ADM Announces Support for Wilmar ‘No Deforestation’

On 12 May 2014, Archer Daniels Midland Company (NYSE: ADM) announced that it will make its palm oil supply chain fully traceable. To do so, ADM will work with Wilmar, the world’s largest palm oil trader.

ADM is one of Wilmar’s largest shareholders. Wilmar is in the process of implementing a “no deforestation, no peat, no exploitation” policy, a policy effective now that will be fully implemented by 2015. ADM’s endorsement of this policy demonstrates the continued proliferation of “no deforestation” commitments in the commodity sector, as two of the world’s largest commodity traders move to harmonize standards.

This announcement comes on the heels of President Obama’s visit last month to Southeast Asia, where most palm oil is sourced. Obama decried Southeast Asia’s rainforests “being shredded because of primarily the palm oil industry.” The President’s explicit warning to “large business interests” in the sector and his clarion call for them to “be a part of the solution” demonstrate high-level political support for policies like those from ADM and Wilmar. The Indonesian Chamber of Commerce, the country’s largest business lobby, also recently called on the private sector to transform commodity sourcing through no deforestation policies.

High-level support for no deforestation policies is spreading, as are the policies themselves. Chain Reaction Research predicts that companies without such policies may face challenges with market access in the near future.