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The Chain: Singapore haze bill, new monitoring tool, Sarawak boomerang

February 20, 2014

There recently have been a number of breaking updates in the palm oil sector, which reflect rapidly changing market entry requirements on deforestation:

  • Government of Singapore haze bill. This week, the Government of Singapore proposed a bill that would apply extra-territorial jurisdiction to foreign companies that are responsible for cross-border haze. This bill responds to large-scale forest fires in Indonesia this summer that caused major haze problems. The bill would impose civil and criminal penalties on companies found responsible for causing haze. Currently, Singapore is soliciting public feedback on the bill, but we believe it is likely to be approved. (Financial Times, Channel News Asia)
  • New forest monitoring tool promises greater speed in law enforcement, supply chain tracking. Today marks the launch of Global Forest Watch, a new forest monitoring and alert system that uses satellite technology, Google’s Earth Engine, and open-source data to track deforestation in real time, providing far more data faster than has ever been possible before. Project designers promise that forest tracking that once took months or more will now take mere days. Global Forest Watch is designed in part to help companies make informed sourcing decisions for commodities like palm oil – and help governments better enforce forest laws. (Bloomberg)
  • Sarawak boomerang. While the new Singapore law and voluntary adoption of deforestation-free sourcing requirements have spurred many producers to change their practices, there has also been some resistance to the rising tide of new policies. While many producers are shifting operations away from forest and peat in response, there was an initial negative reaction from the Sarawak Oil Palm Planter Owner’s Association (SOPPOA). SOPPOA and the Sarawak government claimed in the past week that Wilmar would cease purchasing palm oil from Sarawak as a result of the state’s ongoing and past conversion of carbon-rich peatland forests.As Wilmar pointed out in a statement of clarification released this week, however, their policy only excludes palm oil from companies engaged in ongoing deforestation or peat conversion, and doesn’t exclude palm oil based past activities. The Sarawak palm growers may have been temporary victims of their own rhetoric, however: as reported by The Edge, Sarawak palm oil companies Sarawak Oil Palms Bhd (SOP) and Ta Ann Holdings Bhd (TAH) lost 3% and 3.6% of their share prices earlier this week after investors learned of the companies’ claims that Wilmar would cease sourcing from the state altogether. SOP is now up 1.3% since its Monday low, and TAH is up 3.6% since then.

    There may still be misunderstanding about Wilmar’s policy in some quarters. Contrary to some media reports, the main provisions of Wilmar’s policy are effective immediately: to quote the policy, “Effective immediately, Wilmar will not engage in development of HCS, HCV, or peat, nor knowingly source from suppliers engaged in development of HCS, HCV, or peat…” The policy requires compliance with a number of additional policy provisions no later than January 1, 2016, but the core forest and peat provisions have been in place since the policy was announced, and are already being implemented. (The Edge Malaysia, Mongabay)


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