Global palm oil companies fail to prevent Indonesian fires

8 December 2015

A large number of forest fires have been discovered on Indonesian plantations owned by global palm oil companies Bumitama and Wilmar International. Despite new evidence that both companies violate their own ‘no deforestation’ policies, major U.S. and European investors have not taken significant steps to address these problems, according to a new report released today.

Developed by Friends of the Earth Europe, Friends of the Earth Netherlands (Milieudefensie), Friends of the Earth US and Friends of the Earth Indonesia (WALHI), the Up in Smoke’ report is based on research into five palm oil plantations owned by Bumitama and Wilmar International in Indonesia. Fires were detected in all of the plantations. Wilmar and Bumitama denied they were responsible for starting them, but they failed to provide any evidence to support their position. According to Indonesian law, the companies are legally responsible for the fires.

Anne van Schaik, campaigner at Friends of the Earth Europe, said:

“Banks and pension funds in the UK, Netherlands, France and the United States are providing direct financing to Bumitama and Wilmar, despite having publicly committed to good practice criteria that should prevent them financing such destructive activities. This report shows yet again that the Indonesian palm oil sector continues to be a high risk environment, as voluntary corporate commitments all-too-easily go up in smoke.”

Despite both palm oil companies adopting their own ‘no burning and no exploitation on peat’ policies, the report says they have systematically violated national laws by developing palm oil on peatland, destroying high carbon stock areas and allowing forest fires in their areas.

It also provides evidence that the two companies are being financed by UK, Dutch, French and U.S. financiers, including a number of major international banks. Several of these financiers have their own policies on environmental and social sustainability which are intended to prevent them financing companies involved in forest fires and deforestation.

Added to this, the report says the Indonesia government has failed to prevent plantations from being developed on fragile peat lands, despite installing a moratorium in 2011 forbidding companies from developing plantations on peat deeper than three metres.

With social movements, world governments and corporations currently gathered in Paris for the UN climate talks, the Friends of the Earth groups have stated that the voluntary policies of the companies and their financiers cannot be trusted. They have called on the EU and US governments to introduce and implement strong and binding laws in order to stop the fires.

Arie Rompas, director Walhi Central Kalimanten - Friends of the Earth Indonesia said:  

“The fires of 2015 caused enormous health and environmental problems for hundreds of thousands of people in Indonesia and neighbouring countries. On certain days our emissions from the fires alone soared to almost 97% of Indonesia’s total emissions. We need urgent action by our leaders who are gathering now in Paris to hold companies accountable for stopping emissions wherever they occur.”

Based on the report’s findings, the environment organisations have called for a range of actions which they say must be taken to stop the forest fires:

- The companies should obey regulations issued by the Ministry of Environment and Forestry regarding the prohibition to open up peatlands and ensure rehabilitation of forests and peatlands burned within their concessions, and take responsibility for damages to the people and lands impacted by the fires and haze in the burned areas.

- At local level, local government in Indonesia must obey and implement regulations, the Indonesian authorities must tackle corporate crime, and the palm oil companies that have allowed burning within their concession areas must be held responsible for the fires.

- At national level, the Indonesian government must review all of the permits given to palm oil developers, must implement the peat moratorium and ensure no palm oil plantations are developed on peat lands, and must strongly demand that the companies take responsible for the rehabilitation of the land and the people impacted by the haze in the area.  

- At global level, there must be solutions agreed at the UN climate talks in Paris that benefit people and the planet. Financiers linked to Wilmar and Bumitama should withdraw their financial services to both companies, the EU and US government should regulate theses financiers, and new and binding rules on transnational corporations and financiers must be introduced.