Golden Agri adopts no deforestation policy

palm oil generic
Demand for palm oil, a key ingredient in many consumer and commercial products such as cosmetics, biofuels and edible cooking oils, is growing, with more than 40 million tonnes of palm oil worth $20 billion produced each year.

Singapore-listed Golden Agri-Resources (GAR) yesterday announced a new forest conservation policy that will ensure its palm oil operations will minimize its impact on forests.

GAR is the world’s second-largest palm oil producer and the largest in Indonesia with annual revenues of US$2.3 billion. Its move was seen widely as a response to intense pressure and lobbying by environmental groups such as Greenpeace recently over allegations of illegal forest clearing.

The firm yesterday signed an agreement in Jakarta with The Forest Trust (TFT), a Geneva-based non profit organisation, which will commence work immediately to work with GAR to identify high carbon stock forests, high conservation value (HCV) areas and peat lands.

This is defined as forests that contain 35 tonnes of carbon per hectare – a definition that may change after consultations with stakeholders, it said.

TFT’s involvement will also prevent the plantations from contributing to the destruction of forests that are particularly valuable in terms of environmental preservation, biodiversity, landscape, or to local livelihoods.

TFT executive director Scott Poynton said yesterday’s agreement “represents a revolutionary moment in the drive to conserve forests”.

“This shows that the private sector can quickly change its practices around forest destruction if the right factors are in place,” he said.

“It’s about going to the root causes of deforestation; we have shown that the destruction of forests is anchored deeply in the supply chains of the products we consume in industrialized nations, and we are showing we can do something about that,” he added.

The NGO began working with GAR last year after Nestle engaged TFT to adopt responsible sourcing guidelines for its palm oil suppliers.

Allegations that GAR’s Indonesian unit, PT SMART, was illegally clearing HCV forests and threatening the surrounding biodiversity has led the firm to lose big-name clients such as Nestle, Unilever and Burger King.

Last year, GAR had commissioned an independent audit to investigate the allegations, but after the results were released, GAR and Greenpeace clashed on how it should be interpreted.

When contacted, Greenpeace spokesman Bustar Maitar said the new move “could be good news for the forests, endangered species like the orang-utan and for the Indonesian economy”.

If GAR “do make these changes, large areas of forests will be saved. But now they’ve got to implement these plans, and we’re watching closely to make sure this happens,” he added.

Greenpeace also noted that the new initiative must have the support of the Indonesian government, which the government should demonstrate “by stopping any more licences being granted for forest and peatland clearance, and by reviewing activities in areas where licences have already been handed out.”

Indonesia’s Vice Minister of Trade, Mahendra Siregar, who was at the press conference yesterday said Indonesia will strive to be the best in this sector, and that means adopting sustainable business practices.

“The sustainability of our high economic growth depends on the sustainability of its industries,” he said.

Demand for palm oil, a key ingredient in many consumer and commercial products such as cosmetics, biofuels and edible cooking oils, is growing, with more than 40 million tonnes of palm oil worth $20 billion produced each year.

If the agreement translates into action, it could play a critical role in assuring investors that “Indonesia is on course to end the destruction of its natural forests and could help stimulate investment in Indonesia,” said Poynton. He added that various stakeholders were still in talks about how to conserve the land after it has been identified and set aside.

In 2009, Indonesia’s President Yudhoyono was one of the first leaders to commit a major developing country to national emission reductions from 26 percent to 41 percent.

Poynton noted that the agreement marks “the start of a broader consultation process in Indonesia on land use change in relation to the palm oil industry”. This process brings together government and industry officials, major palm oil customers, civil society groups and local and indigenous communities. “No substantive land-use change can take place without the involvement of these key players,” he said.

Franky Wijaya, Chairman and CEO of GAR also added that the agreement was a “first step” towards a wider collaboration within the palm oil industry and that the company was committed to taking a leadership role.

“As a leading player in the palm oil industry, we are committed to playing our role in conserving Indonesia’s forests and look forward to working with all stakeholders including the Government of Indonesia… to find the common ground for sustainable palm oil production,” he said.

The move will not have a significant impact or cost on its operations, said the firm.

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