- Mondelēz International, the company behind Oreo cookies and Ritz crackers, continues to source palm oil linked to deforestation in Indonesia, according to a Greenpeace report.
- The report said the company’s suppliers had cleared an area of rainforest greater than the city of San Francisco from 2015 to 2017, of which more than a third was orangutan habitat.
- Greenpeace says Mondelēz’s supply chain continues to be tainted with palm oil produced on deforested land because it uses the weakest certification model for its supply.
- Mondelēz, which has committed to a zero deforestation goal by 2020, says it hasn’t yet been able to achieve 100 percent sustainable palm oil in its supply chain, and pledged to keep working to that end with its suppliers.
JAKARTA — A new report has linked Mondelēz International, the food giant behind such iconic snacks as Oreo cookies and Ritz crackers, to large-scale deforestation in Indonesia.
The investigation by Greenpeace International found that between 2015 and 2017, 22 of Mondelēz’s palm oil suppliers cleared more than 700 square kilometers (270 square miles) of rainforest — an area larger than the city of San Francisco. Of that area, 250 square kilometers (96 square miles) constituted the habitat of critically endangered orangutans.
Mondelēz continues to source from deforesters, the report says, despite the U.S. food giant’s series of commitments and policies to sourcing sustainable palm oil, a commodity found in items ranging from ice cream and laundry detergent to cosmetics and biofuels.
“Palm oil can be made without destroying forests, yet our investigation discovered that Mondelēz suppliers are still trashing forests and wrecking orangutan habitat, pushing these beautiful and intelligent creatures to the brink of extinction,” said Kiki Taufik, the head of Greenpeace Indonesia’s forests campaign. “They’re literally dying for a cookie.”
The report also noted that the scale of deforestation linked to Mondelēz, whose brand portfolio also includes Cadbury’s and Toblerone, might be greater than what Greenpeace had unearthed.
“Alarmingly, these are just the cases that Greenpeace was able to identify — Mondelēz sources from hundreds of palm oil companies and this destruction is likely just the tip of the iceberg,” the report said.
Kiki said the findings were “outrageous” in light of Mondelēz’s publicly stated sustainability commitments.
In 2010, the company along with other members of the Consumer Goods Forum (CGF) acknowledged the global climate impact of deforestation and agreed to work toward zero deforestation by 2020.
Then in 2014, Mondelēz adopted a “no deforestation, no peat, no exploitation” (NDPE) policy, restricting the company to sourcing palm oil “produced on legally held land, [that] does not lead to deforestation or loss of peatland, respects human rights, including land rights, and does not use forced or child labor.”
That same year, it signed the New York Declaration on Forests, a voluntary and non-legally binding political statement to reduce global emissions of greenhouse gases through deforestation.
Mondelēz is also a member of the RSPO, the world’s largest association for ethical production of palm oil. The company’s director of sustainability, Jonathan Horrell, serves on the RSPO’s board of governors.
In a response to the report, Mondelēz said that while it hadn’t been able to source 100 percent sustainable and traceable palm oil, it remained committed to eradicating deforestation in its supply chain.
It said that at the end of 2017, 96 percent of its palm oil was traceable back to the mill, and 99 percent came from suppliers whose policies aligned with its own.
To achieve 100 percent sustainable and traceable palm oil, Mondelēz said it had called on its suppliers to further map and monitor their oil palm plantations. It has also excluded 12 suppliers that fell short of its standards, the company said.
“We will continue to prioritize suppliers that meet our principles, and exclude those that don’t,” Mondelēz said.
The Greenpeace report said 95 percent of the palm oil that Mondelēz purchased in 2017 was subjected to the “weakest of the certification models” offered by the RSPO, known as a “book-and-claim” certificate.
Under this certification model, companies aren’t required to physically trace their palm oil supply chain. Instead, they can buy certificates, in this case called “RSPO Credits,” to cover the sustainability aspect of their supply chain.
“This means that the plantations and producer groups from which the overwhelming majority of the palm oil that Mondelēz purchases is sourced are not governed by any sustainability initiatives,” the report said.
Mondelēz’s supply chain is further tainted by the company’s decision to buy palm oil from Wilmar International, the world’s largest refiner and trader of the commodity, the report said.
After intense pressure from green groups, Wilmar became the first palm oil trader to pledge, in 2013, to stop deforesting. And in 2015 it became the first to publish the names and locations of its suppliers, ostensibly to bring greater transparency to a notoriously opaque industry.
Despite this, Greenpeace said that Wilmar, which gets more than 80 percent of its palm oil from third-party suppliers, still failed to monitor its suppliers across all of their operations to determine whether they had complied with its policies or were still destroying forests.
Wilmar, an earlier Greenpeace report alleged, still buys palm oil from 18 deforesting. Among them is the Bumitama group, whose practices, according to Greenpeace, amount to “one of the most flagrant examples of the RSPO’s failure to police its membership.”
The Bumitama group is a joint venture between the Harita Group, controlled by the family of Indonesian tycoon Lim Hariyanto and Malaysian conglomerate IOI Group.
In its report, Greenpeace said Bumitama was operating on an unlawful basis, as shown by its prospectus when the company’s main palm oil holding company, Bumitama Agri Limited (BAL), floated on the Singapore Exchange in 2012.
In the prospectus, BAL said it faced various risks relating to its ownership and acquisition of land, including expired location permits in more than 60 percent of its landbank. The prospectus also revealed that more than 700 square kilometers of BAL’s concessions had been developed without the necessary permits, representing nearly four-fifths of its landbank.
“Our Group holds uncertified land, the titles to which may be the subject of dispute,” the prospectus said.
To conceal Bumitama’s responsibility for this unlawful concession development, the company allegedly uses an elaborate laundering scheme, according to the Greenpeace report. This involves passing nominal control to one or more of a handful of “third parties” supposedly unconnected to Bumitama — but which Greenpeace’s investigation identified as being closely associated with the company.
These parties then obtain the required permits for the plantations, before selling them back to Bumitama, sometimes for a trivial sum, after the land has been deforested. This allows the Bumitama group to declare it has nothing to do with the concessions during their period of development without permits or in breach of RSPO rules.
At least 18 plantation companies — one-third of the total in Bumitama’s holding — passed through the hands of one or more of the “third parties” before being formally acquired or reacquired by Bumitama.
Greenpeace mapping analysis shows that since 2005, 111 square kilometers (42 square miles) of forest were cleared within the “laundered” concessions in the three areas it studied.
“Under RSPO rules, this should result in Bumitama’s expulsion from the RSPO,” Greenpeace said.
Bumitama has refuted the allegation, saying the acquisition of the plantation companies isn’t part of a laundering scheme. But the group also said it would “reflect on this method of company acquisition, and … review and update our procedure via the Investment Committee.”
Greenpeace also called on Bumitama to provide its concession maps for its operations, which the group has not done.
Dato’ Lee Yeow Chor, chief executive of the IOI Group and a non-executive director of Bumitama, welcomed greater scrutiny of Bumitama. He said IOI bore some responsibility for “any major malpractice by Bumitama” and that he personally had “a duty of oversight” for ensuring that Bumitama “complies with the laws of the country and the commitments which are spelt out in the company’s Sustainability Policy.”
Lee said IOI was willing “to put pressure on Bumitama’s management as a substantial shareholder” and would “welcome any advice from Greenpeace or other NGOs on how to exert more pressure.”
Banner image: Baby orangutan at a conservation center in North Sumatra, Indonesia. Image by Rhett A. Butler/Mongabay.