Palm traceability sector (update 3a): GAR/Sinar Mas back in NGO focus, TFT suspends Golden Agri takes (and hours later a new chief sustainability officer is appointed for the plantation giant - Agus Purnomo)

21 May 2015: TFT suspends Golden Agri takes (and hours later a new chief sustainability officer is appointed for the plantation giant - Agus Purnomo)
 
Key issues and questions arising from Golden Agri / PT Smart's present situation:

• Despite innovative industry attempts to promote traceability as a more inclusive solution (versus RSPO which struggles to include small producers and independent smallholders) while heightening key pledges such as "no deforestation, no peat and no exploitation," recent events raise the question of whether producers can live up to promises ("hastily made" according to many key industry players). 
• Is palm oil entering a renewed phase of boycott risks? At the SIIA Singapore Dialogue, several IPOP members sat on a panel where Wilmar made a public pledge that it would (if told by other IPOP members) stop buying from any "errant suppliers" who were unable to make the necessary upgrade moves (and if it found such, it would stop buying; tell its fellows and request they would do likewise). Other panelists suggested more focus on constructively working with suppliers for improvement rather than boycott. If agreed, the IPOP "supplier boycott" proposal should give some teeth to the group. But it seems that IPOP members are not clear of the boycott risk themselves; with Golden Agri, a lead member itself now facing RSPO censure and TFT suspension.
• Many industry players regard the shift to TFT B2B traceability as part of a processor-trader led move to find a more business-ready solution (that now seeks to shift the centre of gravity to refinery "supply sheds"; away from the RSPO mill and supply base P&C and RSPO's relatively costly physical supply chain SCCS outlook). The palm oil supply chain has since the mid 2000s been spending time and effort via NGO service providers, auditors and their newly established sustainability teams.
• Industry watchers have been concerned about how widely known implementation gaps among the top highly rated traceable plantation groups will be treated by the broader NGO sector. Clearly, business life is hardly straight forward and the current issues suggest that there is no place for over-confidence and complacency while using new solutions. It seems we are entering a "third wave" where social issues and implementation will be primary - but have the big plantation groups put in enough resourcing to upgrade their implementation efforts to their pledges?  

Some background on IPOP group here: Tuesday, October 7, 2014 Indonesia Palm Oil Pledge (IPOP) /khorreports-palmoil/2014/10/indonesia-palm-oil-pledge.html. At the SIIA dialogue we had a useful chat with a Catapult Campaigns staffers who confirmed their key role in the New York Declaration and IPOP. On the risk of large dominant players establishing boycotts on smaller suppliers (raising question on economic interest suppression), there was no answer. A key consideration is on campaign advocacy efficiency and impact.

News link:

Golden Agri takes another hit as sustainability guru suspends its membership by Philip Jacobson May 20, 2015; The charity that Indonesia's Golden Agri-Resources has enlisted to devise and implement its zero-deforestation and community-engagement commitments suspended its cooperation with the palm oil giant yesterday, following "several breaches" of the policies they had designed together, according to The Forest Trust (TFT), which helps companies run responsible supply chains. A few hours after TFT announced the suspension, Singapore-listed Golden Agri said in a statement that its chief sustainability officer, Peter Heng, had resigned "to pursue new career opportunities." His replacement is Agus Purnomo, who has headed one of Golden Agri's Indonesian subsidiaries, Sinar Mas Agro Resources and Technology (Smart). Smart's own subsidiary, Kartika Prima Cipta, became the subject of a formal complaint against its operations last year after Golden Agri filed to expand its plantations in 18 of its subsidiaries including Kartika Prima, despite evidence that Kartika Prima had taken community land without residents' informed consent, failed to properly conduct a high-conservation value (HCV) assessment and more. The grievance was lodged by the Forest Peoples Programme (FPP), a UK-based NGO, with the Roundtable on Sustainable Palm Oil (RSPO), the industry's largest voluntary certification scheme. Though TFT was vague in its announcement, the suspension is almost certainly a response to what is apparently seen as Golden Agri and Smart's lackluster handling of the RSPO complaint, which takes on additional importance because Kartika Prima is piloting Golden Agri's sustainability commitments. The RSPO upheld the complaint in March and earlier this month prohibited Golden Agri from "acquiring or developing any new areas" pending its resolution.... Read more: http://news.mongabay.com/2015/0520-jacobson-tft-suspends-golden-agri.html#ixzz3aj9U4zFv


16 May 2015: It's not plain sailing for plantations who've gone in with the "second wave" of heightened "three nos" on peat, deforestation and exploitation

It's not plain sailing for plantations who've gone in with the "second wave" of heightened "three nos" on peat, deforestation and exploitation. Sector risk is of a "third wave" of rather tough to resolve social issues, which may be heightened due to the HCS / high carbon stock regimes coming into play.

The Roundtable on Sustainable Palm Oil (RSPO) has prohibited Golden Agri-Resources (GAR), one of its most prominent members, from "acquiring or developing any new areas" pending the resolution of a formal complaint against the palm oil giant in Indonesia's West Kalimantan province.  The decision by the RSPO, the world's largest voluntary certification scheme for palm oil, is a stern directive from an organization that has been criticized for failing to take action against companies that flout its standards....  Read more: http://news.mongabay.com/2015/0508-jacobson-rspo-complaint-gar-fpp.html#ixzz3a19AYBFj<<a%20href=>">http://news.mongabay.com/2015/0508-jacobson-rspo-complaint-gar-fpp.html#ixzz3a19AYBFj

16 Jan 2014:

Khor Reports comment: Plantation partnership deals with some NGOs does not preclude good implementation and monitoring by other NGOs. GAR/Sinar Mas had faced boycotts and enlisted TFT-Greenpeace to help (Wilmar is now also signed up on TFT-Greenpeace HCS Approach and other principles). Now, plantation planners should prepare for larger set-aside areas for their new plantings.

The latest news on GAR from a study by Forest Peoples Program / FPP (see news links) highlights some problems of high carbon stock (HCS)/social implementations of the new policies of TFT-Greenpeace for GAR. GAR said, “We thank FPP for their additional findings which have assisted our own full field audit of PT KPC, conducted in partnership with The Forest Trust.” Separately, APRIL and RGE are under pressure from Greenpeace.
News: http://www.eco-business.com/news/golden-agri-april-under-fresh-scrutiny-unsustainable-practices/ 

RSPO RT12: On social and labour issues

We did not attend at these sessions yesterday but thanks to a reader for highlighting key issues:

a) A new Labour Working Group is being set up. This is expected to work on ultimately getting company-level worker collective bargaining in place.

b) In social assessments a new approach will come about. We think this will come to inform Compensation Liability on social issues. Currently only monetary and non monetary values and methods are set for environmental concerns.

We'll update as we hear and learn more. Likely these will be hot implementation topics to come as they get fleshed out. As ever, the devil is in the administration details.

Sarawak NCR land - a new development model

News article, 29 Aug 2011: "Felcra-like model to develop native land in S'wak"
Sarawak has introduced a new land management system modelled after Federal Land Consolidation and Rehabilitation Authority (Felcra) Bhd to develop Native Customary Rights (NCR) land in the state..... According to state land development minister Tan Sri Dr James Masing, the pilot project involving the new land management model was carried out in Pasai Siong, near Sibu......"The agreement with Felcra was reached in June this year. This is the first time we used this model on the NCR land management. This model has been used by Felcra in other land areas under the Ladang Rakyat scheme, but this is the first time it was applied to NCR land.... "This is because, to develop NCR land, you need the consent of landowners. Felcra will manage this pilot project with a fee for 15 years," he said.... under the new land management model, NCR landowners would hold 90% shares, with the remainder to be held by Sarawak Land Custody Development Authority (LCDA). Felcra will source all the funding required and will only charge management and marketing fees.... (source: http://thestar.com.my/news/story.asp?file=/2011/8/29/nation/20110829111929&s)

Khor Reports comments:
a) This is a promising new proposal for NCR land development in Sarawak. This is an advancement from the Sime Darby land deal proposals in FY2009, where the plantation sought a 60% stake, while offering the native landowners 30% and LCDA/Pelita 10%.
b) Previously, oil palm land deals have been in the eastern state of Malaysia have been problematic in their general poor inclusion of native landowners. Such issues are exemplified in the IOI Pelita case where a secondary land purchase has been bogged down by controversy from the initial land deal.
c) This suggests that any plantation should be concerned about the level of inclusion of local and native peoples in their current and existing projects. This "social agenda" is likely to become a significant issue for plantations.
d) Investors in plantations might become more keen to ask plantation companies to better disclose such risks, as well as the conservation / environmental usability and risks of their land banks.

Also view: http://khorreports-palmoil.blogspot.com/2011/04/native-customary-rights-ncr-issues-at.html

Native customary rights (NCR) issues at IOI Pelita escalate

The RSPO steps up pressure on IOI Group to address native customary right complaints at IOI Pelita.

In accordance with the RSPO grievance procedure:
1. The current and ongoing certification process of all IOI group’s activities will be suspended with immediate effect.
2. IOI group will be given a period of 28 days from the date of this letter to revert with an acceptable solution to these matters, which preferably should be mutually agreed by parties involved.
3. IOI group is expected to with immediate effect and agreed in advance with RSPO, to publish a statement on their corporate website indicating the two measures stated above.

Failure to deliver the required proposal by the due date of May 2, 2011 will result in the RSPO considering further sanctions against your company, which may include the suspension of your license for new transactions involving Certified Sustainable Palm Oil materials including GreenPalm certificates.

Background summary: After a 12-year legal battle, the Miri High Court nullified the lease of some plantation estates owned by IOI Corp in Sarawak. The Miri High Court declared four natives the winner in a class action suit against the Sarawak government, Land Custody and Development Authority (Pelita / LCDA) and IOI Pelita Plantation Sdn Bhd, end March 2010. The land leases used by IOI were “null and void” as they had been issued by the Sarawak state government in an illegal and unconstitutional way. Read more here, http://hornbillunleashed.wordpress.com/2010/04/04/6268/, where “...the Bruno Manser Fund welcomes the Miri High Court decision and expects IOI to stop its jungle clearance activities and move out of the disputed lands in the Tinjar region with immediate effect....”


Background info:
i) News report: http://biz.thestar.com.my/news/story.asp?file=/2011/4/7/business/8431450&sec=business.
ii) RSPO's announcement on grievance against IOI Group: http://www.rspo.org/?q=content/announcement-ioi-rspo-grievance-panel-breach-rspo-code-conduct-23-certification-systems-424-.
iii) IOI Group's past comment on the IOI Pelita - NCR issue: http://www.ioigroup.com/home_more.cfm?id=62D76BA9-1438-5066-5C1C4FCD256FE2D3; and links to "IOI Pelita" search on the company's website: http://www.ioigroup.com/search.cfm?searchid=44820&searchtxt=ioi%20pelita&CFID=4319922&CFTOKEN=39987901.
iv) NGO report on IOI Pelita issues: http://understory.ran.org/wp-content/uploads/2011/03/Industry_Oppresses_IPs2.pdf


Khor Reports comments:

a) Social HCVs is an emerging issue and is likely a longer term matter of concern to plantation companies. This would impact development in both forest and non-forest lands.

b) Plantation companies should prepare for better inclusion of native landholders with: i) free and/or pre-funded equity ownership with low / fair interest cost, ii) a larger proportion of smallholder schemes and iii) larger set-aside of land for HCV areas in their future developments.

c) Those who make secondary purchases of land of native customary right (NCR) areas should be concerned about the legitimacy of the land concessions. Khor Reports has viewed land deal documents that raise strong ethical questions about the lack of free prior and informed choice (FPIC) of the natives in these transactions. It appears that they were verbally promised a stake, but later they found they were unable to subscribe (pay for) their interest in the plantation developments. In the meantime, they had already assigned their interest in the land. In the strict sense, the natives had given up their right to subscribe. However, the natives would likely have been lacking in financial understanding and resources to participate in the transaction.

d) Such land dispute cases number in the 100s and many have dragged on into a decade.