Palm Oil Giant Agrees to Protect Forests

The world’s second-largest palm oil company has agreed a standard for conservation of Indonesian forests and peatlands, according to non-profit The Forest Trust (TFT).

TFT and Golden Agri-Resources Limited (GAR), part of the Sinar Mas group, a $2.3 billion company that is the largest palm oil producer in Indonesia, have established a Forest Conservation Policy. GAR has pledged to avoid destruction of forests that are particularly valuable in terms of environmental preservation, biodiversity, landscape, or importance to local livelihoods.

But the agreement announced today did not set an exact definition for the areas that GAR cannot touch, and will still leave GAR free to exploit other forest areas, the Guardian says.

Greenpeace is cautiously supportive of the initiative, and will closely monitor GAR’s compliance. The actions should bring substantive change to Indonesian forests by the end of 2011, TFT said.

TFT’s work with food and drinks company Nestle drew GAR to the bargaining table, the non-profit said.

Nestle, Unilever and Burger King all cancelled contracts with GAR subsidiary SMART in response to a Greenpeace campaign last year blasting the company’s allegedly unsustainable clearing of forests for palm oil groves. At that time Nestle also formed a partnership with The Forest Trust.

Greenpeace alleged that Sinar Mas was illegally cutting virgin rain forest, reducing habitat for orangutans and gibbons.

Palm oil is a key ingredient in many consumer and commercial products including cosmetics, confectionary, cooking oils and biofuels. Since the early 1980s, the land allocated for oil palm production has more than tripled, and more than 40 million tons of palm oil worth $20 billion is produced each year, TFT said.

Palm oil production has come under heavy fire for destroying rainforests and peatland across southeast Asia, leading to habitat destruction and high carbon emissions. Indonesia is the third biggest emitter of greenhouse gases, mainly due to deforestation across islands such as Sumatra and Borneo, the AFP says.

But TFT says palm oil also has envirionmental advantages. A hectare of oil palm can yield six times more oil than a hectare of canola, TFT said. Palm plantations also require fewer petrochemicals than other oil plants, and can be grown on land that is already environmentally degraded.

“This shows that the private sector can quickly change its practices around forest destruction if the right factors are in place,” TFT executive director Scott Poynton said. “It’s a simple yet effective way to conserve forests. This model need not be confined to palm oil; any product with a link to forest destruction can switch on this supply chain approach.”

But, Poynton added, “We all know that this agreement counts for nothing if it’s not now implemented.”

He said GAR has provided funds for monitoring, and TFT has a clear action plan to make sure the company sticks to its agreement. “We are confident we will be able to overcome any concerns about whether this agreement will lead to substantive change,” Poynton said.