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The Chain: Wilmar announces major transparency initiative for palm oil

January 23, 2015

Wilmar announces major transparency initiative for palm oil

Today, agribusiness giant Wilmar International (WIL:SP) announced a major new transparency initiative, as part of implementing its landmark No Deforestation commitment. With the help of The Forest Trust, Wilmar is making information on all of its 800 palm oil suppliers available through an online dashboard – an unprecedented level of openness in an industry that for years has operated in secrecy.

The dashboard shows the location of Wilmar refineries in Indonesia and Malaysia and provides a traceability summary for each in addition to its supplier mill lists. The online platform also includes a Grievance Procedure for reporting improper activities within Wilmar’s supply chain.

Since Wilmar’s landmark policy in December 2013, 96 percent of the global palm oil trade has come under responsible sourcing guidelines following the precedent for No Deforestation, No Peat, No Exploitation. With today’s announcement, Wilmar has become the first major palm oil trader to provide open public access to its full list of suppliers. While Wilmar still has a ways to go to fully implement its policy and eliminate deforestation from its supply chain, this announcement sets a standard for transparency and responsibility in the palm oil industry and commodity agriculture worldwide. In the same way that Wilmar’s No Deforestation commitment started a domino effect for responsible sourcing policies, we expect significant pressure on other commodity traders to launch similar initiatives.

Study shows Amazon Soy Moratorium more effective than government policy alone

A new paper in the journal Science by shows that farmers in Brazil are five times as likely to have violated the country’s Forest Code than the Amazon Soy Moratorium, and that in areas like the cerrado that are not covered by the Moratorium, rampant deforestation has continued even as it has declined in the Amazon. Prior to the start of the Soy Moratorium in 2006, about 30% of soy planted in the Amazon was directly replacing forests, but under the current protections, it has fallen to less than 1%. Even as deforestation in the Amazon has fallen dramatically, Brazilian exports of soybeans have more than doubled since the Moratorium’s inception, showing that forest protection and business growth can be decoupled in a big way.

The Soy Moratorium was set to expire at the end of 2014, but was recently renewed through May 2016. The paper argues for a long-term extension of the Soy Moratorium, and that policy replacements alone will be insufficient to protect Brazil’s forests.

“Sustainable” cacao grower caught clearing forests in Peruvian Amazon

According to an investigative report by Mongabay, Cacao del Peru Norte, a wholly-owned subsidiary of United Cacao (CHOC:LN), has been engaging in deforestation of primary forest in the Peruvian Amazon despite the company’s public commitment to sustainability. On United Cacao’s website, United Cacao CEO Dennis Melka promotes the company’s goal “of becoming the largest and lowest cost corporate grower of sustainable and traceable cacao beans.” Extensive research by scientists and conservation groups have concluded that the company cut down more than 2,000 hectares of primary, closed-canopy rainforest in Peru.

In recent years, deforestation has jumped in the Peruvian Amazon, leading many to fear that progress on forest protection in Brazil is being displaced to neighboring countries. The case of United Cacao presents a troubling case for the cacao industry, which has historically been ahead of other commodity industries in addressing deforestation and other sustainability issues.

Sarawak hints at crackdown on new logging concessions

Sarawak Chief Minister Adenan Satem recently stated that the Malaysian province may soon cease granting new logging concessions. The Chief Minister did not provide any sort of timeline for the crackdown, but was reported to have said that he “will not tolerate” further destruction of his state’s timber resources. In October, Adenan stated that he will not issue any more timber licenses until timber smuggling and other illegal logging activities for the palm oil and paper industries are curtailed in the region.

These statements represent a stark departure for Sarawak’s government, which has been notorious for corruption and environmental degradation. However, deforestation and peatland development continue unabated in Sarawak – almost two-thirds of the region’s forests are under active logging concessions. Now that both Wilmar and Bunge, Sarawak’s two major palm oil buyers, are in the process of implementing forest conservation policies, Sarawak faces risk of losing the vast majority of its access to global markets.

Viral Doritos “ad” takes aim at PepsiCo’s palm oil policy

In a new viral advertisement, snack-food company Doritos and its parent company PepsiCo (PEP:NY) have come under fire for their palm oil sourcing policy. The video, produced by the activist network SumOfUs, has generated over 7 million views and 300,000 petitions online to-date asking PepsiCo to adopt a “global, time-bound, responsible” palm oil policy. PepsiCo responded publicly to the campaign, saying its policies were complete and effective in reducing deforestation. NGOs responded to PepsiCo’s statement with a public letter detailing the company’s shortcomings on supplier requirements, traceability, implementation and other issues. While PepsiCo has not yet responded to these charges, the campaign demonstrates continued popular attention to deforestation issues.

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