Wilmar’s strong pledges - NGO reactions

On 5 Dec 2013, Wilmar introduced its ‘No Deforestation, No Peat, No Exploitation’ policy. This adds on many new criteria to the RSPO standard. Noteworthy additions include: (i) the non-use of peat of any depth; (ii) apparent agreement to the controversial 35 tonnes carbon per hectare ceiling (implied by the statement: “HCS will be protected. (Only) Young Scrub and Cleared/Open Land areas may be developed”); (iii) progressive greenhouse gas reductions (likely to affect palm oil waste management and the cultivation of existing peatlands); (iv) the restoration and enrichment of forest and peatlands (at what cost and on whose determination?); and on labour, Wilmar pledges on (v) no forced labour, (vi) a 60-hour work week with 1 day off (i.e. average maximum 10 hour work day inclusive of overtime), (vii) 3.8 square meters / 32 square feet of individual living space, and (viii) trade unions with collective bargaining.

These broad and strong new socio-environmental commitments will apply immediately to Wilmar’s own plantations (it has adhered to the RSPO standard, but it now needs to add numerous new criteria). Wilmar will also apply this to other companies who supply the palm oil, sugar, soy and other commodities that it trades. Thus, this pledge should have big impact, especially on palm oil where it is frequently said to control around half the world trade. Here, Wilmar can use the power of its dominant position.

Such a move by a dominant company has long been the strategic goal of NGOs pushing for strong palm oil sustainability. WWF targets 15 commodities with its “roundtables” voluntary standards program which targets the “big brands” to effect more rapid change[2]. Csrwire.com (15 Nov 2013) exaplains that “corporations can leverage their supply chain power to achieve systemic solutions to social and environmental challenges.” Power or size is a curious thing: big can be a strength as well as a risk.

Wilmar’s policy was launched just after its deal with Unilever, the #2 FMCG giant. Unilever also recently upgraded its own target to only use traceable palm oil by end 2014; together with a plan collapse its supplier roster from over 100 to under 20. Multinationals are under pressure to use “ethical” ingredients. NGO commentators note that “the commercial benefits to Wilmar of appearing to be an environmental leader are clear.” At the same time, they are watchful of how Wilmar will implement its policy.

"RSPO+9", new TFT / Climate Advisers-led policies for Wilmar include:
(i) non-use of peat land of any depth; (ii) likely 35 tonnes carbon per hectare ceiling for land development; (iii) progressive GHG reductions; (iv) restoration and enrichment of forest and peatlands (similar to RSPO HCV compensation?); (v) no forced labour, (vi) 60-hour work week with 1 day off inclusive of overtime, (vii) 3.8 square meters / 32 square feet of individual living space, (viii) trade unions and collective bargaining; (ix) grievance procedure where advisers and stakeholders have a say in banning suppliers Note: Summarised from Wilmar’s “No Deforestation, No Peat, No Exploitation Policy,”

Wilmar’s existing suppliers have until the end of 2015 to comply. Wilmar plans to semi-outsource key parts of its supplier management, notably: “Wilmar will cease to do business with any suppliers who our independent advisors (TFT and Climate Advisers) or other stakeholders find are in serious violation of this policy, and who do not take immediate remedial action to correct those violations.” It promises that a banned list of suppliers will be created.

NGOs seem interested to see how Wilmar’s new policy will affect the Ganda Group, a palm oil company closely connected to Wilmar (reports by Friends of the Earth, 2007 and Greenpeace, 22 Oct 2013). Awasmifee.potager.org (11 Dec 2013) writes that “Wilmar has a special relationship with Ganda Group, which is owned by Ganda Sitorus, the younger brother of Wilmar founder Martua Sitorus. In recent years the Ganda Group has taken over plantations which do not meet Wilmar’s previous ethical commitments to the RSPO and IFC… (e.g. Wilmar) sold its subsidiary PT Asiatic Persada to the Ganda Group.”

It appears that Wilmar is in the position of pushing rather strongly with pledges that may prove challenging to implement. Judging from the tone of NGO reactions, their scrutiny of Wilmar’s moves could remain pretty tight. Can it hit its KPIs and timelines? Will enough NGOs regard Wilmar’s move as satisfactory or will some NGOs see opportunity to bargain for more? Such shifts can attract more change-makers seeking tipping points across several tropical and other commodities.
Along with TFT and Climate Advisers, Greenpeace now sits atop palm oil sustainability (by virtue of its ground-breaking move with TFT at Golden Agri/Sinar Mas on the new high carbon stock criteria). Greenpeace views the move as “Wilmar (caving) to public pressure.” it promises that it “will be closely monitoring how Wilmar will put these words into action…” and asks “will it now immediately stop buying from companies such as the Ganda Group” (5 Dec 2013). Rainforest Action Network calls this “only the beginning” (ran.org, 5 Dec 2013).

How will other dominant players react (see page 2)? While it looks like they may need to rely on the same imaginative independent advisers (TFT and Climate Advisers lead Wilmar), it is possible that at the industry level there is need to hedge risk via some “home grown” national, regional or multilateral programs. If there is perceived or actual weakness in negotiation strategies and tactics - industry and companies can become “soft targets.” Indeed, some professionals worry that marketing is making the call rather than science. If so, we would not be surprised to see stringent interpretation and implementation of Wilmar’s pledges and/or even more criteria added in years to come. But only time will tell.

[2] Jason Clay explains WWF’s 15 commodity-big brands strategy in this video: http://www.ted.com/talks/jason_clay_how_big_brands_can_save_biodiversity.html

This is an article from Khor Reports' Palm Oil Newsletter #6, Jan/Feb 2014.