Palm Oil Supplier’s Certificate Suspended

12.04.2016 -

The Roundtable on Sustainable Palm Oil (RSPO) has suspended the certification of IOI, a Malaysian palm oil company that supplies palm oil to more than 300 companies worldwide. The intervention is seen as especially significant as IOI is one of RSPO’s founding members. For as long as the suspension lasts, the company and its trading division IOI Loders Croklaan will be barred from selling palm oil certified as sustainable.

RSPO’s action comes amid multiple complaints from non-governmental organizations that IOI does not conduct its business in a sustainable manner. After several plans of actions were drawn up by the palm oil producer to remedy the situation, but no improvements were forthcoming, the Roundtable took action.

Greenpeace has accused IOI of destroying orangutan habits and peatland forest, especially in Indonesia, where repeated outbreaks of fires in and around its concessions occurred last year. Additionally, Finnish NGO Finnwatch said IOI has committed labor offenses on its Malaysian plantations, including confiscating workers’ passports, providing contracts in a language they could not understand, restricting freedom of association and paying salaries below minimum wage.

In March 2015, sustainability consultants Aidenvironment submitted a formal complaint to RSPO alleging deforestation in IOI concessions in Ketapang, West Kalimantan. While this was being investigated, it reported that the company appeared to be digging new drainage canals in one of its concessions under investigation, a violation of its commitment to protect peatlands.

Immediately following news of the suspension, Unilever – also a founder of the RSPO and one of the world’s largest end-consumers of palm oil – canceled its contract with IOI. Other large commercial consumers including Mars, Hershey’s, Kellogg, Colgate-Palmolive, Johnson & Johnson, Procter & Gamble, SC Johnson, Yum Brands and Nestlé have reportedly severed ties with the supplier.

The Malaysian palm oil producer has appealed part of its suspension and offered another action plan that has not yet been accepted by RSPO. The environmental organization Friends of the Earth has accused the Roundtable of foot dragging and called for its voluntary approach to be replaced with legally binding criteria. Meanwhile, Asian countries where palm oil is produced are moving to protect their own natural resources from unsustainable plantation activity.

Indonesian president, Joko Widodo, has ordered peatlands to be protected to prevent additional devastating forest fires. This would entail introducing an immediate moratorium on all plantation development across the supply chain, along with efforts to restore the damaged forest and peatland landscapes.

Plantations make up a small proportion of IOI’s business, but strong action would have a huge, positive impact for Indonesia and the global climate, Kiki Taufik, head of Greenpeace’s Indonesian Forests Campaign, told the British newspaper The Guardian.

“That makes this a small price to pay to reduce the risk of forest fires in a region that suffers disproportionately from fires and toxic haze,” he added.