Destruction of rainforest for an oil palm plantation in Malaysia
Genting Plantations Bhd’s stock price fell by more than two percent after the palm oil company’s membership in the Roundtable of Sustainable Palm Oil (RSPO) was suspended due to a complaint from the Borneo Rhino Alliance for failing to abide by the body’s principles on establishing new plantations, reports The Edge Financial Daily.
Genting’s stock has fallen 26 sen, or about 2.3 percent, since the suspension was picked up by the financial press. Other Malaysian palm oil stocks like Sime Darby Bhd, Kuala Lumpur Kepong Bhd, and Felda Global Ventures Holdings Bhd remained roughly unchanged since the story broke.
Genting has been criticized by environmentalists for leading an effort to convince Malaysian palm oil producers to abandon the RSPO for the Malaysian Sustainable Palm Oil (MSPO) certification initiative, a standard that is based on compliance with Malaysian law, rather than the social and environmental safeguards established by the multistakeholder body. Green groups say the MSPO is considerably weaker than the RSPO.
In the complaint, the Borneo Rhino Alliance (BORA) argued that Genting has failed to achieve RSPO certification, while simultaneously working to undermine the initiative.
“How does GPB explain the fact that it has reported a plantation expansion of more than 22,000 ha after the New Planting Procedure requirement took effect in January 2010 without placing prior notice on the RSPO website for comment?” the complaint asked. “How is it that GPB has been active in the development of the MSPO standards while not striving to achieve RSPO certification standards?”
According to the RSPO, Genting has repeatedly failed to address issues raised in the complaint, including disclosing new plantings as required under the body’s principles and criteria.
However Genting’s suspension from the RSPO isn’t expected to impact its bottom line according to analysts interviewed by The Edge Financial Daily.
“Whilst the firm is a top loser today, we do not think it is due to the firm’s suspension as an RSPO member,” The Edge Financial Daily quoted an unnamed analyst as stating. “There is no material impact on the company.”
But Cynthia Ong, Executive Director of LEAP Spiral, a Malaysian NGO, said the case is important in that it provides a blueprint for future complaints against RSPO members who fail to abide by their commitments under the initiative.
“This case is significant because it is an example of how to proactively engage the RSPO space,” she told Mongabay. “BORA engaged in the complaints mechanism, saw the process through – letters, emails, and calls – and it resulted in the suspension.”
“If more engaged in the process – rather than standing on the sidelines and complaining – it will become increasingly useful in building credibility and clout in impacting the industry.”
Palm oil production is one of the biggest drivers of deforestation in Malaysia and Indonesia. This picture shows forest clearing on a steep slope for oil palm in Sabah, Malaysia
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