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‘No forests, no cash’: palm oil giants commit to sustainability, but will they follow through?

  • Four of Indonesia’s largest palm oil producers signed a landmark commitment in New York in September to further implement sustainable practices across one of the country’s largest commercial sectors.
  • Then-President Susilo Bambang Yudhoyono and the Indonesia Chamber of Commerce (KADIN) witnessed the undertaking, which is hoped to expand the country’s palm oil industry while making it more environmentally friendly.


Indonesia Chamber of Commerce plans to lobby for expansion of sustainable business practices

Four of Indonesia’s largest palm oil producers signed a landmark commitment in New York in September to further implement sustainable practices across one of the country’s largest commercial sectors.



Then-President Susilo Bambang Yudhoyono and the Indonesia Chamber of Commerce (KADIN) witnessed the undertaking, which is hoped to expand the country’s palm oil industry while making it more environmentally friendly.



Wilmar, Golden Agri Resources, Asian Agri and Cargill all signed on to the agreement. Although nonbinding, their commitments emphasized greener palm oil development policies, more social benefits for workers and further cooperation in forming an implementation mechanism for the pledge.




A young Sumatran orangutan (Pongo abelii) in North Sumatra. Orangutans are often found orphaned after their mothers are killed or displaced by palm oil development and other types of deforestation. The species is listed by the IUCN as Critically Endangered, with a 2004 survey estimating 7,300 are left in the wild. Photo by Rhett A. Butler.


World Wildlife Fund (WWF) Indonesia CEO Dr. Erfansjah was among those who lauded the gesture.



“Amidst the grim pictures in the market of how oil palm development has been impacting forests and people, WWF believes the commitments presented today by the top palm oil leaders of industry and KADIN sheds light to the global market that Indonesia is seriously making step-wise journey towards sustainability in the ways palm oil is produced,” he said in a statement.



Glenn Hurowitz, the chairman the Forest Heroes campaign, echoed this sentiment, saying that such pledges make significant waves on the international palm oil market.



“Investors are increasingly wary of providing finance to companies engaged in deforestation,” he said. “The message is clear: no forests, no cash.”



Indonesia is the world’s largest producer of palm oil, a commodity that can be found in a variety products ranging from cooking oil to shampoo. Although it is important for Indonesia’s economy, the country’s palm oil sector has also contributed to Indonesia’s status as the world’s biggest deforester in terms of annual rate. According to Global Forest Watch data, Indonesia lost more than two million hectares of forest cover in 2012 alone, of which 840,000 hectares was primary, natural forest.


Furthermore, slash and burn land clearing tactics associated with palm oil plantations spur a yearly haze on Indonesia’s island of Sumatra. The smog, stemming mostly from palm oil-rich provinces such as Riau, has at times completely blanketed local communities as well as neighboring countries such as Singapore. Singapore recently passed a measure to hold both foreign and domestic companies responsible for creating haze that has at times choked the city-state for weeks at a time.





According to a study published in
Environmental Research Lettersin 2012, the province of Riau had the Sumatra’s highest rate of forest loss between 1990 and 2010, with 42 percent of the island’s deforestation. Data from Global Forest Watch shows intact forest exists as scattered islands, with about a third degraded between 2000 and 2013. Map courtesy of Global Forest Watch. Click to enlarge.




Riau has Sumatra’s highest concentration of palm oil plantations. Together with timber and wood fiber, concessions dominate the province’s landscape. Map courtesy of Global Forest Watch. Click to enlarge.




Active fires detected by NASA satellites in the last week (Oct. 13-Oct. 20). Air circulation patterns funnel air –and smoke — from Indonesia to Singapore and elsewhere in Southeast Asia. Map courtesy of Global Forest Watch Fires. Click to enlarge.

While all of the companies in question had previous policies aimed at reducing deforestation, this newest pledge is significant due to KADIN’s participation. Though many of its member corporations have yet to adopt green policies, the body has stated openly that it will now lobby the Indonesian government to expand sustainable business practices.

“KADIN has recognized the potential global demand for deforestation-free palm oil,” Greenpeace Indonesia forest campaigner Annisa Rhamawati told mongabay.com. “While the signatory companies have their own individual policies with timelines and detailed implementation plans, the KADIN pledge presents a challenge to other palm companies to turn their destructive practices into zero deforestation policies.”



However, Greenpeace noted in its press statement that while Cargill, Golden Agri and Wilmar are actively “taking steps to ensure that their operations and supply chains no longer contribute to deforestation, peatland destruction and social conflict,” the fourth signatory has yet to prove to the international community that they are doing the same.

Asian Agri is part of the Royal Golden Eagle Group, a conglomerate with longstanding ties to the Suharto regime run by Sukanto Tanoto. The group owns both Asia Pacific Resources International Ltd. (APRIL) and Toba Pulp Lestari — two firms that have lagged behind in sustainability commitments and have consistently been linked to heavy deforestation in Indonesia.

“Greenpeace welcomes the commitment by another big Indonesian palm oil company to stop clearing forests and peat lands, but we regret that the Sukanto Tanoto’s RGE Group has failed to seize this opportunity to address all of the group’s impacts on the rainforests of Indonesia and to commit to support wider forest conservation initiatives,” said Bustar Maitar, Greenpeace’s global head of its Indonesian forest campaign. “If Mr. Tanoto was serious about forest protection he would be stopping the bulldozers immediately in Indonesia.”

Attempts by mongabay.com to contact Asian Agri were unsuccessful.

WWF’s Irwan Gunawan said that despite the nonbinding and individual nature of each commitment, he believes the global stage on which the agreement was made will force the companies to make great leaps toward sustainable practices.

“For the companies and KADIN to make such a public commitment at a global forum… [it] will tie them with a huge responsibility, and to some extent put their reputation at risk… if they fail to meet what they pledged,” he told mongabay.com.


Most fires in Indonesia happen on peat swamps that are drained for development. Here, a peat swamp in Riau is drained via a series of canals. Photo by Rhett A. Butler.