Palm Oil Monitor Weekly Update – 25th October 2018

African Farmers and RED Gain Attention

Our colleague Thompson Ayodele from the Initiative for Public Policy Analysis in Nigeria has highlighted the EU’s attitude towards palm oil and the new ‘risk’ framework they’re attempting to impose on palm oil. His view is in line with ours; the ‘risk’ approach is not about compliance with specific rules for imported goods; it’s about imposing EU principles on production.

Thompson worked with us on the Nigerian case study for the HCS Study commissioned by the Sustainable Palm Oil Manifesto.

Thompson’s view – unsurprisingly – is much more informed by smallholder concerns for the African sector, and the general indignity caused by the EU approach. He writes in both Euractiv and Nigeria’s Punch:

[The Deforestation Criteria framework] poses an existential threat to farmers who rely on palm oil: the EU essentially wants to designate millions of developing world farmers as ‘risky’. This kind of signal would be devastating for future trade, investment, and employment.  Furthermore, declaring palm oil risky is a disrespect to millions of farmers.

We suspect that Brussels hadn’t expected this African perspective to get an airing. However, the EU Commission needs to understand that its approach is gaining negative attention well beyond Jakarta and Kuala Lumpur.

Indonesian Lawmakers Hit Greenpeace

Indonesian parliamentarian Firman Subagyo has hit out at the recent actions by Greenpeace in Indonesia, specifically its attacks on Wilmar.

Firman told reporters, “We do not value this commodity enough. Why do we have to defend it? Because it relates to our national competitiveness. The government and the people of Indonesia should not allow negative campaigns to affect our national pride.”

Indonesian government officials have hit out at Greenpeace in the past. In 2011 Greenpeace Director John Sauven was refused entry into Indonesia because of ‘smear campaigns’ against the country’s timber and forest industries.

This was at a period when Greenpeace’s relationships with some of the country’s largest commodity producers hit a clear low.

In response, Greenpeace has stated – once again – that it is ‘not anti-palm oil’. Again, this is difficult to believe when the organisation is flatly saying ‘Drop Dirty Palm Oil’.

The hypocrisy of Greenpeace in this instance is breathtaking. They state due to the behaviour of companies like Wilmar, “Indonesian palm oil commodities are at risk of being banned by countries in the European Union.” Of course, that would have nothing to do with Greenpeace’s anti-palm oil campaigns across Europe, would it?

France follows Greenpeace

The French Government appears to be following the Greenpeace tactic of maintaining that they’re ‘not anti-palm oil’.

French President Emmanuel Macron has unveiled his new cabinet team following a reshuffle of his government. Former Public Affairs Director of Danone Emmanuelle Wargon was named Deputy Environment Minister. Wargon has previously publicly stated her quite balanced views on palm oil in a video from her time at the company.

The video buzzed on social media following her appointment, which was met with harsh criticism from NGOs that didn’t approve the appointment of a “lobbyist” from the private sector with pro-palm oil views.

This led the French government’s spokesperson Mr. Benjamin Griveaux to quickly state that the new Deputy Environment Minister will have to follow the roadmap of the government which is to “fight against palm oil”.

A choice of words that was quickly followed by the French Foreign Affairs Ministry’s updated position via a press briefing post that stated:

The government is not combating the production of palm oil as such. It is the fight against deforestation and climate change that are our priorities: When its production fails to meet certain sustainability criteria, palm oil can lead to significant direct and indirect deforestation, in the same way as other agricultural products.

However, we couldn’t help notice the combination of the following in France: antipathy to anti-palm oil labelling; introducing the ‘Nutella tax’ not once, but twice;  the flagging of a sustainability commission for palm oil; a statement by the former French environment minister that palm would be banned from biofuels.

France has confirmed it will support the ongoing work by the European Commission on palm oil. But does this mean their anti-palm oil stance will be reflected in the European Commission’s deforestation criteria, i.e. banning palm oil biofuels? If this is the case, this week’s visit to Malaysia by EU officials will be nothing more than a public relations exercise.

How Sustainable are Sustainability Indices?

S&P’s sustainability indices came under fire this week, with campaign groups arguing that the inclusion of palm producer Golden Agri was ‘greenwashing’. This claim is based on controversy surrounding GAR’s operations in Liberia.

We’re not in a position to comment on the GAR situation in Africa, but it’s difficult to make generalisations on an index based on the behaviour of one company. So, how does the A&P index perform?

The index is actually put together by RobecoSAM, a sustainability consultancy. The methodology the company uses is based on what it described as financially material sustainability criteria.

Financially material criteria vary from governance to supply chain management to environmental stewardship and cash/capital management, among other things.

These criteria are weighted according to industry. So, product safety will matter more in a consumer goods company than it will in a commodity producer. And from there, indicators are used for each company, with the total number ranging between 80 and 120, based on qualitative and quantitative data.

In other words, there is a reasonably robust framework in place that assesses companies across the board.

So, for a campaign group to label an entire index as potentially fraudulent is a bit of a cheap shot. Clearly, they wanted to attack the GAR operations, but concluded that the best way to do it was by attacking the index.

Investors are clearly going to take the word of the index over that of Friends of the Earth.

It’s important to realise the end goal here. They’re not seeking to have S&P drop or change the methodology, or even change investor sentiment; they’re seeking to have Golden Agri turfed from the index.