In which year did we first invest?
We first invested in M.P. Evans in 2006.
Where is their head office?
The head office is in Kent, UK.
What is the attraction of M.P. Evans?
M.P. Evans is an Indonesian producer of sustainable crude palm oil (CPO), with one of the healthiest production profiles in the industry. It has roughly 40,000 hectares of oil palm tree planted areas that are spread across seven different locations in Sumatra and Kalimantan, with an average tree age of about nine years.
The company has a strong balance sheet, driven by stronger average selling prices and manageable levels of cost, as well as relatively low capital expenditure due to its young tree profile. Above-average productivity and relatively low operating cost track record suggest that management has successfully established the right planting blueprint, infrastructure and ecosystem for its estates, and enhances our confidence in the company’s ability.
What have our engagement efforts been focused on?
We have discussed with the company the benefit of better visibility and public perception around M.P. Evans’ ESG commitments and ways that can be done. For example, the company commissioned University of Indonesia to do a baseline study of some of its newer plantations, from which it can monitor impact over time.
Further, we have provided inputs on the 2020 sustainability report the firm produced, where we encouraged it to report alignment on its operations with respect to the United Nations’ Sustainable Development Goals and the company did so.
As an example, M.P. Evans outlined its policies and guidelines around forest protection and reducing greenhouse gas emissions that are not only aligned to the UN SDGs, but stand out in an industry that is associated with cutting down tropical rainforests and destroying habitats of endangered species.
The company trains workers to respond quickly to any fires on the plantations; it raises awareness in areas like habitat preservation, bans hunting on all estates and high conservation value areas as well as expanding its biogas capacity to reduce the carbon footprint. New developments take place in heavily degraded areas that are not forested or suitable for habitats, while burning of vegetation and old palms to clear land is prohibited. In addition, the company has policies in place to prevent any forms of forced labour or child labour – another issue that has blighted some of M.P. Evans’ peers in recent years.
Moreover, M.P. Evans is a member of the Roundtable on Sustainable Palm Oil (RSPO) and has helped to develop a framework to produce Certified Sustainable Palm Oil (CSPO). All of the company’s existing mills are certified and company policy dictates new mills have to achieve RSPO certification as soon as possible after commencing operations. M.P. Evans also has policies in place to promote zero waste and to support smallholder communities and co-operatives – including by persuading independent smallholders to commit to producing their crop in line with the RSPO Independent Smallholder standard.
We also often discuss the board of directors and its refreshment, and this is playing out. For example, on August 1, 2022, the company appointed a new director to the board with extensive experience working in ESG roles.
How do we rate M.P. Evans’ ESG capabilities?
Even though M.P. Evans is not rated by MSCI, its ESG practices and disclosures are comparable – and in many ways ahead of – its larger peers. Though the group last published its sustainability report in 2020, we note that it is relatively proactive in the management of ESG risks, led by the CEO personally, disclosing unresolved grievances, issues as well as progress of its ESG metrics on its website. We will continue to engage with the company to improve disclosures.