What Golden Agri's sustainability practices could mean for food firms

It was included in the 2017 Dow Jones Sustainability Index.

Golden Agri Resources (GAR) was included in the 2017 Dow Jones Sustainability Indices (DJSI) in Asia Pacific, marking its first inclusion since the index's conception in 1999.

According to OCBC Investment Research, GAR is the only Southeast Asian palm oil company to be included in the food, beverage, and tobacco sector.

"The sustainable development of palm oil plantations is a major issue for the industry," said OCBC analyst Low Pei Han.

As an example, Norway banned the public procurement of biofuel based on palm oil.

Whilst it is still unknown if other EU countries will follow Norway's footsteps, the region's moves should be closely monitored as it is the second largest importer of palm oil.

OCBC said if palm oil companies want to stay in business for the long term, they should be serious about sustainability efforts.

"Consumers are slowly but surely moving to products that are developed in a responsible way. This is especially so for developed markets where standards of sustainable sourcing have to be met," Low added.

Investors should also pay attention to a company's' sustainability practices.