Report Rates Palm Oil Companies on Sustainability

October 6, 2014 Updated: October 6, 2014

 A new report published Forest Heroes, an advocacy campaign pushing for an end to deforestation, ranks global palm oil companies on their sustainability commitments. 

The Green Tigers, authored by Glen Hurowitz, reviews the recent history of environmental policies in the palm oil sector, beginning with the formation of the Roundtable on Sustainable Palm Oil (RSPO) in 2004 through the wave of comprehensive zero deforestation commitments in 2013-2014. It then looks at individual companies’ commitments, ranking firms on three lists: “green tigers”, which it calls “responsible suppliers”; “yellow list”, which it asserts have “serious issues in [their] supply chains”; and “red list” — not to be confused with the IUCN’s system for classifying endangered species — for what it terms “irresponsible suppliers”. The criteria include commitments to human rights, conservation of wildlife-rich forests (HCV), preservation of high carbon stock (HCS) areas, peatlands protection, and human rights. 

Coming out on top of the ranking are several companies that have signed “No Deforestation, No Peat, No Exploitation” commitments including Agropalma (Brazil-based), Daabon Organic (Colombia), Golden-Agri Resources (Singapore / Indonesia), Wilmar (Singapore), Cargill (USA), and New Britain Palm Oil (Papua New Guinea). 

Yellow list companies include Bunge (USA), Sime Darby (Malaysia), Felda (Malaysia), and Olam (Singapore). Indofoods (Indonesia), Musim Mas (Indonesia), KLK (Malaysia), IOI (Malaysia), First Resources (Singapore), Asian Agri (Indonesia), Bumitama Agri (Indonesia), and Astra Agro Lestari (UK) are placed on the red list. 

The report notes that most of the companies that are signees to the Sustainable Palm Oil Manifesto (SPOM), a commitment established this year, are on the yellow or red lists, while Palm Oil Innovation Group (POIG) companies are on the green list. Environmentalists have criticized SPOM as having weaker criteria than POIG, although several SPOM members just committed to a one-year moratorium on clearing of potential high carbon stock areas while they work out a definition of what constitutes forest. 

The Green Tigers argues that there has been a structural shift in key markets for palm oil from an “anything goes” approach to one where preference is given to deforestation- and conflict-free palm oil. Accordingly, the report says companies that fail to adopt stricter sourcing policies are positioning themselves on the wrong side of the trend, thereby increasing financial risks for their operations. 

“This interest is not just altruistic or ephemeral; it is driven in significant part by client demand,” writes Hurowitz. “If Southeast Asia does not continue with a rapid transition to deforestation-free production, it is at serious risk of losing market share in key commodities, especially in high-value markets. Conversely, those companies that are adjusting are finding new market share, new investors, and new receptivity on the part of the people and governments of the region.” 

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