Bunge and Sarawak – Background

By Joel Finkelstein
Forests & Lands, Political Strategy

On today’s earnings call, agribusiness giant company Bunge Limited (NYSE: BG) is reporting on its global business results. But evidence has just emerged that Bunge is excessively reliant on a single palm oil supplier that has engaged in rampant deforestation and clearance of ultra carbon rich peatland, and is working to sabotage emerging progress that is breaking the link between commodity production and deforestation.

Information about today’s call is available online.

Why This Matters: Bunge and Sarawak

Sarawak Oil Palms Bhd (SOP) is actively working to sabotage progress towards protecting forests, peatlands, and the people that rely on them. According to trade data, Bunge purchases 88% of the Sarawak Oil Palms Bhd Company exports. According to Bunge’s own filings with the industry trade group, this represents approximately 44% of Bunge’s total global palm oil supply.

Sourcing from SOP will likely make Bunge ineligible to supply to major global, premium value customers because of SOP’s rampant deforestation and clearance of peat. The world’s largest palm oil consumers including Nestle, Unilever, Hershey’s, Mondelez, Ferrero Rocher, Neste Oil, Safeway, and Reckitt Benckiser have all made public commitments not to source palm oil from companies engaged in deforestation or peatland clearance. Many other companies are racing to adopt similar policies in response to rising pressure from consumers. Continuing to source from SOP means that Bunge will have a difficult time accessing these markets.

Sarawak’s actions have drawn the attention of major companies and investors and create a significant liability for Bunge. Reporters should ask what actions it will take to mitigate this risk.

Wilmar International (the world’s largest palm oil trader with a 45% market share) recently announced its “No Deforestation, No Peat, No Exploitation” policy that requires their suppliers to immediately cease deforestation, peatland clearance and human rights abuse. Wilmar is working hard to implement the policy, and we have already seen many supplier companies take action to comply. As such, the policy has created important momentum.

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» Forests & Lands, Political Strategy » Bunge and Sarawak – Background
On February 13, 2014

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