Indonesia Sinar Mas Denies Greenpeace Deforestation Charges
April 27 2010 - 12:59AM
Dow Jones News
Sinar Mas, Indonesia's biggest palm oil producer, Tuesday said
the company remains committed to following sustainable practices
while producing palm oil, a product widely used as a cooking medium
as well feedstock for bio-diesel production.
In a statement, the company said it won't cultivate oil palms on
land with high carbon stock or land with high conservation
value.
Sinar Mas, the parent company of the Jakarta-listed PT Sinar Mas
Agro Resources and Technology Tbk (SMAR.JK) and the
Singapore-listed Golden Agri-Resources (E5H.SG), came under fire
recently after environmental group Greenpeace charged the company
with failing to follow sustainable plantation practices required by
the Roundtable on Sustainable Palm Oil (RSPO).
The report said Sinar Mas was widely involved in clearing rain
forests and draining peatlands for developing oil palm
plantations.
The campaign forced global giants such as Nestle N.V (NESN.VX),
Unilever Plc. (ULVR.LN) and Cargill Inc. (CRG.XX) to stop sourcing
palm oil from Sinar Mas, despite the company being a member of
RSPO, an industry-sponsored certification body.
The offtake by these companies isn't exceptionally large, but
their international visibility has helped Greenpeace push the
message that Indonesian palm oil producers continue to be a threat
to the country's rainforests and several endangered species of
animals. Indonesia is the world's biggest palm oil producer, with
output reaching 20.5 million tons in 2009.
Nestle, which uses around 4,000 tons of crude palm oil annually,
stopped buying CPO from Sinar Mas in February.
Prior to that, in December 2009, Unilever suspended palm oil
purchases from Sinar Mas, estimated around 47,000 tons or $32
million annually. Unilever has also stopped buying palm oil from
another Indonesian producer, Duta Palma.
Unilever, which uses palm oil in products ranging from soap to
ice-cream has said it would review the boycott if independent
auditors provide proof that Sinar Mas is following sustainable
practices.
Sinar Mas has appointed Control Union Certification and the BSI
Group to carry out independent audits and verify Greenpeace's
reports, the company said earlier this month.
While the result of the audits will be known only by June, Sinar
Mas said it viewed "any breach of its sustainability practices
seriously and has suspended the plantation manager responsible for
the area highlighted in the Greenpeace report."
But at a news conference Tuesday, Greenpeace said Sinar Mas
continues to break sustainability commitments made earlier.
"Evidence shows that Sinar Mas continues to lie to its
shareholders and customers about its environmental standards.
Whatever new promises it makes today, it is clear the company
intends to continue trashing rainforests and destroying orang-utan
habitat. We will continue to press Sinar Mas' customers to stop all
business with this forest destroyer until it cleans up its act,"
Greenpeace Southeast Asia Forest Team Leader Bustar Maitar
said.
According to Greenpeace, Indonesia has one of the fastest rates
of forest destruction on the planet, with palm oil and pulp and
paper plantations being major causes. As a result, it is now the
world's third largest greenhouse gas emitter, after China and the
United States, the group said.
By Shie-Lynn Lim & Sameer Mohindru, Dow Jones Newswires;
+603 2026 1233; shie-lynn.lim@dowjones.com