Indonesian palm oil company PT Sinar Mas Agro Resources & Technology (SMAR.JK) said Tuesday that a third-party audit of its estates shows it wasn’t responsible for cutting down forest and destroying orangutan habitat for palm cultivation, refuting allegations by environmental group Greenpeace.
Greenpeace started issuing reports late last year alleging that the firm was involved in illegal rainforest clearing and draining of peatland for palm oil production.
Global food giants Nestle NV (NESN.VX) and Unilever PLC (ULVR.LN) suspended palm oil sourcing from PT Smart in response to Greenpeace’s efforts, despite the company being a member of the Roundtable on Sustainable Palm Oil, an industry-sponsored certification body.
Both companies have said that they would resume purchases if the Indonesian producer were cleared of the environmental group's charges.
An independent verification report showed that the Greenpeace claims were exaggerated and "was wrong in much of its campaign," Daud Dharsono, president director at PT Smart said.
"The allegations made were unfounded and Smart is not responsible for deforestation and destruction of orangutan habitat as had been claimed."
Control Union Certification and the BSI Group found that less than 2% of PT Smart's concession areas were planted on peatland exceeding three meters in depth and they "could not find evidence" of burning.
PT Smart engaged the two firms, both recognized by the RSPO as independent auditors, to review Greenpeace's allegations.
But in a statement late Tuesday Greenpeace said the company continued to break sustainability policies made earlier.
"We've repeatedly shown that Sinar Mas says one thing and does another. They destroy peatland and call it water management. They clear rainforests and say that they're developing degraded land. Instead of acting on our findings, which conclusively prove Sinar Mas destroys rainforests and peatlands, they are trying to greenwash their image," said Bustar Maitar, Southeast Asia Forest Team Leader for Greenpeace.
"The Sinar Mas spin is a poor attempt at brand protection that does nothing to challenge Greenpeace's findings," he added.
According to Greenpeace, Indonesia has one of the fastest rates of forest destruction on the planet, with palm oil and pulp and paper plantations being major culprits.
Unilever, which uses palm oil in products ranging from soap to ice-cream has said it would review its boycott on Smart if independent auditors provide proof that Sinar Mas is following sustainable practices.
Unilever stopped sourcing palm from Smart mid-December. It also stopped buying palm oil from another Indonesian producer, Duta Palma.
The firm, which purchases 47,000 tons of palm oil from Smart annually, said in a statement that "while the verification reports represent a good start, they are not sufficient in themselves for us to resume business with Smart. We want our suppliers to really work with us towards attaining 100% sustainable palm oil by 2015."
A company spokesperson at Nestle didn't respond to comments on Smart's verification reports.
-By Shie-Lynn Lim in Kuala Lumpur and Andreas Ismar in Jakarta, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 10, 2010 06:57 ET (10:57 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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