Sinar Mas gets ultimatum from RSPO over palm oil and deforestation

Posted by ianduff — 23 September 2010 at 6:03pm - Comments

At last, the Roundtable of Sustainable Palm Oil (RSPO) is threatening action following the release last month of the independent audit commissioned by Sinar Mas, which showed that the company had been breaking Indonesian law and RSPO rules.

Yesterday, the RSPO uploaded to its website a statement confirming that they were taking Sinar Mas to task. However, before that happened they accidentally uploaded the letters they'd sent to Sinar Mas. These were strongly worded and pointed out that significant breaches of the RSPO's principles and criteria had been made by several Sinar Mas companies holding RSPO membership.

It's powerful stuff and essentially the letters are an ultimatum to Sinar Mas to shape up or ship out.

The RSPO quickly realised its mistake and within 30 minutes pulled down all the letters from their website. However, we managed to grab them and you can access them here:  

My favourite paragraph is the part where the RSPO says:

"The Grievance Panel finds that there has been serious non-compliance with the RSPO Code of Conduct... In particular infringement of Principles 2 and 7..." These two principles cover legal compliance, environmental impact assessments, development of high conservation value land, peat conservation and community engagement.

That's a pretty long list of offences that Sinar Mas must now answer to and the RSPO has given them four weeks to do so or they'll "proceed to suspend and eventually terminate...  [Sinar Mas] membership"

The RSPO rarely talks about terminating membership and with Sinar Mas being Indonesia's largest and most destructive palm oil company, this would be a gigantic step forward in terms of strengthening the credibility of the organisation.

This official reprimand by the RSPO confirms that that Indonesian palm oil giant has been misleading its customers and shareholders, and that companies like Nestle, Unilever, and Kraft were right to stop buying from Sinar Mas. If Sinar Mas is kicked out of the RSPO contracts with these global brands will be put out of reach for good.

But the big questions now are whether Sinar Mas is going to take this opportunity to demonstrate it will genuinely (and fundamentally) change, and if the RSPO has the balls to follow through on its threats if they don't? Perhaps they didn't want the public to see their letters to Sinar Mas so that it will be easier to walk away from any unmet ultimatums. This is likely to be a real test of the RSPO's resolve, something that has yet to see the light of day.

Finally, remember PR agency Bell Pottinger - parachuted in by Sinar Mas to help stem the exodus of companies cancelling their contracts? I wonder whether there could have been a better case study of an agency hasting the demise of a client's sinking ship.

Since advising Sinar Mas to cover up the real results from last month's audit with greenwashing statements and misleading press releases, Sinar Mas has faced the wrath of its own auditors, watched Burger King walk away publicly on Facebook, and now this week received letters from the RSPO threatening suspension and expulsion. A good couple of months work for Bell Pottinger and a classic example of why slick PR cannot disguise stubborn inaction.

So, is the game now up for Sinar Mas? If they won't change, then the RSPO has the opportunity to prove that it can save its ‘sustainable' palm oil name from the dirty activities of this group. Let's hope their resolve is just as determined when the deadline is up.

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