By Eric Stryson
The frontier of the assault on responsible action on climate change is now the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong (Hong Kong Exchange and Clearing Limited or “HKEx”).
Designed as a way to raise capital for ‘high growth high risk businesses,’ in the case of a subsidiary of CCT Telecom, GEM has become a vehicle for accelerating the destruction of virgin forests under an entirely irrational and hubristic appeal to bio-fuel demand.
CCT Resources, a subsidiary of HK-listed CCT Telecom, has acquired more than 300,000 hectares (5 times the size of Hong Kong SAR) of virgin tropical forests in West Papua, Indonesia and has recently begun the process of clearing the land for export of hardwood and rapid replanting of oil palm plantations. Alluding to the increasing popularity of using crude palm oil as a bio-fuel as a way for industrialized countries to reduce their green house gas emissions, the company states, (verbatim) “For good future of people and environment, the Group will replant oil palm trees in the forested land.”
What the company fails to acknowledge is that the act of clearing forests on land located above shallow to deep peat deposits and eliminating the best resources for natural carbon remediation which are the forests themselves, the company actually contributes a far greater amount of carbon to the atmosphere than could ever be compensated through bio-fuel uptake in industrialized countries.
This is an extreme but commonly found example of faulty logic and an insincere commitment to actually doing something that will reverse the trend toward catastrophic climate change. On the contrary, if the plans of CCT come to fruition it will accelerate the rate at which carbon is released and set a dubious precedent for the development of Papua, exclusively in the name of extraction of maximum profit for shareholders without regard for climate or greater social issues. Furthermore, the profiles of the management board indicate a lack of both experience and concern for any sustainable approach to forestry or plantation operations and are rather heavily weighted toward telecommunications, electronics and technology.
In its haste to cash in on increasing global demand for palm oil the Indonesian government has demonstrated an inability to effectively manage its forests and monitor the actions of foreign investors who are stepping in to exploit them. As documented in recent reports from the Environmental Investigation Agency and Telapak, the process of granting concessions for plantations is chaotic and often contradicted at different levels of the Indonesian government. It is difficult or impossible to obtain data on which plantation licenses have been granted to which companies and it is not unusual for foreign-invested companies to begin clearing land before the permitting process is completed.
Furthermore, by many estimates the Indonesian government’s recent policies toward promoting oil palm plantations in the name of bio-fuel production is undoing much of the progress the country made in reversing the trend toward deforestation. Rather than increasing the productivity of barren or unused land as it reportedly intends, it is actually speeding up the process of virgin forests being cleared due to a lack of transparency and mismanagement of concessions.
This process is exacerbated by the insatiable demand from China for palm oil as well as for hardwood timber which is processed in China and shipped to buyers in developed economies as furniture. To this end the company announced the formation of an advisory board last year comprised of key individuals with influential connections to the PRC government as well as the energy and resources sectors who will no doubt aid the rapid expansion of the customer base for the company’s products.
The Hong Kong Stock Exchange should not be a vehicle to perpetuate such blatant social irresponsibility. According to its own website, HKEx has a policy for Corporate Social Responsibility and has signed a Carbon Reduction Charter.
But, what does this do to compensate for the damage from environmentally destructive businesses for which it raises funds?
Is it ok that the Hong Kong Stock Exchange is exploiting and even perpetuating a lack of good governance in Indonesia which is negatively affecting an issue of major global significance?
Hong Kong prides itself as being at the forefront of economic progress and a world class city in terms of living standards and opportunities. As the gateway to China it also acts as the intermediary for much investment flowing in and out of the emerging economic superpower. As such it has a role to play greater than that of simply facilitating the spoils of a new generation of robber barons.
The people of Hong Kong have been outspoken on the topic of climate change, given that the air we breathe is often a liability both to our health and to the economic competitiveness of the city – multi-national companies are often lured to rival Singapore due to the superior air quality. However this popular outcry often lacks an awareness of the more significant drivers for climate change, as well as those for biodiversity loss, water shortages and other global issues to which Hong Kong is not immune.
It is time that Hong Kong – its investors, regulators and business communities – wake up to the grim realities of the world that its financial system is perpetuating, and stand up to a greater degree of integrity for the way it addresses them.
Eric Stryson is the Director at Global Institute For Tomorrow.