2016-04-09

Report finds palm oil giants and multinationals tainted by illegal palm oil supply chain

JAKARTA (foresthints.news) - A damning new report on the ongoing proliferation of illegal palm oil production has been released by Eyes on the Forest (EoF), a coalition of environmental NGOs based in the especially susceptible area of Sumatra’s Riau Province.

The report, which focuses specifically on palm oil derived from Riau's Tesso Nilo National Park, pulls no punches, pointing the finger of blame for the continuing production and trade of illegal palm oil squarely at a collection of well-known suppliers, including subsidiaries of the Royal Golden Eagle (RGE) group, Golden Agri-Resources (GAR) of the Sinar Mas group (SMG), Wilmar and Musim Mas.

EoF laments the fact that, despite extensive commitments made by the palm oil industry to put an end to deforestation, the practice continues largely unrestrained, wreaking havoc on the environment - be it through the destruction of the last remaining habitats of critically endangered species or the awfully predictable, annually recurring fires which blanket much of the surrounding region in a toxic haze.

The report, in broad terms, explains the mechanisms whereby Fresh Fruit Bunches (FFB) of palm fruit (from which palm oil is derived) are grown on unlawful plantations in protected areas and transported to a vast network of mills, many of which are operated by the giant palm oil conglomerates previously mentioned.

EoF believes that the findings of its report merely scratch the surface of the problem.

The report provides numerous painstakingly detailed examples of how these companies are violating their pledge not to make use of illegally-grown FFB, and highlights the extent to which they have profited from illicit palm oil production and reneged on their commitment to zero deforestation.

The report also explains how the location of the palm oil producers’ mills - often far away from the illegal plantations themselves - is deceptive. In this region, distance is no hindrance and illegally-grown FFB are routinely transported hundreds of kilometers from plantation to mill.

As such, tracing palm oil supplies back to seemingly innocently situated mills should not absolve these companies from responsibility for illegal palm oil production.

In the interest of fairness, EoF gave each of the alleged corporate culprits a chance to respond to the report’s findings as well as its recommendations.

Wilmar failed to respond specifically to many of the report’s recommendations, implied that forest restoration is relatively unimportant compared to avoiding further deforestation - in effect failing to address its deforestation legacy - and said it does not thoroughly trace the source of the FFB it uses.

The world’s largest palm oil trader did emphasize, however, that it had ended its association with one of the suppliers extensively mentioned in the report as a grower of illegal FFB.

GAR agreed in principle to the report’s recommendations and stated that it has improved, and continues to improve, its FFB tracing procedures, especially for its mills where issues have been reported. It also said that it has entered its four suppliers mentioned in the report into its grievance procedure.

RGE did not respond specifically to many of the report’s recommendations, but did undertake to look into and take action against the illegal supplies specified in the report. It also said that it has informed all suppliers that it will only accept legal supplies and that it requires dealers of third-party FFB to provide GPS locations on plantations. It was quick to cite the example of one of its mills, Ukui 1, which it claims has 100% traceability on FFB.

Lastly, Musim Mas also failed to respond specifically to many of the report’s recommendations. It said it had identified all the CPO suppliers to its refineries and informed them of its policy of only using legally-grown FFB in its product, and also undertook to investigate the issues brought up in the report.

In general, the companies said how difficult it was to trace and filter out from their supply chains all illegal FFB supplies, to which EoF responded by appealing for them to adopt a “leave it out if in doubt” approach if the source of the FFB cannot be verified.

The authors of the report appear somewhat skeptical about this mixed set of reactions. For example, they seem to consider the response from Wilmar to be wholly inadequate.

While they applaud RGE’s stipulation on only accepting legal supplies, they also cast doubt on its claim of 100% traceability, saying that illegal FFB still makes its way to the mill concerned.

Overall, EoF decries the systemic nature of the palm oil problem - how a lack of enforcement and due diligence encourages further land conversions and illegal production - and explains that it is going to require the collective will of a number of stakeholders - not just the actions of one or two players - to tackle this problem through joint efforts.

The report also reveals the extent to which multinational food & beverage companies, such as Unilever, Nestle and Cargill, are linked to the supply chain of illegal palm oil from the region's palm oil giants.