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What does Greenpeace's palm oil report mean for IOI & RSPO?

Niamh Michail

By Niamh Michail+

28-Sep-2016
Last updated on 28-Sep-2016 at 16:06 GMT2016-09-28T16:06:23Z

 © iStock/Mihtiander
© iStock/Mihtiander

Greenpeace's damning report on Malaysian palm oil supplier IOI, just one month after its membership of the Roundtable on Sustainable Palm Oil (RSPO) was renewed, could be damaging for the certifier, according to one sustainability consultant.

Greenpeace's blockade began yesterday mid-morning and ended yesterday afternoon with Dutch police chainsawing logs that blocked access to IOI’S Crokkers refinery.

The action accompanied a Greenpeace report  on IOI on breaches of its own sustainability policy in its supply chain compiled using publicly available information including from concession maps and deforestation alerts, NASA fire hotspot data and official complaints made to the RSPO.

According to the report, IOI’s third party suppliers, including Eagle High, Goodhope, TH Plantations and Korindo, are illegally clearing primary forest, developing on peatland, extensively using fire and abusing human rights by developing on land without the consent of local communities. It also alleges child labour on some plantations.

Yesterday the company’s CEO Dato’ Lee Yeow Chor issued a conciliatory statement which shifted attention from the individual company to industry-wide efforts.

IOI is one of the world’s biggest traders and processors of palm oil and palm-derived products, last year trading and/or processing more than 1.5 million tonnes.

It also grows its own palm oil but not enough to meet its own needs – just 38% of its traded volumes comes from IOI-owned mills in Indonesia and Malaysia - and therefore relies on third party supplies sourced through other traders such as Wilmar International and Golden-Agri Resources.

Greenpeace first raised concerns over its environment track record in Kalimantan, Indonesia in 2008, and over the past year it has been dropped by major manufacturers and temporarily suspended from RSPO, for failing to respect sustainable sourcing criteria.

“It is clear that despite the many achievements of several companies’ No Deforestation, No Planting on Peat and No Exploitation policies, industry-wide collaboration is critically needed. IOI fully accepts its own responsibilities as a producer and trader of palm oil. In this respect, IOI accepts Greenpeace’s challenge to use its voice and influence to help achieve the outcomes both IOI and Greenpeace desire," he said.

 

From Greenpeace's IOI report A Deadly Trade-Off © Greenpeace

CEO of the Malaysian Palm Oil Council (MPOC) Yusof Basiron took an alternative view, calling the blockade "an affront to Malaysia" given the country's track record for providing palm oil that has been certified as sustainable by the Malaysian government and the RSPO, adding: "The real question we should be asking is: who paid Greenpeace to do this, and why are they against Malaysian palm oil?”

IOI said it has already committed to take action on several of the 15 points made by the NGO as part of its Sustainability Implementation Plan and Policy, drawn up in a bid to regain membership of the Roundtable on Sustainable Palm Oil (RSPO).

“We accept that there is always more we can do as a company," said Dato’ Lee Yeow Chor, adding the company was ready to host a stakeholder meeting to advance the issue.

'Passing the buck'

But for Greenpeace, the company is merely passing the buck. “IOI responded with weak calls for collective industry discussions. It made no commitment to cancel trade deals with the dirty palm oil suppliers identified in Greenpeace’s investigations,” it said.

According to Greenpeace Indonesia forest campaigner Annisa Rahmawati, the company is portraying itself as "virtually powerless" despite being one of the largest palm oil companies in the world.

Can far-reaching sustainable practices be achieved on a global scale for such a widespread commodity and complex supply chain?

Greenpeace says the Brazilian Soy Moratorium is a model that the palm oil industry should look to “as an example of an industry-led effort that slashed deforestation rates in the Amazon.”

What does this mean for RSPO?

The implications of Greenpeace's report and the headline-grabbing blockade may go beyond the company itself.

What does it mean for RSPO, which just last month renewed IO’s membership citing "significant progress in resolving the cases of non-compliance with the [RSPO] principles and criteria"?

According to director of sustainable trade consultancy Aidenvironment, Eric Wakkeralthough the report and blockade related to IOI and its third party suppliers, it puts RSPO in a potentially embarrassing and damaging situation.

“For us in Aidenvironment, the complaint case is also about RSPO; about testing its complaint mechanisms. We clearly see that their system is still deeply flawed,” he said.

Following IOI’s suspension from RSPO, sustainability risk analysis firm Chain Reaction Research published an evaluation  of the impact on IOI - which included lost revenue and reputation damage – and recommended remedying this by focusing on achieving RSPO compliance and RSPO Next certification.

But this may no longer carry the same credibility it did before. “Regardless of RSPO, some 27 large palm oil buyers such as Unilever have suspended trade with IOI. And this is still in place,” said Wakker.

Mondelēz confirmed neither the renewed RSPO membership nor the Greenpeace report had changed its position.

©iStock/Clariant

RSPO is nevertheless sticking by its decision on IOI. A spokesperson told us: “The complaint was carefully scrutinised by the RSPO complaints panel, which also includes representatives of the social and environmental NGOs. Based on the information submitted by IOI the panel decided that the company has met all conditions required by the RSPO complaints panel to lift the suspension.

Problem palm oil 

Is this particular focus on IOI - rather than other palm oil players - justified? According to Eric Wakker of Aidenvironment: IOI has poorly addressed its well-documented complaint cases and that over a very long period of time. Because of this, many people have lost all trust in the company. Not just NGO people but also business people.”

But IOI is not the only palm oil supplier or trader linked to these environmental and labour abuses.

Greenpeace's report said that although many consumer goods companies have dropped IOI, they continue to buy palm oil from Wilmar, Golden Agri-Resources and Musim Mas – the traders who connected IOI to the “problematic” third party suppliers.

"The problems identified in this report are not limited to IOI’s palm oil supply. Similar issues can no doubt be found in all other traders’ supply chains. Indeed [...] in several instances IOI was supplied with palm oil from non-compliant suppliers by another trader, such as Wilmar International, Musim Mas or Golden AgriResources,” said the report.

“It is clear that palm oil linked to deforestation, peatland degradation, social conflict and worker exploitation has continued to flow into the consumer market.

“Responsibility for change lies with these traders and with IOI, who are failing to proactively monitor their supply base or to exclude noncompliant suppliers.”

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