IOI Group Suspended From RSPO for Violation of Palm Oil Sourcing Standards

01 Apr 2016 --- IOI Corporation Bhd said it is actively engaging with the Roundtable on Sustainable Palm Oil (RSPO) with regards to suspension of the RSPO certification of the entire IOI Group effective April. IOI said it has received the letter notifying the suspension of RSPO certification in respect of complaints against its Indonesian subsidiaries’ plantation estates, which produced approximately two per cent of IOI Group’s annual crude palm oil production. IOI Group is the holding company of ingredients supplier IOI Loders Croklaan.

IOI said it is very concerned about the impact on its stakeholders and reputation if the Group is not able to supply certified palm oil in the future due to prolonged suspension, adding these potential sales losses are not quantifiable.

IOI Group was one of the founding members of the Roundtable on Sustainable Palm Oil, but it has been suspended over its operations in the Ketapang area of Indonesian Borneo, where three of its subsidiaries are alleged to have violated a raft of RSPO standards meant to prevent rainforest destruction and social conflict, and some laws. 

NGOs had already filed a grievance about these operations six years ago, but with the RSPO’s slow complaints system; it has dragged on ever since.

During that time, IOI has been one of the biggest suppliers of RSPO-brand “Certified Sustainable Palm Oil,” or CSPO, to the consumer goods giant Unilever, another roundtable member. IOI’s ability to sell palm oil as CSPO has been suspended, too.

A statement by IOI Chief Executive Officer on RSPO Suspension read: “The recent suspension by the RSPO of our Group’s certification, for non-compliance of certain RSPO Principles and Criteria, is a very serious matter and has given rise to new challenges for us. We wish to assure all our stakeholders that after the complaint was made to the RSPO one year ago, we have taken corrective actions to review and enhance our sustainability practices. These include rehabilitating affected areas, improving our firefighting capabilities and engaging consultants to advise on all relevant Indonesian laws and regulations which are the subject matters of the complaint.”

Recent actions from the IOI Group were listed as follows:
"• Put in place a new Sustainability Team Structure where the Sustainability Heads at all operating divisions have a reporting line to the Group Head of Sustainability, who reports directly to the Group CEO. This will ensure that the operations personnel strictly adhere to all Sustainability policies, practices and commitments of the Group; 
• Setting aside equivalent lands within our development areas for conservation as a compensation measure for the affected HCV area; 
• We are a joint funder of the two-year High Carbon Stock Study, together with several large plantation companies and multinational corporations, which has resulted in a science-based HCS+ methodology. We are committed to conduct field trials and testing of the HCS+ in our new planting developments;" 

“IOI is in the process of identifying and appointing an internationally reputable organisation as our implementation partner and sustainability consultant particularly for matters related to new developments.”

“Pursuant to the letter from RSPO dated 14 March 2016, we have submitted a comprehensive action plan in the prescribed format on 23 March 2016. We will actively work with the complainant to jointly verify the issues and to engage another licenced HCV assessor from the HCV Resource Network to conduct an additional peer review of our HCV assessments report.”

"IOI, as one of the founding members of RSPO, has participated in the drafting of the RSPO Principles and Criteria and is fully committed to upholding all the RSPO Certifications and Processes. We place great emphasis and value the importance of sustainability in our business practices. In fact, it is also one of our corporate core values which is embedded in our Vision IOI as expounded by our founder and early pioneers of our company more than twenty years ago."

In a statement to FoodIngredienstFirst, an IOI Loders Croklaan spokesperson confirmed that from April 4, 2016 products produced at their refineries will no longer be able to carry the label of Certified Sustainable Palm Oil (CSPO). “We understand that this will impact our customers’ own sustainability commitments and we sincerely regret the disruptions that this may cause. Even though we are unable to provide MB or SG certificates during the suspension, our existing inventory of certified sustainable palm oil (CSPO) remains compliant with the RSPO Principles & Criteria. There will be no change to the quality or sustainable sourcing of the oil provided during the suspension,” the statement read. 

“We will continue our efforts to serve our customers in jointly finding solutions to minimize disruptions to their supply chain. These solutions will take into account the instructions we have received from RSPO. The suspension will last at least until the action plan submitted by IOI Group has been accepted by RSPO and the Peer Reviews of the HCV assessments have been performed. We cannot over emphasize how serious we take this matter and despite the current set back, we remain committed towards building a traceable, transparent and sustainable palm oil supply chain,” the statement concluded.

Following the suspension of the IOI Group, Unilever  issued the following statement: “Unilever takes the allegations against IOI and its suspension from the RSPO extremely seriously. We expect the highest standards from all of our suppliers and strict adherence to the Unilever Sustainable Palm Oil Policy. This suspension puts IOI in breach of our policy. In line with our grievance procedure, we are now in the process of disengaging with the supplier and have set a time bound plan to do this over the next three months.”

"In parallel, we are reaching out to IOI and to relevant NGOs and stakeholders to work together to determine a way forward for IOI to address and remediate the proven complaints and to demonstrate its commitment to fundamentally and transparently change the way it drives sustainable palm oil development to meet the highest social and environmental standards. We believe that this is a critical step in leading industry transformation."

by Robin Wyers

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