Some of the world’s biggest consumer goods firms have been sourcing palm oil from plantations illegally developed in Indonesia’s Leuser Ecosystem, one of Southeast Asia’s most important remaining rainforests that is home to critically endangered elephants, rhinos, orangutans, and tigers.
An undercover field investigation by environmental group Rainforest Action Network found that two palm oil traders that supply the firms—Singapore-headquartered Musim Mas and Golden Agri-Resources (GAR)—have been sourcing from plantations that have been deforesting the nationally protected Rawa Singkil Wildlife Reserve in Sumatra’s Singkil-Bengkung region.
Unilever, Nestlé, Mars, PepsiCo, Mondelêz, General Mills, Kellogg’s and Hershey’s were the multinational firms named in the investigation.
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The findings undermine long-standing commitments made by the likes of Mars and Unilever to distance themselves from suppliers that fell rainforests to produce palm oil, an ingredient found in about half of all supermarket products.
The report, which is part of the website Leuser Watch, also points to the banks that are financing the palm oil traders. They include Singapore’s OCBC Bank, Japan’s Mitsubishi UFJ Financial Group, and Dutch bank ABN Amro.
Singkil-Bengkung is not only a wildlife hotspot. Its peatlands are the largest and deepest in Aceh, and the drainage of the carbon-rich land has left the area vulnerable to haze-causing fires that bedevil Indonesia almost every dry season. Over the past decade, 18,000 hectares of forests within Singkil-Bengkung have been cleared for plantations.
[Big brands] are still sourcing from the companies driving palm oil plantation expansion into the heart of one of the highest priority conservation landscapes for addressing the climate crisis and wildlife extinction.
Gemma Tillack, forest policy director, Rainforest Action Network
Tracing the sale
In one of two investigations conducted in early 2019, RAN followed freshly harvested oil palm fruit grown on peatlands inside the protected reserve to a mill believed to supply Musim Mas and GAR, two of the world’s largest palm oil firms.
The grower was identified as CV Buana Indah, one of over 20 brokers selling palm oil in the Singkil-Bengkung region. The mill investigated by RAN was owned by PT Global Sawit Semesta.
RAN’s study also revealed that another of GAR’s suppliers, a mill located near the wildlife reserve called PT Samudera Sawit Nabati, had been processing oil palm grown by CV Buana Indah.
RAN pointed out that GAR’s supplier list includes PT Samudera Sawit Nabati’s mill, which does not have a system in place for tracing the source of its palm oil.
“The mills investigated here simply do not have the basic systems in place to ensure their palm oil is not driving rainforest destruction, so no company with a no-deforestation commitment can buy from them in good faith to their existing policy,” RAN campaigner Gemma Tillack said.
RAN said in the report that a lack of investment in traceability and compliance systems by big palm oil companies, combined with low palm oil prices and competition for higher-quality oil palm fruit among underperforming mills had meant that consumer goods brands continued to buy conflict palm oil.
GAR said that based on its own investigations, its supplier mills are not procuring from the companies highlighted in RAN’s report. However, the company conceded that none of the six mills it uses near Rawa Singkil Wildlife Reserve are able to fully determine the plantations from which they source.
The Sinar Mas-owned company, which was one of the first palm oil firms to feature on the Dow Jones Sustainability Index in 2017, aims to be able to trace 85 per cent of the palm oil it procures back to the plantation by the end of this year, and achieve 100 per cent traceability-to-plantation by the end of 2020.
Musim Mas said it has asked its suppliers to stopped working with the companies investigated in RAN’s report, and business with the two mills highlighted in the report would be suspended until they were compliant with its No Deforestation, No Peat, No Exploitation (NDPE) standards.
Musim Mas said it had achieved 53 per cent traceability for the nine mills it uses near the reserve, including independent smallholders and, like GAR, is aiming for full traceability by the end of 2020.
Both Musim Mas and GAR are members of the Roundtable on Sustainable Palm Oil (RSPO), the industry certifier for palm oil grown in areas free from deforestation. An RSPO spokesperson said that the plantation companies in RAN’s report are not RSPO members, and they have not received any complaints about the two mills in the study.
Unilever, a member of the Consumer Goods Forum which pledged to be deforestation-free by 2020, said that the company “has started its grievance process so any appropriate action can be taken”. It is in contact with both Musim Mas and GAR over the issue.
Nestlé told Eco-Business that GAR was investigating the matter, and had confirmed that the two mills in question “do not source palm oil from plantations engaged in deforestation activities in the Rawa Singkil Wildlife Reserve.” The company added that all of its supply chain is now monitored by satellite technology, a move that the company announced a year ago.
Mondelez International’s director of global sustainability Jonathan Horrell said the company has required all of its palm oil suppliers to use sustainable practices since 2014, and while it has made progress to incentivise plantation companies still deforesting to “stop, or be excluded,” the consumer goods industry “cannot win the fight against deforestation alone.” Partnership with governments, suppliers, and farmers is critical, he said.
Eco-Business has approached the other companies mentioned in the report for comment.
RAN’s Tillack commented: “The Singkil-Bengkung region of the Leuser Ecosystem presents a rare opportunity to still get it [conservation] right. This area still has vast, intact habitat for elephants, rhinos, orangutans, tigers and countless other species, but without real action by snack food companies and major banks, this treasure and globally important, natural carbon sink will be lost to a death by a thousand cuts.”