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Palm oil deal points to corporate greening

Richard Black | 16:31 UK time, Wednesday, 9 February 2011

This week's announcement of a new partnership aimed at curbing deforestation in Indonesia should give succour to anyone who thinks consumers and companies, rather than governments, hold the key to curbing environmental decline.

Man with bike laden with palm oil fruits


Essentially, the world's second biggest (and Indonesia's biggest) producer of palm oil, Golden Agri-Resources (GAR), has joined forced with environmental group The Forest Trust (TFT) to establish and follow tougher rules on where they can plant.

Old-growth forest is supposed to be protected already - at least, where companies adhere to regulations established by the Roundtable on Sustainable Palm Oil (RSPO).

The new deal is principally aimed at preventing the release of carbon, and so will protect all forests whose tree density (and thus carbon storage) is above a certain threshold.

It will also ban development on peat. As Indonesia contributes about half of the world's CO2 emissions from peat, that's no trivial issue.

International organisations such as Greenpeace have been pursuing the East Asian palm oil industry for years (as they have the soy industry in the Amazon, for similar reasons).

Generate enough heat this way - persuade enough consumers to write angry letters to major brands or politicians, put companies' names in the press with unflattering references to their environmental footprint, maybe even instigate a boycott or two - and eventually, those major Western brands will pay attention.

Last year, TFT worked with Nestle [pdf link] to draw up rules ensuring the company's palm oil footprint, as it were, had no net impact on forests.

That meant Nestle putting pressure on its suppliers, creating problems for companies that did not up their game - and opportunities for those that did.

GAR's oil, for example, will now appear more attractive to a number of Western buyers - and at least some of GAR's competitors will presumably follow suit.

The deal comes at a paradoxical time for Indonesia.

In 2009, President Susilo Bambang Yudhoyono became one of the first developing country leaders to pledge control of greenhouse gas emissions, promising a curb of 26% by 2020 - or by 41% if enough international assistance were forthcoming.

That implies slamming the brakes on deforestation - the country's biggest source of emissions.

Last year, the government pledged a two-year moratorium on new logging concessions, in return for which Norway would contribute $1bn - a harbinger of the much greater wealth transfers that may come under the UN's Reducing Emissions from Deforestation and forest Degradation (REDD) scheme.

Palm plantation

Palm oil plantations create a monoculture - damaging to biodiversity, and more

But amid confusion over which of two decrees should be used to introduce the moratorium, the Indonesian government delayed implementation.

And last week it announced that most mining and logging companies in Kalimantan, the Indonesian province that takes up the largest slice of Borneo, were operating illegally.

This shouldn't exactly have been a surprise, given that organisations such as Global Witness, with local counterparts, have been researching and revealing such issues in southeast Asia for years.

The status of the Norway-Indonesia deal is currently unclear. But while it disentangles itself, TFT and its allies have taken a parallel route, scouting around the edges of government concerns and heading down the track of consumer and corporate engagement - and scored something of a success.

It's a tactic with a mixed record.

Probably the quintessential example of a success is the "dolphin-safe tuna" campaign of the 1980s, which saw consumers (especially in the US) demanding that retailers stock only fish caught using methods that did not harm dolphins.

The issue itself remains somewhat controversial, with critics maintaining the methods that fleets subsequently adopted have had a disproportionate impact on other marine species, less iconic but more threatened - while backers argue that rules established then have subsequently been watered down.

Whatever the rights and wrongs of that issue, there's little doubt that purely as a campaign, it was a huge success, sending ripples right through the industry.

But it's one of just a few successes in a huge industry - fisheries - that has remained largely barren.

Forestry, too, has not been substantially impacted by consumer and corporate pressure. As Greenpeace itself acknowledges, the Asian pulp and paper industry remains largely immune to outside influences, even as palm oil suppliers feel the consumer force.

And there are some regions of the world where the tradition of public engagement in such issues leading to corporate pressure just doesn't seem to have relevance - notably China, whose importance as a destination for all kinds of goods sourced in nature is soaring.

Nevertheless, the palm oil deal demonstrates that in certain circumstances, the tactic does work.

Ten years ago, Greenpeace and its counterparts were lambasting virtually the entire industry as unsustainable, socially exploitative and environmentally destructive. Now, they're suggesting that if GAR/TFT standards were applied across the whole sector, the war would virtually be over.

For some, then, this is a surely a day for a piece of celebratory cake - made, surely, with just a dash of sustainable palm oil.



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