IOI and Unsustainable Palm

By PSU EcoMerge Capstone - 5:41 PM

While several companies and organizations have been accelerating efforts to produce or use sustainable palm oil, one palm oil producer has not. IOI Corporation, one of the two leading palm oil producers in Malaysia, has recently "failed to comply with the terms set by the RSPO (Roundtable on Sustainable Palm Oil) Grievance Panel last month" according to Malaysiakini. Though this is a failure by the company, the RSPO granted IOI a 21-day extension in order to comply with the terms.

What does this mean? It means that the IOI Corp can continue to sell and market their palm oil as sustainable and green to those who buy from them, even though they violated rules about green and sustainable production.

There are a number of factors within this story that makes it so troubling. First is that IOI has not issued any sort of apology or statement of promise to reverse course and to comply with the RSPO rules. They seem to appreciate the extra time they are receiving, as described in an article by Bloomberg news (Click here for a link to the full story), but other than "working 'closely' with an industry group on a roadmap" to address the issues they face, IOI has not seemed to interested in saving face.

This means they seem to think they did nothing wrong, even though there are reports and statements to the contrary.

IOI is accused of illegal encroachment on protected forest lands, possibly clear-cutting up to 1,000 hectares of protected forests. Also, in the village of Long Teran Kanan (located in Sarawak, Malaysia), the community has faced intimidation from IOI. Villagers have been hit with  police reports filed by IOI against the people who try to reclaim their land, which IOI is accused of taking. And has IOI apologized? No. They seem to want to end this litigation and get their certification as being "green" in order to keep their profit margins going strong as ever.


It seems that, in all likelihood, IOI is not going to become a true sustainable producer of palm oil. Their dirty tactics and lack of concern for not only general law, but the near total disregard for the environment have made it clear. And until the RSPO and other organizations step in and take action, this will not change. The RSPO needs to revoke their sustainable seal of approval and make sure that IOI does not get it until they prove they are truly sustainable.

But that alone will not solve this issue. The true source of IOI's power is in the money. The money they get from palm oil production. Unless companies refuse to purchase from IOI Corp as long as they are either no longer certified as sustainable or continue their destructive actions, IOI and other producers like them will continue their ways. However, considering the slow progression of companies making the switch from unsustainable to sustainable palm, this strategy will take time. That is, if it ever occurs.

Still, this brings to light how some palm oil producers work and why people and product manufacturers need to take a closer look at where they get their palm oil and just how truly sustainable and green the raw material sources are.

Sources and More information:
http://www.malaysiakini.com/letters/165286
http://www.bloomberg.com/news/2011-05-26/ioi-corp-working-with-industry-group-to-achieve-roadmap-1-.html

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