Tipping Point: Majority of World’s Palm Oil Trade Covered by Deforestation-Free Policies

By Joel Finkelstein
Forests & Lands, Political Strategy

On Friday, February 28, the palm oil industry crossed an important threshold: A new policy from Golden Agri-Resources (GAR) means that most of the palm oil traded globally is going to come from sources that don’t drive deforestation.

  • GAR has long been a significant player in the palm oil industry, and is the second-largest palm oil grower in the world. In 2011, responding to Nestlé’s Responsible Sourcing Guidelines, GAR worked with the sustainable products nonprofit TFT and Greenpeace to establish a landmark Forest Conservation Policy for the palm oil it grows.
  • But GAR’s 2010 policy did not apply to the palm oil it traded – which, at the time, was minimal. Over the past year, however, GAR has dramatically expanded its trading operation and now controls about ten percent of global palm oil trade.
  • On a shareholder call on Friday and in a filing posted on the Singapore Stock Exchange, GAR announced that it is extending its landmark Forest Conservation Policy to the palm oil it trades.
  • GAR’s new policy puts them in line with Wilmar International’s “No Deforestation, No Peat, No Exploitation” policy announced December 5. Wilmar controls about 45 percent of global palm oil trade.

Together, GAR and Wilmar trade most of the palm oil exported around the world – and as of today, that means most of this palm oil is going to be responsibly sourced.

“GAR’s announcement signals that an industry that has been synonymous with deforestation and species extinction is rapidly evolving towards responsible production,” said Glenn Hurowitz, Managing Director of Climate Advisers, who worked with Wilmar to develop their policy. “The industry has reached a tipping point. Consumer companies now have several different options to source deforestation-free palm oil, and no longer need to rely on companies like Cargill and IOI that continue to resist change. Investors should take note that companies that continue to deforest just aren’t going to have the same kind of market access as their competitors. In the debate over the future of the palm oil industry, the forests are winning.”

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On March 4, 2014

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