Is this Malaysian palm oil firm still destroying forest in Borneo — and selling to Wilmar?

A Greenomics report finds deforestation in the supply chain of Genting Plantations, a supplier of Wilmar International.

west kalimantan aerial
A plantation landscape in West Kalimantan taken in 2009. Image: Waks, CC BY-NC-ND 2.0

The Malaysian-owned palm oil company Genting Plantations has again been accused of clearing ecologically important secondary forest in Indonesia’s West Kalimantan province according to a recent report by Greenomics that raises fresh concerns over the effectiveness of “zero-deforestation” monitoring within the palm oil industry.

The report, titled “Wilmar’s palm oil products continue to be associated with deforestation,” alleges that PT Citra Sawit Cemerlang (PT CSC), a Genting subsidiary, cleared High Carbon Stock (HCS) forest in its concession in West Kalimantan, a violation of Wilmar International’s landmark pledge to purge its supply chain of deforestation. The Singapore-listed agribusiness giant is the world’s largest palm oil trader and depends on producers like Genting to sate its refineries.

“If they [Wilmar] want to clean up supply chains then they have to be responsible for this,” said Vanda Mutia Dewi, executive director of the Jakarta-based Greenomics, an NGO. “That is why if they find anything like this they have to cut their relationship with their suppliers.”

Wilmar interprets its commitment differently. The multinational company believes severing ties with errant producers will only ensure that the destructive practices continue. Better to engage with these suppliers in a bid to shepherd them along the path to sustainability. Cutting them off is seen as a last resort.

That approach, Wilmar contends, has been successfully applied in this case. Executives said that while “it is possible that HCS may have been cleared prior to September 2014,” the trader has since worked with Genting and the Bogor-based consultancy Aidenvironment to conduct a survey of the concession’s forest cover in order to produce a rough map for PT CSC’s future operations. According to Wilmar, Genting and PT CSC stopped all clearing during Aidenvironment’s assessment, and PT CSC has since adhered to the consultancy’s advice.

“We take our No Deforestation, No Peat and No Exploitation Policy commitment seriously,” Wilmar said. “[We] have been working diligently towards ensuring both our own operations and companies from which we source will provide products that are free from links to deforestation or human rights abuse.”

But satellite images provided by Greenomics appear to tell a different story. The discussion has since stalled as both sides hold firm to their assessments of the situation, with the palm oil companies denying any additional wrongdoing and Greenomics standing behind its initial allegations.

“Based on [Genting’s] own documents this is HCS,” Vanda said. “It is not Greenomics who classified this area as HCS. There is no doubt about this. We are using Genting Plantation’s documents, saying that the land cover of this area is HCS.”

Is self-monitoring enough?

The issue also highlights deeper concerns over the self-monitoring of palm oil traders and their ability to enforce structural change in a highly fragmented industry that is struggling to appease both the Indonesian government’s demands for higher productivity in the sector and the international community’s want of a more sustainable product.

Wilmar pledged to cut deforestation and peatland conversion from its supply chain at the end of 2013, before beginning work in earnest in the following year. But more than two years later, a tiny nonprofit like Greenomics, which analyzes free Landsat and Google Earth satellite images and relies on publicly available information, is still able to catch probable violations with greater frequency than a company recently valued at $15.49 billion.

“We know they are doing monitoring, but not tight monitoring,” Vanda said. “It’s happened many times. They have to admit that it is not enough to only rely on just TFT [the consultancy helping Wilmar implement its commitment], for example. They need to be thankful for independent monitoring if they are serious.

“We asked them, ‘what were your intentions when you wrote down your policy?’ because in your policy there are very beautiful words, saying that ‘boom, sim salabim’ and now [it’s done] and then when civil society comes to the public saying this was a violation of their policy they say, ‘it is a journey; we cannot implement our commitment [immediately],’ and so on.”

Wilmar officials admit that its sustainability team still relies heavily on third-party monitoring as it works to iron the kinks out of its procedure for addressing alleged violations within its vast supplier network. The company only recently finished tracing its palm oil from the refinery to the mill level in the first comprehensive survey of its own supply chain, a move Wilmar believes will provide a detailed assessment of “monitoring of practices on the ground, [while] promoting greater transparency and accountability.”

“I think there’s always room for improvement, but we are not in the business of policing,” the company told Mongabay. “It comes with experience — we have only launched our policy in the end of 2013 and we started this whole process in 2014, so we are learning as we go along. How we improve is essentially based on the experience of these two years.”

Plantation problems persist

PT CSC’s West Kalimantan plantation was, by all accounts, in breach of numerous sustainability commitments from the start. The Genting subsidiary began to clear its concession without first filing a “New Planting Procedure” plan with the Roundtable on Sustainable Palm Oil (RSPO), a clear violation of its parent company’s obligations under its membership with the roundtable, which forbids clearing of virgin forests, riverbanks and other High Conservation Value (HCV) areas.

We asked them, ‘what were your intentions when you wrote down your policy?’ because in your policy there are very beautiful words, saying that ‘boom, sim salabim’ and now [it’s done] and then when civil society comes to the public saying this was a violation of their policy they say, ‘it is a journey; we cannot implement our commitment [immediately],’ and so on.

Vanda Mutia Dewi, executive director of Greenomics

In August 2013, the Borneo Rhino Alliance (BORA) filed a complaint with the RSPO over the missing NPP documents. BORA questioned how Genting was, at the time, reporting an additional 22,000 hectares of new plantations when the RSPO had no new NPPs on record. The roundtable issued a stop-work order in April 2014, during which all land clearing and development was supposed to freeze in PT CSC’s West Kalimantan concession.

By the time the RSPO ordered PT CSC to halt all operations in the concession, environmental watchdogs like BORA and Greenomics had assembled a long list of alleged issues, including the destruction of both High Carbon Stock and HCV forests.

Genting hired Aidenvironment to conduct a Land Use Change and Cover (LUCC) study that would provide a rough guide for future development, including an assessment of potential HCS areas that were effectively off-limits to conversion under Wilmar’s policy. (The RSPO’s less-stringent standards allow clearing of HCS forests.)

During a series of site visits, assessors discovered that preliminary HCV maps which appeared to show a network of rivers running through the concession were erroneous. No HCV was present at the site, according to documents filed with the RSPO.

The roundtable lifted its stop-work order in September 2014. One month later, Aidenvironment began its assessment of plantations operated by both PT CSC and PT Permata Sawit Mandiri (PT PSM), another Genting subsidiary operating in West Kalimantan. By January 2015, Aidenvironment had concluded its surveys. A LUCC study for PT CSC and a HCS assessment for PT PSM were submitted to the RSPO.

Four months later, Aidenvironment announced that its work in the two concession areas was complete, but the consultancy suggested PT CSC continue its assessment and conduct a more precise analysis of the concession’s HCS coverage.

Eric Wakker, a senior consultant with Aidenvironment, explained that the LUCC was never meant to be the final survey of the HCS coverage in the concession. The survey only provided PT CSC with a broad overview of the area, and in all likelihood the plantation company cut down HCS forest when it followed the consultancy’s maps alone.

“Whether or not HCS was cleared before or after is somewhat hypothetical because no HCS study was done, but I agree with Wilmar: likely,” Wakker said. “Our ‘go-no-go’ effort intended to give an approximate estimate of how much land could potentially be developed, pending review of the HCV study and full HCS study.”

Wakker told Mongabay that the Indonesian government never should have released the forest as an oil palm concession in the first place, but that he understands why a foreign-owned company like Genting would be eager to begin clearing the land. The Genting subsidiary was authorized to clear the entire concession in order to develop a new plantation and granted the right to sell the timber harvested during the process.

Indonesian officials were looking at Genting to fulfill its obligations and begin to pay taxes on timber sales, Wakker said. “I can assure you that for a foreign-owned company operating in Indonesia, it is not easy to withstand such pressure,” he explained.

Whilst it is clear enough by now that our ‘go-no-go’ assessment should not have been used as a basis to recommence land clearing, I can see Genting’s perspective. Namely that workers and contractors were already unemployed for six months, that communities were not seeing their plasma smallholdings” — those managed as part of an arrangement with the company — “realized and that the forestry department was awaiting tax revenue from timber sales.”

Unlike Wilmar — and the other big palm oil traders with zero deforestation commitments — the Indonesian government allows clearing of secondary forest. Finding a way to balance these corporate sustainability pledges with the demands of the state is often a difficult task, Wakker stressed.

“The PT CSC case is a prime example where external stakeholders end up patching up weak local governance by parachuting new requirements down upon growers,” he said. “Handling all this in real-life situations on the ground where local actors are powerful in the game, is outright tough for growers — especially for those foreign-owned.”

But is Wilmar in violation of its policy?

Greenomics stands behind its report, which claims that HCS was cleared before, during and after Aidenvironment’s survey. Vanda, the executive director, pointed to Google Earth and Landsat images that she said indicate the ongoing conversion of secondary forest in the concession zone.

Wilmar, Wakker and Genting all deny that any clearing occurred while the RSPO’s stop-work order was in effect or during Aidenvironment’s assessment. Neither side is willing to back down and Greenomics has called on Aidenvironment to make its “go-no-go” maps public in order to finally clarify who is at fault. Either PT CSC cleared HCS in violation of the consultancy’s maps or Aidenvironment failed to properly identify all HCS within the concession, Vanda argued.  

Wilmar has declared the matter “closed for monitoring” and continued its relationship with Genting under the assumption that additional studies, including a full HCS assessment, will be completed in the near future.

Greenomics has urged the company to clarify its stance. If “closed for monitoring,” means that the matter has been resolved, then why has PT CSC continued to clear HCS forests?

“Wilmar said ‘closed for monitoring,’ and then Wilmar continued to have a purchasing relationship with Genting Plantations,” Vanda explained. “It means that Genting has followed the rules of Wilmar, right, so we were surprised to see that the areas had been deforested like this. So then what is the meaning of ‘closed for monitoring’ for Wilmar?”

Wilmar said that Genting and PT CSC were operating in accordance with the Aidenvironment assessment. The company told Mongabay that it will continue to monitor the situation and is currently working with Genting to investigate some of the concerns raised by Greenomics.

“Genting is now reviewing the issues raised in the Greenomics report and will update Wilmar on its findings and next steps,” Wilmar said.

The overarching Genting conglomerate is run by Lim Kok Tay, Malaysia’s fourth-richest person. Wilmar was founded by the Malaysian billionaire Kuok Khoon Hong and Martua Sitorus, one of Indonesia’s wealthiest.

This story was published with permission from Mongabay.

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