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The Chain: Bunge announces forest conservation policy

October 28, 2014

Bunge announces forest conservation policy

On Monday, agribusiness giant Bunge (BG: US) announced a new policy to end deforestation in its palm oil supply chain. Bunge’s commitment joins similar policies from traders Wilmar International, Golden Agri-Resources and Cargill, but it is set to have an outsized impact: the company is one of the largest buyers of palm oil from the Malaysian state of Sarawak, on the island of Borneo – the epicenter of climate pollution from carbon-rich peatlands.

Just between 2005 and 2010, the state cleared a full third of its peatland, with a significant amount by the company Sarawak Oil Palms Bhd (SOP). According to trade data, Bunge purchases 88 percent of SOP’s exports, and Bunge’s own filings show this represents 44 percent of their total palm oil trade. Bunge also owns a minority share of a joint venture in Bumiraya Investindo that operates plantations in Kalimantan.

Deforestation, peatland clearance, and infractions of Native Customary Rights have been persistent issues for palm oil and timber companies in Sarawak, such as SOP and its suppliers. Bunge’s policy means that both of the state’s major palm oil buyers, Bunge and Wilmar, have now adopted tough forest and peat conservation policies. How Sarawak growers and the Sarawak government – which owns 28.5% of Sarawak Oil Palms – respond may determine the state’s ability to easily access global markets.

Report: Sarawak gets tough on illegal logging

The Sarawak government appears to getting more serious about enforcing logging restriction and prosecuting companies and individuals that violate the law. The chief minister of the environment in Sarawak, Awang Tengah, said that he will not issue any more timber licenses until timber smuggling and other illegal logging activities for the oil palm and paper industries are curtailed in the region. Speaking on a yet-approved logging permit, the minister said that those who proceed without permit “will be dealt severely and face the law.” The announcement comes as a stark contrast for the Sarawak government, which has traditionally encouraged rampant logging. Combined with Bunge’s zero-deforestation pledge, the comments may signal a change of course for the region to protect its forests and peatland.

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