Australia resource industries seek ban of market boycotts (update 1)

3 May 2014:

Ben & Jerry's referred to consumer watchdog over save-the-reef campaign; theguardian.com, Friday 2 May 2014 06.58 BST; http://www.theguardian.com/environment/2014/may/02/ben-jerrys-referred-to-consumer-watchdog-over-save-the-reef-campaign; Ice-cream company’s ‘mistruths could cost jobs’, says Queensland LNP senator elect who has written to the ACCC; "Queensland LNP senator elect Matthew Canavan said he wrote to the Australian Competition and Consumer Commission (ACCC) on Tuesday to consider the company’s conduct... “Australia has strict laws to protect consumers against misleading and deceptive behaviour,” he said. “These mistruths could cost jobs and development in regional Queensland. It’s irresponsible behaviour from a company that should know better.”.. The Queensland premier Campbell Newman also said on Thursday: “The World Wildlife Fund can make such false assertions, so be it. But a company is bound by consumer law and can’t make false and misleading statements and they are making false and misleading statements when it comes to this.”...


3 April 2014

Australian government may ban environmental boycotts; Guardian Australia: Parliamentary secretary says there is 'an appetite' for removing environmental groups' exemption from secondary boycotts ban; Thursday 3 April 2014; http://www.theguardian.com/environment/2014/apr/02/coalition-review-of-consumer-laws-may-ban-environmental-boycotts: "Coalition MPs and industry groups are using a review of competition laws to push for a ban on campaigns against companies on the grounds that they are selling products that damage the environment, for example by using old-growth timber or overfished seafood....  Groups including the Australian Forest Products Association and parts of the seafood industry are also preparing submissions to the review arguing that environmental campaigns against companies selling products made from native timbers or “unsustainable” fishing amount to a “secondary boycott” and should be unlawful....  But the new state Liberal government intends to undo the forest “peace deal”, expand sawlog production and stop environmental campaigns through tough new state laws aimed at protesters. It is also lobbying the federal government for a change to competition laws to stop market-based campaigns.... Colbeck said he would be suggesting a further change to competition law to increase the power of the Australian Competition and Consumer Commission to police general claims made by environmental groups about particular types of products “to ensure that they are truthful”.... “They can say what they like, they can campaign about what they like, they can have a point of view, but they should not be able to run a specific business-focused or market-focused campaign, and they should not be able to say things that are not true,” he said.... Groups like GetUp! and Markets for Change are currently exempt from section 45D of the Consumer and Competition Act which prohibits actions that stop a third person buying goods from another....

Tasmanian forests set for logging as Liberals push ahead with repeal; State government unveils plan to tear up historic deal between industry and greens protecting 400,000 hectares of forest; Australian Associated Press; theguardian.com, Tuesday 8 April 2014; http://www.theguardian.com/environment/2014/apr/08/tasmanian-forests-logging-liberals-repeal

Khor Reports comment: Interesting to see a possible push back from Australia industry, state and federal government over market boycott campaigns by domestic NGOs. In contrast, palm oil has been facing significant market campaigns, but at a transnational level. Actions have been taken by palm oil producers in the French trade tribunal, for instance, but negative market actions continued and the number of products affected continued to rise. Also interesting that this is the second time in as many months that we read of a competition act possibly used in relation to the sustainability issue.

HSBC ratchets up sustainability risk policy

HSBC Agricultural Commodities Policy, March 2014, sets out details of the international bank's sustainability risk policies which requires key risky agri-commodity sectors: palm oil, soy, rubber wood and cattle ranching.

The focus is largely on palm oil. HSBC requires its existing grower, miller, refinery and trader customers to be 100% RSPO certification compliant by 31 December 2018 with the appropriate full information disclosures (notably on NPP and ACOP). New HSBC customers in this sector should have a clean track record and be fully compliant within 4 years.

 

Pushing bank customers for 100% compliance and disclosure

source: HSBC Agricultural Commodities Policy

The other high risk sectors - soy, rubber wood and cattle ranching - are on comparatively less stringent policies than palm. HSBC asks its soy sector clients to comply with RTRS (which is a simpler program than RSPO), rubber wood (FSC or PEFC which are voluntary and national standards respectively), and no details for cattle ranching set. No time schedules are mentioned for these other sectors versus palm as their programs are more flexible.

 

Soy, rubber wood and cattle ranching concerns, but less stringent

source: HSBC Agricultural Commodities Policy

The context

This major bank sets out quite detailed requirements on palm oil for its clients. Several including the World Bank Group, Standard Chartered and various other European banks already have broad policies on palm oil asking clients to be members. We can expect more banks to toughen up on such policies.

RSPO is notably different from RTRS, FSC and PEFC on various features including a) its requirement for 100% areal certification requirement and b) RSPO's upcoming HCV Compensation Liability, which sets environmental compensation at USD2,500-3,000 per hectare for post-1 Dec 2007 vintage estates for RSPO members and post-post 1 Jan 2010 vintage estates (then non-RSPO member controlled land) lacking appropriate HCV assessments and without land-use change (LUC) assessment submission. Those who do the LUC assessment, can multiply the liability by 0x, 0.4x and 0.7x depending on the status of the land in November 2005. Social compensation cost indicators have yet to be given, but some plantation sustainability experts tell us that if you spend $1 on environmental sustainability, you could also be spending $1 on social.

There is renewed urgency and tougher implementation of sustainability programs in the palm oil sector due to strong NGO campaigning and intra-NGO competition (also noted in the soybean sector) which has resulted in new stronger pledges from large producers and processors. Palm oil is now moving into a second phase of sustainability with sets out broader and deeper changes across the supply-chain for compliance with programs largely led by TFT-Greenpeace and RSPO-WWF principles.


Q&A on HSBC's new policy

Q: Will this have much of an impact on planters/refiners in Malaysia and Indonesia?
A: This is part of a trend of higher standards also being pressed by the large dominant plantation groups. As such, this change may not impact the category of large integrated producers as they are already making such promises and more within shorter timeframes. The impact will come as other supply-chain players have to comply with the procurement standards successfully campaigned by NGOs and taken up by producers and more buyers. The effect will cascade to small and mid-sized estates and independent processors. They will need to start moving with these voluntary sustainability programs.

Q: Will local Asian banks pick it up too?
A: The skeptics will say that if HSBC is less willing to lend, other banks will just step in. However, we hear from NGO sources that a handful of dominant plantation players have a new agreement that promises that they will ask their bankers to also comply. Thus, we can expect Asian banks to face more questions, not just from international NGOs but also from some of their own large plantation customers. If so, it may be sooner rather than later that more banks will be examining and issuing sustainability risk policies.

Q: Could this lead to a curb on further expansion of oil palm planting?
A: Expansion has been slowing among the large dominant players. Quite a few companies and analysts have noted the slowdown and attributed it to higher enviro-social standards. Thus, it is interesting to see statistics in Indonesia that shows relatively faster growth among smallholders in recent years. A senior adviser on sustainability note that sustainability has done a good thing in slowing expansion, as it has helped boost prices. But relatively high prices still signal for many to increase planting. Should we regard that as a paradox of the current sustainability policies or not? Also, buoyant prices and still good margins should make it easier for plantations to absorb higher cost for sustainability programs. While it may affect certain segments who need to adjust, the higher standards may or may not curb further global expansion of oil palm. Sustainability is one factor in many affecting palm oil supply and these policies can result in unintended and paradoxical changes.

Indonesia parliamentary elections (update 2)

RSIS Commentary 070/2014, 15 April 2014, Indonesia’​s Ambiguous Elections: Implicatio​ns for the Region by Yang Razali Kassim: Indonesia's 4th parliamentary elections since the fall of strongman Suharto in 1998 have taken place without incident. Though the official results are expected only in May the contours of the new political landscape are emerging. The two-step exercise in its latest democratic transition – parliamentary followed by presidential elections - is likely to revolve around the top three parties, the Indonesian Party of Struggle (PDIP), Golkar and the Greater Indonesia Movement (Gerindra).... Over the next three months, they will display intense political manoeuvering as they engage in coalition-building and deal-making with nine other smaller parties to achieve two parallel objectives: victory in the coming July presidential election and forming a government supported by the majority of the incoming parliament.... In the post-Reformasi era, the Indonesian parliament has become increasingly independent of the Presidency, and at times even prone to chest-thumping, as if to make up for the three decades of being subservient to president Suharto. In the last parliament, such behaviour had come at the expense of Indonesia’s neighbours. For instance ASEAN’s failure to push through a proposed region-wide anti-haze law was partly due to this. The legislature simply dragged its feet and refused to ratify the ASEAN Agreement on Transboundary Haze Pollution Bill, which had been passed by all other ASEAN members.... This posture reflected a parliament that did not want to be seen as being dictated to by other countries. Will the new legislature seek to be even more independent-minded, and more assertive, such that the next President will have a difficult time entering into international agreements with other countries? Will the Haze Pollution Bill be finally ratified by Indonesia so that ASEAN can implement its haze-fighting strategy?.... The second known unknown is about the next president. For the three leading parties, their presidential candidates are clear at this point: the hugely popular Joko Widodo or “Jokowi” for PDIP, Aburizal Bakrie for Golkar and Prabowo Subianto for Gerindra. It is quite possible that a new presidential candidate will emerge following the current coalition bargaining. In the direct presidential election in July, Jokowi’s immense popularity with voters will stand him in good stead. However his path to the presidential election may have been made easier had he not faced some resistance from within the PDIP. Yet, notwithstanding his star appeal, there is, paradoxically, not much known about the presidential front runner.... Unlike Jokowi, Bakrie and Prabowo have issued clear manifestos of what they stand for.

Jokowi's poorer showing is put down in part to the unexpectedly good showing of Islamic parties in the parliamentary poll as they moved to the "centre of the political spectrum, and away from a doctrinaire Islamic position"; http://khoryuleng.blogspot.com/2014/04/indonesia-electoral-politics-and-palm.html refer to Greg Fealy's analysis.

Jokowi. Articles on Jokowi in Tempo: http://www.tempo.co/topik/tokoh/613/Jokowi--Joko-Widodo.

Bakrie's blog: http://icalbakrie.com/?page_id=412; articles on Bakrie in Tempo: http://www.tempo.co/topik/tokoh/219/Aburizal-Bakrie; a critical piece: http://www.theglobalmail.org/feature/an-environmental-problem-for-brisbane-roar/81/;

Prabowo website: http://prabowosubianto.info/; articles on Prabowo in Tempo: http://www.tempo.co/topik/tokoh/137/Prabowo-Subianto; a critical piece: http://www.nytimes.com/2014/03/27/world/asia/indonesia-candidate-tied-to-human-rights-abuses-stirs-unease.html?_r=0;


Indonesia poll outcome dims economic reform hopes: analysts
Channel News Asia;13 Apr 2014; http://www.channelnewsasia.com/news/asiapacific/indonesia-poll-outcome/1069710.html; Prospects for much-needed reforms in Southeast Asia's top economy are in doubt after a worse-than-expected election performance by the main opposition left Indonesia staring at an unwieldy coalition government, analysts warn.


Indonesian Voters Head to Polls; Voice of America April 08, 2014 ‎; http://www.voanews.com/content/reu-indonesia-gears-up-for-legislative-election/1888504.html 
JAKARTA - Some 187 million voters in Indonesia head to the polls Wednesday in parliamentary elections that will have a big influence on the country's presidential poll in July; Current electoral laws stipulate that a party or coalition of parties must win 25 percent of the popular vote or 20 percent of seats in the national parliament to nominate a presidential candidate....  But polls show that only one party, the Democratic Party of Struggle or PDI-P, will definitely pass the threshold... Known locally as Jokowi, the Jakarta governor is wildly popular for his reputation for transparency and his hands-on approach to governance....  After his presidential bid was confirmed last month, the PDI-P’s popularity jumped from 27 to 37 percent in a widely watched opinion poll. The same poll showed the next closest party lagging 20 percent behind....  Professor Jemadu said it is too soon to call a Widodo presidential victory a certainty, but he said it is clear Indonesian voters want change....  A relative outsider with no connection to the country’s political elite, Joko Widodo is being touted as a new breed of Indonesian politician...  Nonetheless, even as Widodo offers hope and change, the voting system is riddled with corruption... Since the collapse of Suharto’s 32-year authoritarian rule, this year marks the fourth time Indonesians will democratically elect their parliament...  Results for the parliamentary election will be officially announced by May 9, but a quick count of the polls is expected within 24 hours.

Indonesia Vote Shapes Presidency Race as Jokowi Seeks Boost, Apr 8, 2014; http://www.bloomberg.com/news/2014-04-07/indonesia-vote-shapes-presidential-race-as-jokowi-urges-turnout.html; Jakarta Governor Joko Widodo said nothing about his party’s plans for the country should it win a large slice of seats in a parliamentary election tomorrow. Instead he appealed to voters for a big turnout for the party, known as PDI-P, in a vote that will affect his bid to become the next president of Southeast Asia’s largest economy.... If Widodo’s popularity means PDI-P can get a significant portion of the vote he may not have to form the type of large, disparate coalition that has been the hallmark of previous governments.... By contrast, President Susilo Bambang Yudhoyono’s Democrat party won about 26 percent of seats in the 2009 vote and had to trade cabinet posts to form a coalition with five other parties.,,,If PDI-P fares well in the vote and seeks a small coalition, potential partners would be the National Awakening Party, or PKB, newcomer NasDem, or the National Mandate Party, or PAN, said Marcus Mietzner, associate professor at ANU.. In a nation where the major parties have similar policy views on issues from the economy to resource management to education, party campaigns have been focused more on pushing individual personalities than laying out details of platforms and how they would help ordinary citizens.... Bakrie of Golkar, Indonesia’s oldest political party, has promoted resource protectionism alongside a focus on building infrastructure, without giving specifics.....

Khor Reports comment: What impact on regulatory changes relating to the palm oil supply chain, including on foreign ownership limit? There is a target to get this done before the end of the current presidential term. The presidential election will be on 9 July 2014. Currently, all the ministries relevant to palm oil are held by different political parties. This is regarded as having stymied more coordinated policy actions. According to news reports, there are few policy differences between the parties; Jokowi has been silent on PDI-P's policy platform while Golkar has promoted resource protectionism. We'll find out more from friends in Jakarta once these results are in and the Presidential campaigns heat up.

Revisiting Brundtland Report 1987

Khor Reports: The risks in unequal trade deals has long been recognized, even in the earliest days of the international push for change for sustainability in its broadest sense (inter-generational equity and more) . The UN’s "Our Common Future" / Brundtland Report of 1987 was still heavy on a government role and the principle of “sharing” and conflict mitigation between unequal institutions in the developed world and the developing world. This thinking seems of lower currency in the 2000s sustainability movement (or not highly practiced), including in the sector of palm oil sustainability, which has been narrowly driven on the basis of eco-certification or labeling. The narrower approach is associated with greater competition among NGOs for control of market share in eco-labels and market access policies, as seen across various agro-commodities. In palm oil, top Indonesia policy makers and industry associations are stepping up on regulatory changes and plans for national spatial landuse mapping. Is this the return of government to mediate the uneven negotiations of the big B2NGO2B deal phase? Also witness Australia state government moves to raise the standard on NGO claims and reduce the problem of market boycotts; /khorreports-palmoil/2014/04/australia-resource-industries-seek-ban.html.


The Brundtland Report states: “Effective cooperation with transnational corporations (TNCs) is possible in creating equal conditions for all parties. This can be attained by a strict observance of the principle of sovereignty of the host country. For their part, many corporations have recognized the need to share managerial skills and technological know-how with host country nationals and to pursue profit-seeking objectives within a framework of long-tern sustainable development....But mutual suspicions still exist, usually because of an asymmetry in bargaining power between large corporations and small, poor, developing countries. Negotiations are often made one sided by a developing country's lack of information, technical unpreparedness, and political and institutional weaknesses. Suspicions and disagreements remain, particularly concerning the introduction of new technologies, the development of natural resources, and the use of the environment. If multinationals are to play a larger role in development, these conflicts and suspicions must be reduced.....Strengthening the bargaining posture and response of developing countries vis-a-vis transnationals is therefore critical. Where nations lack indigenous capacity to deal with large TNCs, regional and other international institutions should assist” (Brundtland and Khalid 1987, 76).

Brundtland, Gro Harlem , and Mansour Khalid. 1987. "Report of the World Commission on Environment and Development: Our Common Future (Brundtland Report)." United Nations. Accessed April 12, 2014. http://www.un-documents.net/our-common-future.pdf.

Algal vs palm oil. Coming soon?

The use of algal oil to partially replace palm oil in home and personal care (HPC) is being planned by some companies. The first major brand which stated such a plan is Unilever. Ironically, the company is a key leader in the RSPO which says it promotes the use of sustainable palm oil (but a few RSPO members have taken this to be insufficient and instead pledge no palm oil usage; and much to the consternation of other RSPO members).

Ecover recently reports plans to produce algal oil in Brazil and then in its own factory in Belgium, for a new laundry liquid for launch in Europe in a few months time. Thus, we have a company in HPC pledging "no palm oil" eventually, starting with 7% replacement [1]. Francophone Europe has faced heavy negative palm oil campaigns and various food producers feature products with "no palm oil." Algal oil technology is still evolving and costing needs to be improved [2], but things can shift with many researchers working on this. An update on costing is needed. So far, it sounds like an early higher cost partial substitute for premium HPC products. Thus, we see Unilever still planning a new production facility in Sumatra for the use of palm kernel oil for oleochemicals in its HPC products. At the same time, in a separate and yet related trend, another key HPC brand, P&G is facing pressure from Greenpeace.

[1] News item: Ecover adopting algae-based laundry liquid to cut palm oil use, The Guardian, Wednesday 2 April 2014, http://www.theguardian.com/environment/2014/apr/02/ecover-algae-laundry-liquid-palm-oil; Ecover, the green cleaning company, will launch the algae-based laundry liquid in Europe later in 2014, as part of its pledge to ultimately replace all palm oil.... “Through our research into palm oil replacements, we discovered that algae are capable of producing one of the purest and cleanest oils available,” said Dirk Develter, Ecover’s Head of Research and Development. “Algal oils have a much smaller ecological footprint than most tropical oils, such as palm oil, making them ideal for home products, where tropical oils are widely used.”... At the start, 7% of the oil ingredients in the laundry liquid will come from algae, Ecover said, with the intention of raising that proportion as more is learned about its use. The first algal oil will be produced in Brazil from sugarcane, which is an efficient feedstock with a relatively low carbon and water footprint..... Ecover said it would be producing algal oils close to its Belgian factory in three years and was examining different feedstocks, including agricultural and forest waste, to identify which was the most sustainable feedstock of those locally available.... Ecover is also researching the use of bacteria to convert organic material into useful chemicals and, in 2013, the company committed to using plastic waste retrieved from the sea to create sustainable and recyclable plastic bottles.... Algae, and seaweed, are being developed as biofuel sources by numerous companies and the US Navy has tested algal fuel in its ships.

[2] Khor Reports at 2012 conference on algal biofuels; I am in Singapore... at the "Biofuel 2012 - alternative aviation fuel in Asia conference and Asean algae biofuel initiative conference."... How does this touch on palm oil? First, a positive. There's a potential use for POME in the cultivation process. Second, a competitive concern: the likes of global giant Unilever says it hopes to replace palm oil in its Dove soap and some other skin care products with algal oils, with a target date 2017... How about the economics of production? ..... Read more here: /khorreports-palmoil/2012/02/conference-algal-biofuels.html 


Algal oil researchers:

SGI, founded by J.Craig Venter; newslink below on his R&D on algae for biofuels:
http://www.forbes.com/sites/christopherhelman/2012/06/24/milking-oil-from-algae-craig-venter-makes-progress-in-exxon-backed-venture/ (thanks to a reader for this link!)