Environment

Green Groups Get a Big Win in the Palm Oil Wars


An Indonesian palm plantation

Photograph by AP Photo

An Indonesian palm plantation

Green groups notched a big win yesterday in the climate-change wars. For years, environmentalists have been trying to shame multinationals from using palm oil grown on land in Indonesia and Malaysia that had been rain forest. Palm oil is a cooking oil popular in developing countries, such as India, and it’s a major ingredient in processed foods consumed in developed economies. In the European Union, palm oil accounts for 25 percent of edible oil consumption.

Palm oil consumption has quintupled since 1990, and the $44 billion industry shows no sign of stopping. The World Bank expects demand to double by 2020. That has led to worries about the environmental impact of palm oil plantations taking the place of old-growth trees. Another problem: Digging up the land to plant palm trees leads to the destruction of carbon-rich peatlands, a loss that releases large amounts of carbon into the atmosphere. Green activists have argued, too, that the spread of palm oil groves contributes to the demise of orangutans and other wildlife. Palm oil workers are also subject to widespread human rights abuses, a Bloomberg Businessweek investigation reported in July.

Largely because of campaigns to increase public awareness about the risks of palm-oil plantations, Nestlé (NESN:VX), Unilever (UN), and other companies have made pledges to use more sustainable palm oil and avoid oil grown on plantations carved out of virgin rain forest.

Which leads us to yesterday’s big win. Wilmar International isn’t a household name in the West, but it’s a major player in the food industry. The Singapore-based agribusiness company is the world’s largest trader of palm oil, and any campaign to encourage businesses to buy only palm oil certified as sustainable needs Wilmar on board.

That’s now happened, with the company announcing in a statement on Dec. 5 it will launch what it calls a No Deforestation, No Peat, No Exploitation policy that, Wilmar says, “aims to advance an environmentally and socially responsible palm oil industry.” The company promises that it will “only provide products that are free from links to deforestation or abuse of human rights and local communities,” adding that the new policy “includes measures to protect high carbon stock and high conservation value landscapes, and to ensure respect for community rights and support for development.”

Environmental groups are crowing. “Wilmar has responded to years of pressure from Greenpeace, other NGOs, and a growing movement of consumers around the world demanding clean palm oil and an end to forest destruction,” Bustar Maitar, head of the Indonesia forest campaign at Greenpeace International said in a statement. “Wilmar’s commitment to No Deforestation has the potential to transform the controversial palm oil industry.”

“The announcement represents a vital new approach for Wilmar International, which stands astride the global palm oil industry through its control of 45 percent of palm oil trade, and is a significant player in other commodities like sugar and soybeans,” Climate Advisers and the Forest Trust said in a statement. “The announcement sets a responsible path forward for one of the most environmentally intensive commodities on earth.”

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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Companies Mentioned

  • NESN:VX
    (Nestle SA)
    • $67.75 CHF
    • -0.25
    • -0.37%
  • UN
    (Unilever NV)
    • $37.05 USD
    • -0.15
    • -0.4%
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