Clear-cutting rainforests is perhaps the environmental issue confronting Southeast Asia. Not only is deforestation blamed for increasing the severity of floods during the monsoon season, but it is also feared that irreversible biodiversity loss may result from disturbing these unique ecosystems. A new cause celebre among environmental activists is the Indonesian conglomerate Sinar Mas. While it has many different activities, that which it is increasingly known for is clearing prime rainforests in alleged contravention of Indonesian law to grow palm oil used by multinationals in food preparation and to grow trees for pulp paper. A few days ago, Burger King joined a long list of MNCs that have cut off business ties with Sinar Mas:
Environmentalists on Saturday praised Burger King's decision to stop buying palm oil from an Indonesian company accused of destroying rainforests. The U.S. hamburger chain giant — which recently sealed a deal to sell itself for $3.26 billion to 3G Capital — said Friday that it was canceling its contract with PT Sinar Mas Agro Resources and Technology over concerns it had not adopted sustainable farming practices.And speaking of Cargill, the Ecologist recently commented that it is not committing to severing business ties with Sinar Mas:
It cited an independent audit that found the company's plantations had violated several regulations, including planting in some peatland swamps and secondary forests. "These practices are inconsistent with our corporate responsibility commitments," Burger King said in a statement on Facebook as it joined a growing list of multinationals that have broken ties with Sinar Mas.
Burger King did not say what its alternate source of palm oil — used for frying — would be. The environmental group Greenpeace, which has accused Sinar Mas companies of tearing down forests that are home to orangutans and other endangered species, welcomed the move. Bustar Maitar, the group's regional forest campaigner, urged other major corporate consumers like Cargill, Pizza Hut and Dunkin' Donuts to do the same.
Jatna Supriatna from Conservation International Indonesia sees the move as a lesson for Sinar Mas and others companies that have destroyed the tropical forests that are home to endangered wildlife and act as a filter to absorb carbon dioxide, a key cause of global climate change. "They should not just be aggressive in expanding plantations without allotting their revenues for the forest restoration," Supriatna said Saturday. "The government has to stop them."
Indonesia is the world's largest producer of palm oil, a cheap commodity used to manufacture cooking oil, margarine, cosmetics and biofuel. Sinar Mas said in a statement it was disappointed with Burger King's decision, but would work hard to convince the U.S. company that it was committed to sustainable practices. Unilever, Nestle and Kraft Foods also have recently broken ties with Sinar Mas.
The billion-dollar agribusiness giant Cargill is refusing to cut its ties with an Indonesian palm oil supplier who has admitted illegally clearing forest...Nestle, Kraft, Unilever and Burger King have stopped trading with the Sinar Mas group after an independent audit of its operations found it broke Indonesian law by clearing land before any assessment had been made of its conservation value.Aside from this episode occurring in my backyard, I hope that keener readers familiar with American business notice the difference between the likes of Nestle and Burger King on one hand and Cargill on the other: Cargill is privately held, and hence more able to withstand pressure applied by activists from organizations such as Greenpeace. Lessons here cut both ways: NGOs may need further strategizing when aiming to achieve compliance by those whose ownership is concentrated and less likely to bow to public pressure. They don't scare as easily. At the same time, firms doing business with questionable CSR implications may be better off not listing on the stock exchange.
[Sinar Mas] has also been accused of trying to cover-up the critical report by initially claiming it cleared them of destroying peatlands or forests of high conservation value in Indonesia...
[Cargill] said it was encouraged by the group's commitment to 'taking corrective actions and to strengthening its standard operating procedures'. It also says it is aiming to buy 60 percent of its palm oil from Roundtable for Sustainable Palm Oil (RSPO) certified growers by 2010. Sinar Mas is currently aiming for all its existing growers to become a RSPO certified by 2015.
Greenpeace has criticised such commitments as unforceable on the ground. It said Cargill would now become the focus of its campaigning against the illegal forest and peatland clearance undertaken by Sinar Mas. 'We will not stop until Cargill has stopped trading with Sinar Mas,' said Greenpeace Indonesia forest team leader Bustar Maitar.
