Palm oil company's profits double in spite of reputational disasters

CSR consultants would like you to believe that reputational disasters can hit a company's bottom line. If this was true, palm oil giant Golden Agri Resources' balance sheet should have been bleeding. But that is not the case. Golden Agri has reported that its fourth quarter net profits more than doubled to $1.17 billion.

Golden Agri, part of Indonesia's Sinar Mas, has been at the centre of Greenpeace campaigns for allegedly destroying natural forests in Indonesia to pave way for oil palm plantations. Last year, the company actually faced the most intense campaign, and also saw its shabbily designed counter-attack on Greenpeace badly backfired. Golden Agri also continued to lose multinational customers due to accusations of forest destruction.

2010 should have been the company's worst year if reputational disasters had any effect. But actually, last year has turned out to be the best year in the company's history in terms of profits.

One can still be optimistic and say that the company would have made even greater profits if it had a better sustainability reputation. Who knows?

Multinational companies such as Unilever, Kraft, Nestle, Burger King and HSBC have deserted Sinar Mas group companies, under pressure from campaigners. The question then is who is fueling the group's growth, and profits? Well, the company's profits are pouring in from large developing countries, mainly China and India. The company plans to add 1.3 million tonnes crushing capacity in China this year to meet growing demands there.

Palm oil's new pipeline: Africa

Indonesia's two year moratorium on commercial development of forests and peat lands, expected to come into effect this year, is forcing palm oil producers to look elsewhere for expansion as the demand and price of the controversial commodity soar. And Africa is the new destination for many.

Malaysia-based Sime Darby Plantation, world's largest crude palm oil producer, is said to be considering a $2.5 billion investment in Cameroon to develop 300,000 hectares of oil palm plantation. The company currently has 530,000 hectares of palm oil plantations in Malaysia and Indonesia.

Cameroon government may find the proposal attractive as the project promises to create 30,000 jobs in the impoverished country. But the expansion may alarm environmental groups who have been campaigning against the industry's unsustainable practices including destruction of natural forests.

Sime's expansion plans also include ventures in Liberia where the company has been granted a concession of 220,000 hectares.

Other palm oil giants which have announced plans to expand to Africa in recent months include Wilmar International, Olam International and Golden Agri. While Golden Agri has signed a $1.6 billion project in Liberia, Olam has announced a 300,000 hectares project in Gabon. UK-listed Equatorial Palm Oil already operates 169,000 hectares oil palm plantation in Liberia.

Palm oil prices have now crossed $1100 a tonne, almost doubling from the average $500 a tonne over the last decade. That explains frantic expansion plans by the industry players. The key question is: how will the industry ensure its expansion in Africa is above board, and sustainable?

Now Burger King drops palm oil group Sinar Mas

Now Burger King has dropped Sinar Mas, the palm oil giant which is struggling to cope with a reputational disaster for alleged environmental damage through destroying forests.

Last month, Sinar Mas unsuccessfully tried to use an audit report to clear itself from the allegations. That attempt backfired when BSI, one of the audit firms involved, came out saying that the report was misrepresented.

We did our bit of coverage on this blog and on Ethical Corporation website and also in Ethical Corporation magazine. See here.

Now Burger King has cited the same audit report in its decision to stop buying palm oil from Sinar Mas group companies.

A statement by Burger King reads: "After completing a thorough review of the independent verification report conducted by Control Union Certification (CUC) and BSI Group, we believe the report has raised valid concerns about some of the sustainability practices of Sinar Mas' palm oil production and its impact on the rainforest. These practices are inconsistent with our corporate responsibility commitments."

"As a result, we have decided we will no longer purchase palm oil from Sinar Mas or its subsidiaries."

By the way, Sinar Mas Group walked away with no so coveted title of Greenwasher of the Year at the Ethical Corporation Responsible Business 2010 Awards earlier this year.

The problem with many of the palm oil companies is that they really don't get it. They also continue to rely on half-baked self-certified corporate responsibility consultants and incompetent PR executives to address the issue. It is not working. And will not work. It's time for them to get some sound advice from sound minded professionals.

NGOs trash World Bank framework for palm oil industry

The proposed World Bank/IFC Framework for the Palm Oil Sector is receiving negative comments from the NGOs who say the framework is weak and does not address the real problem.

See also here for the critics are saying.

In an interesting development, the Indonesian government has said that it will reject any loan offers from the World Bank/IFC for the palm oil industry. The government says it does not need loans from the World Bank/IFC. The government officials say the industry should continue to rely on loans from commercial banks.

Are they saying this as they don't want their companies to be subjected to more demanding World Bank/IFC framework?

Industry players on the other hand are hoping for that the World Bank will lift the financing ban and loans will start flowing again.

Palm oil giant's claim disputed by their own auditors

A confrontationist approach taken by palm oil giant PT SMART (the Indonesian palm oil arm of Sinar Mas), part of the Singapore Exchange listed Golden Agri Resources, to discredit Greenpeace report seems to have backfired, literally.

In a report, Greenpeace had accused PT SMART of destroying forests to raise oil palm plantations. The report prompted several of PT SMART customers including Unilever, Kraft and Nestle to terminate their sourcing agreements with the company.

PT SMART which has all along denied Greenpeace allegations then said it would commission an independent audit of its palm oil plantations to prove it has done no wrong.

Two weeks ago, PT SMART executives, armed with the "independent audit report" and advised by a UK-based PR firm Bell Pottinger, arrived in the UK to hold a press conference to claim that Greenpeace allegations were found to be untrue.

A fine spin work ensured worldwide headlines implying that an independent audit had cleared PT SMART of all wrongdoing and making Greenpeace look like a nuisance maker.

Greenpeace accused the company of misreporting the audit findings and selectively ignoring parts of the report. Ethical Corporation published comments from Greenpeace on the matter and invited PT SMART to respond. But nothing heard from the company yet.

Within three days of the press conference, BSI-one of the two audit firms involved in the audit- came out saying that PT SMART had misreported the audit findings. Well, this is what we call "a gun backfiring."

Greenpeace has ceased the opportunity and has written to the Singapore Stock Exchange seeking action against Golden Agri Resources for making factually incorrect claims.

PT SMART still insists it has not misreported the findings. Is this the advice they are getting from Bell Pottinger? And whoever are their sustainability advisers. They appear to in the wrong hands.

In the meantime, Golden Agri plans to expand into Liberia. The company is investing in private equity fund Verdant that is the sole shareholder of a Liberia-based firm in the process of being granted a government concession to develop 220,000 hectares for 20 years.

Comments on draft Framework for Palm Oil Sector

A few weeks ago I wrote on this blog that the World Bank and IFC have released a Draft Framework for Palm oil sector for consultation.

Robert Goodland, a reader of my blog, has sent me his comments on the Framework that he has submitted to the World Bank Group. His comments are interesting and I am reproducing them here:


“WBG Framework for Palm Oil”
(undated) Draft for Consultation
palmoilstrategy@ifc.org

Comments for the consultation by R. Goodland (RbtGoodland@gmail.org) respectfully submitted on:17 August 2010


[Note: Pagination refers to the page numbers in the 46-page WBG Framework. The text of the Framework has been italicized. My comments are in bold.]


P.3: The World Bank Group, with its primary mission of poverty reduction, sees the palm oil sector as an important contributor to furthering economic development in many developing countries.

The Framework needs to make the case that palm oil projects reduce poverty more than a similar investment elsewhere. That case has not yet been made convincingly in the current draft.

P.3: The World Bank Group is aware of the sector’s negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts, and questions over land tenure and human rights.

Such awareness must be very recent as IFC denied the sector’s negative impacts by categorizing the Wilmar, Bertin industrial cattle ranching, monoculture Maggi soy and other damaging projects as ESA Category “B” until brought to book by CAO and others.

P.3: Recent civil society organization complaints to the Office of the Compliance Advisor/Ombudsman in relation to IFC’s handling of four downstream investments (in a palm oil trader and a refinery), as well as a complaint to the Inspection Panel regarding a World Bank smallholder oil palm program have raised concerns about sustainability issues. The World Bank Group recognized the legitimacy of these concerns and in response temporarily suspended any new investments in the palm oil sector.

It should not need CAO reports, massive outcries and complaints for the WBG to ‘recognize the legitimacy of these concerns’. The Knowledge Bank should be aware of such basic facts in advance, especially if it is to offer advisory services. These negative impacts are all too well known worldwide, and have been known inside the WBG at least since US Congress (led by Rep. Henry Reuss) pressured WBG President Robert McNamara on Malaysia’s massive Jengka Triangle oil palm projects in the 1970s.

P.4: A Common Approach …. In particular, IFC will only invest in plantation operations that are certified for sustainable palm oil production according to an internationally-recognized certification scheme, or have a time-bound action plan to achieve such certification.

This is too risky. It is well known that development agencies have highest leverage up to and just before Board approval. Once approved, such pari passu leverage and interest wanes fast. Time-bound action plans to achieve certain standards usually fail in such cases. Only part of the action plan is divulged. How the client is progressing to meet action plans is never divulged by IFC.


P.5: World Bank Group Commitments Key actions could include: working with governments to implement land registration systems, build capacity for environmental and social impact assessment and regulation, strengthen forest and land governance and administration and increase productivity.

Commitments and key actions could include a lot of good stuff. That is inadequate at this stage. IFC has been caught violating its own policies. The time has come to clarify what specifics IFC will firmly commit to in order to prevent such social and environmental damage and violations in the future.

P.6: Concerns about sustainability-related issues in the sector were highlighted by the IFC’s Office of the Compliance Advisor, the World Bank’s inspection panel, and civil society organizations and prompted a temporary moratorium in November 2009 on new World Bank Group investments in the palm oil sector pending development of a more strategic approach to
engagement in the sector.

(a) Is this “Framework” document supposed to be the strategic approach mandated by President Zoellick, and fostered by the unprecedented moratorium? The document is entitled Framework, but in places a strategy is hinted at. The e-mail address for comments on the Framework is “Strategy”. Clearly a strategy or even a policy is required if the recent massive impacts of IFCs investments leading to the moratorium are to be prevented in the future.

(b) IFC’s Compliance Adviser’s evaluation of IFC’s oil palm investments was kept secret for months before they were only partially released. CAO convincingly showed that corporate pressures had repeatedly trumped social and environmental concerns, starting with what is commonly IFCs weakest point, miscategorization for the Environmental and Social Assessment (ESA). Categorization as the ESA Category “B” of any project a priori likely to impact fairly intact tropical forest, likely to impact Indigenous Peoples, likely to emit significant GHG from forest removal, burning or peats, involuntary displacement—all should be systematically categorized as “A”. IFC’s AMaggi soy monoculture investment in the Amazon forest region, IFC’s Bertin industrial cattle ranching in Amazon forest region, and most, if not all oil palm projects, should routinely be classified as “A”. IFC categorized them all as “B” and refused to categorize them prudently without prolonged pressures, complaints, CAO investigations etc. All branches of the WBG should be enhancing prudentiary measures, rather than struggling to lower the standards.

(c) In addition, the CAO’s reports, the Inspection Panels reports and the complaints need to be included in full in the new oil palm Framework as annexes, or at least with easy-to-use links.

(d) CAOs findings -- that IFC systematically violated its own standards and policies -- need to rectified and stringently prevented in the future. Therefore, this Framework needs to specify precisely how the CAO-identified policy violations will be prevented in future.

P.6: The World Bank Group’s engagement in the palm oil sector is consistent with its mission to fight poverty without compromising economic, environmental and social sustainability.

Clearly not, or not yet. This claim is worrying. The Framework seeks to make WBG’s engagement consistent etc., but it’s a long way from achieving that as yet. The moratorium was commendably imposed on IFC precisely because IFC was refusing to follow its own standards and normal precautions. The CAO, IP and other evaluations showed that IFCs projects were exacerbating poverty and wreaking much environmental damage.


P.15: Table 1: A Summary of Possible World Bank Group Interventions under the Four Themes and Their Relation to Feedback from Consultations.

A menu of possible options is not what is needed at this stage. This Framework has been drafted precisely because IFC has been caught violating its own policies and standards. At this stage, firm commitments are needed, not “possible interventions.”

P.18: IFC may invest in oil palm plantation operations and other palm oil sector companies even if the public sector legal/regulatory enabling environment is less than ideal, if IFC is convinced that the project will have strong and measurable development impacts and that any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present.

This has been tried by IFC and has failed. Post-approval leverage to foster compliance with pari passu action plans is weak at best. IFC needs to ensure that the design of projects it supports is as prudent as possible in advance, and that it has reduced all possible risks to a low or acceptable state. See comment on P.4 (above) on the risks of resorting to such pari passu aspirations.

P. 18: ….any risks can be mitigated through other governmental or non-governmental programs, including other World Bank Group operations, if present.

Up until now this statement is false. IFC has failed to mitigate risks such as destruction of forest, impacts in Indigenous and other poor people, harming GHG sequestration and forest fires etc, that’s why the moratorium was imposed on IFC. The moratorium is IBRD/IDA’s way of stopping IFC from creating more damage until their procedures are upgraded, fully agreed upon and conscientiously implemented by IFC, preferably with independent third party verification. The Framework as currently drafted could reduce risks further, but that would be insufficient. At this stage, in view of IFCs violations and irreversible damage as exposed by the CAO and others, the new strategy must ensure that: (a) no more forest is destroyed; (b) no more Indigenous People or poor re harmed; (c) no more GHG sequestration is impaired; (d) no more water is polluted. Clarifications and emphases on these basic priorities must be added to the next draft.

P.18: Last para: For the World Bank, the final selection of indicators will follow as activities are selected.

Despite all the Framework’s rhetoric about enhanced coordination between IFC and the rest of the WBG, this para suggests IFC prepared this Framework mainly on their own, but hopes IBRD/IDA will come in later.

P.23: Issue regarding how companies and government agencies obtained consent for land use changes was a strong theme. ….. Full adherence to the concept of Free Prior Informed Consent by investors in the palm oil sector was seen as essential by many of the stakeholders.

If FPIC is considered essential, where is IFC’s response? As FPIC is so important to RSPO and many other stakeholders, does the WBG propose to follow the United Nations Declaration (UNDRIP) and accept FPIC, or will it persist in debasing the UN Declaration into FPIConsultation? IFC is supposed to be a member of RSPO in good standing. As IFC apparently does not accept FPIC, it is violating RSPO’s membership criteria of accepting FPIC.


P.31 & 32: These projects are not discussed in the review because at the time of the research, the projects were missing from the Bank’s information depository (Business Warehouse) due to a problem with the internal sector coding system.

I respectfully suggest the missing projects be found and their lessons learned be integrated into this Framework while still in draft. I suspect the comment on P.3 (above) refers to these or similar projects.

P.44: All World Bank projects are categorized on the basis of the environmental and social risks associated with the project. Depending on the assessment of environmental and social
impacts and risks, projects may require Environmental Assessments and/or Environmental Management Plans to be prepared and implemented.

In fact, as already mentioned, IFC rarely finds a project worthy of an ESA Category “A”. IFC classifies practically all of its forest-, Indigenous Peoples- and GHG emitting projects as Category “B” at least until the CAO or others show how imprudent IFCs classification is. If IFC wants to promote sustainability and prudence, while reducing risks to environment or humans, it will classify any proposed project as a Category “A” that may impact or otherwise affect Indigenous Peoples, forest or GHG sequestration capacity, or any projects needing involuntary resettlement.



Conclusion: Three Gaps in the Draft Framework

1. Definition of ‘degraded’ sites: The Strategy or Framework should emphasize clearly that the WBG will decline to finance (or otherwise encourage) destruction of tropical, high conservation value, critical natural habitat, old-growth forest, secondary forest, hi-graded or selectively logged forest or other ecosystems, and impacts on Indigenous People. Further, that human displacement will be avoided or minimized, and that GHG emissions will be fully accounted beforehand, compensated for, and minimized.

The sites on which oil palm, soy or other projects may be located must be scrupulously defined. Brazil’s commendable policy is to select ‘abandoned’ or ‘degraded’ sites only. That’s a good first step. In the WBG’s case how a proposed site was found to be suitably abandoned or sufficiently degraded needs to be explicitly described. There have been far too many cases in which nomadic ethnic groups have hidden from development officials or are in another part of their customary ambits during a visit. Similarly, some officials may opine that a forest from which some mature trees of one species have been removed – selective logging -- is sufficiently altered to be called ‘degraded’. The basic premise, now that climate risks have intensified, is that most forest still standing is providing GHG sequestration services which are more valuable than more oil palm.

2. Use of Vegetable Oils: This is a tricky one akin to claiming: “guns don’t kill people.” On the one hand, IFC will garner much support if they can show that oil palm investments directly reduce poverty, create jobs for the poor etc, while not causing environmental and social damage. On the other hand, if the main benefit of oil palm production is to fuel vehicles, IFC won’t get much support. Between these two extremes, if oil palm production makes corporations more profitable and a fraction of this profit eventually trickles down to the poor, support for IFC also is likely to be weak (except from multinationals). If oil palm based industries are created in-country, thus diversifying products and expanding refining and processing benefits to the producing country, that would be a benefit. IFC should encourage domestic processing and value-added to the fullest extent possible. Indonesia rejected WBG advice a few years ago by thoughtfully imposing a ban on the export of crude undressed logs. As a result, Indonesia now has a thriving plywood, veneer, particle-board and finished wood products industry, along with massive wood processing jobs. As an ecologist, I haven’t a ready solution, but the problems are real and should be tackled.

3. Water Use and Pollution: Now that fresh water has become scarcer than at any time in history, its conservation has risen in priority. It may have been understandable in the 1950s and 1960s for palm oil producers to dispose of their extremely high BOD oil palm wastewater into the nearest creek. That era has long gone. Now even untreated sewage outfalls from coastal cities into the ocean are increasingly being banned. The time has come for IFC to lead palm oil producers into closed-cycle water management. This would conserve the supplies of water, while preventing the pollution of waterways below the oil palm factory. In addition, it would create secondary industries in recycling and use of waste products regained form wastewaters.

Carbon credits for palm oil plantation companies?

While environmental campaigners accuse the palm oil industry of destroying natural forests in Indonesia, the Indonesian government is preparing to allow the palm oil plantations to claim carbon credits under reducing emissions from deforestation and degradation (REDD), a UN backed scheme still under negotiation.

REDD is yet to be approved by the UN Framework Convention on Climate Change.

If REDD is approved, the Indonesian government's plan to include palm oil plantations in the scheme would generate billions of dollars revenue for the palm oil companies as they will be able to claim carbon emission reduction units or carbon credits and sell them in the market!

Here is more on this.

Activists are for sure going to see red.

Unilever's sustainable palm oil plan on track, Cargill also committed

Unilever is clearly establishing itself as a leader in sustainable palm oil sourcing, a commitment that it made last year in response to a high-pitch campaign by Greenpeace.

Unilever says the company is on track to meet its target of 100% palm oil from sustainable sources by 2015. The company will have 35% of its palm oil coming from certified sustainable sources by the end of this year.

The company has recently signed an agreement with commodities trader Cargill to supply 10,000 tonnes of RSPO-certified sustainable palm oil for its European operations. About the same time, Unilever also signed a long term supply agreement with IOI-Loders Croklaan to source fully segregated RSPO-certified palm oil.

Cargill, a major player in the global palm oil trade, has announced a goal of 60% of its total crude palm oil from RSPO-certified producers by the end of 2010. The company eventually wants to buy 100% of its palm oil from RSPO-certified producers.

A partnership between the two giants- Unilever and Cargill- is a positive sign. Will other food majors follow suit?

IFC/World Bank framework for palm oil sector engagement

The International Finance Corporation / World Bank yesterday released a draft framework for engagement in the palm oil sector.

IFC/World Bank last year suspended lending to palm oil sector after a series of complaints against a few large palm oil producers lodged by civil society organisations.

"The World Bank Group recognized the legitimacy of these concerns and in response temporarily suspended any new investments in the palm oil sector," reads the executive summary of the draft framework.

The framework says that "the World Bank Group is aware of the sector’s negative environmental and social impacts, including deforestation, biodiversity loss, greenhouse gas emissions, land use conflicts, and questions over land tenure and human rights."

But the framework also adds that "the palm oil sector has played a significant role in advancing development and accelerating poverty reduction in the many tropical countries in which it grows. It often forms an important basis for national economies, both as a source of jobs, an export and a raw material for local industry."

The draft says that "the World Bank Group’s engagement in the palm oil sector is consistent with its mission to fight poverty without compromising economic, environmental and social sustainability."

"Adoption of this framework, coupled with compliance with environmental and social policies (the IFC’s Performance Standards and the World Bank’s Safeguard Policies), will enable the World Bank Group to play a catalytic role in moving the palm oil sector to a more sustainable footing."

The World Bank Group has defined four key themes that will frame its future engagement in the sector. These are:
• Supporting the development of an enabling policy and regulatory environment
• Mobilizing socially and environmentally sustainable private sector investment
• Encouraging benefit sharing with smallholders and communities
• Supporting sustainability codes of practice.

Here is the link to the draft framework document.

UK govt to research palm oil sustainability. HSBC exits controversial palm oil giant

The UK government has launched a research project into the use of palm oil. The project will look at how much palm oil is used in the UK and what portion is sustainably sourced. The project will also look at the palm oil's connection with the destruction of natural forests in Indonesia.

In an unrelated development, the British banking giant HSBC has announced that it has sold off its shares in the Indonesian palm oil producer Sinar Mas. Several reports by Greenpeace have accused Sinar Mas of illegal forest clearing.

The palm oil plantation industry is under attack for alleged unsustainable practices that are contributing to massive deforestation in South-east Asia.

Greenpeace urges top brands to boycott palm oil giant Sinar Mas in a new report

A new report by Greenpeace urges some of the top brands to boycott palm oil producer Sinar Mas.

The report, How Sinar Mas is Pulping the Planet, says: "“It’s time for companies like Burger King, Dunkin’ Donuts and Kentucky Fried Chicken to catch up. We’re calling on companies in this report to stop doing business with Sinar Mas immediately."

Palm oil giant under tax fraud probe

Media has reported that Wilmar International, the world's largest palm oil company, is facing a tax fraud probe by the Indonesian authorities. When the news of the probe broke pout, Wilmar's shares dropped 7%, one of the biggest one-day drop for the company.
It has been reported that the authorities are investigating a possible evasion of $393 million in taxes.
In a statement, Wilmar has denied of any wrongdoing.
In an interesting twist, a group of Indonesian lawmakers is asking to curb the powers of the tax office. They are saying that companies such as Wilmar should take legal action against the tax office if they are treated unfairly during the investigation.

In an unrelated report last week, San Francisco based campaigner CorpWatch, said accused ADM of complicity in forest destruction and child labour in palm oil operations. The report also mentioned ADM's linked with Wilmar pointing out that ADM has 16% stake in Wilmar.

Palm oil producers' profits up

Aggressive campaigns led by Greenpeace against palm oil industry's alleged unsustainable practices have not hurt the bottomline of top palm oil producers.

At least two major palm oil players listed on Singapore Stock Exchange have reported a jump in their profits. Golden Agri Resources said last week that its first quarter net profit surged 10-fold on year to $88.5 million.

The company said it expects demand for crude palm oil from the renewable energy sector to continue to grow in view of the increasing push by governments to expand renewable energy capacity.

Global Agri Resources operates a planted area of 427,000 hectares, as well as 34 palm oil processing mills, three refineries and six kernel crushing plants in Indonesia.

During the same week, Wilmar International, the world's largest palm oil producer, declared a better than expected 6% rise in first quarter profits. The first quarter earning of the company stood at $401 million, up from $380 million in the same period last year. The company's first quarter revenue however climbed 36% to $6.8 billion.

Early this year, Wilmar had reported a record profit of $1.88 bn for the year 2009, up 23% over the previous year. Pre-tax profit from plantations and palm oil mills grew 41% to $122.2 million.

Another top palm oil producer Sinar Mas which was recently suspended by Nestle following a Greenpeace campaign reported that its first quarter operating income more than doubled compared with the same period last year. The company operates 134,770 hectares of palm plantations in Indonesia.

Greenpeace takes the sustainable palm oil campaign back to the fields

After hugely embarrassing Nestle with a multi-media Kit-Kat and social media campaign, Greenpeace has taken the sustainable palm oil campaign back to the ground, literally.

Greenpeace organised a press conference in Singapore coinciding with the annual general meeting of Sinar Mass, one of the largest oil palm plantations companies and a key palm oil supplier for Nestle. It has been reported that Nestle has canceled its direct contact with Sinar Mas after being attacked by Greenpeace. Earlier, Unilever had stopped buying palm oil from Sinar Mas.

Greenpeace campaigners presented in the press conference what they call a fresh evidence of forest destruction in Indonesia by the palm oil industry. Greenpeace has also released a new report Sinar Mas-Rainforest and Peatland Destruction based on recent research on the ground.

The report says that a comparison of satellite images from 23 February 2010 and 19
November 2009, confirms that peatland and forest clearance continues in PT ALM concessions, owned by Sinar Mas. The report says that satellite images also show that approximately 2,300 hectares (of the 6,252 hectares identified as HCV in 2006)iv, has been cleared by PT ALM.

This is the second report on Sinar Mas in five months. Last December, Greenpeace had published Forest Clearance and RSPO Greenwash: Case Studies of Sinar Mas accusing the group of rainforest destruction.

An hour ago I received news that Spanish energy giant Abengoa has sacked Sinar Mas as palm oil supplier. Abengoa buys palm oil to be used as bio-fuel to produce energy.

Greenpeace has been campaigning to put pressure on the European Union to ban the use of palm oil as bio-fuel.

Cargill also under attack
Rainforest Action Network, published a report Cargill's Problems with Palm Oil last week which said the commodities giant Cargill was destroying rainforests in Indonesia to expand its palm plantations. Cargill has denied allegations.

Palm oil players taking the sustainability route to IPO

Palm oil producers seem to have started recognising the reputational benefit of sustainability. You know this when their Initial Public Offering (offering shares to public in order to get listed on a stock exchange) advertisement mentions their commitment to sustainability.

Global Palm Resources Holdings Limited, a little known palm oil company with operations in Indonesia, has taken out IPO advertisements in newspapers as it seeks listing on the Singapore Stock Exchange.

The IPO ad has a banner headline which reads: "Benefiting People and the Planet." Then the body text has two main parts: "Investment highlights, and Our Environment Policy."

The environment policy section states that the company adopts a zero burning policy in clearing land for planting, it's moving toward zero waste management, has proposed co-composting method of treating empty palm fruit bunches and the mill effluent to reduce methane emission, and has applied for membership to the Roundtable on Sustainable Palm Oil (RSPO).

Their website has a CSR link which tells you that the company has applied for membership to RSPO on 11 March 2010. Now that is about six weeks before their IPO opened for sale on the 22nd April.

A press release from the company on the IPO has this headline: "Global Palm Resources Holdings Limited, a palm oil producer with a focus on environment and community,to list on SGX Main Board"

However, the company does not mention if its CSR claims are substantiated by any independent audit, verification or certification, or if there is any endorsement by respectable stakeholders or NGOs.

The company says it plans to double the size of palm plantations with the money raised from the IPO.

Elsewhere, Greenpeace activists dressed as Orang-utans descended on Nestle annual general meeting in Lausanne, Switzerland, protesting against the chocolate-maker's alleged role in the destruction of Indonesia's rainforests by not committing to buying palm oil from sustainable sources.