Unilever Boycotts Sinar Mas Palm Oil on Deforestation Report

Fidelis E Satriastanti & Bloomberg, Jakarta Globe 11 Dec 09;

Unilever, the world’s biggest user of palm oil, on Friday announced it was suspending purchases from Sinar Mas Group until the company proved its plantations weren’t contributing to deforestation in Asia.

The development came on the same day the Forestry Ministry dismissed evidence released by Greenpeace on Thursday that Sinar Mas was illegally clearing woodlands in West Kalimantan.

Unilever’s boycott will apply until Indonesia’s biggest oil palm grower “can provide verifiable proof that none of their plantations are contributing to the destruction of high conservation value forests and expanding onto peat lands,” the London-based company said on Friday.

PT Smart, a unit of Jakarta-based Sinar Mas, provides about 5 percent of all the palm oil that the Anglo-Dutch company uses in its sauces, detergents and ice creams, Unilever spokesman Flip Dotsch said.

Unilever will buy palm oil from other Indonesian companies, he said, without giving names.

Earlier on Friday, the Ministry of Forestry said Sinar Mas had violated no laws in regard to its activities in West Kalimantan.

Awriya Ibrahim, director of forest protection at the ministry, said allegations that three Sinar Mas companies did not have the proper permits to clear land in West Kalimantan’s Kapuas Hulu district were unfounded.

“Sinar Mas companies have not made any violations, especially not in regard to land-clearing activities,” he said. “They do possess the necessary documentation needed to clear land.”

Awriya said that clarification was needed in regard to a continuing misperception concerning existing regulations governing timber plantations.

He said companies were well aware that all of the country’s forested areas were state-owned, and that any conversion or land clearing activities carried out in those areas needed to be approved by the government.

“Sinar Mas companies did not require the [timber harvesting permit] because within their RKT [annual work plan] they were scheduled to pay the state for cutting forested areas. It is the same thing,” Awriya said.

On Thursday, a Greenpeace report said Sinar Mas companies were not obtaining permits for clearing forested areas.

The 1999 Forestry Law prohibits companies from cutting down trees without a permit.

“RKT only elaborates on the companies’ plans to convert forested regions, including details on how many hectares are earmarked for conversion. The companies still need to obtain a permit,” Joko Arif of Greenpeace Southeast Asia said.

The Greenpeace report accused Sinar Mas units PT Kartika Prima Cipta, PT Paramitha Internusa Pratama and PT Persada Graha Mandiri of illegally clearing land in West Kalimantan from 2006 to 2008.

‘Unacceptable practices’ see Unilever end Sinar Mas deal
The Jakarta Post 11 Dec 09;

Anglo-Dutch company Unilever has suspended all future purchases of palm oil from Indonesia’s PT SMART, a subsidiary of the Sinar Mas Group, citing the supplier’s failure to meet the “highest possible” sustainability standards.

The company said in a statement issued Friday that the suspension would remain in place until SMART could provide verifiable proof that none of its plantations contributed to the destruction of high conservation value forests or expanded into peatlands.

Unilever said that over the past 18 months, it had been scrutinizing the activities of its suppliers to verify their compliance with standards set by the Roundtable on Sustainable Palm Oil (RSPO).

The RSPO, which also includes Sinar Mas, is a self-regulating body aimed at preventing illegal forest clearance. Environmental groups have criticized it as toothless and an obstacle to independent scrutiny.

The Times reported Friday that Unilever decided to suspend the annual contract worth £20 million (US$32.5 million) after it had obtained photographic evidence of Sinar Mas clearing protected rainforests, including reserves for Indonesia’s endangered orangutan population.

The environmental NGO Greenpeace published this week a report detailing serious allegations against Sinar Mas’ environmental practices. Following up on the report, Unilever decided to take immediate action.

Sinar Mas managing director Gandhi Sulistyanto condemned Greenpeace for its actions, saying the group was being steered by other stakeholders with vested interests in undermining the company.

Illegal palm oil from forests taints Unilever household brands
Ben Webster, Times Online 11 Dec 09;

A company that produces many of Britain’s best-known household brands has been exposed as contributing to the destruction of rainforests by buying thousands of tonnes of illegal palm oil.

Unilever, which uses palm oil in its Flora and Stork margarines, Dove toiletries and Persil washing powder among many other products, will today announce that it is cutting links with Sinar Mas, Indonesia’s largest palm oil company.

Unilever is acting after being shown photographic evidence of Sinar Mas clearing rainforest in protected areas, including reserves for the country’s endangered orang-utan population.

The Anglo-Dutch company, which claims to be a leader in protecting rainforests and chairs the Roundtable on Sustainable Palm Oil (RSPO), was informed almost two years ago about Sinar Mas’s illegal activities.

It cancelled the £20 million annual contract in the past few days after learning that Greenpeace was about to publish a dossier of evidence.

The RSPO, which also includes Sinar Mas, is a self-regulation body that aims to prevent illegal forest clearance. Environmental groups have criticised it as toothless and an obstacle to independent scrutiny.

The growth of the palm oil industry in Indonesia has turned the country into the third-largest emitter of CO2, after China and the US. Indonesia has the fastest rate of deforestation, losing an area the size of Wales every year.

Deforestation contributes 15-20 per cent of global greenhouse gas emissions and is one of the key issues being debated at the Copenhagen climate change summit.

Sinar Mas is one of dozens of palm oil companies likely to exploit loopholes in proposed new UN rules on protecting forests. Under the draft text of the rules, known as Reducing Emissions from Deforestation and Forest Degradation (Redd), palm oil plantations created by clearing rainforests would qualify for payments from a new fund under which rich countries would pay developing countries for storing carbon in trees.

Gavin Neath, Unilever’s vice-president for communications, said: “We have received very serious allegations against Sinar Mas and we had no choice but to suspend future purchases from them.” He said that the company had not acted before because it thought it better to work with Sinar Mas to improve its practices. He admitted that this approach had failed.

Unilever is the world’s biggest consumer of palm oil and has pledged to buy only from certified sustainable plantations from 2015. This year, 85 per cent of its palm oil was uncertified.

Waitrose said this month that all the palm oil in its own-brand products would be from sustainable sources by 2012.

The growth of certified palm oil has been held back by a dispute between producers and buyers over the price for the sustainable product.

Producers had been asking for an additional 10 per cent to cover the cost of certification. Mr Neath said that Unilever had been unwilling to pay this because it believed that consumers had little understanding of the issues about palm oil and would not accept the extra cost. Unilever negotiated a smaller premium on 180,000 tonnes of sustainable palm oil this year out of its consumption of 1.3 million tonnes.

Simon Lewis, research fellow on tropical forests at Leeds University, said: “We shouldn’t have the companies buying the palm oil being the policemen. We need a strong Redd agreement with independent monitoring and no loopholes for new plantations.”

RPT-Unilever cuts palm oil supplier ties after report
Reuters 11 Dec 09;

LONDON, Dec 11 (Reuters) - Consumer goods company Unilever (ULVR.L) (UNc.AS), the world's largest user of palm oil, has suspended purchases of edible oil from Indonesian group Sinar Mas on concerns over rain forest destruction.

Unilever, which uses palm oil in such products as Dove soap, Ben & Jerry ice cream, and margarines like Stork, cancelled its annual 20 million pound ($32.6 million) contract with Sinar Mas after a critical report by environmental group Greenpeace.

Anglo-Dutch Unilever said on Friday it was suspending purchases from PT SMART (SMAR.JK), which is part of Sinar Mas, until the Indonesian group could give proof that none of its plantations was contributing to the destruction of rain forests.

Greenpeace alleges that Sinar Mas, Indonesia's biggest palm oil producer and the second biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

Sinar Mas was not immediately available for comment. In the past, it has denied accusations its activities were damaging the environment.

"The Greenpeace claims are of a nature that we can't ignore. Unilever is committed to sustainable sourcing. Therefore, we have notified PT SMART that we have no choice but to suspend our future purchasing of palm oil," said Unilever's Chief Procurement Officer Marc Engel said in a statement.

Unilever said an independent audit of palm oil suppliers in early 2009 had highlighted areas of concern which were being addressed on an individual basis, but the Greenpeace report had prompted the group into immediate action.

"Unilever's decision could represent a defining moment for the palm oil industry. What we're seeing here is the world's larger buyer of palm oil using its financial muscle to sanction suppliers who are destroying rain forests and clearing peatlands, said Greenpeace director John Sauven in a statement.

Unilever consumes around 1.3 million tonnes of palm oil each year and has pledged to buy only from certified sustainable plantations from 2015, while around 90 percent of worldwide supply comes from Indonesia and neighbouring Malaysia. ($1=.6138 Pound) (Reporting by David Jones; editing by Karen Foster)

Unilever cuts palm oil ties over environment fears
Jenny Wiggins, Financial Times 11 Dec 09;

Unilever, one of the world’s largest single purchasers of palm oil, has stopped buying oil from Indonesian company PT Smart amid Greenpeace allegations that its plantations destroy forests.

It is the first time that Unilever, which uses palm oil in its margarines, soups and shampoos, has stopped buying oil from one of its suppliers for environmental reasons.

The multinational consumer goods company buys about 3-4 per cent of global production of palm oil, or about 1m tonnes annually. It uses six suppliers in Indonesia and Malaysia, including PT Smart.

Unilever decided to stop buying palm oil from PT Smart after it was shown a Greenpeace report making allegations against the company’s environmental practices. “They showed us evidence we can’t ignore,” said the company.

Unilever declined to specify how much money it spends annually on purchases from PT Smart. It said it had “ongoing relationship” with the Indonesian company rather than an annual contract and would switch purchases from PT Smart to its existing suppliers.

PT Smart is part of the privately-held Sinar Mas group, Indonesia’s biggest palm oil producer, and has a 130,000 hectare palm plantation.

The Sinar Mas group is controlled by Indonesia’s Widjaja family. In 2001, the family’s Asia Pulp & Paper company defaulted on $14bn in debt in the biggest corporate default in emerging markets history.

Unilever has pledged to make all its European palm oil purchases sustainable by 2012 and all its global purchases sustainable by 2015.

It buys GreenPalm certificates for about 15 per cent of its total purchases. The certificates are awarded to palm oil producers for every tonne of oil that is sustainably produced. Producers can then sell the certificates on a web-based trading platform to manufacturers.

Indonesia, which is the world’s largest palm oil producer and emitter of greenhouse gases through deforestation, aims to grow 8.1m hectares of palm oil by 2010, which would generate 23.2m tonnes of oil.

Sinar Mas executives have regularly denied any wrongdoing. Gandi Sulistiyanto, a company managing director, told Reuters earlier this year the company only opened up new plantations in degraded land that had been farmed on or previously logged and not rainforest.

”We should have been arrested if we had ever been involved in deforestation,” he said. ”We are still a growing company. We (Indonesia) are still competing with Malaysia to become the world’s top producer of palm oil. So we must keep planting.”