Deforestation-Linked Palm Oil Still Finding Its Way Into Top Consumer Brands: Report
October 1st, 2018 / 1:30 PM
A Greenpeace Forest Fire Prevention (FFP) team puts out a blaze in a peatland area in Kubu Raya district, in the Indonesian Bornean province of West Kalimantan | Image Credits: Rendra Hernawan/Greenpeace.
- A new report by Greenpeace finds that palm oil suppliers to the world’s largest brands have cleared more than 1,300 square kilometres (500 square miles) of rainforest — an area the size of the city of Los Angeles — since the end of 2015.
- Greenpeace says palm oil-fueled deforestation remains rampant in countries like Indonesia and Malaysia because global consumer brands like Unilever, Nestlé and PepsiCo continue to buy from rogue producers.
- These brands have failed to commit to their zero-deforestation pledges and are poised to fall short of their own 2020 deadlines of cleaning up their entire supply chain from deforestation, Greenpeace says.
- Greenpeace has called for a transformation in the palm oil industry, particularly in Indonesia, the world’s biggest producer of the commodity.
JAKARTA — Pledges by major brands to stop buying palm oil from companies known to destroy rainforests have failed to stop the clearance of a total area of forest the size of Los Angeles in just the last three years.
That’s the finding from a new report by Greenpeace, which sought to gauge the progress made by leading consumer brands and palm oil firms in making good on their promises to break the link between the palm oil they buy and the destruction of rainforests and other ills.
The report found that palm oil suppliers to these top brands had cleared more than 1,300 square kilometres (500 square miles) of rainforest in Southeast Asia since the end of 2015, despite a growing number of commitments by most major refiners, traders and end users of palm oil to stop doing business with deforesters and land grabbers.
The reason? The brands and their suppliers are not abiding by their own pledges.
“The answer is really simple,” Greenpeace Indonesia forest campaign head Kiki Taufik said. “Despite promising not to buy palm oil from rainforest destroyers, the world’s biggest brands are, in fact, still buying palm oil from companies that destroy rainforests.”
Greenpeace researchers found that 12 of the world’s largest brands — Colgate-Palmolive, General Mills, Hershey, Kellogg’s, Kraft Heinz, L’Oréal, Mars, Mondelez, Nestlé, PepsiCo, Reckitt Benckiser and Unilever — were still sourcing from at least 20 palm oil groups that actively cleared rainforests in Indonesia, Malaysia and Papua New Guinea.
The palm oil produced from these plantations winds up in some of the most well-known products on the market, including Kit Kat chocolate bars, Colgate toothpaste, Johnson’s baby lotion, Doritos tortilla chips, and Pop-Tarts pastries, among others.
“We’re consuming their products on a daily basis,” Greenpeace Indonesia senior forest campaigner Annisa Rahmawati said at the launch of the report in Jakarta. “So we are exposed [to their products] and indirectly participate in deforestation and human rights violations if these brands don’t uphold their commitments.”
In addition to deforestation, the report cited evidence of other problems linked to these industrial palm plantations, from labour exploitation and social conflicts, to the unlicensed development and slash-and-burn land clearing, especially on carbon-rich peat soil.
With less than two years before their self-imposed 2020 deadlines — which in many cases have already been pushed back from earlier deadlines — the companies involved must act swiftly to transform the palm oil industry, activists say.
“There’s an extreme urgency here because we’re less than 500 days to 2020, and yet we haven’t seen the implementation of their [zero-deforestation] commitments,” Annisa said.
While all of the global brands cited in the report have committed to zero deforestation, many measure their progress in terms of the number of their suppliers who have published their own “No Deforestation, No Peat and No Exploitation (NDPE)” policies — rather than the number that has successfully implemented these policies.
And many of these policies are actually commitments to stop buying from deforested at a future date — one that can be pushed back, again and again.
Meanwhile, these brands and their main suppliers, including global commodities traders such as Golden Agri-Resources, Musim Mas and Wilmar International, tend not to proactively monitor their entire supply chains in order to identify companies that are still involved in deforestation.
Instead, these brands and their traders tend to wait until NGOs identify deforestation or other policy breaches by suppliers. When this happens, brands and traders tend to treat them as isolated cases meriting “engagement” or “monitoring,” according to Greenpeace.
“They always say they are engaging their suppliers but they don’t say when this engagement will end,” Annisa said. “Meanwhile, their producers keep destroying Indonesia’s rainforests.”
A few days before the report came out, Kit Kat owner Nestlé announced it would start monitoring 100 per cent of its palm oil supply chain for deforestation using satellite imagery by December 2018, in a bid to meet its 2020 deadline of cleaning up its supply chain from deforestation.
As of 2017, only 58 per cent of the Swiss food giant’s global supply chain for palm oil was deforestation-free.
Nestlé said it would use Starling, a satellite-based service developed by Airbus and sustainability consultancy The Forest Trust (TFT), to monitor its supply chain 24/7, calling it “a game changer to achieve transparency in our supply chain.”
Richard George, a forest campaigner at Greenpeace UK, pointed out that it had taken Nestlé eight years since it made its zero-deforestation commitment back in 2010 to start monitoring its entire supply chain.
“Big brands like Nestlé have been promising to stop deforestation for palm oil for almost a decade,” he said. “For Nestlé to announce only now that it will start trying to monitor where its palm oil comes from is simply embarrassing.”
George called on Nestlé to go beyond simply monitoring its supply chain and stop buying palm oil from traders and producers associated with deforestation.
“Nestlé knows it has been buying palm oil from 23 of the dirtiest producers in Indonesia, much of it via Wilmar,” he said. “This is something it can change immediately. If Nestlé is serious about fixing its palm oil problem, it needs to drop the dirty trader Wilmar and instruct the companies that produce its palm oil to publish[land] concession maps that prove they aren’t destroying forests.”
Wilmar in the spotlight
According to the report, Wilmar, as the world’s largest refiner and trader of palm oil and the first to promise, in 2013, to stop deforesting, is still buying from 18 of the palm oil groups cited in the report.
Wiko Saputra, an economic policy researcher from the Indonesian environmental NGO Auriga, said the core problem with big palm oil traders like Wilmar was that their own plantations were unable to produce enough palm oil to meet their export demands.
“Their exports reach around 8 million tons, while their own plantations can only produce around 1.6 million tons,” Wiko said at the launch of the report. “Therefore, Wilmar can only supply 15 to 20 per cent of their exports and thus they have to buy from other suppliers. This is where the problem lies.”
In order to be certain it wasn’t buying palm oil linked to deforestation, Wilmar would have to monitor the supply chains of every mill and plantation — not to mention the middlemen who move between them — it sources. This, said Wiko, is very difficult to do.
“So how can they control other plantations owned by their suppliers?” Wiko said. “This is a classic problem in Indonesia.”
Wiko said Wilmar was able to control much of the palm oil exports from Indonesia because it owned much of the storage infrastructure at various ports throughout the country.
“They don’t have many plantations and mills, but they control ports because they have so many storage tanks,” he said. “When we visited ports like Dumai [in Riau province], Belawan and Kuala Tanjung [both in North Sumatra], we can see that Wilmar owned almost 75 per cent of the storage tanks there. That’s where they store their [crude palm oil]. As a result, many big producers are forced to sell through Wilmar.”
Wiko said this disparity needed to be addressed if the palm oil industry wanted to transform itself and stop deforestation.
“If this is not addressed, I don’t think they can meet the 2020 deadline of cleaning up their supply chains,” he said. “Even if they have 10 more years, it’s still not possible because there’s a structural problem.”
TFT, which works with Wilmar, has also called the implementation of the company’s NDPE policy into question, saying that recent progress had been slow. It said Wilmar had not proactively addressed the root causes for this lack of progress.
As a result, it challenged Wilmar’s membership with TFT and asked the company to recommit to its NDPE policy.
“In TFT’s view, without a significant acceleration of the implementation of their NDPE, in particular in Indonesia, and a major shift in public transparency and stakeholder engagement, Wilmar will not be able to live up to the commitment it made back in 2013,” TFT said in a statement.
In response to the report, Wilmar said it was disappointed with the claims raised by Greenpeace, calling them “nothing more than a distraction from the genuine efforts by Wilmar to promote the sustainable development of palm oil.”
Wilmar said it already had a monitoring system in place through its supplier group compliance verification program, which covers 110,000 square kilometres (42,470 square miles) of plantations, 117 parent groups, 1,500 individual plantations and close to 500 mills across Malaysia, Indonesia and Papua New Guinea.
On the issue of transparency, Wilmar said it couldn’t publish maps and geospatial information about its suppliers provided to them by sustainability consultancy Aidenvironment and its own internal suppliers, citing legal constraints. It added it had published maps of its own plantations, via the Roundtable on Sustainable Palm Oil (RSPO), on the Global Forest Watch (GFW) mapping platform.
Wilmar said it had also suspended 16 suppliers for failing to convincingly improve their policies and actions, resulting in more than 1 million metric tons of lost volume supply to worldwide operations.
It said it would work with TFT to come up with a new time-bound action plan to improve and speed up the progress of its NDPE implementation around the world, with a specific focus on Indonesia.
The action plan will include using a more comprehensive global monitoring and verification system to track the environmental and social performance of Wilmar’s supply chain and in particular to monitor supplier groups and their land concessions. Wilmar also promised to disclose the progress of its action plan to the public and be fully transparent about it.
Greenpeace said the action plan would not address the NDPE violations in Wilmar’s supply chain.
“Instead, today’s announcement appears designed to pre-empt the damning findings of Greenpeace’s investigation into Wilmar’s suppliers, rather than to support the industry transformation that’s so urgently needed to meet 2020 commitments,” Greenpeace said.
It called on Wilmar to prove that it no longer sources from forest destroyers by requiring all producer groups in its supply chain to publish mill location data and concession maps for their entire operations, and cutting off any that refuse to comply.
“Wilmar must then completely transform its supply chain so that by 2020 it is only trading with producers whose entire operations have been independently verified as compliant with all aspects of its NDPE policy — even if that means it must sell less palm oil,” Greenpeace said.
Greenpeace said TFT and other consultants that supported companies like Wilmar in the implementation of their NDPE policies must also answer for their failure to hold clients to account.
The co-founder of the Wilmar, Martua Sitorus, was recently forced to resign from the firm after he was found to be running a second firm, Gama, with his brother that has cleared an area of rainforest twice the size of Paris since 2013.
Transforming Indonesia’s palm oil sector
With the bulk of the palm oil-fueled deforestation occurring in Indonesia, the world’s largest producer of the commodity, environmentalists have also called on the Indonesian government to address the underlying issues plaguing the industry.
Of the 1,300 square kilometres of deforestation carried out by the 25 palm oil groups since 2015, 40 per cent occurred in the country’s easternmost Papua region, according to Greenpeace.
“Papua is one of the most biodiverse places on Earth, and its pristine forests had until recently been spared the destruction happening elsewhere in Indonesia,” Greenpeace Indonesia’s Kiki said. “But now the palm oil industry is moving in and clearing forest at an alarming rate. If we don’t stop them, then Papua’s beautiful forests will be destroyed for palm oil, just like [in] Sumatra and [Indonesian Borneo].”
Lush rainforests in the latter two regions have been cleared on an industrial scale to be replaced with seas of oil palm trees. Many endangered species that inhabit the country’s forests have also disappeared, with habitat destruction by the palm oil industry a leading driver of their population decline.
Half of the Bornean orangutan population has been wiped out in just 16 years, and all three orangutan species in Indonesia are classed as critically endangered — just one step away from being extinct in the wild.
The relentless pace of deforestation has also put other species like elephants, rhinos and tigers in serious danger.
In Riau’s Tesso Nilo National Park, more than three-quarters of the ostensibly protected area, home to tigers, orangutans and elephants, has been converted into illegal oil palm plantations.
Palm oil remains a crucial component of Indonesia’s economy. The country produced more than 36 million tons of the commodity in 2017, and the 16.4 million tons that it sold abroad accounted for more than 12 per cent of global exports, according to the Sustainability Policy Transparency Toolkit.
Palm oil lobbyists often talk up the sector’s contributions to Indonesia’s economy and present it as a lifeline for smallholder farmers. Some 50 million Indonesians depend directly or indirectly on palm oil and its derivatives, the Indonesian Palm Oil Association says.
However, Greenpeace says the economic benefits of the palm oil boom have accrued largely to the handful of already wealthy individuals that control the big plantation companies. Even initiatives that are supposed to help smallholder farmers, such as the Indonesian government’s export levy, are misdirected to provide even more support to the largest players in the sector, it says.
To reform the industry, the government can use a recently signed moratorium on new licenses for oil palm plantations as a starting point, according to environmentalists.
The moratorium was signed by President Joko “Jokowi” Widodo on Sept. 19, two years after he declared he would impose it in a bid to end the annual fires associated with the clearing of land and forests for planting.
The policy constitutes not just a freeze on new licenses, but an order for the relevant central government ministries and local governments to conduct a massive review of oil palm licensing data.
“This report by Greenpeace strengthens the argument that the moratorium has to be enforced and these operating companies have to be audited,” said Indah Fatinaware, director of palm oil watchdog Sawit Watch.
Environmental NGO Mighty Earth also welcomed the moratorium, as well as the Malaysian government’s recent announcement that it would stop palm oil expansion in the country and maintain its forest cover.
“President Jokowi’s decision means that both Malaysia and Indonesia have recently adopted policies to stop companies from clearing rainforests to make way for oil palm plantations,” Mighty Earth Southeast Asia director Phil Aikman said. “Such policies would have been unthinkable a decade ago, and though overdue, it is a crucial step in the right direction.”
Teguh Surya, executive director of the environmental NGO Yayasan Madani Berkelanjutan, said that while the moratorium was a crucial starting point, it wouldn’t matter much if the enforcement was lacking.
“The support and monitoring from all stakeholders are badly needed, considering that the whole process of permit evaluation and other tasks mandated by the president have to be finished in three years,” he said.
It’s important for the government, he said, especially the eight central government ministries tasked by Jokowi with implementing the moratorium, to work swiftly in a transparent manner.
Teguh said he was worried that the implementation would not be prioritized by the government, as some of the relevant officials, including ministers in the cabinet, are more focused on the elections slated for next year.
“And after the presidential election, there’s a high chance that there’ll be a cabinet reshuffle and this moratorium might not be followed up by a concrete action plan by the next administration or not even prioritized any more,” Teguh said.