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Palm giant Golden Agri renews green push after criticism on land use

Wednesday, June 17, 2015 - 17:00

[JAKARTA] Singapore-listed palm giant Golden Agri-Resources has renewed its commitment to sustainability to address customer concerns after an international body accused one of its Indonesian subsidiaries of breaching land acquisition rules.

Last month, a Golden Agri subsidiary was ordered by the Roundtable on Sustainable Palm Oil (RSPO) to halt buying or developing new plantations in Indonesia, a move that caused concern among buyers and traders and was seen as a test case for local land rights.

The RSPO is a body of consumers, green groups and plantation companies that promotes sustainable palm oil production. Membership in the group is seen by many European edible oil buyers as the industry's sustainability benchmark.

The RSPO can withdraw a company's membership, which could lead to lower purchases by Western consumers concerned about the environmental impact of the palm industry.

"Our customers of course had concerns about this negative publicity," Agus Purnomo, Golden Agri's new managing director for sustainability told Reuters. "Our traders on the front line keep receiving general enquires (from customers).

"We haven't yet heard of any punishing decisions but there are concerns," said Mr Purnomo, a former director at WWF Indonesia and presidential advisor on climate change, who was appointed to his Golden Agri role at the end of last month.

The RSPO said last month a Golden Agri-Resources subsidiary had failed to adhere to RSPO rules on conservation assessments and consultation and consent of local people before converting land for planting in West Kalimantan.

Golden Agri has now submitted documents in response to the RSPO charges, which grew out of accusations from rights and environmental groups, and the matter is due to be discussed at a Thursday meeting of the RSPO's complaints panel.

Over the last six weeks, Golden Agri has reorganised its management structure, hired more sustainability people and developed third-party risk analysis, said Mr Purnomo.

It is also holding weekly calls with major buyers to address their concerns and working with green groups on action plans to improve the company's sustainability performance, Mr Purnomo said.

An RSPO spokesman in Kuala Lumpur said the group is waiting for feedback from some of the parties involved - and the review session on Thursday - before making any judgement on Golden Agri's progress in addressing the accusations.

Golden Agri produced 2.95 million tonnes of palm oil in 2014 from plantations mostly in Sumatra and Kalimantan.

It is the parent of Indonesian palm company PT Sinar Mas Agro Resources and Technology, the target of an anti-deforestation campaign by Greenpeace in 2009-2010 that led to a boycott of its palm products by leading buyers.

REUTERS