by Helen Burley
Could there be a glimmer of hope for Indonesia’s forests? Last week the Indonesian President Jokowi Widodo signed a long-promised moratorium on new licences for palm oil plantations. The ban is only temporary – but could represent an opportunity to reduce the levels of “dirty” palm oil, linked to deforestation in supply chains.
Just last week, a new investigation by Greenpeace revealed how major brands, including Forest 500 companies, were sourcing palm oil from traders linked to deforestation in Indonesia, despite committing to deforestation policies for their palm oil supply chains.
The brands highlighted by Greenpeace are all members of the Consumer Goods Forum, which made a commitment in 2010 to work towards ending deforestation by 2020. Eleven of these companies are also signatories to the New York Declaration on Forests – committing to eliminate deforestation from the production of agricultural commodities such as palm oil by no later than 2020.
Seven of the companies highlighted by Greenpeace received the top score in last year’s Forest 500 assessment – which ranks the policies of the most influential companies in forest-risk supply chains. These seven companies - Kellogg’s, Colgate-Palmolive, Danone, Mars, Nestle, L’Oreal and Unilever – all have targets in place to ensure deforestation-free supply chains.
A failure to implement
It is clear that while these companies have policies and commitments, they are not being successfully implemented. Instead, the report finds that companies are “falling at the first hurdle by failing to identify the producer groups in their supply chains and monitor them across their operations.”
As a result, they continue to source from palm oil producers who are clearing forests, buying from one or more of 25 palm oil producer groups identified by Greenpeace as having been involved in destroying more than 130,000 hectares of forest and peatland since 2015.
Seven of these palm oil producers appear in the Forest 500 2017 ranking, which shows that they are significant players in the palm oil trade, with the power to change the deforestation economy.
Some of these traders also have commitments, including Wilmar International, the world’s biggest palm oil trader. It announced a ground-breaking No Deforestation, No Peat, No Exploitation policy in 2013.
Wilmar is one of four palm oil traders highlighted by Greenpeace who scored 5/5 for their palm oil policies in the 2017 Forest 500 assessment. Despite having policies in place, they are still involved in clearing forest, either directly or through subsidiaries, to develop new plantations for palm oil. That is why Forest 500’s upcoming assessment will introduce indicators to assess what companies say they are doing to implement these policies. A first step, but important nonetheless.
A need for action
More transparency is clearly needed in palm oil supply chains. Companies need to know where their supplies are coming from – and this means engaging with their suppliers and asking difficult questions about where they source from. Some companies have made progress here, and others need to follow suit.
But transparency is also needed upstream. Wilmar and others need to be transparent about the plantations they source from, and perhaps most crucially, about their subsidiaries and related companies – so that deforestation cannot be hidden by complex corporate structures. Their commitments to zero deforestation must apply across all of their activities if they are to have any value at all.
This should sound a warning to financial institutions who also must demand greater transparency from the companies that they lend to and invest in. They need to be able to show that they are not investing in deforestation – the related climate emissions are a material risk for their business.
“It is time for an honest conversation about the global commodities trade, and how the land we have is used and for whose benefit. As global temperatures rise and populations of endangered species dwindle, companies will come under increasing pressure to prove their supply chains are clean or ditch high-risk commodities altogether. The future of the palm oil industry and other sectors depends on their adoption of a new model of trade based on radical transparency, independent verification and zero tolerance for deforestation and human rights abuses.” The Final Countdown, Greenpeace, 2018
Calling a halt to deforestation
In the meantime, Indonesia’s three-year moratorium can perhaps change the game for palm oil developers. Importantly, the President has instructed all central and provincial governments, including governors, mayors and district chiefs to re-evaluate permits that have already been issued – creating an opportunity to stop deforestation in its tracks.
It also provides an opportunity to address the numerous land conflicts that have arisen because of the rapid expansion of palm oil, and the disregard by some companies for local communities’ rights.
Of course, there are immense challenges in enforcing the moratorium – it is not a silver bullet that will transform the palm oil industry overnight. But it sends an important message to companies that making commitments that are not implemented is not acceptable – and governments have a role to play in making this clear. Perhaps this will help drive much needed change.
