Forest fire in Tropical Rainforest in Sambas District, West Kalimantan. Milieudefensie/FoE Netherlands

In a statement, issued today (4th July) Wilmar responded by saying; "As a leading global palm oil player with one of the largest plantation land banks in Indonesia and Malaysia, we believe Wilmar International Limited has become a convenient target for Friends of the Earth Netherlands (FoE), which has made a number of serious allegations about the Group. We have made a point-by-point rebuttal of these allegations and we regret that FoE has decided to disregard our position and proceeded to publish its erroneous, misleading and defamatory report."

The report is scathing about Wilmar's conduct in the region and, says Paul de Clerck, Corporates Campaigner at Friends of the Earth International, it reveals; "that Indonesian palm oil traded by Wilmar is scandalous and damaging the environment. Forests are being cut and burnt down illegally, Indonesian laws are being broken and local people are suffering.”

Much of the blame is laid at the door of Europe and the growth in biofuels. Rully Syumanda, Forest Campaigner at Friends of the Earth Indonesia / WALHI said “Europe's growing demand for palm oil is leading to environmental and social devastation”.

“If the European Union continues to promote palm oil imports in order to meet its recently-adopted 10% biofuels target, this will simply aggravate the severe environmental and social impacts in countries like Indonesia. The European Commission should accept that setting such a rigid target was premature and drop it until the situation in producer countries has been fully assessed,” de Clerck added.

Nevertheless, Wilmar has stuck by its response to FoE and is trenchant in its defence of its actions. The statement it issued made a series of points which the company said addressed the issues raised in the report:

- We adhere strictly to a zero burning policy and do not engage in any logging activities.

- We will only develop plantations on land, which is approved by the government for the cultivation of oil palms.

- Although land tenure and rights in Indonesia remain ambiguous, Wilmar will work to ensure that all mutual agreements with communities and individuals in Indonesia are clearly defined, documented and legally established, thus demonstrating clear evidence of long term land use rights for our land. Wilmar will not threaten or diminish, directly or indirectly, the resources or tenure rights of the local communities. We diligently strive to ensure that we are using land to which we have a legal right and in which the country’s government recognises us as the rightful entity to manage the land in question. If there are land disputes, we seek to resolve them. Fair compensation will be provided to local communities in the event of loss or damage affecting legal or customary rights, property, resources or livelihoods. Wilmar will endeavour to undertake all measures to help avoid such a loss or damage.

- We are committed towards contributing to the local communities in which we operate by providing opportunities for residents to carve a livelihood for themselves to raise their economic and social well-being. We wish to highlight that like many plantation owners in Indonesia, our operations provide gainful employment opportunities to thousands of local residents in the rural areas. We also provide infrastructure and amenities such as clinics, community halls, crèches, schools, places of worship and recreational facilities for our plantation employees.

Both FoE and Wilmar have highlighted the role of the Round Table on Sustainable Palm Oil (RSPO), an industry body, though for very different reasons. According to FoE's statement: "The palm oil industry has attempted to market the trade as environmentally and socially sustainable, but this report exposes these policies as hollow and inadequate. Singapore-based multinational Wilmar is a member of the industry-led Round Table on Sustainable Palm Oil (RSPO) and is funded by the World Bank's private arm as well as private European banks which have codes of conduct against unsustainable palm oil. Rabobank and Standard Chartered Bank are the main European financers."

But Wilmar is clear about its intentions and its track record on sustainability. "The Group is actively involved in activities promoting sustainable palm oil. We are a participant in a two-year trial implementation project till November 2007 to field-test and review a set of principles and criteria for sustainable palm oil production before subsequent adoption as the RSPO standard. As part of our ongoing initiatives to evaluate our environmental and social performance, we participate in evaluations and audits, including those conducted by international organisations. We will continue to develop our CSR policies and procedures in line with the evolving industry standards. We will also continue to increase efforts and resources to ensure effective internal compliance of our policies and procedures."

The company was also clear in its rebutal of the allegations in the report and its intention to take the matter further. "As an established plantation player with over half a million hectares of land bank, we adhere to stringent Corporate Social Responsibility policies and will not undertake “intentional and systematic burning” to clear such a small fraction of our land bank (less than 1%) as alleged" said the company. "Whilst legal proceedings on the above are ongoing, we have been advised by our external legal counsel that our case is highly defensible. As such, we do not expect these legal actions to have a material financial impact on the Group."

Get the full FoE report here