Document Abstract
Published:
1 May 2008
The hidden carbon liability of Indonesian palm oil
Indonesia’s palm oil industry- the way ahead.
This paper looks at the effects of Indonesia’s palm oil industry. It focuses on the activities of Unilever and other major organizations in dealing with the carbon liability issue. The paper concludes by discussing the way ahead to 2015 and 2050.
It argues that the expansion of the palm oil sector in Indonesia is driving the country’s growing greenhouse gas (GHG) emissions. A moratorium on further deforestation is an urgent priority. Unlike Nestlé, Procter & Gamble and Kraft, Unilever has recognised the global problems associated with palm oil expansion and the need for drastic reform to this sector. Major liabilities associated with palm oil from Indonesia include poor governance and illegality, biodiversity loss, social conflict and major carbon liability. Given these sector-level crises, Unilever has called for an immediate moratorium on deforestation and peatland clearance. It recognised that this is the only realistic way to curb the growing liabilities associated with palm oil in Indonesia and to allow time to clean up the on-the-ground operations of oil palm producers. The report shows how unless companies like Nestlé, Procter & Gamble and Kraft support Unilever's call for a halt to deforestation, the palm oil industry itself will continue to present a massive carbon liability over the coming years. If investors and corporate groups like Unilever intend to make a difference in terms of GHG emissions, they need to look at the carbon footprint of the group as well as the sector – looking at the ‘macro-level’ climate impact as opposed to the product supply chain.
The report concludes that the Indonesian government needs to:
It argues that the expansion of the palm oil sector in Indonesia is driving the country’s growing greenhouse gas (GHG) emissions. A moratorium on further deforestation is an urgent priority. Unlike Nestlé, Procter & Gamble and Kraft, Unilever has recognised the global problems associated with palm oil expansion and the need for drastic reform to this sector. Major liabilities associated with palm oil from Indonesia include poor governance and illegality, biodiversity loss, social conflict and major carbon liability. Given these sector-level crises, Unilever has called for an immediate moratorium on deforestation and peatland clearance. It recognised that this is the only realistic way to curb the growing liabilities associated with palm oil in Indonesia and to allow time to clean up the on-the-ground operations of oil palm producers. The report shows how unless companies like Nestlé, Procter & Gamble and Kraft support Unilever's call for a halt to deforestation, the palm oil industry itself will continue to present a massive carbon liability over the coming years. If investors and corporate groups like Unilever intend to make a difference in terms of GHG emissions, they need to look at the carbon footprint of the group as well as the sector – looking at the ‘macro-level’ climate impact as opposed to the product supply chain.
The report concludes that the Indonesian government needs to:
- stop the problem- zero deforestation- establish a moratorium on forest clearance and peatland degradation and ensure enforcement of the moratorium
- start the climate protection solution- prioritise protection of remaining peat swamp forests and other forest areas with high carbon storage capacity, biodiversity values and benefits for indigenous peoples and other local communities.
- stop the problem and support zero deforestation-support a moratorium on forest clearance and peatland degradation
- start the solution and clean up the trade- set and disclose targets for reducing GHG emissions in the supply chain from deforestation
- avoid trade with those engaged in deforestation and peatland degradation. Inform suppliers that purchasers will no longer buy from companies engaged in forest conversion and peatland degradation.
