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Leon Kaye headshot

Palm Oil from Alleged SE Asia Deforester Hits the Market – But So Far, No Takers

By Leon Kaye

According to the NGO Mighty Earth, one of South Korea’s largest conglomerates has produced a massive amount of palm oil with alleged links to deforestation in Indonesia. But the company, POSCO Daewoo, has not found any takers amongst many of the world’s largest buyers of this key ingredient, which by most accounts is in half of the world’s processed foods and personal care products.

The result, insists Mighty, is that companies are hearing the message that deforestation can pose significant risks to their business, as companies increasingly become serious about ensuring that their palm oil supplies are derived from more responsible sources. And this is also good news for certification organizations such as Rainforest Alliance and the Roundtable for Sustainable Palm Oil (RSPO), the latter of which now says the proportion of the global supply of palm oil that can be traced as responsibly sourced has reached an all-time high of 21 percent.

“POSCO Daewoo has been rapidly clearing Indonesia’s last pristine rainforests and is finally ready to cash in on its destruction,” said Deborah Lapidus, Mighty’s campaigns director. “But there’s one big problem for the company: The global marketplace is resoundingly rejecting POSCO Daewoo’s palm oil, demonstrating yet again that deforestation is increasingly bad for business.”

POSCO Daewoo, which touts itself as the largest trading company in Korea, operates a plantation of 34,195 hectares (132 square miles) in the southeastern region of the remote province of Papua. Satellite imagery and data compiled by Mighty suggested that while more of the global palm oil industry pledged to halt deforestation within its supply chains, POSCO Daewoo was rapidly clear-cutting their concessions. Mighty claims that about 9,900 hectares of forests in this land have been lost since November 2015, and almost one quarter of that amount was cleared during the first few months of this year alone.

As most of the land cleared was considered primary forest critical for endangered species’ habitat, Mighty says that any purchase of palm oil from POSCO Daewoo would run afoul of companies’ commitments to the RSPO. Furthermore, any procurement of palm oil from this region would violate most companies’ “no deforestation” supply chain policies. To date, POSCO Daewoo itself has not issued any anti-deforestation commitment. Mighty says it has obtained the plantation’s business plans, which reportedly indicate that the company will continue to deforest vast regions of its concession.

But Mighty went further than simply issuing a warning that the purchase of POSCO Daewoo’s palm oil would make companies complicit in the deforestation of virgin rainforests. The organization reached out to dozens of international palm oil buyers to see they were buying, or considering purchasing, palm oil from POSCO Daewoo. In addition, Mighty’s researchers also reached out to investors to inquire whether they were financing POSCO Daewoo or the specific plantation in question.

Of the almost 50 responses Mighty received, not one company said it currently sources palm oil from POSCO Daewoo or the plantation. And 20 firms said they would specifically exclude POSCO Daewoo and its plantation from their supply chains or investment portfolios until they could become compliant with their sourcing policies.

Mighty acknowledges that POSCO Daewoo may not be ready to release this palm oil to the markets quite yet. It could also be possible that POSCO is selling to another regional company, Korindo, which Mighty has criticized in the past for its alleged deforestation practices. Nevertheless, what is important about this development is that it shows the global marketplace is ready to reject palm oil that has links to any measure of deforestation.

Image credit: Mighty Earth

Leon Kaye headshot

Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.

Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.

Read more stories by Leon Kaye