Leading Palm Oil Producer Sues RSPO in Swiss Court

The Roundtable on Sustainable Palm Oil (RSPO) has not had an easy time over the past year, as many palm oil producers allegedly ran afoul of the RSPO’s standards — guidelines to which many of these companies agreed in the first place when they helped establish this organization.

Last year, the RSPO suspended dozens of members after many neglected to send an annual report on their business operations. Then an investigation into one of the world’s largest sustainable palm oil producers, IOI Group, accused the Malaysia-based company of causing the destruction of peatlands and forests in Indonesia. One of IOI’s most important customers, Unilever, severed ties with the company after the RSPO suspended the producer’s membership. Other companies followed Unilever's lead.

Now IOI is suing the RSPO in a Zurich, Switzerland, court.

According to an IOI news release, the company filed the lawsuit on two grounds. First, IOI alleges that the suspension was based upon standards covering operations within palm oil plantations — but the company claims those rules were used against its downstream processing units, which are held to a different set of RSPO standards. In addition, IOI complains that the RSPO’s decision should not apply to existing palm oil purchase and sales contracts to which the company had already agreed before the suspension. Meanwhile, IOI insists that it is still committed to membership within the organization and its sustainability principles.

But many environmental organizations are not buying into IOI’s rhetoric.

Greenpeace's United Kingdom chapter has been especially vocal on the problems related to the global palm oil supply chain, and the organization has investigated lands managed by IOI in Indonesia’s West Kalimantan region on the island of Borneo. Despite the RSPO’s rules that ban palm oil production on peatlands (which are a carbon sink and minimize fire risks in tropical rainforest regions), last month Greenpeace Indonesia investigators found continued drainage and development in such areas.

Mongabay, an advocacy group focused on both preserving the world’s forests and holding companies operating in such regions responsible for destructive business practices, has long made public allegations of land grabbing by IOI. The organization has also been vocal in its criticism of the RSPO, claiming that investigations into land grabbing take way too long to resolve. Mongabay’s complaints against IOI have been ongoing for years; their grievances include the company’s refusal to respect court decisions that returned some of its palm oil plantations to indigenous peoples who had long lived on that land.

Another NGO calling out IOI is Rainforest Action Network (RAN). Despite the company’s claim that its palm oil operations were “green” and “sustainable,” the nonprofit has accused IOI of non-compliance when it comes to RSPO standards. And at the same time, RAN activists expressed disappointment over past grievances, when the RSPO would grant IOI extensions, which allowed the company to continue selling palm oil even as one of the certifying board’s committees agreed it had breached RSPO guidelines. IOI has many subsidiaries that source, produce and sell palm oil across the world, and RAN has investigated many of them, including IOI Loders Croklaan, one of the largest exporters of palm oil to the U.S.

When it comes to the ill effects of palm oil, much of the focus centers around Southeast Asia. Indonesia and Malaysia are the two largest global producers of this commodity, which is used in many food products and consumer packaged goods. But the RSPO points out that Latin America has emerged as a major sustainable palm oil producing region. Almost 20 percent of RSPO-certified palm oil comes from countries such as Colombia, Ecuador, Guatemala, Honduras, Costa Rica and Peru. But that does not mean headaches similar to those caused by IOI will go away. Accusations of land grabbing have festered in Colombia and surrounding countries as far back as the 1960s.

In the meantime, IOI is standing its ground, determined to fight the RSPO suspension while the company insists it has a “zero-burning” policy and engages in sustainable agriculture practices. But until the photographs of fires and wide swaths of scorched earth stop circulating, do not expect environmental groups to give this company a free pass anytime soon.

Image credit: CIFOR/Flickr