Kuok Khoon Hong

How the deal was done - changing palm oil trade policy to eliminate deforestation: the Wilmar-TFT-Forest Heroes story

This is a very in-depth (long) and interesting reportage of what went on behind the scenes to drive the 5 Dec 2013 shift to the "no peat, no deforestation, no...." policies. I remember this period quite vividly for all the chatter swirling over large plantation groups pondering over these new pledge terms. These are being operationalised as de facto trade standards for the palm oil trade, and percolating surely down to the entire supply-chain. It is part of  the "second wave" of NGO policy makers into the palm oil sector (first wave being lead by WWF-RSPO).

What it doesn't discuss: It doesn't talk much about the traceability versus certification issues*. Nor does it address the many commercial drivers associated with these. Also, traceability deforestation policies have different special clauses for each company; so you'd probably need to seriously read it to tease out the big commercial impacts. That's a big difference versus the more public RSPO program.
*Traceability moves: RSPO Traceability Taskforce has IDH who runs Palm Oil Traceability Working Group initiative /khorreports-palmoil/2015/04/traceability-moves-rspo-traceability.html

Looking ahead. Questions: Will there be a  third wave? On social issues** perhaps? Notably, as more service-providing NGOs enter the palm oil fray, and as policy areas get earmarked by different groups of NGOs, the push is into more challenging (= complex and costly) policy areas (like social issues) and also the spread to other commodities such as cane sugar and others will be useful to observe. Already, those operating in Indonesia note that local NGOs are already quite active on these issues, but there is certainly room for more? With limited growth potential (under the new realities of enviro-social "voluntary" policies) for large companies in Indonesia, the push is on downstream expansion and also growth elsewhere, including in Africa.
**Social issues could relate to local peoples, indigenous rights and labour contestation. Example, Blockade at Wilmar mill could erupt into full-blown strike by  Andi Fachrizl April 03, 2015; http://news.mongabay.com/2015/0403-jacobson-wilmar-mill-blockade-kalbar.html

In our conversation with Indonesia specialists the last few days, we note the bottom line: Plantable areas dropping to around 50% or lower on HCS enviro standards, depending on site and domestic policy overlays; and the socio-economic inti:plasma ratios seen more operational in the 60:40 range across oil palm and cane sugar. Also, consider how the purchase of external crop from forested areas will be handled? This policy is said to be about the business of reforestation cum soft/food crop concessions - how can existing farmers be accommodated, and will more plantations have to develop their skill-sets in such a reforestation move?

The Corporate Capture of Sustainable Development by Leslie Sklair; /khorreports-palmoil/2015/05/the-corporate-capture-of-sustainable.html


48 hours that changed the future of rainforests By Nathanael Johnson, 2 Apr 2015

Catchy excerpts:

Hurowitz emailed his co-workers at Forest Heroes, the nonprofit he’d founded, telling them to prepare for a protracted struggle. “I said, ‘Suit up, we’re going to war’,” Hurowitz told me. Then he got into bed, deflated. As he was settling in, his iPhone chimed a new text message. It was Scott Poynton, head of The Forest Trust, who had been working closely with Hurowitz and Kuok. Kuok was ready to make a commitment, the text said......Hurowitz rushed to book a flight to Singapore. That Monday, he was on the airplane...... It takes 24 hours to fly from Washington, D.C., to Singapore. By the time Hurowitz got off the plane, he saw he had another email from Kuok. Perhaps the time was not right, the palm oil exec was saying now; he wasn’t going to make any commitments unless the other palm oil companies did the same...... Hurowitz knew that wasn’t going to happen. Negotiations had been proceeding for years and had consistently failed to stop the chainsaws. He fired back an email with a picture of protesters holding banners outside the Kellogg’s headquarters in Battle Creek, Mich. (Kellogg’s bought oil from Wilmar.)...... “Every one of your customers’ headquarters is going to look like this,” Hurowitz remembers writing. “This is an opportunity to distinguish yourself.” Then he waited. There was no immediate response from Kuok. “That was a good sign, because usually if he was mad he’d fire something right back.” Two hours later, Kuok sent an email telling Hurowitz they would talk over dinner...........Within 48 hours, Wilmar had signed a sweeping commitment that went further than any other company in the industry. Wilmar not only promised to stop cutting down forests; it pledged to ensure that all the farmers it bought from did the same..........http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

.............One day, Kuok’s wife confronted him: She had seen an interview on Bloomberg Television in which Hurowitz lay the blame for the haze on Wilmar. Here’s how Poynton later told me that conversation went. (I didn’t get to speak directly to Kuok for this article.) “His wife said to him, the TV and all the articles in the news are saying that this is your fault that we are all choking here. She asked him, ‘What’s going on?’”... Kuok was upset. Surely Wilmar was a more responsible corporate citizen than some of the other traders. It was by the book and law-abiding, in the Singaporean way. Why was this fellow on Bloomberg singling them out?........... “You have been a huge part of the Asian success story,” he remembers telling Kuok. “Now it’s time to solve the Asian environmental crisis.” Then he flew to Singapore to meet Kuok in person.....http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

..........Hurowitz suggested that Wilmar bring in Scott Poynton’s organization, The Forest Trust, to help work out a more detailed approach to changing his company’s palm oil sourcing. Coincidentally, Goon had also emailed Poynton, asking for his help. The Forest Trust is a nonprofit that contracts with companies to teach them how to stop deforestation. “Glenn [Hurowitz] was able to raise the problems, but he was not able to raise solutions,” Poynton said. “That’s my role. I’m the guy who shows you the path out of the wilderness.”....... Poynton also got a lecture from Kuok when they first met, but, having been through this process with business leaders many times, he was expecting it. Kuok, Poynton said, felt misunderstood by the activists in the nonprofits and NGOs. So it made perfect sense that he would spend those first meetings trying to get Hurowitz and Poynton to see things from his perspective.......Hurowitz was the catalyst, Goon said. “But he’s not the one who convinced Mr. Kuok to take the plunge. Scott Poynton’s role was probably the most crucial. I think Mr. Kuok resonated a lot with Scott. Scott was the guy who knew his stuff, [he was] my chairman’s sounding board, his voice of reason, and perhaps his voice of conscience too, to a certain extent.”
By midsummer, Kuok had decided that Wilmar had both the ability and responsibility to effect change in the palm oil industry
. It’s hard to know what was going on in his head, but we do know that he had a growing interest in the environment....http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

......Kuok didn’t want it to look like he was bowing to the pressure of activists and NGOs. But it was getting harder to do that as the environmental nonprofits stepped up their campaigns. The NGOs had all aimed their fusillades at Wilmar, because it had the greatest market share and greatest ability to move the industry..... In September, Kuok met with Greenpeace official Bustar Maitar and other Greenpeace leaders in Singapore. “He asked me what he should tell them,” Poynton remembered. “I said, tell them everything, inspire them with your vision! So here’s this 64-year old Asian billionaire, confronted by these young Greenpeace people, and he opened himself to them totally, and thought the meeting went very well.”....http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

Kuok also said he’d show Greenpeace the policy he’d been developing. But Wilmar delayed sending it over. It had begun negotiating with Unilever, to try to get the Roundtable members to adopt this policy, and the policy was in flux........In October, Greenpeace released a report called “License to Kill” filled with heartbreaking pictures of wounded orangutans and smoking wastelands. It featured a prominent indictment of Wilmar. Then Greenpeace activists broke into a Wilmar plantation, crashing through the gate and unfurling banners. ..........Poynton implored Maitar to hold off further actions until after Dec. 5. The companies in the Roundtable were thinking about signing the policy that Wilmar and Unilever had negotiated, and they had promised to make a decision by that date. Just wait until Dec. 5, Poynton urged Maitar. If Kuok failed to act by then, it meant he needed more pressure.....http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

Nov. 27, 2013... Goon, Poynton, and Hurowitz had worked feverishly to get the other companies in the Roundtable to adopt their policy, but at least three of the corporations in the Roundtable had rejected it, and all the other palm-oil traders seemed to be balking......... At 10:41 p.m. Poynton sent a long email from his home near Geneva, Switzerland, to Kuok, urging him to sign, rather than wait for consensus. A few hours later, midday in Singapore, Kuok responded noncommittally, indicating that he would only sign if two others corporations, Cargill and Musim Mas, also pledged to end deforestation......... Kuok didn’t want to be the only one breaking ranks. If Wilmar acted alone, he pointed out, it might look like it was responding to attacks from the NGOs, rather making a solid business decision, that the other companies would be likely to emulate. He wanted to bring the other companies along, he said, and it would be more difficult to do that if it looked like Wilmar had switched sides....... 1:30 a.m., Nov. 28, 2013, Switzerland......... As soon as he received Kuok’s email, Poynton began hammering at his keyboard, speedily composing a 2,000-word response. Poynton argued that if Kuok was worried about alienating the other companies, this was the time to act, because the NGO campaigns would only intensify. The acrimony would only get worse. The people who wanted to keep making money destroying forests and people’s lives were hiding behind Wilmar, letting it absorb the PR attacks, while thwarting the very changes that Kuok wanted to make to stop the destruction, he wrote. Finally, he told Kuok he could throw out this latest Roundtable manifesto for all he cared. You know your own values, Poynton said; simply make those values Wilmar policy.
“It was time to just get it out there and say, for fuck’s sake — pardon my language — you know the path, you’ve known it since August. And now you are saying that you won’t go down the path unless your stupid mates go with you. And they aren’t ready,” Poynton told me
.... At the last minute, Poynton attached a cartoon by Michael Leunig, showing a powerful but lonely man whose heart contained “the deepest pit in the world.” But in the bottom of that black pit, the last panel reads, “lay the lightest, loveliest, tenderest, most beautiful, happy angel in the universe. So things weren’t so bad after all.”... Poynton knew he was taking a risk. Would it look like he was saying that Kuok was a lonely, dark-hearted man, with just a flicker of good in him? He hesitated, then thought: “No, bugger it, I’m going to send it. If he reacts badly he’s not the right bloke. But if he is the guy I think he is, he’ll resonate to it.”....... 7:30 a.m., Nov. 29, 2013, Singapore..... The response would come a little under 24 hours later. Kuok gently teased Poynton for writing such a long and impassioned email. He said he still wanted to persuade another company to join them, but he had talked to Goon and another executive, and he was ready to sign........http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

.....Unilever, which declined to comment for this story, was the most important Wilmar customer telling Kuok not to sign, said Poynton, who had grown increasingly frustrated with the company
.....“Let’s write to [Unilever CEO Paul] Polman,” he said.... “Right,” said Poynton. That made sense: Bypass the midlevel Unilever employees, go straight to the top. .....When they finally arrived, Engel met them at the door. He wasn’t smiling. He’d gotten their email, forwarded by Polman, with a brusque note to sort it out, Poynton recalls......... They spoke in a conference room in a newly constructed Unilever training facility on the edge of the city. Things didn’t look good. Unilever wasn’t going to break ranks and sign the Roundtable manifesto with Wilmar, and Engel didn’t have the authority to shift that position........ But according to Poynton, Engel had long questioned the commitment to consensus. After hours of hashing it out, Engel thought up a compromise. Unilever had recently asked for bids to supply it with a large quantity of palm oil; Wilmar was in line to get a big piece of that contract. Engel offered to add a line to that contract making it contingent on Wilmar signing the sustainability policy. In other words, Unilever would award the contract to Wilmar only if it committed to ending deforestation.... .By 5:30 p.m. the work was done, and everyone met back at the Unilever building. Kuok arrived just before 6 p.m. and the others met him outside. Poynton half-lifted his palms from his sides. Kuok reciprocated the gesture and smiled. Neither man is a casual hugger, but they walked forward and embraced.... Engel and Kuok signed the agreement. Cameras flashed. Champagne corks popped. But Poynton was still nervous. He’d promised Bustar Maitar, of Greenpeace, that Wilmar would make an announcement by Dec. 5. And if there was no announcement on Wilmar’s website, Poynton expected a Greenpeace campaign. “I knew that the guns were loaded and pointed,” he said.....http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

.........Of course, that, too, was a false ending. Sure, one year later, every major palm oil trader had made pledges like Wilmar. But not all these companies are truly committed. Some seem to be backsliding already. Forests are still burning. Some brands, like Kraft, have refused to commit to deforestation-free palm oil. Others, like Burger King and McDonald’s, haven’t updated their policies to require anything more than Roundtable certification..... But the accepted norm has shifted, as has the momentum. And it is spreading to other products. Last September, a host of major companies made vague promises to end deforestation. Cargill stepped up with a clear commitment to eliminate deforestation from all its supply chains, across all commodities, all around the world. Then ADM committed to a no-deforestation commitment for soy and palm oil, with even more details about how it would make it work...... http://grist.org/food/48-hours-that-changed-the-future-of-rainforests/

........Since the Wilmar pledge, Hurowitz has shown an ability to achieve results, Poynton said, because he is not purely oppositional. “Glenn’s a different kettle of fish,” Poynton said. “He can see the good in these people. He’s ready to sit down and engage with them as a human.”.... Several activists told me they thought Wilmar changed thanks to the accumulated pressure. Perhaps. Or perhaps NGOs had been failing for years to make the kind of connection Hurowitz achieved with Kuok. Probably both are part true: Kuok needed the NGO pressure to start thinking about this, and he also needed the pragmatic partnership he found in Poynton and Hurowitz.....