Supply Chain
RSPO Recertifies IOI Group, But NGOs Have Yet to See ‘Real Action on the Ground’

Less than five months after the Roundtable on Sustainable Palm Oil (RSPO) suspended Malaysian palm oil producer IOI Group’s certification, that suspension has been lifted – much to the dismay of NGO campaigners. While the RSPO’s Complaints Panel has said it is “satisfied that IOI has met the conditions set out in its letter to IOI,” Greenpeace Indonesia and the Center for International Policy says they have yet to see any real action on the ground.

Following years of accusations that IOI Group was not adequately protecting peat areas and forests, the suspension of IOI Group’s RSPO certificates became effective on April 1, 2016. Major customers including Unilever, Mars, Kellogg and Nestlé immediately moved to drop IOI as a supplier. Claiming this “unfairly affected” the company, IOI filed a lawsuit against the RSPO in early May. While the lawsuit raised concerns that palm oil companies could bully the sustainability body, IOI withdrew the lawsuit in June, saying it has engaged with its stakeholders to resolve the issue and had agreed to create and follow an “action plan.” Throughout the four months-and-a-week that the suspension was in place, IOI submitted a number of documents [pdf download] regarding the intentions it has and actions it has taken to regain its certification. The suspension was officially lifted on August 8 (coincidentally, it was also Earth Overshoot Day 2016).

“Re-certifying the IOI group on the basis of unreliable promises, without waiting for verified action on the ground is risky and counter-productive. It sends the message that the RSPO is more concerned about helping a founding member regain its customers than ensuring its standards are upheld,” Greenpeace Indonesia forest campaigner Annisa Rahmawati said in a statement.

“When IOI lost its RSPO certification, dozens of companies took their business elsewhere. The RSPO’s hasty about-turn doesn’t make IOI any less toxic. IOI hasn’t restored the forests it destroyed nor resolved its social conflicts with communities in Malaysia. Its drainage operations still pose a serious fire risk for peatlands both inside its concessions and in the adjoining landscape.”

The RSPO stressed that the reinstatement of certification was subject to an inspection of IOI Group’s land by an “independent ground verification by a team of experts,” to be appointed by the RSPO Secretariat by September 4, 2016. The team’s findings are to be verified by the RSPO’s Complaints Panel, and the suspension will be re-imposed should any “significant failures in the in the implementation of IOI’s commitments to RSPO” be found. IOI is expected to continue to submit quarterly progress reports for a year, at which time another on-the-ground verification will take place and the Complaints Panel will review the action plan, progress, and conditions of IOI’s certification again.

Deborah Lapidus, the Campaign Director at the Center for International Policy, believes the RSPO should have waited to lift the suspension until after such verifications take place. “[The] RSPO’s suspension seems to have woken IOI up to the need to do more, but IOI is still wiping the sleep from its eyes,” she said in a statement. “It is naive in the extreme to trust a company that has broken virtually every commitment it has made and been suspended by RSPO twice, until it delivers lasting change on the ground.”

Back in 2011, the RSPO Grievance Panel suspended an ongoing certification process for IOI Corporation Behad (IOI Corp. Bhd.) following land dispute complaints and charges of deforestation by NGOs concerning Indonesia’s Ketapang district and Malaysia’s Sarawak province. In 2012, the RSPO reported it was “closely following” the mediation process, and the subsidiary would remain prohibited from obtaining RSPO certification until the conflict was resolved. Negotiations have remained unsuccessful, with seemingly little effect on the rest of the IOI Group’s standing in the RSPO.

“Regardless of the RSPO decision, the fact remains that IOI has yet to regain the trust of the marketplace,” Lapidus continued. “The two dozen major palm oil buyers that have severed their ties with IOI have been burned by IOI too many times in the past to settle for half-measures. They know IOI poses too big a threat to the credibility of their responsible sourcing commitments and their reputations to reengage too soon.”

The Center for International Policy was one of several NGOs including Greenpeace, Rainforest Action Network and the Union of Concerned Scientists that sent a letter to the RSPO last month urging the Complaints Panel to maintain the suspension and outlining a number of actions they would like to see IOI undertake. Given the conflicting opinions of the RSPO and NGOs, the responsibility now falls to businesses as to whether they should re-engage with IOI as a supplier.

“Unilever is looking into the decision taken by the RSPO and based on this assessment will decide on the right approach and next steps,” the company told BusinessGreen in an emailed statement. “We will be able to communicate further on this matter in the next few days.”

Greenpeace’s Rahmawati insisted businesses use caution, saying, “The RSPO has proved too weak to stick by its sustainability mandate. Buyer companies should not make the same terrible mistake, but instead hold out for verified action from this industry laggard before resuming trade.”