Orangutan habitats being cleared in areas near palm oil mills, report finds

• A new study identifies the palm oil mills in Indonesia with the most clearance of orangutan habitat happening around them.
• The top 10 mills are all on the island of Borneo and are producing palm oil that makes its way into the supply chains of consumer goods giants such as Nestlé, Procter & Gamble, Kellogg’s, General Mills, Avon, Mars, Mondelēz and more ⁠— companies that promised long ago to stop buying palm oil linked to deforestation.
• Just because deforestation is happening around a palm oil mill does not mean it is being done by an entity supplying that mill with palm fruits. But it is a strong red flag that this may be the case.
• Several of the consumer goods giants contacted by Mongabay said they were either actively investigating the deforestation or suspending trading with the mills. Others were vaguer in their responses.

Rainforest clearance during the month of May destroyed orangutan habitat near 144 different palm oil mills in Indonesia, according to a report by MapHubs, an open-data platform and technology company that monitors natural resources.

The top 10 mills, all located on the island of Borneo, lost an average of 104 hectares (257 acres) each. Among the companies that source their palm oil from these mills are household names such as Avon, Colgate-Palmolive, General Mills, Hershey, Kellogg’s, Mars, Mondelēz, Nestlé, Pepsico, Procter & Gamble, PZ Cussons, Reckitt Benckiser and Unilever.

“The report is a risk analysis,” said Leo Bottrill, the founder and CEO of MapHubs. It’s intended to “highlight that both major traders and buyers with NDPE [no deforestation, no peat, no exploitation] policies, are buying from mills located in high-risk areas for orangutan habitat clearance.”

Just because the forest clearance takes place near a palm oil mill doesn’t mean it is being done in order to supply that mill, or even to plant oil palm. While some major buyers of palm oil have mapped out their supply chains to the mill level, untangling the ever-shifting networks of farms, plantations and brokers that sell to third-party mills is something no large firm has yet managed to do. But achieving this “full traceability” is critical if palm oil users are to prove their supply chains are free of deforestation and other ills.

While some of the deforestation identified in the report occurred on lands licensed out to oil palm planters, others are happening in the surrounding forests, making it difficult to track who is responsible. Many mills process palm fruits sourced from smallholder plantations where ownership and land management agreements are often unclear.

However, given that palm fruits begin to spoil within 24 hours of harvest, most are processed by mills within a 25-to-50-kilometer (15-to-30-mile) radius. Therefore, there is a high degree of probability that those responsible for clearing the forest, if they are doing so to plant oil palm, are banking on being able to sell their product to nearby mills. By identifying those mills now, the entities engaged in deforestation will learn that there is no nearby market for their crop, since most major consumers purchasing from those mills have established strongly-worded zero-deforestation commitments that apply to their entire supply chain.

In practical application, however, the level of engagement in the process — and response to allegations — varies significantly among the companies buying palm oil from these mills. While some rely on third-party certifications, other companies have signed on with monitoring systems that give them direct oversight of their entire supply chain. This additional step, they say, allows them to respond more quickly and effectively to reports like this one.

Colgate-Palmolive, Nestlé, PZ Cussons and Reckitt Benckiser have each signed on with Starling, a service that uses satellites and remote sensing to monitor a company’s supply chain. Each of these companies told Mongabay they were actively investigating the deforestation, using their own satellite data to directly engage suppliers and clarify what actions will be taken.

Nestlé said it had suspended trading with two of the mills, and was investigating the others named in the MapHubs report. PZ Cussons said it had already stopped sourcing from two mills, and was speaking with its suppliers about the others. Both Colgate-Palmolive and Reckitt Benkiser also said they were verifying the reports, and would terminate business with any company falling short of their no-deforestation commitments.

While several other companies may not have the benefit of live monitoring, they did indicate they were actively responding to the MapHubs report. Unilever said it had already suspended one of the mills as a supplier due to previous violations, and was conducting further investigations to ensure the other mills are complying with its zero-deforestation commitment. Procter & Gamble also previously ended trading with three of the mills identified by MapHubs, but said it would look more closely at the others it still deals with. PepsiCo said it would thoroughly investigate the issue.

Meanwhile, Kellogg’s responded to the report by simply reaffirming its commitment to sustainable palm oil, while General Mills said that since it had no evidence that the mills it sources from owned the concessions where deforestation was occurring, it did not consider the problem to be part of its supply chain.

Avon, Mars and Mondelēz did not respond to Mongabay’s inquiries, while Hershey said it needed time to look into the issue.

Palm oil producers Bunge, Musim Mas and Fuji Oil confirmed they were actively investigating the areas of deforestation identified in the report, and a few had entered the concerns into their formal grievance processes.

Sime Darby, Bunge and Archer Daniels Midland each told Mongabay that while they had already suspended some of the mills for previous violations, they would make sure that those in proximity to these deforestation areas were not trading with third-party suppliers who were not in their tracking systems.

Palm oil giant Wilmar said that any deforestation activities occurring on land directly within its supply chain were already being addressed as part of Wilmar’s grievance procedure, but that the firm could not be reasonably expected to investigate deforestation occurring near its mills without a clear understanding of land ownership and management oversight of an area.

“As there continues to be a leakage market,” a spokesperson for Wilmar said, “where there is no scrutiny on those purchasing these excluded volumes, we will continue to see deforestation happening. This is not something that Wilmar alone can influence or stop.”

Wilmar also said MapHubs’ reliance on mill proximity was “highly erroneous and misleading,” differing from its own monitoring program provided by Aidenvironment, a nonprofit consultancy that works with large firms.

Golden Agri-Resources was also skeptical of the “guilty by proximity” link, pointing out that an area with a 25-kilometer radius was nearly three times the area of Singapore.

“The result is predictable,” a spokesperson for Golden Agri said, “numerous incidents of deforestation will be detected around these mills. Investigating every single incident detected is neither practical nor a productive exercise.”

While this sentiment may not be shared by every company, it gets at the heart of the issue: tracing the supply chain to just the mills is not sufficient. The web of middlemen, smallholders and interconnected companies makes it difficult but vital that palm oil consumers ensure accountability for the product from seed to shelf. And although mill proximity is a useful indicator for high risk of non-certified product leaking in, using proxies can shift focus from achieving true accountability.

For example, PT Jabontara Eka Karsa (PT JEK), a mill located in Indonesian Borneo that supplies nearly all of the companies named above with palm oil, has the greatest amount of orangutan habitat in its vicinity. The MapHubs report flagged PT JEK due to the 442 hectares (1,092 acres) of forest that have been cleared this year by a nearby plantation owned by the Palma Serasih Group. PT JEK’s parent company, Kuala Lumpur Kepong, stringently denies that it sources palm oil from anyone but its own concessions, which finished their forest clearing in 2015. This leaves open the question of who Palma Serasih intends to sell its fruits to.

Although there are limitations to using proximity as a proxy for responsibility, Bottrill said that since some 40 percent of oil palm fruits are supplied by smallholders, establishing direct links can be virtually impossible. However, he said he wishes that more companies with source data would be transparent about where their oil palm is being grown.

“Companies and their consultants such as Aidenvironment have accurate concession data,” Bottrill said, yet “few, if any, have made this concession data publicly available, citing [intellectual property] concerns.” Palm oil producers Socfin and Neste have both publicly released concession maps, a trend Bottrill hopes catches on.