Palm oil from Indonesia's shrinking forests taints global brands - report

Golden Agri-Resources

18/07/2018 17:01

* Forests cleared due to lack of supervision - EoF
    * Report says palm oil fruit on trucks tracked by GPS
    * Unilever, Nestle, others say committed to sustainable oil
    * For link to EoF website, click on https://bit.ly/2mqsAw8

    By Fergus Jensen and Bernadette Christina Munthe
    JAKARTA, July 19 (Reuters) - Palm oil sourced from illegally
cleared rainforest areas in Indonesia has flowed through traders
to major consumer goods brands despite widespread commitments to
cease purchases of non-sustainable oil, a new report says.
    Palm oil companies Royal Golden Eagle (RGE), Wilmar
 WLIL.SI , Musim Mas Group and Golden Agri Resources  GAGR.SI 
sold oil from 21 "tainted" mills to more than a dozen global
brands including Nestle  NESN.S  and Unilever  ULVR.L   UNVR.L ,
according to the report by Eyes on the Forest (EoF), a coalition
of environmental NGOs including WWF-Indonesia.  
    In spot checks since 2011, EoF used GPS tracking to follow
trucks carrying palm oil fruit, known as Fresh Fruit Bunches
(FFBs), to mills from plantations within the Tesso Nilo National
Park and Bukit Tigapuluh protected forest areas in central
Sumatra.
    "All companies bought directly or indirectly from at least
some of the 21 implicated mills," according to the report, which
calls for traceability on palm oil to be improved and to be
extended to plantations that supply mills.
    Forest cover on Indonesia's Sumatra island, home to
endangered tigers, orangutans and elephants, had declined by
more than half to 11 million hectares in 2016 from the 25
million hectares it had in 1985, as palm oil and other
plantations have expanded and encroached on protected areas.
    Nestle said in an emailed response it was "committed to
tackling" deforestation. A company spokeswoman said the firm was
working with partners to transform the palm oil industry
"further down the supply chain".
    Unilever said by email it publicly disclosed suppliers and
mill details and was committed to increasing traceability in the
palm oil supply chain "and to working with our suppliers and
partners to resolve issues." 
    Unilever also said it was examining "details behind the
investigation to determine the right approach and next steps".
    Indonesia's Environment Ministry spokesman Djati Witjaksono
Hadi said smallholders, "not companies", owned plantations in
national parks.
    Hadi referred further questions on the mills to the
ministries of agriculture and industry, which did not
immediately respond to requests for comment.
    Similar issues were highlighted in earlier EoF reports
including in 2016, but a lack of strict supervision by traders
has led to more forest clearing and illegally grown palm oil
entering global supply chains despite their commitments to
improve traceability and stop deforestation, the report said.
    
    TRACEABILITY
    "We acknowledge that it's really challenging to get
traceability beyond the mill and going right down to the
plantation source," Elizabeth Clarke, WWF global palm oil lead,
told Reuters. "But it's absolutely paramount that they do this."
    Among those mentioned in the report, Wilmar International
 WLIL.SI  was accused of buying palm oil from PT Citra Riau
Sarana (PT CRS) whose three mills were found to have bought FFBs
from Tesso Nilo in 2011, 2012, 2015 and 2017, even though Wilmar
sold its 95 percent stake in PT CRS in 2014.
    "Whatever action they've been taking, it hasn't fixed that
particular mill, and this is what we're asking these particular
individuals to do," WWF's Clarke said.
    Responding to the report, Wilmar said it had "continued to
engage with PT CRS and to monitor their traceability system"
from 2014. "While there was progress made on traceability, we
have stopped purchasing from them since June 2018 for other
reasons," Wilmar said in an emailed statement. 
    But Wilmar said it had not received "a clear confirmation
from the authorities which companies are illegal in the
landscape" despite making a request to the Environment Ministry.
    PT CRS could not immediately be reached by phone for
comment. 
    Sime Darby Plantation, also named in the report, said it had
94 percent visibility of its supply chain "which provides key
customers access to traceability information that can help them
make informed choices about the palm oil products that they
purchase."
    It also said it was working with non-governmental
organisations (NGOs) to eradicate deforestation for the
remaining 6 percent.
    Daniel A. Prakarsa, head of downstream sustainability at
Sinar Mas Agribusiness and Food, a subsidiary of Golden Agri,
said the company considered 39 percent of its output to be fully
traceable, and was targetting full traceability from the 427
mills of its suppliers by 2020.
    "Our policy is to help suppliers to comply. Not just
(saying) 'this is our standard, you must comply, otherwise we
stop (buying)," he said.
    Musim Mas Group did not immediately respond to a written
request for comment. On its website, the group says it is
working with smallholders and other stakeholders along the
supply chain to achieve sustainable palm oil production.
    Clarke from WWF said trading firms "need to make it very
clear to the mills that they won't buy from them until they can
provide assurance that it is 100 percent legal."

 (Reporting by Fanny Potkin and Bernadette Christina Munthe in
Jakarta, Aradhana Aravindan in Singapore and Emily Chow in Kuala
Lumpur
Writing by Fergus Jensen
Editing by Edmund Blair)
 ((fergus.jensen@thomsonreuters.com; +62 21 2992 7604; Reuters
Messaging: fergus.jensen.thomsonreuters.com@reuters.net))