Sinar Mas Says Report Clears Them of Greenpeace Claims That Cost It Nestle

An independent study cleared Sinar Mas Group, the world’s second-biggest palm oil producer, of destroying rainforests in Indonesia, according to a statement from PT Sinar Mas Agro Resources and Technology Tbk.

The report, by Control Union Certifications and BSI Group, “demonstrates that the environmental campaigner was wrong in much of its campaign and exaggerated throughout,” PT Sinar Mas Agro, said in a statement. Sinar Mas Agro, also known as PT SMART, is a unit of Singapore-listed Golden Agri-Resources Ltd., part of Sinar Mas Group.

Nestle SA, the world’s biggest food maker, Unilever and Spanish energy company Abengoa SA stopped buying palm oil from Sinar Mas after Greenpeace said that the company was contributing to climate change and destroying the habitat of Sumatran tigers. The environmental group also lobbied Wal-Mart Stores Inc., the world’s largest retailer, and Yum! Brands Inc. to stop buying from Sinar Mas Group’s pulp paper unit.

“The report concluded that the allegations made were largely unfounded and that SMART was not responsible for deforestation of primary forests and the destruction of orang utan habitats,” according to today’s company statement. The study also found PT SMART complied with Indonesian law, it said.

Control Union and BSI Group are certification bodies approved by the Roundtable on Sustainable Palm Oil, according to the roundtable’s website. The Kuala Lumpur-based group is a trade body of producers and buyers set up to promote the “growth and use of sustainable oil palm products,” according to the website. Unilever and Nestle are members.

Report’s Findings

“All the land in the eleven concessions examined comprised of secondary forests, degraded and shrub land and were no longer primary forests before SMART started land clearing,” according to a copy of the Control Union and BSI Group report that was posted on the PT SMART website. “Planting on peat lands and deep peat were found but not as extensively as claimed.”

“They are trying to greenwash their image,” said Bustar Maitar, Greenpeace’s Southeast Asia forest team leader, according to an e-mailed statement. The report “is a poor attempt at brand protection that does nothing to challenge Greenpeace’s findings,” Maitar said.

While the report is a “good start”, it is not sufficient for Unilever to resume business with Sinar Mas, the London- and Rotterdam-based company said today. “We want our suppliers to really work with us toward attaining 100% sustainable palm oil by 2015 and require concrete and verifiable actions that demonstrate progress,” it said in a statement.

Biggest Producer

PT SMART has gained about 30 percent this year in Jakarta trading, compared with the 21 percent gain in the benchmark index, and traded at 3,500 rupiah at 12:20 p.m. in Jakarta. Golden Agri-Resources has climbed about 17 percent this year, and was at 59.5 Singapore cents at 3:26 p.m. in the city-state.

Indonesia is the world’s biggest producer of palm oil, used in foods, as a cooking oil and a fuel additive. The commodity surged 57 percent last year on the Malaysia Derivatives Exchange as the global recovery boosted demand, and traded today at 2,690 ringgit ($853) a metric ton. Malaysia is the number-two grower.

Cargill Inc., the largest U.S. agricultural company, also said that it may stop doing business with the Indonesian company if the claims were correct and it took no action.

Unilever accounted for about 3 percent of Sinar Mas’s palm oil sales, and Nestle 0.2 percent, PT SMART said on March 25.

Greenpeace first made the claims against Sinar Mas in an April 2008 report titled “Burning up Borneo.”

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

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