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up in smokeFriends of the Earth Europe Executive Summary 2015

Failures in Wilmar’s promise to clean up the palm oil business EXECUTIVE SUMMARY | December 2015

friends of the earth europeUp in Smoke: Failures in Wilmar’s promise to clean up the palm oil business

executive summary

In August and September 2015, as in thedry seasons of previous years, fires startedto smolder and roar in the forests andpeatlands of Sumatra and Kalimantan,Indonesia. The fires of 2015 causedenormous health and environmentalproblems for hundreds of thousands ofpeople in Indonesia and neighboringcountries. In peat land areas the fires canburn for months, releasing carbon dioxide,methane and nitrous oxide. The impact ofpeat fires can be more than 200 timesworse for the climate than fires on otherland.1 Bloomberg calculated that on 14October, 2015, emissions from the firesalone soared to 61 megatons, almost 97percent of Indonesia’s total emissions.2

At the time of this writing, as the monsoonrains bring relief to Indonesia, and as theworld gathers for UNCOP 21 in Paris toaddress the global climate crisis, thequestion that rises from the ashes is: whois responsible for these fires? And how canwe prevent this from happening next yearand in the years beyond?

In 2011, the Indonesian governmentinstituted a moratorium on plantationdevelopment on peat deeper than threemeters; in 2013, the moratorium wasextended for another two years. Yet due tofrequent revisions of the moratorium area,palm oil companies have been consistentlyallowed to develop plantations on fragilepeatlands formerly designated as peatmoratorium areas.

Friends of the Earth has conducted researchinto five palm oil plantations in CentralKalimantan that belong to the palm oilcompanies Wilmar International (WIL:Singapore) and Bumitama Agri Ltd. (BAL:Singapore). Despite the fact that both palmoil companies have adopted high-profilepolicies prohibiting burning, deforestation,and exploitation of peatlands, we have foundthat both companies appear to have floutednational laws, their own sustainabilitypolicies and the widely celebrated New YorkDeclaration on Forests by developing palm oilon peatlands, causing or allowing thedestruction of High Carbon Stock areas, andtaking insufficient measures to preventforest fires in their plantations.

Of course, these palm oil companies do notoperate in isolation. While the Indonesiangovernment has made strong declarationsand issued presidential decrees to preventfuture forest fires and promote restorationof affected areas, government bodies haverepeatedly issued plantation permitsoverlapping the peat moratorium area,enabling peatland drainage, development,and ultimately, destruction by fire.

Given the complexity of the landscapes,land uses, and concession boundaries andthe role of smallholder farmers within andnearby company concessions, it isconsistently challenging to prove whostarted the fires; however, according to theforest law no. 41/1999 article 49,3

companies are legally responsible for fireswithin their concessions. The allegationscontained in this report, therefore, are basednot on proving, or needing to prove, whoexactly started the fires, but on recognizingthat accountability and legal liability restultimately with the concession owners.Company claims that external sources areresponsible for fires in their concessions lackcredibility if no proof for those claims isprovided. Neither Wilmar nor Bumitamahave provided such evidence.

Financiers in the UK, Netherlands, France,the United States, and other countries areproviding direct financing to thesecompanies – many of them doing so despitehaving publicly committed toEnvironmental, Social and Governance(ESG) criteria that should prevent theirfinancing such destructive activities. Ofeleven financiers in the EU and fourteen inthe US to whom Friends of the Earth hassent this report for comments, seven haveresponded by the time of publication. Theanswers we received range from advice thatFoE file a complaint with Wilmar itself orwith the Roundtable on Sustainable PalmOil (RSPO) – notably, a multi-stakeholderbody without a legal mandate and with anotorious lag-time in addressingcomplaints4 – to a lengthy response arguingthat Wilmar is in fact operating sustainably.

That is to say that, despite detailed,independent, satellite-based and ground-checked evidence5 on specific cases, evenfinanciers that have committed to upholdingenvironmental standards do not seemalarmed by the lack of implementation oftheir own and their investee companies’policies during what many commentatorsare calling the largest environmental crisis ofthe 21st century.6 Such a lax attitude bodesextremely ill for the efficacy of voluntarycorporate commitments to social andenvironmental responsibility

We call on financiers linked to Wilmar andBumitama, as well as to other companiesin the palm oil sector found in breach ofenvironmental commitments, to withdrawtheir financial services from thesecompanies to make clear that there will bezero tolerance for breaches of thecompanies’ and their financiers’environmental and social commitments.The Indonesian government must reviewall permits given to palm oil developers,and must take appropriate sanctionsagainst companies and plantations withfires. They must also ensure theresponsibility of companies for therehabilitation of forests and peatlandsburned within their concessions, anddemand that these companies takeresponsibility for damages to the peopleand lands impacted by the fires and haze inthe burned areas.

footnotes:

1 http://www.wri.org/blog/2015/10/indonesia’s-fire-outbreaks-producing-more-daily-emissions-entire-us-economy

2 www.bloomberg.com/news/articles/2015-10-28/how-indonesia-s-fires-made-it-the-biggest-climate-polluter

3 Indonesian forest law (NUMBER 41 YEAR 1999) Article 49:“Holders of rights or licenses shall be responsible for forest firesoccurring in their working area.” (unofficial English translation)

4 Environmental Investigation Agency and Grassroots. WhoWatches the Watchmen: Auditors and the breakdown ofoversight in the RSPO. November 2015. https://eia-international.org/wp-content/uploads/EIA-Who-Watches-the-Watchmen-FINAL.pdf

5 GPS survey points (using professional GARMIN), KMZ files ofmoratorium, national park and concession boundaries,provided by WALHI. Fire hotspots were acquired from theNASA Fire Information for Resource Management System.Base map imagery was provided by ESRI.

6 Among other sources seehttp://jakartaglobe.beritasatu.com/opinion/erik-meijaard-indonesias-fire-crisis-biggest-environmental-crime-21st-century/;www.democracynow.org/2015/10/27/massive_indonesian_plantation_fires_create_environmental;http://www.enca.com/world/indonesia-forest-fires-warships-put-standby

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