IOI contests sustainable palm oil suspension

MALAYSIAN palm oil giant IOI has filed a challenge in a Swiss court against the Roundtable on Sustainable Palm Oil (RSPO) over its decision to suspend IOI’s sustainability certification.

RSPO was set up by NGOs and the palm oil industry together in 2004 to promote the sustainable production of the fruit, and certifies plantations that meet its standards. IOI, which is a member of RSPO, had been fully certified. However, on 4 April 2016, RSPO suspended its certification, after upholding complaints made by sustainability consultancy Aidenvironment that IOI had been illegally clearing land and felling forests, which is expressly forbidden under sustainability rules.

Following RSPO board recommendations, IOI is now unable to sell any RSPO-certified palm oil, which it says will affect its ability to meet major supply contract obligations with manufacturers in Europe and the US. The group believes that the scope of RSPO’s decision is unfair and disproportionate, and that under the RSPO’s own rules, its downstream processing plants and existing contract obligations should not have been affected.

'The decision to challenge the RSPO board’s suspension decision is a difficult and painful one for us to take: On the one hand, we have great commitment and attachment to RSPO, an organisation of which we are a founding member and on whose board we have been actively contributing since ten years ago. On the other hand, we feel that we have been unfairly affected by the extent and scope of the suspension decision which was recommended by the Complaints Panel and subsequently endorsed by the Board of RSPO,' said IOI in a statement.

The court action against RSPO will initially see the Zurich District Court schedule a conciliatory hearing between the two sides. If they fail to reach a decision, the Justice of the Peace is likely to sanction formal court proceedings.

IOI says that the decision to challenge the ruling does not affect the implementation of an action plan required to regain its sustainability certification. In recent weeks this has included a 4-day verification visit with Global Environmental Centre (GEC), which specialises in peat and high conservation value land, and beginning to put improvement measures into action, such as planting native flora in peat areas and peat restoration work. It has also appointed international firm Proforest as its sustainability consultant.

Around 90% of the world’s palm oil is produced in Malaysia and Indonesia. It is used in cooking, processed food production, personal care products such as shampoo and toothpaste, and to produce bioenergy, amongst other things. However, the industry has been mired in controversy, due to the clearance of large areas of land, including native rainforest, mangrove and peatlands, to plant vast numbers of oil palms, to the great detriment of the environment and native flora and fauna. RSPO’s work is becoming increasingly important, as consumers in developed countries increasingly demand RSPO-certified palm oil, and many major companies, such as Unilever and Procter & Gamble have action plans in place to ensure all palm oil is sustainable.

Supplies of RSPO-certified palm oil have been further affected in recent weeks as another major producer, Felda Global Ventures, voluntarily withdrew its own certificate from its 58 palm oil mills. Its kernel crushing plants and downstream refineries were unaffected by the decision. While the reasons behind the decision were not divulged, analysts have told Malaysia’s Star newspaper that it may be linked to an alleged breach of labour conditions at one site, or a report by the NGO Chain Reaction Research that claims Felda subsidiaries cleared 880 ha of peatland in Sarawak.

Felda Group president and CEO Dato’ Zakaria Arshad said: 'We voluntarily withdraw from RSPO P&C certificates to address the sustainability issues in our supply chain. We remain committed to RSPO principles and criteria.'

The company says it plans to progressively re-certify its mills over the coming three years.