Palm Oil – The Green Development Oil Newsletter – Issue 12, March 2011

Wetlands International Report: Missing the Forests for the Trees
Wetlands International has released a report by SarVision which it claims that more than one third of Sarawak’s peat swamp forests and 10 percent of the state’s rainforests were cleared between 2005 and 2010, primarily for oil palm plantations. This is a “so what” number. Sarawak represents only 35 percent of Malaysia’s total land mass, use of which is bound by a long standing Government commitment to retain 50 percent as forest.

Sinar Mas – The Forest Trust Agreement
Much has been made of the recent decision by Sinar Mas’ palm oil division, Golden-Agri Resources (GAR), to cede to Greenpeace demands. The result is an agreement with The Forest Trust, a UK-based NGO that promotes green-acceptable consumer goods. But the agreement that GAR has signed up to could severely hamper the company’s growth.

Biodiversity Scientists Misfire in Criticism of Palm Oil in Malaysia
Repeating what other research has shown – palm oil expansion on Malaysian peatland has been rapid recently, but still only accounts for six percent of converted peat land – biodiversity scientists claim this has caused losses in biodiversity of between one and 12 percent. There is more guesswork and politics than fact behind this claim, symptomatic of the origins of the concept of biodiversity.

Palm Oil Industry Developing ‘Carbon Neutral’ Palm Oil
Palm oil producer, Sime Darby, has announced that it is in the process of developing ‘carbon neutral’ palm oil to meet consumer demand. This is a commendable, but long term goal. Despite green claims to the contrary, there is little dependable research on the full carbon cycle of palm oil. Sime Darby has also stated that it is on target to have all of their 90 oil palm plantations certified under RSPO.

NGO Claims World Bank Oil Palm Draft Strategy a Pilot for Global Regulation of Agribusiness
The Forest Peoples Programme recently released a statement claiming that “the new palm oil strategy (of the World Bank) is being treated as a ‘trial run’ for a wider IFC strategy for all its future investments in agribusiness worldwide.”

RSPO Standards Lack Technical Basis: ACIAR Report
A research report on palm oil in Papua New Guinea produced by the Australian Centre for International Agriculture Research (ACIAR) has highlighted a lack of credible and technical indicators for compliance with the sustainability standards of the Roundtable for Sustainable Palm Oil (RSPO).

Lush’s ‘Sustainability’ Policies No Replacement for Good Business Practices
A recent uproar over cosmetic company Lush’s unauthorised and unintended release of thousands of customers’ credit card details has provided a salient lesson to those companies which adopt sustainability standards. There is no amount of corporate social responsibility (CSR) which will make up for good customer service.

Wetlands International Report: Missing the Forests for the Trees
Wetlands International has released a report by SarVision which it claims that more than one third of Sarawak’s peat swamp forests and 10 percent of the state’s rainforests were cleared between 2005 and 2010, primarily for oil palm plantations. This is a “so what” number. Sarawak represents only 35 percent of Malaysia’s total land mass, use of which is bound by a long standing Government commitment to retain 50 percent as forest.

Another report released in 2010 by Wetlands International also claimed to find that 20 percent of oil palm plantations in Malaysia are grown on drained peatland.

The reports have been met with skepticism by Natural Resources and Environment Minister Datuk Douglas Unggah Embas and Malaysian Nature Society President, Professor Dr. Maketab Mohamed, on the grounds that it is difficult to distinguish one crop from another from satellite vision.

The Sarawak Oil Palm Plantation Owners Association (SOPPOA) has pointed out that while the Netherlands, Wetlands International’s homeland, had removed almost 90 per cent of forest cover, Sarawak had retained 85 per cent under forest. SOPPOA highlighted further inconsistencies in the SarVision report which defined ‘forest’ in line with the UNFCCC definition. The problem is that under the UNFCCC, oil palm plantations meet the definition of ‘forest.’ The conclusion, therefore, that deforestation was occurring for oil palm plantations is highly questionable.

The report also fails to consider the quality of peatland in Sarawak. The 2010 report by Wetlands International itself found that “approximately 223,277 ha [20 percent] of peatland with greater than 70 percent canopy remains in Sarawak, but this includes only 18,920 ha of completely undisturbed peat swamp forest, barely 1.7 percent of the total area of peat swamp forest in Sarawak.”

As a result, while the figures in the SarVision report appear to be dramatic, it is clear that the report fails to consider the quality or existing degradation of the Sarawak peatland. This also raises considerable doubt over whether this land was already earmarked for development, or already partially developed, leading to its degradation.

The broader picture that Wetlands International has failed to consider is that Malaysia has committed at the Rio Earth Summit to retain more than 50 per cent of their forests in reserve. That commitment has not changed. The ongoing pressure and activism from groups such as Wetlands International continually fail to mention this fact and instead seek to pressure Malaysia into abandoning their economic development path.

Sinar Mas – The Forest Trust Agreement
Much has been made of the recent decision by Sinar Mas’ palm oil division, Golden-Agri Resources (GAR), to cede to Greenpeace demands. The result is an agreement with The Forest Trust, a UK-based NGO that promotes green-acceptable consumer goods. But the agreement that GAR has signed up to could severely hamper the company’s growth.

GAR signed the agreement on February 9. It was hailed by some environmentalists as a significant step forward. The regular critics of Sinar Mas – campaigners included – declared a cautious victory.

But as many corporations and NGOs alike are aware, signing the agreement is the easy part. Agreeing on what is acceptable on the ground is another matter.

The GAR/TFT agreement requires GAR to not develop ‘high carbon stock’ forests, high conservation value forests and peat lands, as well as adhere to free, prior and informed consent (FPIC) for indigenous/local communities and comply with all laws and RSPO principles and criteria.

GAR is already a member of the RSPO, and it can be assumed it operates legally. Membership within RSPO means it does not develop HCVF forests. Palm plantations are generally not suited to peat lands. The two new catches for GAR are high carbon stock (HCS) forests and FPIC.

BAPPENAS, Indonesia’s planning agency considers ‘high carbon’ as anything over than 100 tonnes of carbon per hectare (tC/ha); yet the TFT agreement puts this at 35 tC/ha. This would, in theory, exclude all forests. Logged over forests and acacia plantations contain as much as 200 t/C/ha; rubber plantations go up to 96 t/C/ha. Even palm plantations themselves contain as much as 65 t/C/ha. Anything other than imperata grasslands is off limits.

In the NGO world FPIC generally only refers to indigenous peoples rather than local communities. The reason for this is simple: many remote rural communities actually want large-scale forestry or agricultural developments to generate economic growth. Yet tenure in Indonesia is complex; in most areas there are indigenous communities, local settled communities and domestic migrants that were part of the government-sponsored transmigration program of the 1980s.

Negotiating with one local group is manageable, but dealing with as many as four – who are often in conflict – will delay and complicate any investment by the company.

If GAR thought that Greenpeace’s previous actions were disruptive, they’re about to become more so. Western environmentalists hate deforesters immensely, but they hate reneging deforesters even more.

Biodiversity Scientists Misfire in Criticism of Palm Oil in Malaysia
Repeating what other research has shown – palm oil expansion on Malaysian peatland has been rapid recently, but still only accounts for six percent of converted peat land – biodiversity scientists claim this has caused losses in biodiversity of between one and 12 percent. There is more guesswork and politics than fact behind this claim, symptomatic of the origins of the concept of biodiversity.

The “new” research (“Remotely Sensed Evidence of Tropical Peatland Conversion to Oil Palm”) was published in “Proceedings of the National Academy of Science” and edited by no less a biodiversity guru than Professor Paul Ehrlich, the author of “The Population Bomb,” a seminal tract of anti-humanist ecology.

It simply confirms other estimates – that that while recent expansion on peat land has been more rapid, still only six percent of peatland had been converted to palm oil and) and then, breathtakingly, attributes that change to losses of biodiversity of up to 12 percent in the Malay peninsula, 3.4 percent in Sumatra and 1 percent in Borneo.

Research on impacts on biodiversity is typically short on data and long on mathematical models, simplisitic assumptions and, not infrequently, highly political judgments. Let’s start with data. According to the Chair of IUCN’s Survival Species body, only 1.9 million of the 10 – 20 million estimated species have been identified. So how can anyone assess any rate of biodiversity loss with accuracy, let alone arrive at numbers of loss between 1 and 12 percent?

The source for extrapolating the losses of biodiversity is two papers. They give little clue to how models used allowed these conclusions. Consider others in this school. One leading analysis – “Southeast Asian Biodiversity in Crisis” (Sodhi and Brook) – uses human settlement in Singapore as a model for assessing impacts of human settlement in the rest of Southeast Asia. Would anyone use settlement patterns in Manhattan to model trends in New England? More importantly, it assumes that past deforestation rates in Southeast Asian countries will continue ad infinitum, ignoring decisions by governments in most Southeast Asian countries to set up to 50 percent of land mass aside for forest.

“Biodiversity” is not an academic discipline. There are no standardized metrics for measuring biodiversity. It is a term coined by Dr. Thomas Lovejoy when working for WWF who has used it ever since to boost its environmental campaigns. For example 2010 was the Year of Biodiversity. As World Growth has demonstrated in its research reports, and as revealed in the “Amazongate” episode, misrepresentation, not veracity, is a hallmark of WWF-sponsored research on forestry and land use.

Palm Oil Industry Developing ‘Carbon Neutral’ Palm Oil
Palm oil producer, Sime Darby, has announced that it is in the process of developing ‘carbon neutral’ palm oil to meet consumer demand. This is a commendable, but long term goal. Despite green claims to the contrary, there is little dependable research on the full carbon cycle of palm oil. Sime Darby has also stated that it is on target to have all of their 90 oil palm plantations certified under RSPO.

The move positions the Malaysian palm oil producer ahead of the RSPO curve in improving the supply of sustainable palm oil in the market. However, the company also noted that ‘carbon neutral’ palm oil is still a long time coming. In the interim, a significant amount of research is required to enable the company to even measure the carbon emissions from oil palm plantations.

Pro-active actions such as this by Sime Darby are a good example of the most significant sustainability advances being made voluntarily due to consumer demand. This is in stark contrast to certification schemes such as RSPO which seek to force change through pressuring the supply chain, which can often produce weak commitments and patchy observance of sustainability standards.

It is also clear indication that there is insufficient research and information relating to the carbon emissions from palm oil to justify the inclusion of a carbon footprint in the RSPO.

NGO Claims World Bank Oil Palm Draft Strategy a Pilot for Global Regulation of Agribusiness
The Forest Peoples Programme recently released a statement claiming that “the new palm oil strategy (of the World Bank) is being treated as a ‘trial run’ for a wider IFC strategy for all its future investments in agribusiness worldwide.”

The statement from the NGO calls for further revisions to the framework to ensure that all IFC standards are at least as high as RSPO standards. That means that the NGO is calling for all IFC investment in the high yield, high return oil palm plantation to agree to a set of voluntary standards which are too expensive for small holders to meet.

The World Bank has a precedent for allowing environmental standards to undermine their central task of poverty alleviation. All investment in forestry projects by the World Bank’s finance arm, the IFC, must now comply with the standards set by WWF-led certification scheme Forest Stewardship Council (FSC).

It is now clear that the World Bank has subscribed to WWF pressure to enshrine voluntary standards such as RSPO and FSC as a compulsory standard for IFC investment. Such a move would effectively see the World Bank abandon their mandate for poverty alleviation in favor of a broader and ultimately less effective international regulator.

If the revised framework on palm oil funding is being viewed as a ‘trial run’ for all future IFC investment in agribusiness, then the stakes for the palm oil framework are considerably higher than previously thought. At stake is the long-term investment by developed nations in agriculture as a means of poverty alleviation.

RSPO Standards Lack Technical Basis: ACIAR Report
A research report on palm oil in Papua New Guinea produced by the Australian Centre for International Agriculture Research (ACIAR) has highlighted a lack of credible and technical indicators for compliance with the sustainability standards of the Roundtable for Sustainable Palm Oil (RSPO).

The report, “Environmental Sustainability of Oil Palm Cultivation in Papua New Guinea” was undertaken in collaboration with major Papua New Guinea palm oil company, New Britain Palm Oil.

The report found that, “there is a need for practical and scientifically based indicators of environmental sustainability to underpin the RSPO certification and to guide improvements in management.” It also found that in order to ensure a sustainable palm oil industry in PNG environmental indicators must be developed under RSPO which are “meaningful, scientifically sound, practical, quantitative, appropriate, auditable, achievable, and easily communicated to, and understood by, different stakeholders.”

The report specifically highlighted the lack of knowledge in relation to the mooted introduction of a carbon footprint for palm oil. The report stated that more research was required in relation to carbon balance, nutrient balance and soil health to create a measurable value of plantation impacts, rather than a policy prescribed policy positions and practices relating to plantations.

It is clear from the report that the authors do not consider that RSPO standards do not meet the test for providing meaningful, scientifically based or auditable indicators. As pointed out by World Growth previously, RSPO constitutes a set of political standards which are subject to the constant changes based on ENGO desire to ‘shift the goal posts.’ This report makes it clear once more that RSPO operates as a tool to push ENGO demands on captive market, rather than a tool to ensure long-term, scientifically based sustainable production of palm oil.

Lush’s ‘Sustainability’ Policies No Replacement for Good Business Practices
A recent uproar over cosmetic company Lush’s unauthorised and unintended release of thousands of customers’ credit card details has provided a salient lesson to those companies which adopt sustainability standards. There is no amount of corporate social responsibility (CSR) which will make up for good customer service.

Lush has run a vigorous campaign against all palm oil since 2009. Lush has boasted on numerous occasions that their products contain no palm oil at all, regardless of whether is sustainably sourced.

It is clear from comments made by Lush following the unauthorised release of customers’ details that Lush was aware of the potential hole in their security systems which could, and did, result in the breaching of customers security.

It is worth noting to both Lush and other companies employing CSR as a marketing and sales tool: no amount of CSR will regain customers’ trust if business basics are ignored at the expense of flashy campaigns.

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