Some of the companies committing the worst deforestation for palm oil have been entering the supply chains of major international companies with ‘no deforestation’ policies – including consumer brands such as Colgate-Palmolive, Nestle and Unilever – in a clear breach of those standards.
This is highly concerning and shows that the policies and procedures that companies have in place to ensure no deforestation are insufficient, given that palm oil coming from forest clearing has still been entering their supply chains and, no doubt, European markets and supermarket products.
With the EU having just agreed the text for a new regulation to ensure that only products free from deforestation are sold in its marketplaces, companies will need to up their game to ensure they are in compliance.
The deforesting palm oil companies
PT Permata Sawit Mandiri (PSM)
PT Permata Sawit Mandiri (PSM) is a palm oil company in West Kalimantan, Indonesia, which is reported to have cut down up to 1,300 hectares (ha) of rainforest in the first half of 2022.
In 2021, PT PSM cleared about 450 ha of forest and in 2020 about 2,000 ha of forest; it has regularly appeared on lists of the worst deforesters for palm oil.
Both Goodhope and Bumitama have admitted their mills were sourcing from PT PSM – Goodhope admitted this to AidEnvironment, while Bumitama to our Indonesian partner Kaoem Telapak – despite both Goodhope and Bumitama having ‘no deforestation’ policies which apply to their suppliers.
Bumitama’s mill. which has been buying from PT PSM, supplies palm oil to many major companies that also have ‘no deforestation’ policies, including major palm oil traders/processors such as AAK, Archer Daniels Midlands (ADM), Bunge, Cargill, Fuji Oil, Golden Agri Resources, Louis Dreyfus Company, Olam and Wilmar and major consumer brand companies such as Barry Callebaut, Colgate-Palmolive, the Hershey Company, Johnson & Johnson, L’Oreal, Mondelez, Nestle, PepsiCo, PZ Cussons, Reckitt and Unilever, to name a few.
While both Goodhope and Bumitama have now reportedly ceased sourcing from PT PSM after being alerted, they were sourcing from PT PSM up until January 2022 and August 2022 respectively, and therefore PT PSM’s palm oil – and the associated deforestation – would have entered international supply chains.
PT Sawit Sukses Sejati (SSS)
PT SSS (formerly PT Anugerah Langkat Makmur) in Mandailing Natal, North Sumatra, Indonesia cleared about 350 ha of forest in 2021 and about 660 ha of rainforest in 2022.
PT SSS has been supplying palm oil to the Roundtable on Sustainable Palm Oil (RSPO) certified Sikarakara mill, owned by PT Rimba Mujur Mahkota, a part of the Pasific Agro Sentosa Group since at least 2020.
Under RSPO rules, mills certified under the Mass Balance model are allowed to source palm oil from both certified and uncertified sources. In the case of Sikarakara mill, 57 per cent of the palm oil it processes is from uncertified sources, one of which has been PT Anugerah Langkat Makmur (now PT SSS).
Sikarakara mill supplies to many major palm oil companies with ‘no deforestation’ policies. Again, these include major palm oil traders/processors such as AAK, Archer Daniels Midlands (ADM), Bunge, Cargill, Fuji Oil, Golden Agri Resources, Louis Dreyfus Company, Olam and Wilmar and major consumer brand companies such as Barry Callebaut, Colgate-Palmolive, the Hershey Company, Johnson & Johnson, L’Oreal, Mondelez, Nestle, PepsiCo, PZ Cussons, Reckitt and Unilever.
While Sikarakara mill reportedly ceased sourcing from PT SSS as of early 2022, palm oil and deforestation from PT SSS would have been entering international supply chains prior to this.
PT Inti Kebun Sawit (IKS) and PT Inti Kebun Sejahtera (IKSJ)
PT IKS and PT IKSJ have deforested an estimated 700 ha of rainforest in 2022 after restarting clearance earlier this year, as we reported.
The two palm oil concessions are situated in Sorong district, West Papua, Indonesia and are owned by Ciliandry Anky Abadi (CAA).
PT IKJS’s mill is listed as supplying to Grupo Bimbo, one of the world’s largest baking and snacks companies, through International Flavors & Fragrance (IFF).
IFF is an ingredients manufacturer and a major global leader in the food, health and biosciences industries. More than 4,000 companies globally use its flavourings and scents in consumer goods such as fabric softeners, soups and deodorants.
It is unknown whether IFF is still continuing to source from PT IKJS’s mill at this time, with Grupo Bimbo stating it is engaging with its supplier to take action and clarify the deforestation allegations.
Companies must do better
Despite ‘no deforestation’ commitments, major international companies have still been receiving palm oil from plantations that are actively deforesting.
The EU’s new regulation – for which EIA has long campaigned – will require companies to ensure the palm oil and other commodities they are placing on the EU market are not produced on land that has not been subject to deforestation after 31 December 2020. These companies therefore risk being in non-compliance.
EIA contacted a number of the major international companies, many of which confirmed the mills in their supply chain had been buying from the actively deforesting concessions named above but which state action has now been taken and the sourcing has ceased.
However, this deforestation should never had ended up in their supply chains in the first place.
There is no reason why companies cannot identify that they are sourcing from plantations with active deforestation. The deforestation by these palm oil plantations in Indonesia is well-known and publicly documented. It shows companies and their suppliers are not conducting adequate due diligence nor are they adequately tracing their supplies back to palm oil plantations.
As the new deforestation regulation in the EU is set to be formally adopted, companies will need to up their game.
This new law will require those supplying the EU market to trace the palm oil they buy right back to the plantation and to ensure it is both legal and deforestation-free.
To judge from the cases cited above, such a law is evidently much needed.