2001). Some authors discuss that biodiversity should not include abiotic components and processes, as this aspect does not meet the biological part of the definition. However, ecological processes are crucial to maintaining biodiversity (Swingland, 2001).

The definition presented below is the definition of biological diversity adopted by the Convention on Biological Diversity (CBD), a multilateral treaty established by the united nations.

"Biological diversity means the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems.” (CBD, 1992)

This definition divides biodiversity into three parts: genetic diversity, species diversity and ecosystem diversity (Figure 1). Genetic diversity includes the variation of genes within species and populations (Rawat & Agarwal, 2015). It can change from generation to generation as a result of natural selection and mutations (Swingland, 2001). Species diversity is defined as the variety of species. It can be

measured as species richness or species abundance, respectively the total and the relative number of species in a defined area (Rawat & Agarwal, 2015). Ecosystem diversity includes the variety of communities, habitats and ecological processes in the biosphere (Rawat & Agarwal, 2015).

Figure 1: Components of biodiversity: ecosystem diversity, species diversity and genetic diversity (Source: Houde, 2007)

2.2.2 Importance of biodiversity

Biodiversity delivers benefits in several areas. In the next paragraphs the importance of biodiversity and different values which can be attributed to it are discussed.

2.2.2.1 Utilitarian benefits Biodiversity contributes to the well-being of the human population, by the provision of among other things medicines, food and industrial raw materials (Rawat & Agarwal, 2015). For thousands of years, plants have formed the basis of traditional medicine systems. Today not only plants, but also microorganisms, vertebrates and invertebrates, are examined as sources for new medicines (Chivian, 2002). An example is the discovery of antibiotics, produced by microorganisms, and now used over the whole world to treat infections. Also our production of food is based on a rich biodiversity. Breeders have been using and are still using biodiversity to improve crops. In this way, biodiversity contributes to the productivity of crops, the improvement of the nutritional value of food and the resilience in farming systems (Thrupp, 2000).

2.2.2.2 Ecosystem services Ecosystems are defined as the dynamic complexes of living organisms and their non-living environment interacting as a system (CBD, 1992). Ecosystem services are activities or functions of the ecosystem

that provide benefits to humans (Mace, Norris, & Fitter, 2012). Examples of services are purification of water and air, regulation of climate and decomposition of wastes (Chivian, 2002). In many cases, healthy ecosystems work on large scales and are very complex. Disruptions of ecosystems can have catastrophic results, as the complexity makes it impossible for humanity to substitute for them (Chivian, 2002).

2.2.2.3 Ethical and moral benefits Every organism on earth is unique and has an inherent right to exist, regardless of its value to humans. In addition, current human generations have the social responsibility of the well-being of all future generations (Rawat & Agarwal, 2015).

2.2.2.4 Aesthetic value Natural environments can have value for humankind, namely people can derive enjoyment of its presence (Rawat & Agarwal, 2015). This can range from cultural value, by example appreciation of wildlife, to educational, recreational and religious values (Mace et al., 2012).

2.2.3 Threats to biodiversity

Threats to biodiversity refer to processes or events that are likely to cause adverse effects on the sustainable use or the status of components of biodiversity (Rawat & Agarwal, 2015). Species extinction is something that occurs naturally, without the intervention of humans (Swingland, 2001). However, through human activities extinction rates have become at least 100 times higher compared to natural extinction rates (Rawat & Agarwal, 2015). In the next paragraphs, the most important drivers of biodiversity loss are listed.

2.2.3.1 Land-use changes and habitat loss Habitat alteration and destruction is the main factor directly driving worldwide biodiversity losses (Rawat & Agarwal, 2015). Humans use technologies to modify their environment and make it habitable, while other species cannot do this. When a habitat is eliminated, it will kill the individuals living in the habitat. When the entire habitat is removed the species can become extinct unless they can adapt to another habitat. The destruction of habitats by humans has accelerated in the second part of the 20th century (Fisher, 2018), especially by the increased demand for resources leading to land use changes (Mutia, 2009). Some examples of habitat destruction are the clearing of forests for agriculture, the construction of hydroelectric projects on rivers, mining, logging, urbanization and the construction of highways.

2.2.3.2 Overharvesting / overexploitation Overharvesting is the result of a higher exploitation of individuals of a particular species than can be sustained by the natural reproductive capacity of its population (Mutia, 2009). It will lead to population decline and species extinction (Belgian National Focal Point to the Convention on Biological Diversity (ed.), 2013). Overharvesting often occurs with common resources. As exploiters do not own the exploitation site of the resources, they have a limited motivation to restrain their harvesting, also known as tragedy of the commons (Fisher, 2018). Overharvesting forms especially to aquatic species a serious threat (Fisher, 2018).

2.2.3.3 Climate change Atmospheric greenhouse gas concentrations have increased since the start of the 20th century, contributing to global warming. Examples of resulting climate changes are warming of land and ocean surface temperatures, changes in spatial and temporal precipitation patterns and the rising of sea water levels (IPCC, 2002). Most species have to deal with a narrow physiological limit. When climatic limits are exceeded, species can suffer extinction (Rawat & Agarwal, 2015). Climate change has already shown significant impacts on biodiversity and ecosystems, by affecting migration and species distribution, timing of reproduction and population sizes, length of the growing season and the frequency of pest and disease outbreaks (IPCC, 2002). By 2050 projected climate changes may lead to the extinction of species in certain regions, by the end of the century climate change may become the most important direct driver of overall biodiversity losses (Rawat & Agarwal, 2015).

2.2.3.4 Introduction of invasive species Invasive species are non-native organisms who alter the present communities of an area (Fisher, 2018). They can threaten present communities by out competition, predation and disease transmission and in some situations they can lead to extinction (Rawat & Agarwal, 2015). The introduction of invasive species by humans can be intentionally or accidentally (Fisher, 2018).

2.3 Accounting and biodiversity

2.3.1 Accounting as a tool to protect biodiversity

National information systems supporting environmental policy have been largely ad hoc., generally relying on academic research institutions, seldom underpinned by long-term monitoring and with most policy agencies poorly supplied to use the information (Vardon, Keith, Obst, & Lindenmayer, 2019). As discussed in chapter 2.2.3, biodiversity faces many threats, however biodiversity conservation forms a major challenge for government and business.

Accounting is defined as “the process of recording financial transactions pertaining to a business” (Tuovila, 2020) and is a necessary part of business. Two important accounting types are managerial accounting and financial accounting (Stolowy & Yuan, 2017). A company’s managerial account plays a key role in its decision making process, however relationships with the environment are mostly not included in standard accounting practices meaning its role is often not considered when important decisions are made (Bolt et al., 2016). A better representation of biodiversity in accounts may clarify the inter-dependencies of the organisation with natural resources and lead to a better management (Bolt et al., 2016).

A company’s financial account is important for communication with stakeholders (Stolowy & Yuan, 2017). Stakeholders play a role in conserving biodiversity, as they can contribute to biodiversity initiatives and provide benefits for the company which the company would not achieve independently (Boiral & Heras-Saizarbitoria, 2017). Examples of contributions of stakeholders are the implementation of research programs, the creation of protected areas and the development of new standards and their certification (Boiral & Heras-Saizarbitoria, 2017).

2.3.2 National biodiversity accounting

The System of National Accounts (SNA) is an international standard system by the United Nations which provides an integrated, complete system of accounts to facilitate international comparison (United Nations, n.d.-a). The SNA is the source of the Gross Domestic Product (GDP) and is an important tool assisting management and planning (Vardon et al., 2019). However, it does not provide all the information required to determine whether current levels of economic activity can be sustained (UNEP-WCMC, 2015a). The System of Environmental-Economic Accounting (SEEA) follows a similar accounting structure as the SNA, but also integrates environmental data. It provides a more thorough and multiuse perspective of the interrelationship between the economy and the environment. The SEEA focuses on different thematic areas, examples are air emissions accounts, energy, and ecosystem accounts. The System of Environmental-Economic Accounting Experimental Ecosystem Accounting (SEEA-EEA) focuses on organizing biophysical data, measuring ecosystem services and tracking changes in ecosystem assets. While the SEEA central framework puts attention on individual environmental assets, the SEEA-EEA examines how individual environmental assets interact as part of natural processes (United Nations, n.d.-b). With traditional approaches mostly only the economic value of products or services derived from nature is captured. Ecosystem accounting on the other hand aims to assess quantitative measures to determine the condition of ecosystem assets and the development of service flows, which can help to improve the management of ecosystems and their services (European Union, 2016).

One component of the SEEA-EEA is Experimental Biodiversity Accounting. The SEEA-EEA considers ecosystems as assets, characterised on the basis of their extent, condition and capacity to provide ecosystem services. Figure presents the location of biodiversity accounts within the SEEA-EEA framework.

The Extent Account (a) is used for defining spatial boundaries of ecosystem units, based on similar ecosystem characteristics. Spatial units form the structural framework for the different accounts in the framework, once they are distinguished the biodiversity account can be determined. The biodiversity account (b) provides biodiversity measures based on a temporally and spatially structure. It contributes to the Ecosystem Condition Account (d), the Ecosystem Services Account (e) and the Ecosystem Capacity Account (f). The Ecosystem Condition Account includes data fundamental for the functioning, integrity and ability to produce ecosystem services of an ecosystem unit. The Ecosystem Services Account captures the ecosystem service flow from the ecosystem unit into the economy. The Ecosystem Capacity Account considers the capacity to deliver a sustainable service (UNEP-WCMC, 2015a).

Figure 2: Location of biodiversity and linkages with other accounts within the SEEA-EEA (Source: UNEP-WCMC, 2015)

Using the SEEA-EEA framework information on biodiversity is organized in a spatial format in accordance to other national statistical frameworks. This makes it possible to compare data on

biodiversity and ecosystem services with other economic data and understand the relationship between economic development and biodiversity (UNEP-WCMC, 2015b).

2.3.3 Biodiversity accounting in business

2.3.3.1 Importance of biodiversity for businesses In businesses, biodiversity is historically considered from a reputational perspective, as an issue of corporate social responsibility, but not as an important part of a company’s performance. However, it is becoming more and more clear that loss of biodiversity can affect business operations (Bolt et al., 2016). The interrelationships between business and biodiversity, as represented by the Cambridge Institute for Sustainability Leadership, are given in Table 1.

Table 1: The relationships between business and biodiversity (Source: Cambridge Institute for Sustainability Leadership, 2015)

 Through ecosystem disruption Impact of business activities  Through expansion of business operations which often on biodiversity depends on the use of abandoned and degraded land or on the conversion of natural and semi-natural habitats

 For genetic diversity to provide system resilience to pest and climatic events Impact of biodiversity on  For enhanced ecosystem services from species diversity and business activities abundance  For high quantity and quality crop harvests delivered by wild pollination

 As competing user demands and interests increase External impacts on  As human populations rise and consumption trends change biodiversity  As the consequences of climate change increase pressures on biodiversity stocks

2.3.3.2 Recording and accounting for biodiversity Before being able to analyse the effects of specific actions on biodiversity, the present biodiversity has to be known. Two opposing approaches are common to record biodiversity: the natural inventory approach of Jones (1996) and the ecosystem approach of Houdet (2008). The first approach is simple and objective, but focuses on species and not on ecosystems. The second approach deals more

holistically with biodiversity, but is subjective and more difficult to operationalise (Jones & Solomon, 2013).

Jones (1996) used a pyramid of hierarchical criticality to measure changes in biodiversity (Figure 2). The pyramid exists of six levels, moving from critical to non-critical natural capital and from species to population level. At the first level, the inventory is categorised by habitat type and natural capital status (e.g. is it a protected habitat?). The second level focuses on critical species by species and by total population and this on all habitat types, critical as well non-critical. Level three and four record flora and fauna on critical habitats by species respectively by total population. Level five focuses on a general inventory of flora and fauna by species and level six on a general inventory by total population.

Level 1 Categorization by habitat type and natural capital status Level 2 Inventory of listed and protected flora and fauna Level 3 Inventory of critical habitats flora and fauna by species Level 4 Inventory of critical habitats flora and fauna by total population Level 5 General inventory of flora and fauna by species Level 6 General inventory of flora and fauna by total population

Figure 2: Pyramid of hierarchical criticality to measure changes in biodiversity (Source: Jones, 1996)

Further, Jones (1996) added a simplified grading system. Habitats were classified with a grade of one (habitats with very great ecological worth) to five (habitats with very little ecological worth). Finally, a market or equity value would be placed on the habitats. Jones (1996) suggested that companies should produce an annual statement to disclose the results of the organisation’s natural inventory. By recording this information every year over time changes can be established and reported.

In contrast to the natural inventory approach, the ecosystem approach is more top-down deconstructing ecosystems and habitats (Jones & Solomon, 2013). Houdet, Trommetter, Pavageau, & Jacques (2009) broke their analysis for the ecosystem model into four complementary steps. In the first step biodiversity inputs to the company are assessed. Secondly ecosystem services and benefits for the company are determined. In a third step biodiversity and ecosystem services losses and gains are investigated. In the last step interactions between companies and other agents which result in changes of biodiversity and ecosystem services are determined. Houdet et al. (2009) argued that with this method it is possible for companies to quantify business practices and associated costs or revenues which lead to changes in biodiversity.

2.3.3.3 The mitigation strategy More and more attention is given to natural capital and biodiversity, and businesses are expected to take responsibility for negative impacts and mitigate them. The mitigation strategy (Figure 3) is a tool developed to protect biodiversity when planning and implementing development projects (CSBI, 2015).

Figure 3: The mitigation hierarchy (Source: BBOP, 2018 (adapted from Rio Tinto & Govt of Australia))

The mitigation strategy’s goal is to achieve no net loss, or even a net gain in biodiversity (BBOP, 2018). The strategy is made of a sequence which can be used to mitigate biodiversity loss. The first step in the sequence is to avoid any biodiversity loss. If biodiversity loss does occur, it is important to minimize the loss and to restore possible impacts. If after restoring there are still remaining losses, this can be compensated by offsetting through positive conservation actions in another place (CSBI, 2015).

2.4 Organisations and approaches related to biodiversity accounting

Biodiversity conservation is raising global concern, and many organisations are set up to offer tools to address this problem. In the next paragraphs a sample of organisations focusing on biodiversity reporting and some existing accounting approaches for business are presented.

2.4.1 International organisations focusing on biodiversity accounting

2.4.1.1 Global Reporting Initiative (GRI) and the GRI standards The Global Reporting Initiative is an independent and international organization, established in 1997, which focuses on sustainable reporting. With their sustainability reporting standards they deliver a modular structure for reporting on a range of economic, environmental and social impacts (Global Reporting Initiative, n.d.). They consider four key elements in reporting on biodiversity: the relationship with biodiversity and ecosystem services, the perceived role and responsibilities of the company, the policy and management and the actual performance and results. In a first step, the relationship between the organization’s activities and biodiversity is established. This relationship is important to define the expectations of the company, the approaches to be implemented and the performance goals to be achieved. Secondly, the organization’s approach and performance are placed in the context of its perceived roles and responsibilities regarding conservation and sustainable use of biodiversity. For many stakeholders the CBD objectives will be key reference points. When the relationship with biodiversity and the organization’s role and responsibilities are identified, the specific policies and management approaches that are put in place can be reported. Important when reporting on actions is to do this as well forwards as backwards, meaning assessing new approaches but also assessing whether previous approaches were successful. The last step is to communicate the outcomes achieved. For doing so performance indicators are used, examples are indicators on inputs/outputs to the environment and on changes in biodiversity conditions (Global Reporting Initiative, 2007).

A critic on the GRI is that there is no generally accepted basis for defining, identifying and measuring changes in biodiversity (Mansoor & Maroun, 2016). Instead, principles are explained very broadly, which makes it difficult for organisations to apply them and can lead to the interpretation as a disclosure checklist rather than a framework for reducing biodiversity risks (Maroun & Atkins, 2018).

2.4.1.2 The Natural Capital Coalition and the Natural Capital Protocol Together with the Social & Human Capital Coalition, the Natural Capital Coalition is part of the Capitals Coalition, a global collaboration covering more than 300 organizations and focusing on including value provided by society, people and nature in decision making (Natural Capital Coalition, n.d.). In 2016, the Natural Capital Protocol was presented, a decision making framework which enables organizations to

incorporate its influence and dependency on natural capital. The Protocol is not a formal reporting framework, but aims at improving internal decision making (Natural Capital Coalition, 2016b). However, one of the key challenges the Protocol still faces is how to incorporate biodiversity. To address this challenge, a project has been set up in collaboration with the Cambridge Conservation Initiative, a collaboration between the University of Cambridge and different conservation organisations. The goal is to develop robust and biodiversity-inclusive capital assessments (Natural Capital Coalition, 2016a).

2.4.1.3 The Business and Biodiversity Offsets Programme (BBOP) The Business and Biodiversity Offsets Programme was established in 2004 by Forest Trends, a non- profit organisation focusing on incorporating nature conservation into economic activity (Forest Trends, n.d.). The BBOP brings different organisations together with as goal to offer a solution for the trade-off between economic and social benefits and nett biodiversity loss (BBOP, 2018). Its focus is on the mitigation strategy (no nett loss/net gain in biodiversity) and they have developed principles, standards and guidelines for companies and governments. In 2018, they published the ‘Roadmap for Governments’ and ‘Roadmap for Business’, accompanied by a resource paper demonstrating how corporations can prepare balance sheets in which biodiversity net gain is incorporated. For showing net biodiversity gain they make use of biodiversity metrics, but also additional benefits, by example improved air quality, are brought into account by using monetary value (BBOP, 2018).

2.4.1.4 The United Nations (UN) and the Sustainable Development Goals (SDG’s) The SDG’s were developed in 2015 by the United Nations. With 17 SDG’s and setting targets for 2030, they aim to bring back sustainability in an economic, social and ecological perspective. Goal 15 is devoted to “protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss” (UN, n.d.). The SDG’s do not offer tools for biodiversity accounting, but can act as a driver for companies to conduct biodiversity conservation effort.

2.4.2 Practical tools for biodiversity accounting

Different tools have been developed to assist companies in their biodiversity journey. However, there are no generally accepted and applied methodologies for companies on how they can measure and value their impacts and dependencies on ecosystem services and biodiversity (Lammerant, Müller, & Kisielewicz, 2018). In the next paragraphs some methods will be discussed. The first approach relies on qualitative information, while the other approaches are based on quantitative indicators.

2.4.2.1 The Biodiversity Check Companies can use the Biodiversity Check as an initial guide to determine their direct and indirect impacts on biodiversity. The check provides information on the relationship between the company and biodiversity, but also proposals for goals and measures to reduce risks and negative impacts, to protect biodiversity or to compensate for negative impacts (Global Nature Fund, Dokeo, Triple E, & FGN, n.d.).

2.4.2.2 The Global Biodiversity Score The Global Biodiversity Score is a metric developed by the CDC Biodiversité and based on internationally recognised scientific research. It is transparent, easy to estimate and understandable by non-specialists. The assessment exists of two steps: the determination of pressures caused by specific economic activities on biodiversity, followed by the estimation of the impacts of these pressures on ecosystems. For linking the economic activities to environmental pressures an analysis of the business’s complete value chain is conducted. Two important, external tools are life cycle analysis and matrix-based input-output models. For the second step the GLOBIO model, based on pressure- impact relationships, can be used. The GLOBIO model is a tool which can be used to assess the impact of environmental drivers on biodiversity in the past, present and future (GLOBIO, n.d.).

The Global Biodiversity Score can be used for calculating the footprint of a financial asset portfolio, but also for corporate level assessments. It is still under development and some important drivers for biodiversity loss, like overexploitation, invasive species, chemical pollution and soil degradation, are not factored in yet. The first biodiversity footprint audits will be conducted in 2020 (Mission Economie de la Biodiversité & CDC Biodiversité, 2017).

2.4.2.3 The Biodiversity Impact Metric The Biodiversity Impact Metric is an approach developed by a collaboration between the Cambridge Institute for Sustainability Leadership (CISL) and the Natural Capital Impact Group, a global network of companies concerned with the improvement and integration of biodiversity into corporate decision making. The Biodiversity Impact Metric is a quantifiable and easy to use measure that can help companies assessing and tracking their impact on biodiversity in a given area. It can be calculated by multiplying the area land needed to produce a commodity with the proportion of biodiversity lost through production and the relative global importance of the biodiversity loss. The basic idea is that the largest impacts on biodiversity tend to occur on farms where raw materials are produced, in the upstream value chains of companies. As such, the metric is specifically useful for companies involved in bringing a product from raw material to market (Lammerant et al., 2018; University of Cambridge, 2017).

2.4.2.4 The Biodiversity Indicator for Extractive Companies The Biodiversity Indicator for Extractive Companies is a project by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and Proteus. Starting of the needs and current practices used by the extractive sector they are looking to create effective indicators able to establish corporate biodiversity performance. The methodology is still being finalized and pilot studies have to be executed (Lammerant et al., 2018; UNEP-WCMC & Proteus, 2017).

2.4.2.5 The Agrobiodiversity Index The Agrobiodiversity Index is a tool developed by Bioversity International, a global research-for- development organization focusing on agriculture and the food sector. The tool finds it use in food and agriculture companies, but is also useful for governments and investors. The index is calculated based on three levels of measurement, each determined based on different indicators. The first, commitments, assesses the level of commitment as expressed in publicly available documents (e.g. strategies, guidelines, declarations, policies). The second, actions, includes the performance for a list of agrobiodiversity supporting practices. The third one, status, determines the actual state of agrobiodiversity at different levels (Bioversity International, 2018).

2.4.2.6 The Biodiversity Footprint and the Biodiversity Footprint Calculator The Biodiversity Footprint is a method developed by the Consortium of Plansup, Wageningen Environmental Research (Alterra), Netherlands Environmental Assessment Agency (PBL), CREM and JSScience. Its goal is to calculate the biodiversity footprint of a company or product and assess changes in impact and effectiveness of pro-biodiversity actions. For doing so the indicator determines for each part of the production chain the combination of the area of impact and the impact on the quality of biodiversity in the impacted area. The larger the footprint, the higher the impact (Plansup, 2017). The Biodiversity Footprint Calculator is a free calculation tool by Plansup which can be used by companies to test the effectiveness of presumed biodiversity friendly measures. It is a limited version of the full Biodiversity Footprint method, only the impact of land use and greenhouse gas emissions are considered (Plansup, 2018).

2.4.2.7 The Species Threat Abatement and Recovery Metric The Species Threat Abatement and Recovery (STAR) Metric is a metric designed by the IUCN which measures the contribution investments can make to reduce species extinction risk. The calculations are based on the IUCN Red List of Threatened Species. The STAR metric can be calculated before investment activities start and as such be used to compare investments. It can also serve for measuring the achieved impact of past conservation interventions over time (IUCN, 2017).

2.5 Problems underlying accounting for biodiversity

2.5.1 Valuing biodiversity

The lack of visibility of biodiversity and the difficulty of representing its true vale makes it difficult to integrate biodiversity into natural capital assessments (Bolt et al., 2016). Alho (2008) assigns seven different kinds of value to biodiversity: intrinsic, anthropocentric, aesthetic, mitigation and compensation, market, political and scientific value. Because biodiversity possesses divergent values, this leads to different conservation priorities (Maris & Béchet, 2010). Further it is questioned if biodiversity should be monetized. Jones & Solomon (2013) state that, from an ecology perspective, it is morally unacceptable to place a financial value on biodiversity.

2.5.2 Scientific uncertainty

Scientific uncertainty refers to factors related to how to preserve biodiversity and the unexpected outcomes when working with biological relationships. First, there is theoretic uncertainty, already starting with defining biodiversity. Many definitions exist for biodiversity, ranging from focusing on the species themselves to a complete anthropocentric view on biodiversity (Maris & Béchet, 2010). However, for conducting biodiversity conservation planning an accepted definition of biodiversity is needed (Swingland, 2001). Another reason of theoretic uncertainty is that when you are working with a complex thing as biodiversity, you cannot be completely certain which theoretical hypotheses are the most relevant (Maris & Béchet, 2010).

Second, there also is a practical limit, namely the outcome of practical measures is difficult to predict (Maris & Béchet, 2010). Courchamp et al. (2006) showed how rarity of wildlife can make species more valuable, making exploitation more profitable and leading to even a higher chance of extinction. Hence declaring a species endangered may result in an opposite and adverse effect, namely making the species more desirable leading to overexploitation.

2.5.3 Normative uncertainty

Normative uncertainty refers to the uncertainty considering which biodiversity to preserve and why, a result of the complexity of biodiversity as a concept that can be applied at different spatiotemporal scales and different levels of an organization (Maris & Béchet, 2010). An example of this complexity is shown in the research of Sax & Gaines (2003): they investigated biodiversity across spatial scales and concluded that global biodiversity was decreasing, but local biodiversity was increasing.

2.5.4 Impression management

It is not because organisations release information considering biodiversity management, that this information is reliable and contributes to greater accountability (Boiral, 2016). Companies want to show an auspicious picture of their accomplishments, and are more likely to present items with favourable than unfavourable trends (Cho, Michelon, & Patten, 2012). Bansal & Kistruck (2006) investigated stakeholder responses on impression management tactics. They found two techniques that made participants believe that a company was credible in its commitment to the natural environment. Half of the participants was influenced by illustrative (using images and/or comments) tactics, the other half by demonstrative (using facts and details) tactics. This indicates that sustainability reports can be misused by company leaders to manage the impressions of stakeholders instead of using it as a transparent tool for communication on sustainability performance (Cho et al., 2012).

2.6 An alternative for biodiversity accounting: extinction accounting

Extinction accounting can be used as an alternative for biodiversity accounting. It has as purpose the creation of awareness of the importance of managing biodiversity loss, including the risk of extinction (Maroun & Atkins, 2018). A first step is the description of the extinction risk and the reporting on actions, including partnerships, that are taken to mitigate extinction. Secondly also the successes and failures are analysed in detail and on each aspect of the accounting framework reporting is executed (Maroun & Atkins, 2018). Extinction accounting considers biodiversity as more than a disclosure element, and tries to chart the importance of biodiversity loss in terms of environmental, social but also economic impact (Atkins & Maroun, 2018).

2.7 Biodiversity and the palm oil sector

Oil palm is a crop produced in tropical areas, which typically have a rich biodiversity (IUCN, 2018). The conversion of tropical forests to oil palm plantations forms a huge threat to local biodiversity (Wilcove & Koh, 2010) and several non-profit organisations have raised concerns about the expanding cultivation (Greenpeace, 2019; IUCN, 2018). With the increasing pression on the sector traceability, sustainability disclosure and certification gain importance.

In the next paragraphs global palm oil use, the consequences of oil palm cultivation for biodiversity and the most important sustainable standards used in the sector are discussed.

2.7.2 Global palm oil use

Palm oil is an edible oil produced by the fruit of oil palm trees (Elaeis guineensis). It is one of the world’s most popular vegetable oils, present in a wide range of products. Production of palm oil is very efficient compared to other equivalent vegetable oil crops: production per hectare amounts 3,3 tons per hectare, compared to 0,4 ton per hectare for soy and 0,7 ton per hectare for coconut, sunflower and rapeseed (WWF, 2020). In 2019 global palm oil production was estimated covering a surface of 25 million ha with a corresponding production of around 75 Million Metric Tons (United States Department of Agriculture, 2020). It is produced in 44 countries, from which Indonesia and Malaysia make up over 85% of the global supply (WWF, 2020).

2.7.3 Palm oil cultivation and the consequences for biodiversity

Palm oil is produced in tropical areas, regions that are typically occupied by moist tropical forests which are particularly rich in biodiversity (IUCN, 2018). A negative consequence of oil palm cultivation is deforestation. Cultivation of oil palm can lead to deforestation for direct land use, but also indirect reasons like constructing roads to access the plantations can play an important role in deforestation (Fitzherbert et al., 2008). However, the effect of oil palm plantations on deforestation is not clear. Roda (2019) states that oil palm is only responsible for a small part (3%) of global deforestation, as deforestation peaked decades ago and palm oil plantations are replacing other agricultural uses. Vijay, Pimm, Jenkins, & Smith (2016) determined the same trend for some countries situated in Mesoamerica and Africa, but for other countries in South America and Asia they found a scenario in which deforestation matches with recent palm oil plantation expansions.

Conversion of forest to oil palm results in a significant decrease of species richness, combined with a shift to species with low conservation value (Danielsen et al., 2008). The adverse effects do not only occur in the area used for plantations, but also biodiversity in nearby habitats is affected through edge effects, pollution and fragmentation (Fitzherbert et al., 2008). Concerns raise that future oil palm plantations will lead to more deforestation (Fitzherbert et al., 2008; Vijay et al., 2016), especially as demand for palm oil is rising (Gan & Li, 2012).

As banning palm oil production is not a good solution, because alternative oil crops need more surface to yield the same production resulting in even more biodiversity loss (WWF, 2020), the other alternative is to produce palm oil in a sustainable way (IUCN, 2018). With increasing pressure from different stakeholders, companies face different risks producing unsustainable palm oil (Spencer, Guindon, & Melot, 2019). Table 2 gives an overview of different risks and opportunities when producing (un)sustainable palm oil.

Table 2: Threats and opportunities when producing (un)sustainable palm oil (Source: Spencer et al., 2019)

Opportunities Risks

 Supply chain exclusion  Financial Access to finance  Divestment and loss of  Financial outperformance financing

 Lower yields  Improved yields and efficiency Operational  Increased climate change  Improved community and impacts employee relations  Stranded assets

 Reputational  Improved market access Consumer boycotts  Stakeholder assurance  Loss of value

 Competitive advantages  Fines Regulatory  Assure stakeholders of legal  Reduced market access compliance  Supply chain disruption

2.7.3 The importance of sustainability disclosure in the palm oil sector

The Sustainability Policy Transparency Toolkit (SPOTT), an initiative by the Zoological Society of London, is an online, free platform which assesses the public disclosure of commodity producers and traders, such as companies active in the palm oil sector. One of the ten categories on which they score oil palm producers is deforestation and biodiversity (SPOTT, n.d.). Spencer, Guindon, & Melot (2019) compared during 2014-2019 the disclosure of palm oil producers with their financial results. They found that companies scoring higher on SPOTT had on average a higher total return compared to lower scoring companies, and the highest scoring companies also showed lower levels of volatility. These results emphasize the importance of executing sustainability enhancement in combination with a transparent disclosure.

Also sustainability standards and certification form a tool to address sustainability problems in the palm oil sector. Different sustainability standards for certification exist in the palm oil sector. The four with the largest market share in certified palm oil production (Tinhout & van den Hombergh, 2019) are discussed in the next paragraphs.

2.7.3.1 Roundtable on Sustainable Palm Oil (RSPO) The RSPO is a non-profit organisation working together with different stakeholders in the palm oil industry to develop and implement global and sustainable standards for palm oil. The first RSPO standards date from 2008, but they keep reviewing them to make sure the standards remain relevant.

Certification is based on standards in which the requirements are set out and can only be accredited by certified bodies. The RSPO addresses biodiversity conservation by zero deforestation, environmental impact assessments and monitoring and protection of High Conservation Value (HCV) areas. End 2018 the RSPO adapted its deforestation approach: before they had a zero deforestation policy for primary forests, now this is expanded to ‘the High Carbon Stock Approach’ in which also secondary forests are protected (RSPO, 2018).

HCV areas include among others areas with a high species biodiversity, areas with large and intact natural vegetation and little human activity and ecosystems and habitats that are rare (RSPO, n.d.-a). The HCV approach is twofold. Before certified palm oil companies can conduct new planting, both growers and certification bodies have to conduct a HCV assessment to receive approval from the RSPO. In this way the RSPO wants to prevent that new plantings have a negative environmental or social impact (RSPO, 2015). To address previous land clearance and plantation development conducted without prior HCV assessment, they developed a Remediation and Compensation Procedure. The environmental liability of the land clearance is calculated and compensated by onsite or offsite remediation (RSPO, n.d.-b).

2.7.3.2 International Sustainability and Carbon Certification (ISCC) ISCC is a multi-stakeholder initiative focusing on sustainable, traceable and deforestation free supply chains. It offers two certification systems: ISCC EU and ISCC PLUS. ISCC EU is used to demonstrate compliance with the Renewable Energy Directive and Fuel Quality Directive, ISCC PLUS covers all other markets and sectors. ISCC PLUS uses a modular approach: in addition to the core requirements also add-ons are available, amongst others an add-on related to environmental management and biodiversity (ISCC System GmbH, 2018).

2.7.3.3 Indonesian Sustainable Palm Oil (ISPO) The ISPO is introduced in 2011 by the government of Indonesia to improve the competitiveness of the Indonesian palm oil industry, but also to draw attention to environmental issues and reduce greenhouse gas emissions. Objectives are, among others, to protect forests and enhance biodiversity conservation. Certification with ISPO is mandatory for large palm companies and voluntary for small farmers (ISPO, n.d.).

2.7.3.4 Malaysian Sustainable Palm Oil (MSPO) MSPO is the national certification scheme for oil palm plantations and processing facilities in Malaysia. The certification is based on standards and run by an accredited third party. Certification is mandatory for both smallholders and large plantation owners by the end of 2019. MSPO standards include

commitment to no deforestation and protection of rare, threatened or endangered species and high biodiversity value areas (MPOCC, n.d.).

2.7.3.5 Comparison of the sustainability standards in the oil palm sector Tinhout & van den Hombergh (2019) compared different palm oil standards considering their relevance for protecting biodiversity. They based their comparison of the standards on two criteria: the provisions on biodiversity and the level of assurance criteria, namely if the standard gives confidence that its criteria are met. They concluded that RSPO showed the best results for both investigated criteria, and consequently the RSPO should be preferred as certification standard. The ISPO and MSPO on the other side did not score well, where the RSPO scored 70% on biodiversity provisions, the ISPO and MSPO only did 16% and 18 % respectively. For level of assurance the RSPO scored 85%, the MSPO 55%. However, the ISPO and MSPO are national standards and play an important and global role in the sustainability of oil palm. The ISCC had an average score of about 45% for biodiversity protection and around 63% for the level of assurance.

3 Objectives

The focus of this master dissertation is to examine to which extent organisations in the palm oil industry attempt to demonstrate their accountability for biodiversity. Past research is investigated to explore the extent of conducted research in the domain and to determine which tools are available for biodiversity accounting. From literature it is clear that awareness is rising that biodiversity loss is occurring at high rates and that measures have to be taken. However, only limited research is conducted to assess the accountability of companies towards biodiversity loss, especially for the palm oil sector.

In the practical part of this master dissertation, annual and sustainability reports of companies active in the palm oil sector are examined. Because of the exploring nature of this research, a narrative investigation is conducted. The objective of the practical investigation can be split up in two research questions. The first one explores quantitative reporting: are palm oil organisations reporting on biodiversity and how much attention do they give biodiversity in comparison with other sustainability issues.

The second research question focuses on a qualitative assessment: which kind of information is reported and how meaningful is this information. Especially for answering this research question it is useful to compare the biodiversity disclosure in the annual reports with biodiversity accounting techniques found in literature.

4 Methods

4.1 Data collection

The data collection consisted of annual and sustainability reports of organisations with palm oil plantations for the period 2015 - 2019. The choice for palm oil plantations can be explained by the major impact the sector has on biodiversity, as has been explained in the literature study.

Different stock markets were explored for palm oil companies, as for listed companies there is a more severe regulation to disclose information. Bursa Malaysia was found to be the most important stock market for organisations with palm oil plantations, which makes sense as Indonesia and Malaysia are the main palm oil producers worldwide (statista, 2020). Latin American palm oil companies are mostly privately-held (McMahon, 2017), resulting in a lower transparency. Because of these reasons the focus of the data collection was on palm oil companies with plantations in Malaysia and Indonesia.

In total a dataset with 54 palm oil plantation companies was distinguished: 43 were listed on Bursa Malaysia, 8 on the Singapore Stock Exchange and 1 on the London Stock Exchange, the Indonesia Stock Exchange and the Stock Exchange of Thailand. The websites of the corresponding companies were searched for more information and to obtain the annual and sustainability reports.

4.1.1 Annual and sustainability reports

The annual and sustainability reports were downloaded and categorized per company. However, not all the annual reports were found online. For 2015, 2016, 2017 and 2018 respectively five, four, one and two reports were not found. For 2019 many more annuals reports could not be downloaded: 26 of the 54 analysed companies were not (yet) available.

In total 41 separate sustainability reports were published over the period 2015-2019. This was done by 14 companies.

4.1.2 Other company specific data

Beside the search for the annual and sustainability reports, also other company specific data was collected. Preferably the annual reports were used to look this information up, as on a website there is more uncertainty about the accuracy. In case the information was not available in the annual report, the website of the corresponding company was used.

For every company information on the following topics was gathered:

• Stock market • If they are active in other sectors than the palm oil sector • Palm oil surface and total surface • Countries in which they have palm oil plantations • Market capitalization

Market capitalization was found on the websites of the stock markets on which the companies were registered. The information on market capitalization was gathered in the week of 3-9 February 2020 and all converted to euro.

4.2 Analysis of the reports

In the next step the available annual reports of the companies in the dataset were analysed. For companies that issued a sustainability report this report was also analysed. The reports of 2015-2017 were only used to investigate if a trend in biodiversity reporting could be determined. The reports of 2018 and 2019 were studied in more detail. Excel was used to list the investigated companies and the relevant information.

4.2.1 Theme codes

To make the analysis as objective as possible, it was decided in advance which topics to consider as a topic related to biodiversity and which not. Based on previous research in literature (Grabsch, Jones, & Solomon, 2012), a classification with eight pre-determined theme codes was applied. First the annual reports were swiftly investigated in order to get an idea on how biodiversity was mentioned. Based on this exploratory analysis a list was made with topics on biodiversity. Each topic was then assigned to a theme. Table 3 gives an overview of the different themes, topics and a short explanation for each topic. In total a checklist of eight themes and 26 topics was established.

Table 3: Overview of the pre-determined themes, topics and their explanations (Based on Grabsch et al., 2012)

Theme Topic Explanation Whether the company reports a definition on Definition biodiversity Whether the company has a biodiversity-related Scene-setting Mission statement mission statement or a general aim relating to biodiversity Whether the company explains the importance of Certification biodiversity conservation for certification

Sustainable Development Whether the company refers to SDG 15 to explain the Goal 15: Life on land importance of biodiversity conservation Whether the company has a topic dedicated to Topic on biodiversity biodiversity Monitoring Reporting of surveys conducted Reporting of case studies of species information relating Case-studies Species related to specific sites Specific species Mention of specific species IUCN Redlist Whether the company mentions the IUCN Redlist Organisations with which the company has partnerships Partnerships on biodiversity (NGOs, universities, governments) Awards/prizes gained by the company in relation to Awards Social biodiversity engagement Reporting relating to engagement by the company with stakeholder groups on biodiversity issues (engagement Stakeholder engagement with local communities and schools, employee training and away days) Targets Reporting of any biodiversity targets Performance Performance Reporting of status and achievement of targets evaluation Reporting of costs specifically for biodiversity Costs conservation Zero deforestation Commitment to zero deforestation Zero burning Commitment to zero burning Commitment to the protection and restoration of High Commitment HCV Conservation Value (HCV areas) IPM Commitment to Integrated Pest Management (IPM) Protection of peatland Commitment to the protection of peatland Reporting of a stakeholder analysis in which biodiversity Stakeholder analysis is seen as a concern Risk Reporting of a materiality matrix in which biodiversity is Materiality matrix seen as a material risk for the company Whether a team or a biodiversity manager responsible Biodiversity unit for biodiversity conservation is appointed Internal Whether a policy on biodiversity conservation is management Biodiversity policy implemented BAP Information relating to Biodiversity Action Plans External reports GRI Reference to GRI reporting indicators

4.2.2 Quantitative analysis

To start it was investigated if the companies of the dataset mentioned biodiversity in their reports. If available, reports of the past five years (2015-2019) were analysed. For making this task easier, the reports were searched for the keywords ‘biodiversity’ and ‘biological diversity’. For this exploration it was only checked if the reports mentioned biodiversity and not if they mentioned other topics like presented in Table 3.

In a second step the quantity on biodiversity disclosure was examined for the years 2018 and 2019. The quantitative assessment was executed using the word count function in Word. First the reports were converted to a word document by using a PDF to Word converter. For the annual reports the words related to biodiversity, the part of the report related to sustainability in general and the total amount of words were counted. For the sustainability reports the words related to biodiversity and the total amount of words were counted. Counting the words related to sustainability in the annual reports was quite straightforward, as most reports had a section dedicated on sustainability.

Counting the words on biodiversity on the other hand was more difficult, as the information on biodiversity was more scattered over the reports. The predefined topics of Table 3 were used to determine which topics to include for the counting. For every analysed report, the paragraphs and sentences which related to one of these topics were copied in a separate Word document. Finally, the total amount of words in the Word document were calculated to determine the amount of words on biodiversity.

4.2.3 Qualitative analysis

For this part only the annual and sustainability reports of 2018 and 2019 were used. For the qualitative data gathering a more thorough analysis of the content on biodiversity reporting was executed. First it was determined for each company with which certification standards it was certified.

Further, the list with topics, given in Table 3, was used to investigate the qualitative reporting of the companies. This was used as a checklist which made it possible to analyse the reports in an as objective and consistent way as possible. The excel file was expanded with extra columns and for every report it was indicated if the topics of the checklist were discussed or not. In total 26 topics were considered, which means a company’s score could range between 0 and 26.

4.3 Data analysis

In the next step descriptive statistics, based on tools offered by Excel, were used to analyse the gathered data.

4.3.1 Processing of the company specific data

The company specific data is used to give an overview of some characteristics of the analysed dataset. For the characteristics oil palm surface and market capitalization minima, mean and maxima were calculated.

4.3.2 Quantitative data analysis

For every year it was determined how many annual and sustainability reports were published. Further it was analysed how many companies had a section dedicated to sustainability and how many companies referred to biodiversity in their annual reports over the period 2015-2019.

For the years 2018 and 2019 the data on the amount of words was used to calculate ratios. The following ratios were calculated for each company:

• Words on biodiversity compared to words on sustainability (annual report) • Words on biodiversity compared to total words (annual report) • Words on sustainability compared to total words (annual report) • Words on biodiversity compared to total words (sustainability report)

For each ratio the mean, minimum and maximum was calculated over the different companies.

4.3.3 Qualitative data analysis

For the years 2018 and 2019 it was determined how many companies were certified with RSPO, MSPO, ISPO and ISCC. Further an analysis of the data gathered on the biodiversity criteria was executed. For every company it was determined how many criteria they discussed, and the mean over the different companies was made.

5 Results

In total 54 companies were investigated on their biodiversity reporting, the list with their names can be found in the annex. It was decided to exclude one company, DutaLand Berhad, out of the dataset. DutaLand Berhad is an investment holding company with subsidiaries involved in different kinds of businesses, among others palm oil estates. In their annual reports they put the focus on their property development and real estate divisions, which made it irrelevant to analyse them for reporting in the palm oil sector.

The results for the remaining 53 companies are discussed in the next sections. The first section starts with a description of the dataset. The other results are divided in a section dedicated to the quantitative biodiversity assessment and the qualitative biodiversity assessment.

5.1 Description of the dataset

All the investigated companies were listed: 42 on the Bursa Malaysia, one on the London Stock exchange, eight on the Singapore Stock Exchange and one on the Stock Exchange of Thailand and the Indonesia Stock Exchange. Market capitalization ranged from around two million to 16,4 billion euro, with a mean of around one billion euro.

Fifteen companies had plantations in more than one country. In Indonesia were in total 22 companies present, in Malaysia 45. Only two companies had no plantations in Indonesia or Malaysia. Other countries in which the companies had plantations are Thailand, Papua New Guinea, Liberia, Uganda and West-Africa.

Most companies were also active in other sectors than the palm oil sector. This ranged from exploiting other types of plantations like sugar, cocoa or rubber to an additional focus on complete other sectors like property and investment holding. For 9 of the 53 investigated companies the palm oil sector was their only business.

For every company information on its total surface and its surface used for oil palm plantations was gathered. For three companies the total surface was not found. Total company surfaces ranged from 202 hectares to three million hectares, with a mean of 145.179 hectares. The surfaces planted with oil palm ranged from 202 hectares to 603.254 hectares, with a mean of 94.391 hectares.

5.2 Quantitative biodiversity assessment

5.2.1 A first exploration of the dataset

For every year it was determined how many companies published an annual and a sustainability report. The annual reports were further investigated if they had a section dedicated on sustainability and if they mentioned biodiversity. The results are given in Table 4: Overview of the publication and content of annual and sustainability reports over the period 2015-2019

Table 4: Overview of the publication and content of annual and sustainability reports over the period 2015-2019

Mentioning Sustainability Sustainability Annual reports biodiversity in reports section annual report

2015 46 7 8 16

2016 47 8 14 21

2017 50 10 26 31

2018 51 14 36 32

2019 27 4 20 19

In 2018, fourteen companies published a sustainability report. Seven of the fourteen companies which published a sustainability report were listed on the Bursa Malaysia (seven on in total 42 companies), six on the Singapore Stock Exchange (six on in total eight companies) and one on the Indonesia Stock Exchange (only one company listed). The sustainability reports were published by the palm oil companies with the largest palm oil surfaces: only companies with a palm oil surface higher than the median of the palm oil surfaces produced a sustainability report.

For the year 2019 many reports were not published yet, but from 2015-2018 an increasing trend in sustainability reporting can be detected. Both the amount of sustainability reports and the amount of sections in the annual reports dedicated to biodiversity increased. Also in more annual reports biodiversity was mentioned. Figure 4 gives an overview of the trend of mentioning biodiversity in the annual reports. Especially from 2015 to 2017 there is a strong increase. From 2017 to 2018 there is almost no change. In 2019 there is again a slight increase, however only a small part of the annual reports were already available.

80%

60%

40%

biodiversity 20% reports mentioning

Percentage Percentage of theannual 0% 2015 2016 2017 2018 2019 Year

Figure 4: Biodiversity disclosure as percentage from the annual reports

5.2.2 Ratios on quantitative biodiversity and sustainability reporting

For the years 2018 and 2019 the amount of words of the year reports dedicated to biodiversity was investigated. The results are given in Table 5.

Table 5: Quantitative reporting on biodiversity and sustainability for the years 2018 and 2019. For every year the minimum, mean and maximum over all the reports is given. (2018: for 2 annual and 1 sustainability reports the words on biodiversity could not be determined; 2019: for 1 sustainability report the words on biodiversity could not be determined)

2018 2019 (49 annual – 13 sustainability reports) (27 annual – 3 sustainability reports)

Minimum Mean Maximum Minimum Mean Maximum

Total words on 0 378 6334 0 428 3983 biodiversity

Percentage

biodiversity of 0 6 19 0 7 16 sustainability [%]

Percentage biodiversity of 0 1 7 0 1 5

Annualreports total words [%]

Percentage sustainability of 0 7 45 0 8 32 total words [%]

Total words on

biodiversity 349 1620 6334 2139 2700 3983

Percentage reports

biodiversity of 3 7 16 8 11 15 Sustainability total words [%]

The results for 2019 have to be interpreted with caution as only a limited amount of companies published their annual and sustainability reports yet. From the table it is clear that all sustainability reports discussed biodiversity, while this was not the case for the annual reports. From the thirteen companies that published sustainability reports in 2018, six had a limited section dedicated to sustainability and did not or very limited mention biodiversity in their annual reports.

In 15,69% (8 of the 51) annual reports of 2018 there was no reference at all to biodiversity. Only one of these companies published a sustainability report. Eleven of the 50 annual reports did not mention the word ‘biodiversity’, but discussed topics related to biodiversity. For 2019 four of the 26 reports did not mention ‘biodiversity’ at all, which matches with around 15,38%. Four did not mention the word biodiversity, but referred to topics related to biodiversity.

5.3 Qualitative biodiversity assessment

5.3.1 Certification

For every year it was assessed with which certification standards the different companies were certified (Table 6). Many of the annual reports of 2018 mentioned preparations to receive certification before the end of 2019. An increasing trend in certification could be detected: in 2018 eighteen companies had none of the four mentioned certification, in 2019 four companies were not certified.

Some companies were certified with more than one certification standard: for year 2018 eight companies had two certifications, nine had three and two had the four certifications. In 2019 five had two certifications, another five three and two companies had four certifications.

Table 6: Amount of companies certified with RSPO, MSPO, ISPO and ISCC certification in the years 2018 and 2019

2018 (51 annual reports) 2019 (27 annual reports)

RSPO certification 18 12

MSPO certification 22 15

ISPO certification 12 11

ISCC certification 11 7

5.3.2 Qualitative biodiversity disclosure

The annual and sustainability reports of 2018 and 2019 were analysed on the content they reported on biodiversity. In advance 26 topics divided over eight themes were drawn up and for every report it was investigated if the topics were discussed or not. Table 7 gives an overview on how many companies discussed the different topics in their annual and sustainability reports.

Table 7: Overview of the different biodiversity topics and how many companies discussed them in their annual and sustainability reports

2018 2019

Theme Topic Annual Sustainability Annual Sustainability reports reports reports reports (51) (14) (27) (4) Definition 1 6 1 3 Mission statement 14 12 11 3 Scene-setting Certification 7 2 5 1 SDG 15: Life on land 9 8 7 3 Topic on biodiversity 15 11 10 3 Monitoring 11 11 10 4 Case-studies 4 9 1 4 Species related Specific species 9 8 6 3 IUCN Redlist 12 10 9 3 Partnerships 9 10 4 3 Social Awards 2 1 1 2 engagement Stakeholder 9 11 7 4 engagement Targets 6 7 6 4 Performance Performance 5 7 4 4 evaluation Costs 1 2 1 1 Zero burning 33 13 18 4 Zero deforestation 18 11 11 4 Commitment HCV protection 23 14 15 4 IPM 24 11 11 4 Protection of peatland 10 13 13 4 Risk Stakeholder analysis 8 3 6 1

Materiality matrix 12 9 8 4 Biodiversity unit 2 1 2 1 Internal Biodiversity policy 4 1 2 1 management BAP 1 0 2 0 External GRI 8 11 4 4 reports

In 2018 nine companies did not mention any topic in their annual report, one discussed 25 of them. The mean of the amount of discussed topics was 5,3. In the sustainability reports five to 25 topics were discussed, with a mean of 14,4. In 2019 four companies did not mention any topic in their annual report, one mentioned sixteen of them. The mean of the amount of discussed topics was 6,5. In the sustainability reports between seventeen and 26 topics were discussed, with a mean of 19,5.

From the comparison of the (limited) dataset of 2019 with the dataset of 2018 there seems to be a higher trend of biodiversity disclosure in 2019. Both in 2018 and 2019 the sustainability reports have a higher biodiversity disclosure compared to the annual reports.

In the next paragraphs the results for the eight themes are discussed for the annual reports of 2018. For 20 of the 26 investigated topics the percentual disclosure of the annual reports was higher in 2019 compared to 2018. From the 26 investigated topics, only the topic zero burning had a disclosure higher than 50 percent in both the annual reports of 2018 and 2019.

5.3.2.1 Commitment The highest disclosure results were found for the theme ‘commitment’. In the annual reports of 2018 around 65 percent of the companies committed to zero burning, 45 percent to HCV protection, 47 percent to the use of IPM, 35 percent to no deforestation and 20 percent to protection of peatland. Only a few companies mentioned how many hectares of their surface was considered High Conservation Value area.

5.3.2.2 Scene-setting The second highest disclosure was found for the theme scene-setting. Especially a mission statement considering biodiversity and a separate topic on biodiversity were popular: respectively 27 and 29 percent of the companies discussed these in their annual reports of 2018. Only a limited amount of companies formulated a definition of biodiversity in their report. Especially in the annual reports this was an exception for companies to do. The definitions used by the different companies were:

“The diversity (number and variety of species) of plant and animal life within a region.” (United Plantations Berhad, Bumitama Agri Ltd., First Resources and Wilmar)

“The variety of life forms within a particular ecosystem, biome, or habitat.” (IndoAgri)

“The abundance of a variety of bio-natural resources (flora and fauna) found in a certain area.” (Astra Agro)

The reference to the SDGs for biodiversity protection and the discussion of the importance of biodiversity conservation for certification were mentioned by respectively 18 and 14 percent of the annual reports of 2018.

5.3.2.3 Species related Monitoring and the IUCN were important species related topics in the annual reports of 2018, with scores of respectively 24 and 22 percent. Companies used the Red List of the IUCN to determine the status of the species they monitored. Some companies referred to collaborations with local governments if endangered species were encountered. Eighteen percent of the annual reports of 2018 mentioned the presence of specific species. Only eight percent explained specific cases in which they showed effort for conservation of a specific species.

5.3.2.4 Social engagement Eighteen percent of the annual reports mentioned partnerships to deal with biodiversity issues and were committed to stakeholder engagement. The partnerships were generally with specific wildlife organisations. Stakeholder engagements existed of biodiversity conservation trainings for employees and collaboration with locals to protect local biodiversity. Only two companies mentioned they won a specific award for biodiversity conservation effort.

5.3.2.5 Performance evaluation Twelve percent of the investigated companies set out biodiversity targets in their annual reports, ten percent also gave feedback if preceding targets were met. The targets related mainly to (ongoing) monitoring and management of biodiversity and HCV areas. Only one company qualified its target: Golden Agri Resources mentioned in their annual and sustainability report of 2018 that they wanted to release another 60 orangutans by 2021. In their annual report of 2019 they qualified the progress they already made.

In one annual report and in two sustainability reports costs related to biodiversity conservation were discussed. United Plantations Berhad reported a general cost for biodiversity and conservation, while Sime Derby Plantations mentioned an estimation for the cost of a project they conducted.

5.3.2.6 Risk In about one quart of the annual reports biodiversity was recognised as a key material issue in the materiality matrix. Twenty percent of the companies explicitly acknowledged in their annual reports that their business had a negative impact on biodiversity and conservation efforts had to be made. Sixteen percent indicated for which stakeholders they considered biodiversity conservation as an important issue.

5.3.2.7 Internal management Reporting on internal management was the theme with the lowest score. Only two companies, or four percent of the analysed annual reports in 2018, had a team or a biodiversity officer responsible for biodiversity conservation. Eight percent reported they had a specific policy for biodiversity conservation in place. Only one company mentioned a biodiversity action plan.

5.3.2.8 External reporting A large difference was found between the use of the GRI standards in the annual reports and in the sustainability reports: in 2018 about 16 percent of the annual reports used the GRI for reporting, for the sustainability reports this was about 78 percent. Mainly companies with a higher palm oil surface made use of the GRI: the 17 companies with the lowest surfaces did not use the GRI, while the three companies with the highest palm oil surface did use the GRI in their annual reports of 2018.

6 Discussion

6.1 Reporting on biodiversity

The palm oil industry faces raising concerns by stakeholders and the general public, as it is a sector which plays a crucial role in biodiversity conservation. Therefore oil companies should make strong commitments to biodiversity conservation and prove that these commitments are no empty promises but are truly implemented. It has been shown that palm oil companies with a high disclosure of sustainability commitment outperform lower scoring companies in terms of financial return by around 20% (Spencer et al., 2019). Furthermore, commitment to sustainable palm oil production offers different opportunities on financial, operational, reputational and regulatory level. Whereas unsustainable production can lead to different risks.

The results of the study show that biodiversity reporting in integrated reports is not yet a universal phenomenon. Even though an increasing trend of mentioning biodiversity in the annual reports was found from 2015 to 2019, still around sixteen percent of the analysed annual reports of 2018 and 2019 did not mention biodiversity at all. In contrast, biodiversity conservation was discussed in all the available sustainability reports of 2018 and 2019. However, in 2018 only about one quarter of the investigated palm oil companies produced a separate sustainability report.

In 2018 about six percent of the sustainability section of the annual reports was dedicated to biodiversity related issues. In the sustainability reports of 2018, biodiversity topics made up about seven percent. But the quantity of reported information is not necessarily positively related to the quality of reporting. Some companies included the same information multiple times or gave more attention to one topic of biodiversity reporting while excluding other topics. To avoid being deceived by numbers on quantitative reporting, also a qualitative analysis was executed.

Also on qualitative level, a higher amount of reporting was found for 2019 compared to 2018. The results showed that the average amount of discussed biodiversity topics increased from 5,3 in 2018 to 6,5 in 2019 for the annual reports and from 14,4 in 2018 to 19,5 in 2019 for the sustainability reports. So in general an increasing trend in reporting on biodiversity was observed.

6.2 Accounting for biodiversity

Accounting is defined as “the process of recording financial transactions pertaining to a business” (Tuovila, 2020). Jones & Solomon (2013) explain that accounting for biodiversity, even rudimentary, can work as an emancipatory tool to alter corporate behaviour and attitudes towards biodiversity. However, previous research on accounting for biodiversity (Grabsch et al., 2012; Mansoor & Maroun, 2016) and the limited biodiversity reporting of companies show it is not common for companies to provide an account on biodiversity.

In literature, different methods were proposed for recording and accounting for biodiversity (Houdet, 2008; Jones, 1996). For the inventory approach of Jones (1996) the present habitats and species are assessed and classified on criticality. For the ecosystem approach of Houdet (2008), material flows of biodiversity to the company are assessed and biodiversity gains and losses caused by business operations are determined. Applying this on palm oil plantations, for both methods it will be necessary to conduct surveys to monitor biodiversity and determine biodiversity gains and losses over time. About one quarter of the analysed annual reports of 2018 mentioned the conduction of surveys to assess wildlife populations and to monitor high conservation value areas. About 22 percent of the annual reports referred to the Red List of Threatened Species of the IUCN to classify the monitored species depending on their criticality.

In the next step of biodiversity accounting, costs or revenues related to biodiversity need to be determined. Jones (1996) classified different habitat types with a grade between one - habitats with very great ecological worth - and five - habitats with very little ecological worth - and suggested to put a market or equity value on the habitats. However, putting a value on biodiversity is not self-evident. Firstly, biodiversity is not something that is traded on an active market. Also, dependent on the view, different kinds of value can be attributed (Alho, 2008). Furthermore it is questioned if biodiversity should be monetized: Jones & Solomon (2013) state that - from an ecology perspective - it is morally unacceptable to set a financial value on biodiversity.

In the ecosystem approach, Houdet (2008) did not try to determine a direct price for biodiversity, but linked business practices and associated costs/revenues with biodiversity gains/losses to compare the effects on biodiversity between different activities. However, from the 53 analysed companies, only two reported a cost for biodiversity conservation expenditures. One company reported the total cost for biodiversity conservation, which included the maintaining of a forest reserve, setting up endangered tree species projects and a collaboration with the Copenhagen Zoo. The other company reported the expenditure for a rehabilitation project of a forest reserve. To be able to assess the full

impact of biodiversity, companies will need to start reporting more information on financial costs, liabilities and impacts.

In general, the results of the research show that palm oil companies are far away from having accounting for biodiversity integrated in their frameworks. Criticisms find the anthropocentric view of setting a price on biodiversity morally unacceptable and argue that biodiversity should be protected for its intrinsic value (Jones & Solomon, 2013). Extinction accounting is an alternative for accounting for biodiversity, and is inspired by both an anthropocentric and a deep ecological view on biodiversity (Maroun & Atkins, 2018). Instead of putting a monetary value on biodiversity, companies report on the extinction risk they cause and on actions taken to combat extinction. By comparing the conducted policies, plans and actions and their performance and cost, the extinction prevention measures can be evaluated for both financial and operational effectiveness (Maroun & Atkins, 2018). In 2018, one company mentioned having a biodiversity action plan and four companies stated they had a biodiversity policy. Twelve percent of the investigated companies set out targets regarding biodiversity in their annual reports. Ten percent also gave feedback if preceding targets were met. Most companies reported targets related to biodiversity surveys they wanted to conduct, but one company was already a step further. Golden Agri Resources reported a target in which they indicated they wanted to release another 60 orangutans by 2021, a species which is indicated as ‘critically endangered’ by the IUCN Red List. In general however, many of the reported targets were not quantitative, making it difficult to assess their impact and net outcome. More extensive and detailed targets, based on conservation science, can help to advance corporate accountability in order to improve biodiversity (Addison, Bull, & Milner-Gulland, 2019).

6.3 Possible explanations for limited biodiversity reporting and accounting

Despite the disappointing results on biodiversity reporting and accounting, twenty percent of the companies explicitly acknowledged in their annual reports of 2018 that their business had a negative impact on biodiversity and conservation efforts had to be made. About one quarter of the annual reports recognised biodiversity as a key material issue in their materiality matrix. This indicates that awareness of the threats the sector faces is rising and that some companies want to show commitment to protect biodiversity.

The combination of limited knowledge and undetailed guidelines for reporting on biodiversity-related issues can be an explanation for the limited reporting. The problem with accounting for biodiversity already starts with defining biodiversity. Only a limited amount of companies formulated a definition

of biodiversity in their report and a different definition was used depending on the company. About sixteen percent of the annual reports and 75 percent of the sustainability reports of 2018 mentioned they used the GRI for reporting. However, a criticism on the GRI is that it does not provide a generally accepted basis for defining, identifying and measuring changes in biodiversity (Mansoor & Maroun, 2016), which makes it difficult for companies to quantify and report any costs.

On the other hand, extensive disclosure leads to a higher accountability and can attract unintended attention from stakeholders, which could - without the disclosure - not have been aware of the matter. This can be one of the reasons why only eight percent of the annual reports in 2018 includes specific cases in which the companies demonstrated the effort they had executed for conservation of a specific species. Also, through the absence of a clear reporting framework, companies can choose to only disclose information which positively influences stakeholders’ impressions, instead of disclosing balanced information covering both positive and negative effects. In past research in mining organizations, sustainability reports have been identified as an unreliable tool for biodiversity reporting as companies used impression management and only made symbolic commitments to biodiversity conservation (Boiral, 2016). In general, diverse biodiversity topics were discussed in the investigated reports. Remarkable is that the information was partial and unsystematic, which can indicate cherry picking and only showing best-case studies on biodiversity.

Reporting on internal management has the lowest reporting ratio of the investigated subject matters. Only two companies, or four percent of the analysed annual reports in 2018, had a team or a biodiversity officer responsible for biodiversity conservation. Eight percent reported they had a specific policy for biodiversity conservation in place. The lack of internal management can indicate that companies do not see biodiversity as something of paramount importance.

6.4 Other ways of biodiversity conservation commitment

Accounting for biodiversity is not a widespread practice, but some investigated companies showed commitment to biodiversity conservation through other ways. In the annual reports of 2018, around 65% of the companies committed to zero burning, 45% to HCV protection, 47% to the use of IPM, 35% to no deforestation and 20% to protection of peatland, all of which are topics that enhance biodiversity conservation and some of them are required by certification standards. In the past, NGO’s used shaming of palm oil companies into adopting no-deforestation commitments. This was however not enough to deliver a substantial change (Lyons-White & Knight, 2018). Instead, it is necessary to adopt a broader suite of complementary mechanisms, in which certification can play an important role (Lyons-White & Knight, 2018).

Certification can play a key role in addressing the problem of biodiversity loss through the integration of biodiversity conservation in certification standards (Tinhout & van den Hombergh, 2019). From 2018 to 2019, an increasing trend in certification is noticeable. Especially more companies were certified with the ISPO and MSPO standards and a smaller increase was found for the RSPO standards. This makes sense as both MSPO and ISPO are becoming mandatory for companies in respectively Malaysia and Indonesia. Because of this obligation, some companies even mentioned to stop RSPO certification and instead switch to the mandatory national certification. However, Tinhout & van den Hombergh (2019) showed that RSPO certification led to better results for biodiversity protection compared to MSPO and ISPO certification. The national standards play an important role in ensuring sustainable palm oil, but their current unsatisfactory criteria on biodiversity protection brings forth the risk that companies can produce palm oil with a sustainability label, without the assurance of biodiversity conservation. The RSPO on the other hand has developed a more extensive approach to protect biodiversity. Their HCV approach offers an important tool to avoid biodiversity loss. Companies have to assess a HCV analysis and receive permission from the RSPO before they can conduct new plantings. Areas are classified as HCV if they contain e.g. a high species diversity, a large and intact natural vegetation with little human activity or ecosystems and habitats that are rare.

7 Conclusion

From 2015 to 2019 an increasing trend in biodiversity reporting seemed to be present. More and more companies started to produce integrated annual reports and sustainability reports. In 2018, especially sustainability reports were an important tool used by companies to disclose information on biodiversity conservation, but only a limited part of the investigated companies published sustainability reports. Some companies did not publish a sustainability report and did not report on biodiversity in their annual reports.

Many companies showed commitment to biodiversity conservation by pledging to practices, e.g. zero deforestation, that contribute to biodiversity conservation. However, accountability of companies for their impact on biodiversity was rather low. In 2018 one quarter of the investigated companies admitted their business formed a threat to biodiversity and identified biodiversity conservation as a key material issue. But in general, there is still a long way to go for oil palm plantations to incorporate accounting for biodiversity. Despite the high environmental impact of the palm oil industry on biodiversity, biodiversity disclosures were rather limited and restricted in the content they provided. To be able to account for biodiversity, companies will need to start quantifying the biodiversity loss they cause, as well as the associated costs.

On the other hand, one may wonder if accounting for biodiversity is morally acceptable. The first remark relates to setting a monetary value on biodiversity: should we not protect biodiversity for its intrinsic value, instead of applying an anthropocentric approach. Also, it can be difficult to count highly mobile fauna and accounting can therefore be inaccurate. Jones & Solomon (2013), however, argue that if accounting for biodiversity can raise awareness and transform behaviour, poorly accounting may be better than no accounting. An alternative for accounting for biodiversity can be extinction accounting. Extinction accounting is based on disclosing species which face extinction through the company’s operations and reporting on actions and the corresponding costs to protect these species.

Further, certification can play an important role for biodiversity conservation in the palm oil sector. Through the assessment of HCV before new plantings are conducted, areas with a high biodiversity can be protected. Also commitments like no deforestation and integrated pest management can further contribute to mitigating biodiversity losses.

To conclude, some companies start to show accountability for the impact of their actions on biodiversity. However, a large part of the companies does not report on biodiversity or uses impression management to hide the lack of disclosing of relevant information. General reporting frameworks will

need to be more transparent about defining biodiversity and on which information to disclose. To be able to account for the impact on biodiversity, palm oil companies need to monitor and assess the status of species affected by their operations, assess the performance and cost of actions taken to conserve biodiversity and report on this information correspondingly.

8 Strengths and limitations

This master dissertation contributes to literature on accounting for biodiversity. Only limited studies have explored the extent to which companies account for biodiversity loss. Especially for the palm oil sector, a sector under a lot of pressure because of unsustainable production, this theme is very relevant but under-investigated.

A strength of the research is the relative large dataset, namely 54 companies were investigated. The dataset contained mainly palm oil companies active in Malaysia and Indonesia, countries which harbour a very rich biodiversity. Both annual and sustainability reports were analysed. Some other studies focus only on sustainability reports, which can bias the results as companies which do not publish a sustainability report, and consequently probably disclose less extensive information on sustainability, are not included in the results.

The master dissertation also faced some limitations. First, because of the narrative nature of the research and the use of descriptive statistics, the results can be partially subjective. In advance a list with investigated topics was determined to make the analysis as objective as possible. An advantage is that all the reading and analysing has been conducted by the same person.

Further, only the annual reports of 2018 and 2019 were extensively investigated. From 2015 to 2019 an increasing trend in biodiversity reporting was found, but it would have been interesting to also determine and compare the biodiversity topics disclosed.

Next to the analysis of the reports also other company data, like market capitalization and palm oil plantation surfaces, were determined. However, this information was not processed in the further data analysis. Because of the focus on accounting and not reporting of biodiversity, in combination with the exploratory nature of the research, it was decided to focus on the disclosing of qualitative information and not on exploring linkages between reporting and company data. It could have been interesting to investigate if correlations could be found between company properties and the degree of reporting of companies, further research can address this.

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deforestation-119417 RSPO. (n.d.-a). About RSPO. Retrieved March 24, 2020, from https://rspo.org/about RSPO. (n.d.-b). RSPO Remediation and Compensation Procedure. Retrieved May 8, 2020, from https://rspo.org/certification/remediation-and-compensation RSPO. (2015). RSPO new planting procedure. Retrieved from https://rspo.org/library/lib_files/preview/155 Sax, D. F., & Gaines, S. D. (2003). Species diversity: From global decreases to local increases. Trends in Ecology and Evolution, 18(11), 561–566. https://doi.org/10.1016/S0169-5347(03)00224-6 Spencer, E., Guindon, M., & Melot, C. (2019). Palm Oil: A business case for sustainability. London: Zoological Society of London. SPOTT. (n.d.). About SPOTT. Retrieved from https://www.spott.org/about/ statista. (2020). Palm oil: global production volume 2012/13-2019/20. Retrieved March 3, 2020, from https://www.statista.com/statistics/613471/palm-oil-production-volume-worldwide/ Stolowy, H., & Yuan, D. (2017). Financial Accounting and Reporting: A Global Perspective (5th ed.). Swingland, I. R. (2001). Biodiversity, Definition of. In S. A. Levin (Ed.), Encyclopedia of Biodiversity (pp. 377–391). Elsevier. Thrupp, L. A. (2000). Linking agricultural biodiversity and food security: The valuable role of agrobiodiversity for sustainable agriculture. International Affairs, 76(2), 265–281. https://doi.org/10.1111/1468-2346.00133 Tinhout, B., & van den Hombergh, H. (2019). Setting the Biodiversity Bar for Palm Oil Certification - Assessing the rigor of biodiversity and assurance requirements of palm oil standards. In IUCN Netherlands. Retrieved from https://www.iucn.nl/en/updates/iucn-nl-compares-sustainability- certification-for-palm-oil Tuovila, A. (2020). Accounting. Retrieved May 6, 2020, from Investopedia website: https://www.investopedia.com/terms/a/accounting.asp UN. (n.d.). Goals: 15 - Life on Land. Retrieved March 25, 2020, from SDG website: https://www.un.org/sustainabledevelopment/biodiversity/ UNEP-WCMC. (2015a). Experimental Biodiversity Accounting as a component of the System of Environmental-Economic Accounting Experimental Ecosystem Accounting (SEEA-EEA). 96. Retrieved from http://doc.teebweb.org/wp-content/uploads/2015/09/ANCA-Technical- guidance_Experimental-Biodiversity-Accounting_OK.pdf UNEP-WCMC. (2015b). Guidance on experimental biodiversity accounting using the SEEA-EEA. Retrieved November 18, 2019, from https://www.unep-wcmc.org/news/guidance-on- experimental-biodiversity-accounting-using-the-seea-eea-framework UNEP-WCMC, & Proteus. (2017). Biodiversity Indicators for Extractive Companies: an assessment of needs, current practices and potential indicator models. United Nations. (n.d.-a). The System of National Accounts (SNA). Retrieved November 14, 2019, from https://unstats.un.org/unsd/nationalaccount/sna.asp United Nations. (n.d.-b). What is the SEEA? Retrieved November 17, 2019, from https://seea.un.org/ United States Department of Agriculture. (2020). Oilseeds: World Markets and Trade. Retrieved from

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https://downloads.usda.library.cornell.edu/usda- esmis/files/tx31qh68h/vt151125j/44558w98r/oilseeds.pdf University of Cambridge. (2017). Natural Capital Impact Group introduces new biodiversity metric to help companies and investors improve impact on natural environment. Retrieved December 10, 2019, from https://www.cisl.cam.ac.uk/business-action/natural-capital/natural-capital-impact- group/news/natural-capital-impact-group Vardon, M., Keith, H., Obst, C., & Lindenmayer, D. (2019). Putting biodiversity into the national accounts: Creating a new paradigm for economic decisions. Ambio, 48(7), 726–731. https://doi.org/10.1007/s13280-018-1114-z Vijay, V., Pimm, S. L., Jenkins, C. N., & Smith, S. J. (2016). The Impacts of Oil Palm on Recent Deforestation and Biodiversity Loss. PloS One, 11(7), e0159668. https://doi.org/10.1371/journal.pone.0159668 Wilcove, D. S., & Koh, L. P. (2010). Addressing the threats to biodiversity from oil-palm agriculture. Biodiversity and Conservation, 19(4), 999–1007. https://doi.org/10.1007/s10531-009-9760-x WWF. (2020). 8 things to know about palm oil. Retrieved February 10, 2020, from https://www.wwf.org.uk/updates/8-things-know-about-palm-oil

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10 Appendix

Appendix 1: Overview of the general information of the different companies

Market Other Surface palm Total Name company Stock market Products Countries capitalizaiton sectors oil [Ha] surface [Ha] [million €] Astral Asia Berhad Bursa Malaysia yes palm oil 4423 4423 Malaysia 15,939 Batu Kawan Berhad Bursa Malaysia yes palm oil 276134 290384 Malaysia 1.483,020 Malaysia, Indonesia, Kuala Lumpur Kepung Bursa Malaysia yes palm oil, rubber 270750 285000 5.129,250 Liberia BLD Plantation BHD. Bursa Malaysia yes palm oil 30600 51000 Malaysia 107,993 Boustead plantations berhad Bursa Malaysia no palm oil 75000 93300 Malaysia 275,100 Cepatwawasan group berhad Bursa Malaysia yes palm oil 10290 10290 Malaysia 36,446 Chin Teck Plantations Berhad Bursa Malaysia yes palm oil 10954 11327 Malaysia 131,426 Far East Holding berhad Bursa Malaysia yes palm oil 16141 16141 Malaysia 321,720 Malaysia, Indonesia, palm oil, rubber, Sime Darby Plantation Berhad Bursa Malaysia yes 603254 988599 Papua New guinea, 7.344,540 sugarcane, cattle Solomon Islands palm oil, rubber, FGV Holdings berhad Bursa Malaysia yes 339385 439725 Malaysia, Indonesia 980,700 sugar Genting Plantations Berhad Bursa Malaysia yes palm oil 247400 247400 Malaysia, Indonesia 1.978,620 Golden Land Berhad Bursa Malaysia yes palm oil 74830 74830 Malaysia, Indonesia 22,703 Gopeng Berhad Bursa Malaysia yes palm oil 1434 1514 Malaysia 41,150

Market Other Surface palm Total Name company Stock market Products Countries capitalizaiton sectors oil [Ha] surface [Ha] [million €] Hap Seng Plantations Bursa Malaysia no palm oil 40279 40279 Malaysia 275,520 Harn Len Corporation Berhad Bursa Malaysia yes palm oil 17083 17083 Malaysia 17,898 Inch Kenneth Kajang Rubber Bursa Malaysia yes palm oil, rubber 202 202 Malaysia 53,456 Public Limited Company Innoprise Plantations Berhad Bursa Malaysia yes palm oil 11074 22763 Malaysia 83,465 IOI Group Plantations Berhad Bursa Malaysia no palm oil 176156 217973 Malaysia, Indonesia 5.926,200 Jaya Tiasa Bursa Malaysia yes palm oil, timber 69589 83480 Malaysia 148,250 Kluang Rubber Company Malaya Bursa Malaysia yes palm oil 2632 2632 Malaysia 45,902 Berhad Sungei Bagan Rubber Company Bursa Malaysia yes palm oil 1995 1995 Malaysia 39,701 Berhad Kim Loong Resources Berhad Bursa Malaysia yes palm oil 14876 15826 Malaysia 241,710 Kretam Holdings Berhad Bursa Malaysia yes palm oil 18234 23865 Malaysia 205,296 Kwantas Corporation Berhad Bursa Malaysia no palm oil 19665 56917 Malaysia 41,236 Malpac Holdings Berhad Bursa Malaysia yes palm oil 2023 2023 Malaysia 12,600 Matang Berhad Bursa Malaysia yes palm oil 1080 1094 Malaysia 28,508 MHC Plantations Berhad Bursa Malaysia yes palm oil 11405 13395 Malaysia 23,732 NPC Resources Berhad Bursa Malaysia yes palm oil 25651 58233 Malaysia 43,596 Negri Sembilan Oil Palms Berhad Bursa Malaysia yes palm oil 7173 7682 Malaysia, Indonesia 5,012 Pinehill Pacific Berhad Bursa Malaysia yes palm oil 16095 24388 Malaysia, Indonesia 10,225 PLS plantations Berhad Bursa Malaysia yes palm oil, durian 10516 12346 Malaysia 53,762 Rimbunan Sawit Berhad Bursa Malaysia yes palm oil 48765 77427 Malaysia 81,917

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Market Other Surface palm Total Name company Stock market Products Countries capitalizaiton sectors oil [Ha] surface [Ha] [million €] Riverview Rubber Estates Berhad Bursa Malaysia yes palm oil 2544 2583 Malaysia 37,042 Sin Heng Chan (Malaya) Berhad Bursa Malaysia yes palm oil 277730 277730 Malaysia 8,308 Sarawak Oil Palms Berhad (SOP) Bursa Malaysia yes palm oil 88386 121961 Malaysia 414,540 Sarawak Plantation Berhad (SPB) Bursa Malaysia yes palm oil 35893 46248 Malaysia 94,080 TA Ann Holdings Berhad Bursa Malaysia yes palm oil 47838 / Malaysia 308,280 TDM Berhad Bursa Malaysia yes palm oil 43991 43991 Malaysia, Indonesia 88,339 TH Plantations Berhad Bursa Malaysia yes palm oil, rubber 58069 101019 Malaysia, Indonesia 76,100 TSH Resources Berhad Bursa Malaysia yes palm oil 42000 100000 Malaysia, Indonesia 348,180 United Malacca Berhad Bursa Malaysia yes palm oil 33569 49575 Malaysia, Indonesia 229,110 United Plantations Berhad Bursa Malaysia yes palm oil, coconut 46731 63074 Malaysia, Indonesia 1.153,110 London Stock Anglo-Eastern Plantations yes palm oil, rubber 66349 128213 Malaysia, Indonesia 2,126 Exchange Singapore Stock Bumitama Agri Ltd. no palm oil 187567 187567 Indonesia 770,609 exchange Singapore Stock First Resources no palm oil 212073 218394 Indonesia 1.782,730 exchange Singapore Stock Global Palm resources no palm oil 16097 33871 Indonesia 20,119 exchange Singapore Stock Golden Agri-Res no palm oil 497587 500000 Indonesia 1.837,254 exchange palm oil, rubber, Singapore Stock IndoAgri yes sugar, cocoa, tea, 251112 302372 Indonesia 310,345 exchange sugar cane

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Market Other Surface palm Total Name company Stock market Products Countries capitalizaiton sectors oil [Ha] surface [Ha] [million €] palm oil, rubber, Singapore Stock Kencana Agri yes sugar, cocoa, tea, 51586 120108 Indonesia 26,326 exchange sugar cane palm oil, coffee, Singapore Stock Olam yes rubber, peanuts, 144000 3000000 Gabon 3.827,124 exchange rice Singapore Stock Wilmar International yes palm oil 232940 279000 / 16368764750 exchange Indonesia Stock Astra Agro yes palm oil 286877 286877 Indonesia / Exchange United palm oil industry public Stock Exchange no palm oil 5012 / Thailand / company limited of Thailand

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Appendix 2: Data of the quantitative biodiversity analysis

Astral Asia 2018 yes no yes no 405 12% 1% / / Berhad 2019 no no no / / / / / /

Batu Kawan 2018 yes no no no 0 0% 0% / / Berhad 2019 yes no yes no 0 0% 0% / /

Kuala Lumpur 2018 yes no yes yes 908 8% 1% / / Kepung Berhad 2019 yes no yes yes 887 8% 2% / /

BLD Plantation 2018 no no / / / / / / / Berhad 2019 yes no yes no 300 7% 1% / / Boustead 2018 yes yes no no 0 0% 0% 349 6% plantations Berhad 2019 no no no / / / / / /

Cepatwawasan 2018 yes no yes no 0 0% 0% / / group Berhad 2019 no no / / / / / / / Chin Teck 2018 yes no yes no 80 2% 0% / / Plantations Berhad 2019 yes no yes no 79 2% 0% / /

Far East Holding 2018 yes no yes no 406 19% 1% / / Berhad 2019 no no no / / / / / /

Sime Darby 2018 yes yes yes yes 736 16% 1% 1233 9% Plantation Berhad 2019 No No / / / / / / / 2018 yes no yes yes 683 / 1% / /

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Annual Sustainability Words Biodiversity on Biodiversity Words Biodiversity Integrated Name company Year report report GRI biodiversity sustainability AR on total AR biodiversity on total SR report (AR) (SR) AR [%] [%] SR [%] FGV Holdings 2019 no no no / / / / / / Berhad Genting 2018 yes yes no no 8 / / 879 5% Plantations Berhad 2019 no no / / / / / / /

Golden Land 2018 yes no yes no / / / / / Berhad 2019 yes no yes no 209 8% 0% / / 2018 yes no yes no 19 1% 0% / / Gopeng Berhad 2019 no no no / / / / / / Hap Seng 2018 yes yes yes no 797 14% 2% 1072 5% Plantations Berhad 2019 no no / / / / / / / Harn Len 2018 yes no yes yes 134 2% 0% / / Corporation Berhad 2019 no no / / / / / / / Inch Kenneth 2018 yes no no no 0 0% 0% / / Kajang Rubber Public Limited 2019 no no / / / / / / / Company Innoprise 2018 yes no yes no 147 4% 0% / / Plantations Berhad 2019 no no / / / / / / / IOI Group 2018 yes yes yes SR 306 10% 0% 1916 8% Plantations Berhad 2019 yes yes yes SR 199 4% 0% 2139 8% 2018 yes no yes no 651 12% 1% / /

Annual Sustainability Words Biodiversity on Biodiversity Words Biodiversity Integrated Name company Year report report GRI biodiversity sustainability AR on total AR biodiversity on total SR report (AR) (SR) AR [%] [%] SR [%] Jaya Tiasa 2019 yes no yes no 869 15% 2% / / Holdings Berhad Kluang Rubber 2018 yes no no no 0 0% 0% / / Company Malaya Berhad 2019 yes no yes no 311 12% 1% / / Sungei Bagan 2018 yes no no no 32 / 0% / / Rubber Company Berhad 2019 yes no yes no 311 11% 1% / /

Kim Loong 2018 yes no yes no 155 6% 0% / / Resources Berhad 2019 yes no yes no 320 8% 0% / /

Kretam Holdings 2018 yes no yes no 370 7% 1% / / Berhad 2019 no no no / / / / / / Kwantas 2018 yes no yes no 223 5% 0% / / Corporation Berhad 2019 yes no yes no 366 8% 1% / /

Malpac Holdings 2018 yes no no no 0 0% 0% / / Berhad 2019 yes no no no 0 0% 0% / / 2018 yes no no no 12 1% 0% / / Matang Berhad 2019 yes no no no 12 1% 0% / /

MHC Plantations 2018 yes no yes no 162 6% 0% / / Berhad 2019 no no / / / / / / /

NPC Resources 2018 yes no no no 16 3% 0% / / Berhad 2019 no no / / / / / / / 2018 yes no yes no 0 0% 0% / /

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Pinehill Pacific 2018 yes no yes no 0 0% 0% / / Berhad 2019 yes no yes no 0 0% 0% / /

PLS plantations 2018 yes no yes no 207 10% 0% / / Berhad 2019 yes no yes no 418 10% 1% / /

Rimbunan Sawit 2018 yes no yes no 9 0% 0% / / Berhad 2019 no no / / / / / / /

Riverview Rubber 2018 yes no yes no / / / / / Estates Berhad 2019 no no / / / / / / /

Sin Heng Chan 2018 yes no yes no 57 2% 0% / / (Malaya) Berhad 2019 no no / / / / / / / Sarawak Oil 2018 yes yes yes yes 570 7% 1% / / Palms Berhad (SOP) 2019 no no / / / / / / / Sarawak 2018 yes no yes no 148 7% 0% / / Plantation Berhad (SPB) 2019 no no / / / / / / / 2018 yes no yes no 253 8% 1% / /

TA Ann Holdings Berhad 2019 no no / / / / / / /

TDM Berhad 2018 yes yes yes no 763 4% 1% 552 3%

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TH Plantations 2018 yes no yes semi 804 9% 1% / / Berhad 2019 no no / / / / / / /

TSH Resources 2018 yes no yes no 471 8% 1% / / Berhad 2019 no no / / / / / / /

United Malacca 2018 yes no yes no 623 10% 1% / / Berhad 2019 yes no yes no 729 10% 1% / / United 2018 yes yes yes yes 6334 16% 7% 6334 16% Plantations Berhad 2019 yes yes yes yes 3983 15% 5% 3983 15%

Anglo-Eastern 2018 yes no no no 285 10% 1% / / Plantations 2019 no no no / / / / / /

Bumitama Agri 2018 yes yes no no 30 7% 0% 1578 7% Ltd. 2019 yes no yes no 690 11% 1% / / 2018 yes yes no no 80 / 0% 1845 10% First Resources 2019 yes yes no no 0 / 0% 2469 11%

Global Palm 2018 yes no yes yes 390 7% 1% / / resources 2019 yes no yes yes 405 7% 1% / / 2018 yes yes yes yes 812 19% 1% 1863 9% Golden Agri-Res 2019 yes no yes yes 787 16% 1% / / 2018 yes yes no no 56 4% 0% / / IndoAgri 2019 yes no no no 56 4% 0% 903 4%

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Annual Sustainability Words Biodiversity on Biodiversity Words Biodiversity Integrated Name company Year report report GRI biodiversity sustainability AR on total AR biodiversity on total SR report (AR) (SR) AR [%] [%] SR [%] 2018 yes yes yes no 56 8% 0% 1207 6% Kencana Agri 2019 yes no no no 56 8% 0% / / 2018 no no / / / / / / / Olam 2019 yes no no no 275 / 0% / /

Wilmar 2018 yes yes yes no 225 5% 0% 2140 5% International 2019 yes no yes no 186 4% 0% / / 2018 no no no no 103 / / / / Astra Agro 2019 no no no no 103 / / / / United palm oil 2018 yes no no no 0 0% 0% / / industry public company limited 2019 yes no no no 0 0% 0% / /

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Appendix 3: Data of the qualitative biodiversity analysis

Total biodiversity topics in Total biodiversity topics in Name company Year Certification annual report sustainability report 2018 no 7 / Astral Asia Berhad 2019 / / / 2018 no 0 / Batu Kawan Berhad 2019 no 0 / 2018 RSPO, MSPO, ISCC, ISPO 13 / Kuala Lumpur Kepung Berhad 2019 RSPO, MSPO, ISCC, ISPO 13 / 2018 / / / BLD Plantation Berhad 2019 MSPO 8 / 2018 RSPO, MSPO 0 5 Boustead plantations Berhad 2019 / / / 2018 MSPO 0 / Cepatwawasan group Berhad 2019 / / / 2018 no 1 / Chin Teck Plantations Berhad 2019 MSPO 4 / 2018 MSPO, ISCC 6 / Far East Holding Berhad 2019 / / / 2018 RSPO, MSPO, ISPO 13 13 Sime Darby Plantation Berhad 2019 / / / 2018 MSPO, RSPO 11 / FGV Holdings Berhad 2019 MSPO,RSPO / / 2018 MSPO, ISCC, ISPO, RSPO 1 11 Genting Plantations Berhad 2019 MSPO, ISCC, ISPO, RSPO / / 2018 ISPO 8 / Golden Land Berhad 2019 ISPO 8 / Gopeng Berhad 2018 no 0 /

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Total biodiversity topics in Total biodiversity topics in Name company Year Certification annual report sustainability report 2019 / / / 2018 RSPO, ISCC, MSPO 10 15 Hap Seng Plantations Berhad 2019 / / / 2018 no 5 / Harn Len Corporation Berhad 2019 / / / Inch Kenneth Kajang Rubber Public Limited 2018 no 0 / Company 2019 / / / 2018 no 4 / Innoprise Plantations Berhad 2019 / / / 2018 RSPO, ISCC, MSPO 9 17 IOI Group Plantations Berhad 2019 RSPO, ISCC, MSPO 11 17 2018 MSPO 16 / Jaya Tiasa Holdings Berhad 2019 MSPO 15 / 2018 no 0 / Kluang Rubber Company Malaya Berhad 2019 MSPO 5 / 2018 no 1 / Sungei Bagan Rubber Company Berhad 2019 MSPO 6 / 2018 no 2 / Kim Loong Resources Berhad 2019 MSPO 4 / 2018 ISCC, MSPO, RSPO 10 / Kretam Holdings Berhad 2019 / / / 2018 RSPO 4 / Kwantas Corporation Berhad 2019 RSPO, MSPO 7 / 2018 no 0 / Malpac Holdings Berhad 2019 no 0 / 2018 no 1 / Matang Berhad 2019 MSPO 1 /

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Total biodiversity topics in Total biodiversity topics in Name company Year Certification annual report sustainability report 2018 MSPO 2 / MHC Plantations Berhad 2019 / / / 2018 no 1 / NPC Resources Berhad 2019 / / / 2018 no 0 / Negri Sembilan Oil Palms Berhad 2019 / / / 2018 no 0 / Pinehill Pacific Berhad 2019 no 0 / 2018 no 2 / PLS plantations Berhad 2019 no 5 / 2018 MSPO 1 / Rimbunan Sawit Berhad 2019 / / / 2018 no 3 / Riverview Rubber Estates Berhad 2019 / / / 2018 no 2 / Sin Heng Chan (Malaya) Berhad 2019 / / / 2018 MSPO, ISCC 10 / Sarawak Oil Palms Berhad (SOP) 2019 / / / 2018 MSPO 6 / Sarawak Plantation Berhad (SPB) 2019 / / / 2018 MSPO 8 / TA Ann Holdings Berhad 2019 / / / 2018 MSPO, RSPO 10 10 TDM Berhad 2019 / / / 2018 MSPO 9 / TH Plantations Berhad 2019 / / / TSH Resources Berhad 2018 RSPO 7 /

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Total biodiversity topics in Total biodiversity topics in Name company Year Certification annual report sustainability report 2019 / / / 2018 MSPO 8 / United Malacca Berhad 2019 MSPO 7 / 2018 RSPO,ISPO, MSPO 25 25 United Plantations Berhad 2019 RSPO,ISPO, MSPO 25 25 2018 ISPO, MSPO, ISCC 6 / Anglo-Eastern Plantations 2019 / / / 2018 ISPO, RSPO 2 17 Bumitama Agri Ltd. 2019 ISPO, RSPO 6 / 2018 ISPO, RSPO, ISCC 4 16 First Resources 2019 ISPO, RSPO, ISCC 0 16 2018 no 8 / Global Palm resources 2019 no 8 / 2018 RSPO, ISPO, ISCC 16 18 Golden Agri-Res 2019 RSPO, ISPO, ISCC 16 / 2018 RSPO, ISPO 4 9 IndoAgri 2019 ISPO 4 1 2018 ISPO, ISCC 4 12 Kencana Agri 2019 ISPO, ISCC 4 / 2018 / / / Olam 2019 RSPO, ISCC 12 / 2018 RSPO, ISPO, MSPO 6 17 Wilmar International 2019 RSPO, ISPO, MSPO 3 / 2018 ISPO 4 16 Astra Agro 2019 ISPO 4 18 United palm oil industry public company 2018 RSPO 1 / limited 2019 RSPO 1 /

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