In 2017, Chain Reaction Research analysis showed that 74 percent of SE Asia’s palm oil refining capacity was covered by No Deforestation, No Peat, No Exploitation (NDPE) policies. This analysis demonstrated that in Indonesia and Malaysia, refineries with NDPE policies have a combined capacity of 53.2 million MT per year, which equals 74 percent of the total capacity in these countries.
But the report also showed that Hayel Saeed Anam Group (HSA), with its two refineries in Indonesia and one in Malaysia, is the world’s largest player in the leakage refinery market with a total refining capacity of 2.4 million MT per year.
Why does this matter? Because recently, after NGO engagement, companies in the palm oil supply chain such as Nestlé, PepsiCo, Unilever and others have made a material step towards radical transparency by disclosing over 11,000 interlocking palm oil business relationships. All the listed disclosures sum up to more than 11,000 relationships. These disclosures make it easier to track zero-deforestation commitments.
For example, the environmental NGO Greenpeace, using both satellite-based images and boots-on-the-ground, presented analysis demonstrating that the HSA Group was responsible for deforesting around 4,000 hectares (15 square miles) of tropical forest and peat in Papua, Indonesia from 2015 to 2017. Public supplier lists allowed Greenpeace to identify that Unilever, Mars, Nestlé, and PepsiCo were buying from companies associated with the HSA Group. By sharing this information with their corporate counterparts, NGOs can engage as watchdogs by supporting these same corporate counterparts to achieve their zero-deforestation commitments.
These palm oil sector relationship disclosures provide both NGOs and businesses greater ability to reduce the trade of unsustainable palm oil. NGOs can now view relationships across corporations and use their expertise to inform these same corporations of anomalies between their corporate zero-deforestation commitments and palm oil suppliers and mill operators – such as HSA Group – who continue to either produce or refine deforestation-linked palm oil.
Likewise, when corporations begin publicly disclosing their supply chains, this enables both their buyers and suppliers to further trust the origin and sourcing of the palm oil commodities that they are transacting. For example, this trust can add economic value to the transaction of certified crude palm oil, as is the case of MP Evans who prices its RSPO-certified palm oil at a premium of USD 15. Additionally, operational and business risks are reduced for these corporations.
This is why Unilever’s CEO Paul Polman recently stated “Greenpeace is right to hold our feet to the fire on deforestation” as the Consumer Goods Forum’s 400 members have committed to achieving zero-deforestation by 2020 in their tropical agriculture-related supply chains.