Conservation news

Palm oil giant Wilmar promises to take harder line with errant suppliers

A palm oil mill in Indonesia. Photo by Rhett A. Butler

  • Wilmar International announced some changes to its sustainability policy this week.
  • Among the changes, Wilmar will no longer buy palm oil from suppliers found to be violating its policy, but will suspend purchases from them instead.
  • Wilmar also appeared to acknowledge the presence of “shadow companies” in Indoensia’s plantation sector.

The world’s biggest palm oil trader has updated its sustainability policy, as its self-imposed deadline to stop buying palm oil linked to a variety of environmental and social ills draws closer.

Beginning in January 2019, Wilmar International will freeze purchases from suppliers found to be in violation of its sustainability policy, which bars plantation companies from clearing rainforests and peatlands, grabbing land from rural communities and mistreating workers. Previously, Wimar would continue to buy palm oil from these firms while it “engaged” with them.

The Singapore-listed conglomerate also said it would require some suppliers that violate its policy to submit “recovery plans.”

“The Recovery Plans may include options to protect and restore forest, bare land and/or peat swamps and to assist local communities to secure social forestry rights,” Wilmar said in a statement announcing the changes.

It may be a while before any recovery plans are put into effect. The specifics have yet to be defined, a process Wilmar says will begin in January. The firm is giving suppliers until the end of 2019 to submit the plans. Those that fail to do so “will enter the Grievance Procedure,” an indefinite process that can take any amount of time, a spokesperson acknowledged.

“Engagement is essential to bring these suppliers up to compliance with our NDPE policy rather than drive them towards a growing leakage market of unsustainable palm oil,” the spokesperson said in an email. “However, we will suspend suppliers who refuse to comply or do not show any progress in moving towards compliancy with our NDPE policy.”

Wilmar first declared its “NDPE” — “No Deforestation, No Peatland, No Exploitation” — policy in 2013. It initially established a deadline of December 2015 to break the link between the palm oil it buys and practices like deforestation and land grabbing. But Wilmar has revised that deadline several times, and it now stands at end-2019.

Wilmar was the first palm oil giant to declare such a policy, and since then others have followed suit. None have actually managed to break the link between the palm oil they buy and the practices to which they have stated their opposition, with the others pushing deadlines back too.

Wilmar reiterated that corporate pledges would not be enough to rein in the plantation industry. “The strategic position of national governments over the palm oil industry is paramount,” it said.

Palm oil fresh fruit bunches in Indonesia. Image by Rhett A. Butler/Mongabay.

Indonesia, the world’s top palm oil producing country, has lost more rainforest than any nation but Brazil since the turn of the century, largely as a result of uncontrolled plantation expansion, and is consequently a leading greenhouse gas emitter.

Also notable about Wilmar’s statement was that it seemed to acknowledge the presence of “shadow companies” in Indonesia’s plantation sector, a growing issue as it comes to light that some conglomerates are hiding their connections to destructive business units through front shareholders and offshore companies.

Wilmar said in the statement that while it had achieved “significant progress…during the course of implementation of our policy, we are challenged by the opaque ownership structures some companies have in place. Therefore, we are putting in more effort to map out our suppliers’ operations to ensure transparency and compliance.”

Asked to elaborate, the Wilmar spokesperson said, “From our past experience in engaging and monitoring our suppliers at group-level, we learned that there are companies that share similar shareholder(s) and / or links between owners / shareholder(s), which possibly extends to familial ties. This makes our monitoring efforts for our suppliers at group-level challenging as they are not clear cut cases of parent / subsidiary company links. Hence, it is important to develop clear guidelines on the definition of ‘group level supplier’ for more meaningful and constructive engagement with our suppliers.”

Earlier this year, Wilmar’s billionaire co-founder Martua Sitorus was forced to resign after it came to light that he had been running a second firm, Gama, with his brother that had cleared an area of rainforest twice the size of Paris since 2013. Martua had been Wilmar’s non-executive chairman and a board member.

Wilmar also reiterated its commitment to map its supply chain. Since May 2018, the firm has been asking all new suppliers to provide “group-level” maps of their plantation land. The spokesperson said Wilmar expects to finish mapping the rest of its suppliers by end 2019. The maps will be entered into a subscriber-only database managed by sustainability consultancy Aidenvironment.

“However, maps related to Wilmar’s supply chain can be made accessible to key stakeholders that raise concerns over possible non-compliance by Wilmar-owned operations or by our suppliers at group-level,” the spokesperson said.

A Greenpeace campaigner welcomed the policy update with cautious optimism, calling it a “potential breakthrough.”

“If Wilmar keeps its word, by the end of 2019 it will be using satellites to monitor all of its palm oil suppliers, making it almost impossible for them to get away with forest destruction,” Kiki Taufik of Greenpeace Southeast Asia said in a statement. “Greenpeace will be watching closely to make sure Wilmar delivers.”

Christian Purba, head of the board of Forest Watch Indonesia, an NGO, was more skeptical.

“This isn’t the first time Wilmar has announced a policy to prevent deforestation as a result of oil palm plantation activities,” he said. “The first policy declared by Wilmar on zero-deforestation, peatlands and forest fires hasn’t been properly implemented.”

He said Wilmar should release its suppliers’ concession maps to the public rather than keep them in a private database.

“The question is whether this new policy is really serious,” he said.

Banner: A palm oil mill in Indonesia. Wilmar is the world’s largest palm oil refiner. Image by Rhett A. Butler/Mongabay.

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