Palm oil expansion: Greenpeace report reveals devastating impact of IOI environmental violations

IOI oil palm plantation

A new Greenpeace report says the impact of deforestation and peatland drainage on palm oil concessions owned by the Malaysian company IOI far exceeds that referred to in the complaint to the Roundtable on Sustainable Palm Oil (RSPO) that led to the company’s suspension.

The RSPO suspended IOI for conducting peatland clearance in violation of the organisation’s principles, and being in breach of other environmental safeguards.

The suspension of the IOI group’s RSPO certification became effective as of April 4, 2016. It applies to the entire group, including its plantation division and its trading arm, IOI Loders Croklaan, which is based in the Netherlands.

The complaint against the group was filed in April 2015 by the Amsterdam-based, not-for-profit consultancy Aidenvironment and related to three IOI subsidiaries: PT Bumi Sawit Sejahtera, PT Sukses Karya Sawit, and PT Berkat Nabati Sawit.

Aidenvironment accused IOI of breaching RSPO standards and its own environmental policies on its concessions in Ketapang, West Kalimantan, on the island of Borneo.

The consultancy brought forward evidence of a drainage canal being constructed in High Conservation Value (HCV) forest in IOI’s PT Bumi Sawit Sejahtera concession.

Aidenvironment said IOI had also cleared forest on deep peat in that concession, and continued to clear in that area after being told it was in breach of RSPO standards.

There was also illegal planting outside the boundaries of the PT Bumi Sawit Sejahtera concession, Aidenvironment said.

In May, IOI initiated legal proceedings against the RSPO, of which it is a founding member. The company dropped the lawsuit on June 6 – four days ahead of the RSPO’s European summit in Milan – and is now pushing for its suspension to be lifted.

Greenpeace is calling on IOI to protect and restore the landscapes affected by its palm oil operations, and for the RSPO to maintain its suspension until this is done.

Greenpeace International’s new report focuses on the Ketapang regency. (Greenpeace also highlighted forest destruction by IOI in an earlier report, published in 2008.¹)

West Kalimantan is one of the provinces of Indonesia that was devastated by horrific forest fires last year.

“The impact of IOI in Ketapang is far greater than is recognised in the specifics of the RSPO complaint,” Greenpeace states. “The drainage of peat will contribute to degradation, subsidence, and increased fire risk well beyond the boundaries of the concession, with damage to remaining forests and biodiversity. Peat degradation and fires are major contributors to Indonesia’s carbon dioxide emissions.”

IOI is producing yet another new sustainability policy, but this will be of little if any value without comprehensive action on the ground, Greenpeace says, and IOI has a record of breaching its sustainability policies. “Actions offered so far do not address IOI’s destruction, protect what forest and peatland remains, or reduce fire risk.”

Last year’s blazes in Borneo and on the island of Sumatra destroyed more than 2 million hectares of land.

There were fatalities, and at least half a million people suffered from respiratory illnesses because of the choking pollution that blanketed huge swathes of Southeast Asia. In Palangkaraya, the capital of Central Kalimantan, people were suffocating in pollution levels exceeding 3,000. (More than 300 is already considered to be hazardous to health.)

by-bjornA man who was unable to work because of the pollution casts his fishing net into a dirty canal in Palangkaraya. “Better a dirty fish than no fish at all,” he told photographer Bjorn Vaughn.


Most of the forest fires have been on peatland, which should be protected, but has been drained, mostly to make way for oil palm plantations. Once dried out, the peat is extremely inflammable. The fires burn underground and are very hard to extinguish.

Last year’s fires came very close to orangutan sanctuaries in Kalimantan and at least 14 orangutans had to be rescued.

Mama Anti, and her baby, who were found malnourished and in distress in the village of Kuala Satong in West Kalimantan in October. rescued by IARA mother orangutan, Mama Anti, and her baby, were found malnourished and in distress in the village of Kuala Satong in West Kalimantan in October 2015 and were rescued by International Animal Rescue.


The new analysis published in the Greenpeace report indicates that, in one area of Ketapang, 30 percent of the 214,000-hectare peat landscape burnt in 2015.

IOI is the biggest landowner in the peatland area referred to in the report, holding 30 percent of the total area under concessions. In recent years, the company has constructed much of the drainage canal network in the area.

Greenpeace says Ketapang is becoming a test case of corporate commitments to responsible palm oil production.

“Once a forest home to endangered and vulnerable species including orangutans, proboscis monkeys, and sun bears, the Ketapang peat landscape is now being carved up by the plantation sector …”

Forest campaigner for Greenpeace Indonesia, Annisa Rahmawati, said: “The RSPO mustn’t consider readmitting IOI until the company can prove it is cleaning up the mess it’s made.”

Oil Palm Saplings in IOI concessionOil palm saplings and the remains of a burnt tree in the PT Bumi Sawit Sejahtera concession. Photo taken on April 16, 2016; © Ulet Ifansasti / Greenpeace.


IOI’s deforestation and peatland drainage has contributed to a series of fires in its PT Bumi Sawit Sejahtera concession. Half of the concession, including a 141-hectare restoration area, burned in 2014, and many of the same areas burnt again in 2015. (Nearly 1,700 hectares burned within the PT Bumi Sawit Sejahtera concession alone.)

“In 2015, the government ordered companies to block drainage canals and restore burnt areas. Yet our investigators recently documented free-flowing drainage, and planting of oil palm on recently burnt areas,” Annisa said. “The fire season is getting closer and closer. When will IOI take this threat seriously?”

Since IOI’s suspension from the RSPO, a score of major customers have ended their contracts with the company, Annisa says. “However, we still see little evidence of IOI taking responsibility for the damage it has done across its operations.

“Remaining customers, such as Cargill, need to suspend purchasing from IOI until the company has addressed its legacy of forest and peat destruction.”

The Financial Times has reported that Cargill and another major agricultural commodity trader, Bunge, felt it would be easier to drive change at IOI if they remained trading partners.

Companies that have cut their ties with IOI include Colgate-Palmolive, the Delhaize group, Dunkin’ Donuts, Ferrero, General Mills, Golden Agri-Resources, Hershey’s, Johnson & Johnson, Kellogg, Marks & Spencer, Mars, McDonald’s, Mondelez, Nestlé, Procter & Gamble, Unilever, and the palm oil trading giant Wilmar.

Forest Fires in West KalimantanAn aerial view of a burnt peatland forest in Ketapang. Photo taken on September 20, 2015; © Greenpeace.


In a statement issued on June 6, Aidenvironment said the consultancy had been in dialogue with IOI for the previous two months and there would now be a joint review of results of the assessments that had been carried out. The aim, Aidenvironment said, was to ensure that the lessons learnt were being integrated into IOI’s standard operating procedures and sustainability policy, “in line with the expectations of the RSPO complaints panel”.

Aidenvironment said it welcomed IOI’s decision to withdraw its legal action against the RSPO.

It added: “We appreciate the work done by IOI staff over the past two months. However, it is too early to say that the requirements set by the RSPO complaints panel have been met.”

One of the rulings made by the RSPO complaints panel was that IOI had breached roundtable principles by not possessing environmental permits for PT Sukses Karya Sawit and PT Berkat Nabati Sawit at the time of land clearing for planting.

In a further breach, the company had cleared more land than was authorised in the local decree of January 2009.

The complaints panel told IOI to provide a detailed chronology of the relevant companies’ legal compliance with the requirements of Indonesian laws and regulations on the establishment and operation of oil palm plantation for each of the three subsidiaries that were the subject of the complaint, “to ensure that Principle 2 of the RSPO principles and criteria has been adhered to”.

Aidenvironment says that IOI has collected copies of permits held and conducted a first analysis of legal compliance, but a detailed chronology has yet to be completed.

“We will do this through a joint Land Use Change analysis, which is essential for IOI and the RSPO to understand how the various breaches came about.

“Parties are scheduling to commence this work in the second half of July 2016. We will be able to state whether the complaints panel’s terms are met only after completion of this process.”

In a statement also issued on June 6, IOI’s group chief executive officer, Lee Yeow Chor, said the company has completed its action plan and on May 30 had submitted to the RSPO a memorandum on its sustainability policy initiatives and resource deployment, which was endorsed by its board of directors.

One of the key initiatives referred to, he said, was the company’s commitment to voluntarily adopt the more stringent “RSPO Next” certification system, starting from the end of 2016.

“The above-stated initiative affirms our commitment and support towards the sustainability principles and the work of RSPO, an organisation of which we are a founding member and on whose board we have been serving for ten years already.”

In an update issued on June 2, IOI said peat restoration work at PT Bumi Sawit Sejahtera had been completed.

IOI was also in the process of developing a more comprehensive peat protection and management policy for the group.

The group head for sustainability, Surina Ismail, added: “At the plantation level, we further confirm our commitment to developing and implementing current best practices on peatland remediation and restoration.”

Where necessary, the company would implement “compensation measures” on the existing PT Bumi Sawit Sejahtera concession in West Kalimantan.

“To further enhance our sustainability commitments throughout the group, we have drafted a more comprehensive and robust IOI group sustainable palm oil policy,” Surina said.

Surina said IOI was committed to no deforestation, no planting on peat, zero-burning on all newly planted areas and where oil palms had been replanted, and being a driver for a “positive socio-economic impact for people and communities”.

Greenpeace says the “RSPO Next” standards provide no additional protection for peatlands in existing plantings and do not currently set a definition for High Carbon Stock forest.

“Although IOI’s policy commits the company to no deforestation and HCV clearance, there is no mechanism to ensure that all remaining forest and other socially or ecologically important areas within the wider landscape are identified and protected,” Greenpeace added.

“The company should commit to an immediate moratorium on development, including in existing concessions, while the appropriate studies are conducted.”

According to Greenpeace, IOI’s new draft policy and action plan goes no further than existing IOI policy, “and even appears to water down its past commitments”.

The current IOI policy lacks a measurable commitment to transparency, Greenpeace says. “IOI should publish all concession maps for its own operations through Global Forest Watch’s online forest monitoring and alert system and require all suppliers to do likewise.”

IOI’s proposal remains weak, Greenpeace says, and there is no credible timeline for implementation, or measurable milestones.

“IOI should make an explicit commitment to conserve the forest and peatland landscapes impacted by its supply base. This starts by hydrological mapping of the landscapes affected by IOI’s supply base using appropriate technology … to understand the impact of its deforestation and drainage.

“This baseline data will help to produce integrated management plans that mitigate fire risk and protect all remaining forest and peatland in these landscapes.”

IOI’s policy should also include an explicit commitment to conduct independent assessments of social and labour conditions in its palm oil concessions in Malaysia and Indonesia, Greenpeace says.

The company should also resolve outstanding grievances, including with the Long Teran Kanan community, “in a transparent manner to the satisfaction of the local people”.

‘Global environmental disaster’

Last year’s forest fires in Indonesia were described by conservation scientist Erik Meijaard as “probably the biggest global environmental disaster of the 21st century”.

12166819_182709265396386_718531337_nThe Sabangau forest in Central Kalimantan.

In May, the Indonesian Ministry of Environment and Forestry admitted that nearly half of the millions of hectares of peatland that should be protected under a 2011 moratorium has been burned or converted for plantations, other types of agriculture, mines, fish farms, or resettlement areas.

The government has now announced a new ban on peatland conversion and a moratorium on new palm oil and mining licences, but implementation will be a challenge. The licence moratorium’s authority is based on a presidential decree, which carries less weight than a law.

In an additional measure, 3.8 million hectares of peatland that has been damaged or converted will be rezoned. Areas that local people have converted into small-scale plantations and agricultural land will be rezoned as social forestry, and there will be investigations into the conversion of other areas by large companies.

A new Peatland Restoration Agency (BRG) has also been set up and the aim is to rehabilitate more than two million hectares of peat by 2019.

The agency is focusing on four districts in Sumatra and Kalimantan. It has already hit obstacles, however, with the company Asia Pulp and Paper (APP) providing incomplete information about the depth of peatland on its concessions.

The agency has asked seven companies to share maps of their concessions, and all have complied except APP.

The head of the agency, Nazir Foead, says mapping of concession areas on peatland will allow the BRG to identify priority restoration areas and land that should be set aside for conservation or be used for cultivation.

Indonesia still lacks one definitive map of its peatland areas. Three maps have been produced so far, but they all have shortcomings. Some peatland areas do not appear on any of the maps, so even amalgamating the three maps provides an incomplete picture.

“The Indonesian government has been clear on the need for a new map, but this is not scheduled to appear until November 2017,” Greenpeace says in its new report.

Greenpeace points to the complex web of trading in palm oil. “Companies including Eagle High supply palm oil to large RSPO members including Cargill and Wilmar, who in turn trade with IOI subsidiaries as well as global brands.”

Recent Greenpeace investigations revealed extensive fires and clearance in the peatland area within and beyond the concession boundaries of the Eagle High subsidiary PT Arrtu Energi Resources in Ketapang.

The area is identified as orangutan habitat and is covered by the government moratorium on new permits for development on primary forest or peatland.

“The web of external suppliers and complex trading makes it essential for the palm oil industry as a whole to clean up its operations and monitor smaller producers, as part of solving the problems of fires and peatland destruction,” Greenpeace states.

“Whereas some plantation companies have commissioned baseline maps, and dammed hundreds of canals around their plantations, much more is needed. IOI, most RSPO companies, and the vast majority of plantation companies have so far done nothing to demonstrate that they are serious about taking action to ensure that the fires and emissions that choked Indonesians and the region in 2015 are not repeated.”

Burnt Forest in West Kalimantan

Peatland burning at the border of IOI’s PT Berkat Nabati Sejahtera concession in Ketapang. Photo taken on December 3, 2015; © Ulet Ifansasti / Greenpeace.

Aerial photos of the  PT Bumi Sawit Sejahtera concession, February 2014. Images courtesy of Aidenvironment.





1) Greenpeace first exposed IOI’s deforestation, peat drainage, and destruction of orangutan habitat in its report, Burning Up Borneo, published in 2008.

In 2010, 11 NGOs submitted a complaint to the RSPO about IOI’s operations in its Ketapang concessions. The NGOs said there had been clearance of peatland since 2009, clearance of HCV forest, and illegal encroachment into production forest outside the boundaries of the PT Berkat Nabati Sejahtera concession.

The complaint also covered alleged breaches of community land rights in IOI’s Pelita concession in Sarawak. The RSPO complaints panel concluded that there was insufficient evidence in relation to Ketapang. The Pelita/Long Teran Kanan land dispute is still being dealt with in a conflict resolution process.

Aidenvironment complaint in detail


Headline photo of oil palm plantation in the PT Bumi Sawit Sejahtera concession in Ketapang: taken on December 3, 2015; © Ulet Ifansasti / Greenpeace.