Indonesian Sinar Mas-Linked Firms Wrecked Forest: Report

Indonesian Sinar Mas-Linked Firms Wrecked Forest: Report

30 July 2010

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Indonesia — Greenpeace said on Thursday it had fresh evidence that palm oil firms linked to Indonesian agribusiness giant Sinar Mas have bulldozed rainforest and destroyed endangered orangutan habitats in Kalimantan.

The charges were denied by palm oil firm PT SMART Tbk, part of Sinar Mas, which has already said it would stop clearing critical forests.

The accusations, leveled by Greenpeace in a new report, is the latest chapter in a long and bitter dispute between the conservationists and a key player in one of Indonesia’s biggest industries, palm oil.

The high stakes battle has already led to top palm oil buyers Unilever and Nestle dropping PT SMART as a supplier.

Industry giant Cargill on Thursday reiterated that it may also delist the Indonesian producer if the allegations of wrongdoing are borne out in an audit due to be released next month.

It also has implications for Indonesia, which competes fiercely with neighboring Malaysia for dominance of the lucrative palm oil market and which is also under intense international pressure to curb deforestation, seen as fuelling dangerous climate change.

President Susilo Bambang Yudhoyono has promised to cut greenhouse gas emissions by 2020 by as much as 41 percent from business-as-usual levels, and agreed to a moratorium starting in 2011 on issuance of new permits to clear primary forest.

The ban is part of a $1 billion climate deal signed with Norway earlier this year.

SMART has already promised to stop clearing high conservation value (HCV) forests, which refers to forests that shelter endangered species or provide valuable natural services such as trapping climate-warming greenhouse gases.

It said it will publish an audit of its operations on August 10.

SMART manages Indonesian palm oil firms PT Agro Lestari Mandiri (ALM) and PT Bangun Nusa Mandiri (BNM). The parent company for SMART, ALM and BNM is Singapore-listed Golden Agri-Resources, which is part-owned and led by the Widjaja family that controls Sinar Mas.


Greenpeace said in a report released on Thursday that aerial photographs taken in July by their own photographers, as well as by a Reuters photographer, showed that ALM was still clearing carbon-rich peatland forests in Ketapang district, in Indonesia’s West Kalimantan province.

“What we found was that, despite their commitment, high carbon destruction is still going on,” said Greenpeace forest campaigner, Bustar Maitar. “This is still happening, even while their auditor is writing the report.”

Greenpeace also published photographs which it said showed BNM clearing in an area in Ketapang that was identified by the United Nations Environment Program as habitat for highly endangered orangutans.

SMART released a press statement the firm did not clear virgin or primary forest and that it complied with Indonesian laws and regulations.

“We are not responsible for clearing primary forests, which are the natural habitats for orangutans, and High Conservation Value areas. On the contrary, all our concession areas do not contain primary forests and we conserve High Conservation Value areas, creating sanctuaries that will continue to preserve biodiversity,” said Daud Dharsono, PT SMART’s president director. Areas of untouched greenery in the aerial shots were proof that parts of their concession areas are being set aside for preservation, the statement said.

Enormous amounts of greenhouse gases are emitted when peatland forests are cleared and drained. Their preservation is seen as crucial to preventing runaway climate change.

SMART’s spokesman, Fajar Reksoprodjo, told Reuters that in the past, aerial photographs that appeared to show clearing in peatlands had been misinterpreted and showed mineral soil.

SMART initially planned to release its audit in July but delayed it to August 10 because it was not yet finished.

The auditors are paid by SMART and were selected in collaboration with Unilever, which chairs the Round Table on Sustainable Palm Oil (RSPO), an industry body made up of producers, consumers and non-government organizations.

The Greenpeace report also called on fast food chains Pizza Hut — a unit of Yum Brands Inc — and Burger King to stop buying palm oil from firms linked to Sinar Mas.

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