Palm Oil

Palm oil: NGOs condemn reinstatement of IOI’s sustainability certification

IOI oil palm plantationThe Roundtable on Sustainable Palm Oil’s decision to reinstate its certification of the Malaysian company IOI has been fiercely criticised by NGOs and others concerned about environmental protection and human rights.

There is clear evidence that the IOI group has engaged in illegal land clearance, including on peatland, and illegal planting.

The drainage of peatland was the main cause of the forest fires that ravaged large areas of Sumatra and Kalimantan last year, destroying more than two million hectares of land and blanketing much of Southeast Asia with choking pollution.

A recent Greenpeace report said the impact of deforestation and peatland drainage on palm oil concessions owned by the IOI group far exceeded that referred to in the complaint to the RSPO that led to the company’s suspension.

The RSPO suspended IOI on April 4 this year for conducting peatland clearance in violation of the organisation’s principles, and being in breach of other environmental safeguards.

However, in a move that surprised and shocked environmentalists, the roundtable announced on Friday (August 5) that the suspension would be lifted as of today (August 8).

The decision brought an immediate rise in the value of IOI’s shares on the Malaysian stock market, but IOI will have to wait and see whether it will regain the customers it lost when its certification was suspended.

More than twenty companies have suspended their trading with IOI. They include Unilever, Colgate-Palmolive, Hershey’s, Johnson & Johnson, Kellogg, Mars, Nestlé, and Procter & Gamble.

Critics of the RSPO’s decision said it was far too early to lift IOI’s suspension.

The Rainforest Action Network (RAN) said the lifting of IOI’s suspension was premature and demonstrated the certification system’s “lack of enforcement or willingness to hold its most powerful members to account for the impacts of their operations”.

The RSPO’s decision is already diminishing what remained of its credibility. The roundtable has long been accused of being too weak in the face of environmental abuses by RSPO-certified companies.

The Swiss-based PanEco Foundation, which runs the Sumatran Orangutan Conservation Programme, recently resigned from the RSPO, citing, among other things, what it called a “sheer level of inaction” in addressing complaints against errant members.

On hearing about the lifting of IOI’s suspension, the leading environmental activist and advisor Glenn Hurowitz tweeted: “Given IOI’s record of 2 previous RSPO suspensions, results should be required before reinstatement.”

He added: “RSPO to IOI: Fool me once, shame on you. Fool me twice, appoint you to governing board. Fool me 3 times, trust you totally.”

RAN says the decision to lift IOI’s suspension “places the credibility of the entire RSPO certification system in doubt”.

IOI’s suspension applied to the entire group, including its plantation division and its trading arm, IOI Loders Croklaan, which is based in the Netherlands.

The complaint against the group was filed in April 2015 by the Amsterdam-based, not-for-profit consultancy Aidenvironment and related to three IOI subsidiaries: PT Bumi Sawit Sejahtera, PT Sukses Karya Sawit, and PT Berkat Nabati Sawit.

Aidenvironment accused IOI of breaching RSPO standards and its own environmental policies on its concessions in Ketapang, West Kalimantan, on the island of Borneo.

The consultancy brought forward evidence of a drainage canal being constructed in High Conservation Value (HCV) forest in IOI’s PT Bumi Sawit Sejahtera concession.

Aidenvironment said IOI had also cleared forest on deep peat in that concession, and continued to clear in that area after being told it was in breach of RSPO standards.

There was also illegal planting outside the boundaries of the PT Bumi Sawit Sejahtera concession, Aidenvironment said.

Oil Palm Saplings in IOI concessionOil palm saplings and the remains of a burnt tree in the PT Bumi Sawit Sejahtera concession. Photo taken on April 16, 2016; © Ulet Ifansasti / Greenpeace.

Once peat is dried out, it is extremely inflammable. The fires burn underground and are very hard to extinguish.

Last year’s fires came very close to orangutan sanctuaries in Kalimantan and at least 14 orangutans had to be rescued.

Mama Anti, and her baby, who were found malnourished and in distress in the village of Kuala Satong in West Kalimantan in October. rescued by IARA mother orangutan, Mama Anti, and her baby, were found malnourished and in distress in the village of Kuala Satong in West Kalimantan in October 2015 and were rescued by International Animal Rescue.

The new analysis published in the latest Greenpeace report about IOI indicates that, in one area of Ketapang, 30 percent of the 214,000-hectare peat landscape burnt in 2015.

IOI is the biggest landowner in the peatland area referred to in the report, holding 30 percent of the total area under concessions.

Greenpeace says Ketapang is becoming a test case of corporate commitments to responsible palm oil production.

“Once a forest home to endangered and vulnerable species including orangutans, proboscis monkeys, and sun bears, the Ketapang peat landscape is now being carved up by the plantation sector …”

The forest campaigner for Greenpeace Indonesia, Annisa Rahmawati, said: “Re-certifying the IOI group on the basis of unreliable promises, without waiting for verified action on the ground, is risky and counter-productive. It sends the message that the RSPO is more concerned about helping a founding member regain its customers than ensuring its standards are upheld.

“When IOI lost its RSPO certification, dozens of companies took their business elsewhere. The RSPO’s hasty about-turn doesn’t make IOI any less toxic. IOI hasn’t restored the forests it destroyed nor resolved its social conflicts with communities in Malaysia. Its drainage operations still pose a serious fire risk for peatlands both inside its concessions and in the adjoining landscape.”

Rahmawati said the RSPO had proved too weak to stick by its sustainability mandate. “Buyer companies should not make the same terrible mistake, but instead hold out for verified action from this industry laggard before resuming trade.”

‘Trust must be earned’

A group of NGOs and other activists wrote to the RSPO on July 20, urging it to maintain IOI’s suspension “until real action on the ground is achieved”. They included the Union of Concerned Scientists, Greenpeace Southeast Asia, and the UK-based charities the Orangutan Land Trust (OLT) and the Sumatran Orangutan Society (SOS), which are both members of the RSPO.

SOS director Helen Buckland said today: “We would echo the sentiments of other NGOs that the suspension has been lifted far too early. We have not yet seen whether IOI has the capacity, integrity, and volition to turn its paper promises into real action on the ground.

“Trust must be earned, especially in a case such as this where a large company, which has the resources at its disposal to be a world leader in responsible practices, has failed time and time again to uphold its commitments.”

Buckland described the RSPO’s decision as “an incredibly risky and short-sighted move”.

She added: “We would urge all those companies that have dropped IOI as a supplier to stand their ground. They should bestow their business only on those suppliers that embody their values of no deforestation, no oil palm cultivation on peat, and no exploitation.”

OLT executive director Michelle Desilets said: “As a member of the RSPO, OLT is extremely disappointed with the decision of the complaints panel and the board of governors to lift the suspension of IOI prior to independent verification.”

There was no disputing the gravity of IOI’s violations, Desilets said. “The length of time that civil society has been identifying these violations suggests a systemic disregard of RSPO standards by IOI.”

Desilets says that, by trusting such a repeat offender to deliver on promises after sanctions have been removed, the RSPO is jeopardising the credibility of the roundtable as a platform to create positive change in the industry.

“OLT is concerned not only about the threat of continued non-compliance by IOI, but also about the message that this decision sends out to other rogue members of the RSPO.”

Desilets said, however, that she remained optimistic that the RSPO would follow through with a reinstatement of suspension should future verification demonstrate that IOI is not delivering on its promises.

The OLT and SOS were also signatories to a letter, signed by about 30 NGOs and other concerned organisations, that was sent to leading consumer companies and palm oil traders in May and urged each one to “publicly confirm if it has cancelled all contractual sourcing or business relationships with the IOI Group, and/or IOI Loders Croklaan, and outline any corrective actions that it is requiring the company to take prior to being reconsidered as a supplier”.

RSPO panel ‘satisfied’ IOI has met conditions

The recommendation to lift IOI’s suspension was made by an RSPO complaints panel and was endorsed by the roundtable’s board of governors.

The RSPO said the complaints panel was satisfied that IOI had met the conditions set out in its letter to the company dated March 14, 2016, “based on the actions that IOI has taken and implemented since then”.

The roundtable added, however, that the board of governors wished to make it clear that the implementation of the action plan by IOI would be subject to an independent verification on the ground by a team of experts.

These experts would be appointed by the RSPO secretariat within thirty days and their findings would be scrutinised by the RSPO complaints panel.

The RSPO says that, if the verification team finds significant failures in the implementation of IOI’s commitments to the RSPO, and the deficiencies that led to the suspension of the group’s certification have not been corrected, the complaints panel will advise the board of governors to reimpose the suspension, with immediate effect.

IOI would continue to submit its quarterly progress report, as mandated by the complaints panel. After 12 months, the complaints panel would again commission an independent, on-the-ground verification by a team of experts, and then review the complaint.

“The panel shall then determine whether the implementation of the action plan is satisfactory and set any other conditions for the continued progress of the resolution of the complaint,” the RSPO stated.

The agribusiness campaign director for RAN, Gemma Tillack, said, however: “The RSPO has once again risked its legitimacy by settling for half measures and has shown it is willing to certify companies that are operating in open breach of its own standards.”

She added: “This move shows that, despite the RSPO’s efforts to strengthen its complaints procedure and adopt stronger standards via its flawed ‘RSPO Next’ voluntary scheme, the body still falls short of the policy requirements of countless companies that have adopted robust no-deforestation, no-peatland, no-exploitation policies.”

Tillack urged the companies that had cut their ties with the IOI Group after its suspension by the RSPO to continue to act independently. She called on them to ensure that IOI addresses “the violations of its sourcing policies” before reconsidering the company as a supplier.

The campaign director at the US-based Center for International Policy, Deborah Lapidus, said that, regardless of the RSPO’s decision, IOI had yet to regain the trust of the marketplace.

“The two dozen major palm oil buyers that have severed their ties with IOI have been burned by IOI too many times in the past to settle for half measures. They know IOI poses too big a threat to the credibility of their responsible sourcing commitments and their reputations to reengage too soon.”

Lapidus added: “It is naive in the extreme to trust a company that has broken virtually every commitment it has made, and been suspended by the RSPO twice, until it delivers lasting change on the ground.”

In their letter to the RSPO urging continued suspension of IOI, the concerned organisations said IOI’s repeated violations of RSPO rules and its own policy commitments should not be taken lightly. The company needed to demonstrate that any commitments it made in response to its suspension were being implemented on the ground.

The company needed to undergo a fundamental transformation in its business conduct before its suspension was lifted, the signatories to the letter stated.

“Otherwise, the RSPO risks further violations by IOI and a third suspension, which would make a mockery of the RSPO complaints process and result in significant frustration amongst RSPO members, especially consumer goods manufacturing companies that are looking to the RSPO to guide their sourcing decisions.”

The signatories said the RSPO should allow more time for IOI to make substantive and lasting progress “that meets the expectations of the complainants, IOI’s customers, and civil society and that has the potential to spur much broader industry transformation”.

They urged the RSPO to join them in calling on IOI to implement an immediate moratorium on the destruction of forests and peatlands across its operations, including those of its third-party suppliers, and to adopt “a meaningful landscape approach to mitigate the impact of its operations on forests and peatlands, starting with its four concessions in Ketapang”.

The organisations said that evidence of the IOI Group’s deforestation and exploitative labour practices had been in the public domain for at least eight years.

“Nonetheless, it took two formal complaints and numerous civil society reports for the RSPO’s complaints panel to finally uphold the requirements of the RSPO and suspend IOI for clearing forests, draining peatlands, operating without proper licences, and failing to prevent fires in its PT Bumi Sawit Sejahtera, PT Sukses Karya Sawit, and PT Berkat Nabati Sawit concessions …”

The letter signatories referred specifically to IOI’s failure to respect the customary rights of the Long Teran Kanan communities in Sarawak, East Malaysia, and said the company’s suspension should not be lifted until the dispute with those communities had been settled.

IOI needed to recognise the communities’ rights to their customary lands and renegotiate the company’s access to, and use of, these lands subject to the free, prior and informed consent of those communities. “This complaint and grievance has not been resolved to the satisfaction of the community for nearly six years.”

The NGOs and other signatories also said it was critical that IOI takes corrective actions, including steps to restore areas of peatlands that it has degraded or burnt.

They noted that substantial areas inside IOI’s concessions had recently been identified as priority restoration areas by the Indonesian Peatland Restoration Agency.

“The IOI Group has yet to publish a credible policy, let alone the time-bound implementation plan that outlines measures that will be taken to rapidly implement and verify compliance with its policy requirements at a plantation level.

“The company remains non-compliant with the RSPO principles and criteria. The RSPO must not settle for half measures.”

In a joint statement issued on July 28, the IOI Group and Aidenvironment said “significant progress” had been made in resolving the Ketapang complaint.

Agreement was reached about main actions to be taken by IOI, including the immediate removal of all “overplanted” oil palms by IOI.

The company said it would ensure that it had in place legally required fire prevention and mitigation measures and would begin implementing an integrated peat, HCV, and High Carbon Stock (HCS) rehabilitation and management plan throughout all subsidiaries of the PT Sawit Nabati Agro (SNA) plantation group.

 

Burnt Forest in West KalimantanPeatland burning at the border of IOI’s PT Berkat Nabati Sejahtera concession in Ketapang. Photo taken on December 3, 2015; © Ulet Ifansasti / Greenpeace.

Aerial photos of the PT Bumi Sawit Sejahtera concession, February 2014. Images courtesy of Aidenvironment.

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1) Greenpeace first exposed IOI’s deforestation, peat drainage, and destruction of orangutan habitat in its report, Burning Up Borneo, published in 2008.

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In 2010, 11 NGOs submitted a complaint to the RSPO about IOI’s operations in its Ketapang concessions. The NGOs said there had been clearance of peatland since 2009, clearance of HCV forest, and illegal encroachment into production forest outside the boundaries of the PT Berkat Nabati Sejahtera concession.

The complaint also covered alleged breaches of community land rights in IOI’s Pelita concession in Sarawak. The RSPO complaints panel concluded that there was insufficient evidence in relation to Ketapang. The Pelita/Long Teran Kanan land dispute is still being dealt with in a conflict resolution process.

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A 2014 investigation by the Finnish corporate responsibility NGO Finnwatch found severe violations of labour standards in a number of IOI’s Malaysian plantations. These included withholding workers’ passports and denying their rights to join trade unions, and paying them less than the statutory minimum wage.

Aidenvironment complaint in detail

Headline photo of oil palm plantation in the PT Bumi Sawit Sejahtera concession in Ketapang: taken on December 3, 2015; © Ulet Ifansasti / Greenpeace.

Article updated on 10/8/2016.

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