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Created before Nov 2016
Last update: 2016-03-22 00:00:00
Karen Vermeer, BankTrack
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Golden Agri-Resources Ltd (GAR) is the world's second largest palm oil plantation company with a total planted area of 470,600 hectares (including smallholders) as at 30 June 2014. Founded in 1996 and located in Indonesia, it has integrated operations focused on the production of palm-based edible oil and fat. GAR is a subsidiary of the massive Sinar Mas conglomerate. In addition to oil palm, it also has major operations in China that include soybean crushing, noodle manufacturing and refining of edible oil products.
After years of pressure from environmental groups, the company is currently working with The Forest Trust (TFT) to implement its “no deforestation footprint” policy that began in early 2011, attracting cautious optimism from Greenpeace. It is working towards no conversion of High Carbon Stock land (over 35 tons/ha), peatlands, High Conservation Value land, coupled with yield improvements on existing estates. As it desires to achieve these goals, it also aims to be the world's largest palm oil company by leveraging on its third-party plantation relationships (for a list click here, p126) and further growth in value-added oil palm products for export throughout the world. In March 2014 it announced that it would extend its forest conservation policy to third-party suppliers.
c/o 108 Pasir Panjang Road, #06-00 Golden Agri Plaza
Mr. Franky Oesman Widjaja |
Golden Agri is incorporated in Mauritius and listed on the Singapore Stock Exchange since 1999. Flambo International Limited, an investment company representing the Widjaja Family, is its largest shareholder, with a 49.95% stake. Further information on the company's shareholders can be found in its Annual Report (see p166).
TFT suspends GAR membership
Following "several breaches" by GAR of its policies, TFT decided to suspend GAR's membership in May 2015. The step is seen by many as a result of GAR's and Smart's lackluster handling of the RSPO complaint against them.
RSPO complaint against PT KPC
On October 13th, 2014, TuK and FPP filed an RSPO complaint against GAR's subsidiary PT KPC, which has activities in West Kalimantan. In March 2015 the complaint was upheld by the RSPO. FPP found that there was a delay in HCV assessments and that there was a lack of attention to livelihoods and cultural identities, which meant that communities were asked to surrender lands without adequate information about the implications for their livelihoods. PT KPC did not encourage the communities to select their own representative institutions and negotiate with the company about land concessions. Moreover the company ignored both its own and the RSPO policies which require participatory mapping of customary lands. The lack of mapping has been the principal cause of the 4 year-long land conflict with Kerangas, where the company has cleared and planted community lands dispite community objections.
PT BNM is a GAR/PT Smart subsidiary, which operates in West Kalimantan and has around 24,000 ha of palm oil plantations. When it started its operations in 2008 it got involved in conflicts with indigenous communities living in the area. The customary lands of the village of Silat Hulu were cleared and bulldozed repeatedly, without the consent of the villagers. Continued clearing in September 2009 led to protests by Silat Hulu community members who seized company operational machinery, demanding respect for customary rights and compensation for destroyed and lost crops and land. Two of the community members involved in this protest were taken to court at the Ketapang District Public Court and the Provincial Public Court in Pontianak, and accused of having violated the Plantation Law by intentionally taking action to cause damage to PT BNM's plantation and assets. Public Interest Lawyer Network Indonesia (PILNET) brought the case to the Constitutional Court in Jakarta for Judicial Review of the Articles of the Plantation Law. In a decision of huge significance beyond this particular case and for the palm oil sector more broadly in Indonesia, the Constitutional Court found Articles 21 and 47 of the Plantation Law to be contrary to the Constitution of the Republic of Indonesia 1945 and both Articles have now been removed from the Plantation Law (Conflict or Consent Report, 2013).
Landgrabs in Liberia
In 2013, the Sinar Mas Group publicly announced its intention to invest $1.6 billion into Liberian palm oil plantations over the next ten years. The deal is to be channeled through the Verdant Fund, (in which GAR is a major shareholder), to Golden Veroleum Inc., which has been receiving massive concessions (220,000 ha for palm oil plantations, etc.) from the Liberian government since 2010. Opponents claim that GAR is funding land grabs in Liberia and robbing local villages of their livelihoods. A study conducted by The Forest Trust (TFT) in early 2013 confirmed these allegations, citing specific cases where land had been cleared without prior consultation, where drinking water had been polluted, and where cultural and spiritual sites had been destroyed by palm oil companies. Company compensation was also reportedly insufficient. Golden Veroleum's repeated breaches of the RSPO guidelines prompted the Green Advocates of Liberia to file a complaint with the RSPO in 2012 on behalf of affected communities. An analysis of the concession agreements between the Liberian government and Golden Veroleum concluded that the company "failed to ensure compliance with their corporate responsibility to respect human rights and their RSPO commitments."
In December 2009, GAR's subsidiary PT SMART was criticised by Greenpeace for its violation of the RSPO standard. In a report citing specific violations, Greenpeace alleged that subsidiaries of PT SMART were carrying out forest clearance prior to receiving the correct permits. It accused the company of burning, clearing and draining areas of deep peat, causing massive green-house gas emissions, destroying orang utan habitat and illegally clearing lands without environmental impact assessments and without other permits. In 2010, the Roundtable on Sustainable Palm Oil (RSPO) reviewed these allegations.
In February 2011, GAR became the first palm oil producer to announce a commitment to a "No Deforestation" footprint through its Forest Conservation Policy (FCP). It became a member of the RSPO in April and in June 2012 it released a High Carbon Stock (HCS) report, which explains the methodology used to identify HCS forest areas.
A Greenomics report form May 2015 shows that in the first quarter of 2015, GAR was the main buyer of CPO produced by a company group, PT Austindo Nusantara Jaya (ANJT) that continues to extensively clear high carbon stock (HCS) forest in West Papua province to date. According to a Mongabay article, GAR announced it would stop sourcing from ANJT at the end of May 2015.
The illegal use of fire to clear land for oil palm plantations in Indonesia caused devastating wildfires and record levels of haze across Indonesia, Singapore, and Malaysia in June 2013. Hospitals in Indonesia reported increases in lung, eye, and skin problems and the Malaysian government advised its citizens to remain indoors. PT SMART was blamed for the fires. Golden Agri denied any responsibility for the incident, but admitted to doing business with the companies in question.
In March 2015, the RSPO upheld a complaint filed agaist GAR over landgrabbing accusations. The decision comes in response to a detailed complaint filed with the RSPO by Forest Peoples Programme in October 2014, which documented how the company's plans to expand its plantations in eighteen of its subsidiaries in Indonesian Borneo were in violation of the RSPO's New Plantings Procedure and were based on assessments that were fraudulent and which ignored compliance failures by the company which had already been exposed by FPP and admitted by the company. FPP's studies showed how GAR was in multiple violation of RSPO's requirements that lands only be acquired from indigenous peoples and local communities with their free, prior and informed consent (FPIC). GAR's own submissions to the New Plantings Procedures also revealed that 16 of the 18 operations lacked legally required long term ‘business use permits' (Hak Guna Usaha - HGU).
The Norwegian Government Pension Fund Global (GPFG) sold its holdings in 23 palm oil producers (Golden Agri included) in 2012 after determining that many palm oil producers did not have sustainable long-term business models. In particular, the pension fund accused the companies of contributing to tropical deforestation in Indonesia and Malaysia.
In December 2009, Unilever ended its contracts with subsidiary Sinar Mas, after the release of the Greenpeace reports Burning up Borneo and Illegal Forest Clearance and RSPO Greenwash. Others, like Mars, Nestlé and Burger King followed soon.
In 2010, after the publication of the report Pulping the Planet, other large multinational groups like Carrefour, Gucci, H&M, Hugo Boss, Volkswagen, Fuji Xerox, Ricoh, Sainsbury’s, Marks & Spencer and Tesco also ended their contracts with GAR.
In 2012 Norway's Government Pension Fund Global divested from Golde Agri-Resources, after it revised its investment guidelines to include deforestation as a portfolio risk.