- Wilmar International, the world’s biggest palm oil trader, has quit the steering group of the High Carbon Stock Approach (HCSA), which helps agribusiness identify forest areas for protection.
- It cited governance and financial problems within the group — which includes members from agribusiness, civil society and environmental watchdogs — as justification for its April 2 exit.
- But other steering group members and watchdogs say it appears Wilmar is trying to shirk its conservation and sustainability commitments as an HCSA member, and that its exit hurts efforts to boost sustainability in the sector.
- The HCSA mechanism is used by agribusiness to distinguish forest areas that should be protected from degraded areas that can be developed, in a bid to minimize deforestation.
JAKARTA — Environmental watchdogs say the exit of the world’s largest refiner and trader of palm oil from a committee that helps identify forest areas for protection could hurt efforts to achieve greater sustainability in agribusiness.
Singapore-listed agribusiness giant Wilmar International resigned April 2 from the steering group of the High Carbon Stock Approach (HCSA), a widely supported mechanism to distinguish forest areas that should be protected from degraded areas that can be developed. Wilmar was also the first company in the palm oil industry to pledge, in 2013, to end deforestation in its supply chains.
This new development suggests it’s not really committed to achieving full transparency in its supply chains, said WWF Indonesia policy and advocacy director Aditya Bayunanda.
“We’re hoping that there are no growers thinking about taking this shortcut to avoid transparency in their supply chains that are being developed by HCSA,” Aditya told Mongabay. WWF is also a member of the HCSA Steering Group.
Aida Greenbury, the former head of sustainability head at Asia Pulp & Paper, another company on the steering group, said the timing of Wilmar’s exit was unfortunate. She said carbon-rich tropical forests continue to disappear at an alarming rate and major companies are poised to miss their 2020 deadline of eradicating tropical deforestation from their operations. [Editor’s note: Aida Greenbury is a member of Mongabay’s advisory board.]
“It’s time to support organizations like HCSA more,” Aida told Mongabay, “to implement transparency, to ensure that no deforestation is being upheld across our supply chain, to support smallholders, to conserve and restore forests. Because we are currently in an emergency.”
Wilmar’s exit could also deal a blow to small farmers, whom Aida represents on the HCSA Steering Group through the SPKS farmers’ union. She said smallholders are an integral part of the palm oil industry’s supply chain and yet they’re often overlooked and receive little to no support. She said the farmers she represented “are genuinely trying to implement no-deforestation. But they need support: capacity building, the implementation of HCSA, guidance from their buyers. They look up to the big companies and expect them to set an example, to do their bit to support HCSA.”
‘Governance issues’
Wilmar’s 2019 membership fees to the HCSA were due on April 2; failure to pay would have seen it suspended. Instead, it withdrew its membership the same day.
Wilmar said it chose to leave the nonprofit despite being a longtime member because of its concerns over poor governance of the HCSA linked to decision-making and financial management.
“These are all discussions that we have had within the EC [executive committee] since 2018, and which we have raised throughout when we were still members in the HCSA organization,” Ravin Trapshah Ismail, the senior manager of sustainability communication at Wilmar, told Mongabay. “Despite this, we continue to see that the HCSA as an organization takes too lightly these critical governance issues.”
HCSA executive director Judy Rodrigues refuted the allegation. “As a young initiative, [the HCSA] continues to strengthen its governance procedures including for grievances and membership, but [it] does not have any critical governance issues,” she told Mongabay.
Wilmar took issue with the financial management of the HCSA’s budget, saying the organization had been running at deficit. It also specifically cited what it called the HCSA’s poor handling of an objection made by Greenpeace (also on the steering group) to Wilmar’s role as co-chair of the group, which it assumed in 2017. A 2018 Greenpeace report said Wilmar was still buying from 18 palm oil groups linked to deforestation, despite the company’s zero-deforestation commitment. Wilmar subsequently announced it was developing a supply chain monitoring platform with active involvement from Greenpeace.
But Greenpeace ended talks with Wilmar last September after they couldn’t come to an agreement on some elements of the monitoring platform. Greenpeace also said Wilmar had failed to show real progress in meeting its target of cutting out deforestation from its supply chain by 2020.
Wilmar said Greenpeace’s objection wasn’t raised as a grievance at the HCSA and thus “didn’t follow due process.” The company also said Greenpeace’s demand had grown to having all companies barred from assuming the co-chair position, something that Wilmar said “goes against the HCSA’s own Terms of Reference.” Those terms require the leadership of the HCSA to be shared between an NGO member and a grower member.
Wilmar said there appeared to be a “singling out of the grower membership” at the HCSA.
“This ongoing objection on all growers has left a void in the balance of decision making within the HCSA,” Wilmar said.
Rodrigues said Greenpeace had raised its objection in a process in which it “did not need to be lodged as a grievance.”
“It was based on concerns that any plantation grower member candidate should be in compliance with HCSA membership requirements to run,” she said.
‘Avoiding responsibility’
WWF Indonesia’s Aditya said Wilmar should have maintained its membership if its real concern was over the governance of the HCSA, including the requirements to become HCSA members.
“I think Wilmar’s reasoning is not really valid considering that we’ve scheduled a discussion [on the issue of governance] today [April 7],” he said. “As a result, we suspect that the timing of the resignation has been calculated to avoid [their] responsibilities, such as providing data on high carbon stock [areas], including those of Wilmar’s suppliers, and [Wilmar] haven’t paid their membership fees either.”
A follow-up meeting was scheduled for April 8 to finalize the membership requirements, addressing the very issue at the center of the dispute between Wilmar and the Greenpeace.
Aditya said that as an organization with members from agribusiness, civil society and environmental watchdogs, it was to be expected that some would raise concerns over the HCSA’s governance.
“What’s not normal is that as the issue is being discussed, and Wilmar was also [involved] in the process, they just quit,” he said.
Greenpeace also questioned Wilmar’s justification for dropping out. It said the company had failed to provide evidence to the HCSA that it was actively implementing the principle of “no deforestation, peat, exploitation” (NDPE) throughout its supply chains, and thus quit to avoid responsibility, according to Grant Rosoman, senior adviser of global forests solutions for Greenpeace International.
“[Wilmar] are resigning because they don’t want to be held to their [NDPE] commitments,” he said as quoted by Eco-Business.
“Instead of demonstrating real progress to end fires and deforestation in its supply chains, it has chosen to quit and criticize HCSA,” Rosoman said.
Conservation compliance
Wilmar’s Trapshah said the company remained committed to using the HCSA methodology to distinguish forest areas for conservation from degraded lands. He said the HCSA toolkit has helped Wilmar determine areas where deforestation is happening, so that it can take action against the suppliers responsible. Wilmar has suspended 26 supplier groups to date due to non-compliance with its NDPE policy; 22 of them were involved in deforestation.
Trapshah said Wilmar would reconsider rejoining the HCSA as an active and contributing member once its concerns about the organization’s governance have been properly addressed.
“More importantly, we hope that our commitments to HCSA and sustainability as a whole will not be used to question or blindside our concerns surrounding the governance of the HCSA as an organization,” he said.
Rosoman, who is an executive committee member of the HCSA, said being a member meant Wilmar would be subjected to monitoring to ensure adherence to its conservation pledges.
“Now Wilmar won’t be obliged to supply data on where the areas of high carbon stock are in its supply chain that require preservation,” he said.
Trapshah said there’s no such requirement in HCSA’s criteria for steering group members.
Rodrigues said that HCSA membership requirements clearly stated that company members must actively implement the HCSA in their supply chains or have a moratorium in place “To demonstrate they are doing this requires evidence,” she said.
She also pointed out that HCSA’s membership eligibility requirements stipulate all steering group members to submit maps of operations, including plantations, forest cover, high carbon stock forest protected and high conservation value areas, mills, refineries and factories, as shapefiles to the HCSA steering group.
Trapshah said Wilmar is still an active member of the Roundtable on Sustainable Palm Oil (RSPO), the world’s largest association for ethical palm oil production, which requires its members to use the HCSA toolkit. He said Wilmar’s own estate concession maps have been made public through the RSPO process, with identified high carbon stock areas already reported to the HCSA.
Aditya, however, noted that not all of Wilmar’s suppliers are RSPO members and certified under the scheme.
“So these suppliers won’t be covered by RSPO obligations,” he said.
Banner image: Deforestation for oil palm in Malaysia. Image by Rhett A. Butler/Mongabay.
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