Felda Global Ventures voluntarily withdraws RSPO certifications from 58 processing mills following action against IOI.
KUALA LUMPUR: Two of the world’s biggest agricultural commodity traders have refused to cut ties with Malaysia’s IOI Group despite allegations that it failed to prevent the involvement of its subsidiaries in deforestation in Indonesia.
Other large trading partners such as Unilever, Nestle, Kellogg and Mars ceased trading with IOI after its sustainability certificates were suspended in March by the Roundtable on Sustainable Palm Oil (RSPO), a body of consumers, green groups and plantation firms that aims to promote the use of sustainable palm oil products.
Following the action against IOI Group, Felda Global Ventures has voluntarily withdrawn RSPO certifications from 58 processing mills.
The Financial Times reported that Cargill and Bunge felt it would be easier to drive change at IOI if they remained trading partners.
The report quoted Cargill as saying: “We’ve had a longstanding policy across our supply chains… to stick with suppliers as much as we can to help with the process of improving standards.
“The NGOs may be frustrated that we’re not moving quick enough but there’s no question about management’s commitment to our sustainability policy.”
According to the FT report, Bunge said it was in a “frank and active dialogue” with IOI on measures and changes that the IOI Group can make to its sustainability policies and approaches.
Greenpeace spokesman Richard George was quoted as saying: “It is strange that they are taking this risk (trading with IOI) when everybody else is moving away.”
Meanwhile, IOI’s head of sustainability, Surina Ismail, told Reuters the company accepted the findings that it had cleared rainforests and peatland in Indonesia but felt the punishment was too severe because it affected all of its operations.
“We accepted the findings but the scope and breadth of the suspension all the way down to our refineries was a bit excessive.
“Of course we say the suspension was unjustified. We felt like the naughty child in all this.”
Surina said the company was voluntarily adopting a more stringent certification system that the RSPO will put in place by the end of the year.
The IOI Group has engaged with many of its stakeholders such as customers, NGOs and RSPO to resolve this matter.
But IOI Group, according to the Reuters report, is not the only plantation company under pressure.
Malaysia’s Government-linked Felda Global Ventures, the world’s third-largest plantation firm, voluntarily withdrew RSPO certifications from 58 processing mills after what happened to IOI, saying it needed to clean up its supply chain.
The FT report said Moody’s had announced that it was reviewing IOI Group’s credit rating for a possible downgrade after the RSPO’s action and customers’ reaction.
IOI’s shares have fallen almost 15 per cent since the RSPO suspension.