Oceans & Forests Blog

From Main Street to Wall Street, U.S. banks and brands support illegal forest destruction for palm oil

Posted Nov. 21, 2013 / Posted by: Adam Russell

International investigation names brands and investors behind commodity's boom

WASHINGTON, D.C./JAKARTA – Illegal and destructive production of palm oil in Indonesia is continuing, with a chain of culpability that spreads worldwide, from Southeast Asian rain forests to supermarket shelves and Wall Street board rooms, reveals a new report released today by Friends of the Earth1, Forest Heroes and SumOfUs.

In recent years, consumers have been shocked to learn that many household food brands use palm oil from sources engaged in widespread destruction of tropical forests. The new report, Commodity Crimes: Illicit Land Grabs, Illegal Palm Oil and Endangered Orangutans shows how this forest destruction not only harms forest peoples, endangered species and the Earth's climate, but is often illegal. The report names the major U.S. and European banks that are financing these unlawful land grabs and the investors who are profiting.

Commodity Crimes: Illicit Land Grabs, Illegal Palm Oil and Endangered Orangutans documents how one Indonesian company, Bumitama Agri Ltd, engaged in systematic forest destruction in and around forest reserves and in 2012 sold itself in a public offering that admitted to including illegally cleared tracts of forest. The financial maneuvers of Bumitama Agri – a leading supplier to the global market, including to Wilmar International, the world’s largest palm oil trader – also raise questions about compliance with Indonesia's tax laws and law against money laundering.

The report used on-the-ground investigation, global commodity trade data and satellite mapping to document how two companies affiliated with Bumitama have systematically violated Indonesian law, the guidelines of the industry-sponsored Roundtable on Sustainable Palm Oil and the sustainability policies of international finance institutions by illegally clearing thousands of acres of forests and fragile peatlands that are home to some of the world’s greatest biodiversity, including critically endangered orangutans. The report is accompanied by a short video providing graphic testimony to the destruction.

The report traces a chain of culpability that stretches the length of the palm oil supply chain:

  • From local district officials in Indonesia;
  • Through global palm oil traders IOI Corp. and Wilmar International;
  • To financiers like Bank of America and Citigroup; and investors including pension plans like the California Public Employees Retirement System and TIAA-CREF;
  • To companies selling a wide variety of products to consumers on grocery and drugstore shelves.

"Most consumers of packaged foods don't know that they are contributing to the illegal destruction of rainforests," said Jeff Conant, International Forests Campaigner at Friends of the Earth. "But financiers who invest in palm oil – with full knowledge of the industry's corrupt and rapacious way of doing business – have no such excuse.”

“We call on all financiers of Bumitama, Wilmar and IOI to pressure these companies to clean up their acts, or to withdraw their financing," said Conant.

Commodity Crimes puts the spotlight on Bumitama Agri for its unlawful forest destruction. But the case also serves to illustrate how poor regulations and complicated transfers of land and assets allow palm companies and commodity traders to take control of land, regardless of its legal status, traditional use or ecological importance. The Environmental, Social and Governance policies that many financiers have adopted are insufficient to contain the abuses in the palm oil sector, the report argues.

“Companies are often quick to hide the destructive origins of their palm oil by citing complicated supply chains and muddled regulatory landscapes, while hiding behind greenwashing certification systems like RSPO,” said Rob Wohl, Campaigner with SumOfUs.org. “But companies like Nestlé, Ferrero Rocher and Unilever have shown that it is feasible to eliminate deforestation and exploitation from products and implement fully traceable supply chains. Companies should stop forcing consumers to choose between their brands and the world’s rainforests.”

Indonesia’s forest destruction, much of it for palm oil, makes it the third largest emitter of greenhouse gases after the United States and China. The country established a moratorium on new forest clearing in 2010 and extended it earlier this year, but the rule has been widely criticized for poor implementation. 

“The government of Indonesia should immediately show that they are serious about protecting communities’ rights and saving the remaining forests," said Zenzi Suhadi, Forest and Plantation Campaign Manager at Walhi (Friends of the Earth Indonesia)."They should stop issuing new permits to palm oil companies, evaluate existing permits and prosecute violations. Indonesia’s much-heralded moratorium on new plantations is a commitment to the whole world. But to achieve real forest protection, it needs to be implemented with consistency.”

To download the full report, click here
To view the video that accompanies the report, click here

###

Contact:
Jeff Conant, Friends of the Earth, U.S.: (510) 900–0016, jconant@foe.org
Zenzi Suhadi, Friends of the Earth Indonesia: + 628 138 450 2601
Joel Finkelstein, Forest Heroes: (202) 285-0113, joel@catapultaction.com
Rob Wohl, SumOfUs.org: (520) 481-7436, rob@sumofus.org

1. Friends of the Earth International is a global network representing more than two million activists in 74 different countries. Commodity Crimes is co-released in Europe by Friends of the Earth Europe and Indonesia and in the US by Friends of the Earth US and Indonesia, Forest Heroes, and SumofUs.

« Back to main page