Supply Chain

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GAR, Astra International Fulfilling Palm Oil Supply Chain Promises

Two powerful palm oil companies are fulfilling promises related to accountability in their supply chains and bolstering their sustainability.

By Sustainable Brands | Published 8 years ago | About a 4 minute read

Two powerful palm oil companies are fulfilling promises related to accountability in their supply chains and bolstering their sustainability.

Golden Agri-Resources (GAR), the world’s second largest palm oil plantation company, has achieved the major milestone of mapping its palm oil supply to mill. The company tracked its crude palm oil and palm kernel supplies back to 489 individual mills in 8 different locations in Indonesia with the help of environmental organisation The Forest Trust (TFT). GAR reports it will use this knowledge “to further engage and support independent suppliers.”

“We see a clear industry trend where buyers want more information on the impact of the palm oil they purchase. Our customers can rely on GAR to continue improving the information available about our supply chain,” said Paul Hickman, Head of Global Vegetable Oils and Oilseeds, Trading at GAR.

“If we can trace the oil back to its source we can engage more effectively with the suppliers and share what we have learned in our own operations to help them improve their environmental and social practices.”

GAR announced its 100 percent traceability to mill target in 2014, with target completion for the end of 2015. The initiative is part of a larger sustainability effort, which also includes providing funding to alternative livelihood programs to local communities and helping smallholders improve crop yields thereby reducing the likelihood of illegal burning for land expansion. Perhaps most notably, the company recently announced a peatland rehabilitation project to help long-term protection of one of the company’s concessions in West Kalimantan, Indonesia.

GAR is now working on the next phase of supply chain mapping to determine the individual plantations. The company expects to announce a time-bound plan for completing the next phase by the end of this quarter. GAR currently manages over 480,000 hectares of plantation directly or through smallholders.

Meanwhile, Astra Agro Lestari has followed through on its promise to join the Indonesian Palm Oil Pledge (IPOP), a partnership of palm oil companies working toward eliminating deforestation, peatland conversion and rights abuses. The company first pledged to join IPOP in June 2015 and reiterated to do so in September 2015 when it announced its Sustainability Policy. Other IPOP members include GAR, Wilmar International, Musim Mas, Cargill, Asian Agri, and The Indonesian Chamber of Commerce (KADIN).

“Astra Agro Lestari, as Indonesia’s second largest palm oil producer and a part of Astra International, Indonesia’s largest publicly traded company, has a lot of power over the fate of Indonesia’s forests,” said Deborah Lapidus, spokesperson for the Center for International Policy, one of the groups who negotiated with Astra and its parent company Jardines Matheson as it was developing Astra’s Sustainability Policy. “Astra joining IPOP is an important signal that it is ready to use its power for good.”

Astra’s director Joko Supriyono has historically opposed government actions to improve the sustainability of the palm oil industry. Supriyono serves as the Chair of GAPKI, the Indonesian palm oil producers association, lending to his and Astra’s influence. Environmental NGOs led a campaign last year calling on the company to adopt a no deforestation, no peatland policy as many other major palm oil companies have done in recent years. The campaign quoted “an executive with a major palm oil company” as saying Supriyono was “the single biggest obstacle to progress by the Indonesian government.” Some activists are hopeful that going forward, Indonesia could see a convergence of GAPKI and IPOP’s objectives to create a unified industry movement towards sustainable palm oil production.

“Astra joining IPOP represents a huge breakthrough. Even the Indonesian palm oil industry leaders who were previously most skeptical of conservation are calling on the government to launch a major push for forests and community rights,” said Azmi Sirajuddin of Yayasan Merah Putih, a community organization in Sulawesi that has been working with other Indonesian organizations to improve Astra’s practices.

The next step for Astra will be to announce the long-awaited implementation plan for its Forest Conservation Policy which is being developed in partnership with consultancies Daemeter, Rainforest Alliance, and Proforest.