Singapore-based palm oil giant Golden Agri-Resources (Golden Agri) has responded to an inquiry by the Roundtable on Sustainable Palm Oil (RSPO) and rebutted complaints that it had violated multiple industry guidelines on responsible palm oil development.
The company’s 10-page letter, filed on March 25, follows an official complaint lodged by UK-based non-profit Forest Peoples Programme (FPP) last October to the RSPO. FPP had alleged, among other things, that Golden Agri had failed to obtain mandatory permits before submitting plans for new plantings to the RSPO.
The RSPO is an industry-led non-profit association which administers a certification process for sustainably grown palm oil.
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To obtain the certification, palm oil companies which are members of the RSPO must follow a set of Principles and Criteria (P&C) and this must be verified by accredited organisations. The certification can be withdrawn at any time if the rules and standards are infringed.
In a recent interview with Eco-Business, Golden Agri’s managing director for communications and sustainability Peter Heng said that while the complaints had highlighted “some shortcomings” in its processes for developing new oil palm plantations, the company had not violated any national laws.
The FPP complaint claimed that Golden Agri had not done necessary land assessments before carrying out new plantings on its concessions and did not have the required permits for developing plantations.
Golden Agri had stopped all new plantings since 3 November last year, shortly after the FPP complaint was filed.
FPP also allged that on one concession owned by Golden Agri subsidiary PT Kartika Prima Cipta (PT KPC), the company had also violated the customary rights of local communities to their land, and had not sought Free, Prior and Informed Consent from the local Dayak and Malay people on the land.
A panel of representatives from palm oil companies, environment and labour rights groups, and financial institutions - part of RSPO’s Complaints System - investigated these claims and declared in early March that they had reasonable grounds to believe that Golden Agri had indeed breached three of the organisation’s criteria for sustainable palm oil development.
In its response, Golden Agri acknowledged the need to strengthen its processes such as High Conservation Value (HCV) assessments and participatory mapping. But the company maintained it had complied with Indonesian laws on permit requirements and land sales.
The HCV assessment involves identifying and conserving land with an especially high ecological, cultural or social value; and participatory mapping refers to the process where companies and communities agree upon land-use maps after factoring in customary land boundaries, sacred areas, and traditional practices.
Issues of contention
The first RSPO guideline that Golden Agri potentially violated was the requirement that companies obey all national laws in the countries they operate in.
On analysing Golden Agri’s plans for carrying out new plantings on 18 subsidiary-owned concessions, which were submitted to RSPO, FPP pointed out that only 16 of the 18 subsidiaries possessed business land use permits - known locally as Hak Guna Usaha, or HGUs.
In response, Golden Agri referred to a passage in a 2009 report FPP co-authored with other environmental groups, which summarises existing national laws and states that land clearance and planting could begin before an HGU application had been filed.
Heng also pointed to a 2013 report on Indonesian plantation laws by consulting firm Daemeter, which corroborates the fact that HGUs are not a pre-requisite before companies can start land clearance and planting.
What is legally required to begin plantation development is a location permit (Ijin Lokasi) and plantation business license, or an Ijin Usaha Perkebunan (IUP), said Heng. These had been secured for all 18 concessions, and HGU applications were also underway for the 16 concessions that lacked them, he added.
The HCV dispute
FPP also took issue with Golden Agri’s process of carrying out HCV assessments on its concessions.
Firstly, FPP said that the initial assessments done on PT KPC’s concessions had not adequately safeguarded the needs of local communities and their customary land rights; secondly, although Golden Agri had acknowledged this and begun a new HCV assessment, the New Planting Procedures had been submitted to RSPO before the second round of HCV assessments were complete.
Thirdly, FPP pointed out that because the HCV assessments were not completed before developing the land on PT KPC, villagers got back less land than expected. Under an existing government scheme called “Plasma”, communities are meant to get back 20 per cent of land to be developed as smallholdings.
On the first issue raised, FPP said the initial HCV assessment on PT KPC carried out by conservation charity Fauna and Flora International (FFI) in 2011 was found lacking in its attention to two key areas involving the rights of communities and land conservation.
Golden Agri, acknowledging the weakness of FFI’s assessment, had restarted the process with another assessor, the Agricultural University of Bogor (IPB).
This HCV assessment report was finalised in October last year. But FPP’s complaint showed that the 18 New Planting Procedures were submitted to RSPO between April and July 2014 - before the report was done.
Heng acknowledged that “clearly, there are legacy issues” in the way that HCV assessments had been carried out on PT KPC. He attributed this to a lack of awareness and external guidance on how to conduct these assessments when PT KPC was established in 2005, and a lack of assessors.
“While we believed that the HCV assessment in PT KPC was conducted in accordance with the RSPO process then, we now recognise that (it) could be further strengthened,” he added in Golden Agri’s letter to RSPO.
To strengthen their HCV processes, Golden Agri in their 25 March letter announced a collaboration with Indonesian environmental consulting firm Ekologika, which has extensive experience in HCV issues.
Both organisations are developing a new approach to HCV assessment which involves ongoing management and monitoring, rather than one-off assessments, explained Heng.
This method will be used to re-assess previous HCV assessments on all Golden Agri concessions where land development has been put on hold, and is also expected to enhance standards for the whole palm oil industry, said Heng. He added that the method would first be tested out in PT KPC, and once stakeholders there were satisfied, extended to remaining concessions.
FPP and other stakeholders have also been invited to provide feedback on this new methodology.
On PT KPC, Golden Agri paid the community for 5,000 hectares (ha) of land. Under the Plasma scheme, the community was therefore entitlted to receive 1,000 ha back as smallholdings. But this had not been the case because “Golden Agri didn’t do HCV assessments before they took the land, and when they did, they realised that a lot of the areas they allocated to smallholdings was also HCV,” Colchester told Eco-Business. This meant that the community could not use this land for plantation development.
In response, Heng said the company is committed to planting 1,000 ha plasma, and the process of identifying and finalising this land is underway.
But he added this is dependent on when community land were to become available and the ability to secure financing for plantation development in agreement with the community.
FPP also reported issues in GAR’s process of acquiring land from villagers. Participatory mapping was only just commencing in PT KPC, and had not even started in most of the other concessions, and “not a single person had a copy of the land contract”, said Colchester.
Golden Agri had also not compensated farmers fairly for the loss of the use of their lands, and had not explained that by surrendering the land, farmers were permanently giving up their rights to the land, said FPP in its complaint.
Golden Agri’s Heng countered these claims, saying that all transactions with the community had been conducted on a “willing buyer, willing seller” basis.
He added that going forward, Golden Agri will be implementing “robust and mutually agreed participatory mapping processes”. It had also released copies of the environmental and social impact assessment and HCV assessments to communities, provided copies of land sale documents to all individuals they could contact, and was training an internal team in conflict management.
Regarding these allegations, Heng told the RSPO the company had always followed the law in dealing with local communities.
The company is not agreeable to renegotiating original land sale and purchase agreements as recommended by FPP, saying that doing so “opens up great potential risks of confusion and conflict”.
Rather, Golden Agri points to an alternative strategy suggested by The Forest Trust (TFT), an NGO working with the company on its Forest Conservation Policy, that to resolve land issues, individuals can submit a grievance through the company’s grievance mechanism.
“This is an area where there is a need for continuing discussion with FPP on the best way forward,” said Heng.
Golden Agri, who had in December submitted a timeline on rectifying these shortcomings to RSPO, will provide regular updates through its site, which tracks its progress on sustainability commitments.
The company had originally laid out a plan to complete necessary re-checking of its procedures and resubmit new planting plans to RSPO by 1 April, following which it plans to resume land preparation in phases by 1 May.
However, the timeline had been extended indefinitely with the company’s decision to update previous HCV assessments in collaboration with Ekologika, Heng told Eco-Business.
“As we are running a business, we do have a responsibility to our shareholders,” noted Heng. “Time-lines are important, but we also recognise the process is just as crucial.”
“Golden Agri is committed to ongoing dialogue and multi-stakeholder collaboration to continue to improve processes and find solutions for sustainable palm oil production,” he said. By sharing innovative concepts such as the new HCV methodology being developed with Ekologika, Golden Agri hopes to raise collective industry sustainability standards, he added.
On its part, FPP told Eco-Business it is carefully examining Golden Agri’s response and would respond to the RSPO soon. It added that it is willing to continue working with Golden Agri to seek solutions.
“But meanwhile, we expect the Complaints Panel to continue to adjudicate and not just sit on the sidelines,” said Colchester.