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RSPO lifts suspension of Malaysian palm oil giant IOI

  • NGOs have complained about IOI’s operations in Indonesia for years. In April, the RSPO suspended the company’s sustainable certification.
  • On Friday, the RSPO lifted the suspension after IOI submitted an action plan to address the latest complaint.
  • Green groups said the RSPO should have kept the suspension in place until IOI could demonstrate progress on the ground.
  • It remains unclear whether consumer goods giants like Unilever and Proctor & Gamble, which moved to cut supplies from IOI in the wake of the suspension, will look to resume purchases from the company.

Malaysia’s IOI Group has regained the right to sell “certified sustainable” palm oil under the brand of the RSPO, the world’s largest association for ethical production of the commodity.

The Roundtable on Sustainable Palm Oil had suspended IOI’s certification over environmental abuses by the company’s units in the Indonesian part of Borneo island, known as Kalimantan.

Green groups had accused the company of tearing down rainforest without the proper government permits, operating on carbon-rich, deep peat soil and using fire to clear land. All of the above are violations of the RSPO’s standards, not to mention illegal in Indonesia.

Many of IOI’s customers, including consumer goods giants Unilever, Kellogg, Cargill, Mars and Nestle, had moved to cut supplies from the producer in the wake of the suspension.

On Friday, the RSPO announced it would lift the suspension, citing IOI’s “good progress” toward resolving the issues and an action plan submitted by the company.

The plan’s implementation “shall be subject to an independent ground verification by a team of experts,” according to the RSPO.

Drone imagery collected in April by Greenpeace documents extensive forest loss as a result of fires in and around an IOI concession in Indonesia’s West Kalimantan province. Image courtesy of Greenpeace

The lifting of the suspension does not equate to the resolution of the complaint against IOI filed by Aidenvironment with the RSPO’s grievance mechanism last year.

The RSPO said on its website that Aidenvironment had “confirmed” that IOI had made progress. But the consultancy on Friday called the decision “premature.”

“It’s just too early. We can only hope that IOI will stay true to the agreement,” Aidenvironment director Peter de Haan said.

Oil palm fruit on a plantation in Indonesia. Photo by Rhett A. Butler

Green groups condemned the lifting of the suspension. They said the RSPO should have waited until IOI had actually cleaned up its operations, instead of trusting it to keep its latest promises.

The Rainforest Action Network said the decision “placed the credibility of the entire RSPO certification system in doubt.”

Greenpeace said the decision proved the RSPO was “weak” and called for consumer good giants to refrain from resuming purchases from IOI.

“It is naive in the extreme to trust a company that has broken virtually every commitment it has made and been suspended by RSPO twice, until it delivers lasting change on the ground,” said Deborah Lapidus, campaign director at the Center for International Policy, which had called on the RSPO to maintain the suspension.

IOI’s stock price rose by more than 5% on the Bursa Malaysia after the RSPO’s announcement on Friday.

Orangutans in Indonesia and Malaysia have been highly impacted by the spread of oil palm plantations, bringing a strong organized response from international conservation NGOs and local wildlife activists. Photo by Rhett A. Butler

It is unclear whether IOI’s customers, many of which have promised to eliminate deforestation and peatlands conversion from their supply chains, will look to restore ties with the company.

IOI is a founding member of the RSPO, which was set up in 2004 as an association of palm oil producers, traders and users, as well as banks and NGOs.

The first complaint against IOI’s Kalimantan units was filed in 2010. Another grievance has been filed against its operations in Malaysian Borneo, where an IOI unit is involved in a protracted conflict with local indigenous groups. That complaint too has dragged on since 2010.

Indonesia is the top producer of palm oil, used in everything from chocolate to cosmetics. The industry’s breakneck expansion in the archipelagic country has fueled economic growth but also deforestation, land grabbing and the annual peatland fires that last year blanketed the region in a choking haze, sickened half a million people and pumped more carbon into the atmosphere than the entire EU during a two-month period.