- Wilmar, the world’s largest palm oil trader and a long-time target of environmentalists, has signed a landmark policy that commits the company to eliminate deforestation from its supply chain.
- The deal, if fully implemented, has the potential to transform the palm oil industry, which has emerged over the past decade as one of the world’s most important drivers of tropical forest destruction.
Deforestation for an oil palm plantation in Sabah, Malaysian Borneo. Photos by Rhett A. Butler.
Wilmar, the world’s largest palm oil trader and a long-time target of environmentalists, has signed a landmark policy that commits the company to eliminate deforestation from its supply chain. The deal, if fully implemented, has the potential to transform the palm oil industry, which has emerged over the past decade as one of the world’s most important drivers of tropical forest destruction.
Wilmar’s policy, posted on its web site today, comes after months of discussions between The Forest Trust (TFT), an NGO that helps companies clean up their supply chains; Unilever, the world’s largest corporate consumer of palm oil; and Climate Advisers, a consultancy focused on climate change. The policy also follows years of campaigns by activists and human rights groups that have targeted Wilmar for both the damage caused by the plantations it owns as well as the palm oil it buys from third party suppliers.
The new policy addresses both of those areas of concern, committing the company to a policy that applies to “all Wilmar operations worldwide, including those of its subsidiaries, any refinery, mill or plantation that we own, manage, or invest in, regardless of stake” as well as “all third-party suppliers from whom we purchase or with whom we have a trading relationship,” according to the company. It also applies to Wilmar’s non-palm oil holdings and trading, including sugar and soy.
Deforestation for palm oil production in Borneo
The policy has three major areas: deforestation, conversion of peatlands, and human rights. It takes effect immediately for Wilmar, while its suppliers face a December 31, 2015 deadline for compliance.
Rainforests and deforestation
Wilmar says it will not buy or trade palm oil that is produced at the expense of high carbon stock (HCS) forests or high conservation value (HCV) areas. This would effectively rule out conversion of old-growth forests, most secondary forests, and areas that are habitat for endangered species like orangutans, tigers, rhinos, and elephants. Wilmar also commits to a no burn policy just six months after fires linked to the plantation sector blanketed Singapore and Malaysia in a choking haze.
An excavator creates a canal in Riau Province, Indonesia, despite the heavy smoke caused by the forest fires. © Ulet Ifansasti / Greenpeace
In a step-up from other agreements signed by palm oil industry players in recent months, Wilmar will also take steps to “progressively reduce” greenhouse gas emissions on existing plantations. These include treating palm oil waste and managing already-cultivated peatlands.
For new plantations, Wilmar pledges to avoid sourcing palm oil produced on peatlands “regardless of depth.” This stipulation goes beyond the industry standard of avoiding development of peat soils deeper than a specified depth (up to three meters in Indonesia). Because conversion of peatlands for plantations is a major source of carbon emissions — nearly 120 million tons of CO2 emissions per year in Indonesia and Malaysia alone — the stipulation could have significant climate benefits.
On human rights, Wilmar commits to zero tolerance on palm oil linked to child labor or forced and bonded labor. It will require suppliers and sub-contractors to ethical recruitment of workers and “no unlawful retention” of worker documents, a common strategy for retaining laborers. The workers’ rights clauses are significant for an industry that is known for labor abuse, especially of disadvantaged groups, like migrants.
The policy also requires Wilmar to seek Free, Prior and Informed Consent (FPIC) on community lands and to resolve conflicts through a consultative process. Wilmar has been criticized in the past for conflicts with traditional land holders.
Finally, Wilmar says it will create “a transparent sourcing network with full traceability” to ensure compliance with the policy.
Taken together, Wilmar’s policy raises the bar for the entire palm oil industry, according to TFT Executive Director Scott Poynton, who in 2011 brokered “zero deforestation” commitments from Nestle and Golden Agri Resources, one of Indonesia’s largest palm oil producers.
“Few companies dominate their sectors the way Wilmar dominates palm oil, controlling 45 percent of global trade. Today’s announcement by itself transforms the industry,” said Poynton in a statement. “It dwarfs in ambition any previous joint commitment in the sector and raises the bar for responsible global agricultural production. We commend Wilmar for their strong new policy, and now is the time for transparent and verifiable implementation.”
Deforestation for oil palm plantations, 1990-2010, in Borneo, Sumatra, New Guinea, and Peninsular Malaysia. Data from Gunarso et al 2013.
Green groups that have targeted Wilmar immediately welcomed the deal.
“Wilmar has responded to years of pressure from Greenpeace, other NGOs, and a growing movement of consumers around the world demanding clean palm oil and an end to forest destruction. Wilmar’s commitment to No Deforestation has the potential to transform the controversial palm oil industry,” said Bustar Maitar, head of the Indonesia forest campaign at Greenpeace International.
“Wilmar’s policy shows that the sector has a massive problem, and while this policy is great news for forests and tigers, its success will be judged by Wilmar’s actions to implement and enforce it,” he added, noting the obstacles that lie ahead for the company. “Our challenge to Wilmar is this: will it now immediately stop buying from companies such as the Ganda Group, which is closely linked to Wilmar and is involved in ongoing forest clearance, illegal peatland development and social conflict?”
Bill Barclay, Research and Policy Director with the Rainforest Action Network (RAN), agreed that Wilmar’s policy is only the beginning of the transformation of the palm oil sector from a major driver of deforestation, greenhouse gas emissions, and social conflict toward something greener.
“Wilmar’s announcement demonstrates that Conflict Palm Oil has become a front burner issue among some of the world’s largest corporations and clearly signals that these companies are coming to accept that business as usual is no longer tenable,” Barclay told Mongabay.com. “Rainforest Action Network welcomes Wilmar’s public commitments, which hopefully mark the start of a significant sea change for the industry. We must also recognize that implementation remains a huge challenge and changed outcomes on the ground are the true measure of success. This policy is the beginning of a long and complex process towards achieving truly responsible palm oil production, not the end.”
Oil palm estate and rainforest in Malaysian Borneo. Wilmar’s policy will immediately pressure its suppliers to also clean up their supply chains.
Policy part of a broader shift
Wilmar’s pledge comes amid a growing trend among major commodity producers who commit to eliminating deforestation from their supply chains. Emerging out of the anti-old-growth logging movement of the 1990’s and the 2000’s, the first major commitment from commodity producers came in 2006 when Brazilian soy farmers signed a no deforestation pact with Greenpeace. That eventually led to an agreement on cattle production in the Brazilian Amazon, followed by the Nestle and GAR palm oil deals signed in 2010 and 2011. Earlier this year Asia Pulp & Paper pledged not to source fiber from newly deforested areas. These agreements are important because the majority of deforestation today is driven by industrial activities — mostly to supply food, fuel, and fiber for urban populations — rather than subsistence agriculture. The transition means it is easier for environmental activists to focus efforts on the limited number of large companies that control or influence the bulk of commodity production, trade and consumption.
Accordingly, Glenn Hurowitz, Managing Director of Climate Advisers and Executive Director of Catapult, a campaign group that has been targeting the palm oil sector, said Wilmar’s announcement is part of a boarder shift among big companies away from the practice of destroying ecologically-rich habitats for bulk commodity production.
“This agreement could mark the start of a new ‘Green Revolution’ that provides the deforestation-free agricultural goods global consumers are increasingly demanding,” said Hurowitz.
Palm oil consumption for biofuels, food, cosmetics and energy in Europe