This weeks CSR-Asia conference in Kuala Lumpur touched on several critical issues for the region. One contentious topic is palm oil. While organizations, like the WWF lauded Roundtable on Sustainable Palm Oil (RSPO), might have tried to add legitimacy to the notion that palm oil can be cultivated in a sustainable manner, reality reveals problems on both social and environmental grounds.

For instance, one of Malaysia’s largest palm oil companies and member of the RSPO, Sime Darby, recently gained concessions in Indonesia and Liberia to develop plantations on hundreds of thousands of hectares of existing forest land. This means that yet more insidiously named “forest conversion” projects will occur.

Old growth forests with all their biodiversity, native cultures, and other economic opportunities (medicine, eco-tourism, etc.) will effectively be obliterated to make way for mono-crop plantations. One has to wonder what would happen if some disease or insect pest were to afflict this mono-crop that is quickly becoming the livelihood for many. Perhaps the lessons of the pine borer beetle in North America have not been shared elsewhere.

Palm oil is a highly valuable commodity used in making food, hygiene, and biofuel products. Merely weighing the commercial value of these products and the carbon sequestration value of the plantations is missing the point. Any allegedly sustainable land use strategy should not favor the destruction of large swaths of high conservation value forests.

While the language around conservation is better understood and nailed down in other industries, such as agro-forestry and the Forest Stewardship Council (FSC) program, the RSPO’s guidelines are much more loosely worded, allowing less scrupulous members such as Sime Darby room for how they define “high conservation value” forests. The RSPO and Sime Darby both have some explaining to do in their November Roundtable meeting.

t’s not just forests that are at stake, but also the native peoples inhabiting those lands. Dr. Marcus Colchester of the Forest Peoples Program delved into the complexity of the issue, using Indonesia as one extremely difficult example. In Indonesia, land titles significantly lack the structure of government oversight.

Land rights are not clearly defined in the country, and in many areas, traditional customary rights (e.g. land that has been inhabited by native forest peoples for generations, but not formally demarcated) are not always recognized.

Now into this blurry situation come palm oil companies, amongst other industries. While some companies act with some amount of integrity to engage with local communities around development opportunities and work with free prior informed consent (FPIC) guidelines set forth by the UN, others keenly exploit this grey area and the naivety of locals.

Andrew Ng, of Malaysia Nature Society said, “Sime Darby has a substantial number of on-going cases of social conflict in both Sarawak and Kalimantan. Though some of them were ‘inherited’ when they took over two other companies to become the largest company, they have not demonstrated leadership on addressing conflicts as would be expected from the self-claimed ‘sustainability leader’. In fact, their track-record in plantations and social conflicts makes the tag-line ironic humor.”

Some companies have bribed local officials or tribal leaders to essentially evict people from their own land. According to Dr. Colchester, these human rights abuses have lead to some 526 palm oil conflicts up to January 2009. Some of these clashes have been armed conflicts, with government troops being called in to squash resistance.

Needless to say, more ethical companies know abusing human rights is not only bad practice, but the negative publicity is also bad business. Simon Siburat, sustainability co-ordinator for Wilmar International , a major industry player, has gone to great lengths to engage communities in areas it intents for palm oil development. It negotiates with the many groups concerned, involves their leadership at different levels, and allows for self-determination of the outcome. Effectively, if the people decide not to sell up, the company moves on to other areas and approaches other groups.

While the Wilmar International presentation seemed thorough of their practices with communities, interesting questions were raised in regards to the land use and “forest conversion.” Mr. Siburat indicated that much of their development took place on denuded land, including some of the millions of hectares destroyed by 1997 fires that raged across Indonesia.

The images however revealed thousands of straight lines of palm trees giving way to the occasional patch of what appeared to be fairly established forest and mature canopies, perhaps still inhabited by native owners who had not sold out. One is left wondering if all is as clear on this topic as Mr. Siburat suggests. Still, compared to many other players, Wilmar International deserves some points for transparency on at least some of its practices.

All things considered, it looks as if any notion of “sustainable” palm oil deserves some serious rethink in light of these issues, lest yet another industry try to sweep these inherent problems under the rug.

Reprinted with permission from Celsias