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New Report Highlights RSPO Auditing Practices, Builds on Peru-Malaysia Case Study

The Environmental Investigation Agency’s UK office last week provided evidence of systematic problems in actions of auditors charged with certifying oil palm growers under the voluntary Roundtable on Sustainable Palm Oil (RSPO) certification scheme. In a new report called, Who Watches the Watchmen? Auditors and the breakdown of oversight in the RSPO, campaigners detail the effective lack of oversight within the international scheme to promote and certify “sustainable” palm oil suppliers, in the midst of annual meetings of the group in Kuala Lumpur, Malaysia.

Although the auditing groups and the RSPO itself should be identifying major violations, in reality this work “is being provided by NGOs and communities who are consistently highlighting violations by plantation companies through formal complaints.” Breaking down the numbers, the report goes on to note that the 52 current complaints brought by third party NGO and community organizations are likely “just the tip of the iceberg,” given “the limited capacity of civil society to effectively monitor a sector covering millions of hectares of land across three continents, on limited budgets.”

RSPO auditors should be identifying and mitigating the social and environmental conflicts underlying these complaints before they arise, but the report cites nearly a dozen cases where this oversight mechanism failed.

Investigations out of EIA’s U.S. office have also come across RSPO failures as part of research to understand the roots and financing of new, illegal deforestation for oil palm and other agro-commodity crops in the Peruvian Amazon. In the April 2015 report, Deforestation by Definition, EIA documented the origins and operations of a 25-company group advancing a large scale industrial agriculture model by illegally deforesting the Peruvian Amazon. The first of the group’s companies now active in Peru, Cacao del Peru Norte (formerly called Plantaciones de Loreto Sur), referenced Malaysia-based Keresa Plantations’ RSPO certification to put forward their green credentials.

However, when EIA looked further into the RSPO certification process undertaken by Keresa Plantations Sdn. Bhd., the first RSPO-certified plantation in Malaysia’s Sarawak state, we found a group of companies which obtained politically-motivated land handouts and cleared large swaths of forest in Sarawak, Malaysia, just prior to being certified. Profits from these RSPO-certified Sarawak companies are now financing a web of new plantation companies at the expense of Peruvian forests. Over 13,000 hectares, mainly of primary rainforest, has been deforested by offshoots of this group in Peru: Plantaciones de Pucallpa (also an RSPO member), Plantaciones de Ucayali, and Cacao del Peru Norte.

Keresa Plantations became a member of the RSPO on June 2, 2009, and received its RSPO certification of its 6,023 hectare plantation in Sarawak on October 21, 2010. Despite clearance of natural forest by the company in the years leading up to their membership, Keresa Plantations has been selling their oil palm products as a certified sustainable grower since that time. According to an RSPO audit, almost 60 percent (3,100 hectares) of Keresa Plantation’s currently planted oil palm was planted between 1998 and 2002. By cross referencing maps and GPS coordinates provided by the company, with satellite imagery from the United States Geological Survey, EIA determined that massive clear-cutting of forest cover on Keresa Plantations’ land occurred during the same period.

The RSPO requires that an evaluation to determine whether land planned for plantations contains high conservation value (HCV) area be carried out prior to new plantings, in an effort to prevent the destruction of primary forests or other important areas for conservation. Keresa Plantations asserted to auditors assessing compliance with RSPO standards that their land previously hosted a rattan plantation, and the auditors therefore concluded that the company had not developed over High Conservation Value Forest (HCVF). However, the company, created in 1981, obtained the land in 1995. Satellite data clearly shows that the when the land was acquired by the company, it was forested. Any rattan previously grown on the land was the responsibility of Keresa Plantations itself, after clearing the natural forest on the land. An evaluation of publicly available documents shows that not only did Keresa Plantations have an effective lease to the land during the time it was deforested, the company recorded proceeds from the sale of timber between 1995 and 1999.

Basic facts stated in publicly available financial records for Keresa Plantations seem to have been overlooked by RSPO auditors.

According to official land transaction records from Sarawak, leaked by Sarawak Report, Keresa Plantation’s land in the Lavang Land District was allocated as a concession to the company with the purpose of cultivating rattan, a fast-growing non-timber species of vine found natively in South East Asia. Company financial statements indicate that both oil palm and rattan were developed in parallel beginning in 1996. Keresa Plantations’ financial reports make references to trial plantings for rattan being harvested as early as May 2000. If Keresa Plantations developed oil palm over land that previously hosted rattan planting, it should not be excluded from assessment of the company’s responsibility for clearing forests, which satellite imagery confirms the land contained until its conversion under Keresa Plantations’ management.

Satellite imagery from Landsat confirms that by 2005, much of the forest which previously covered the plantation had been cleared. One RSPO audit report for Keresa Plantations said that “an independent body…approved by the RSPO as an assessor,” had undertaken a HCV Assessment “prior to development” in 2005, and found an absence of “protected, rare, or threatened species.” An assessment in 2005, almost a decade after deforestation began, to evaluate whether high-conservation value (HCV) areas existed in the plantation is functionally meaningless. (To see Keresa Plantations' deforestation over time lapse imaging, click here for 1986-2002 and here for 2002-2010.)

The forest cleared for oil palm plantings by Keresa Plantations was not untouched. However, the ample logging roads visible throughout the concession in satellite imagery, and the company’s own sale of timber sourced there for several years show that, before clearance by the company, this forest was rich enough to support marketable tropical timber species. When an assessment of nearby smallholder lands was carried out in 2011, “several endangered species [were] identified.”

The completion of the conversion on Keresa Plantation’s land from forest to plantation takes place around the same time the company was accepted as an ordinary member of the RSPO in 2009, led by director Graeme Brown. The group used their RSPO membership status to promote a sustainable image, not only in Keresa Plantations Sdn. Bhd., once land had already been deforested, but also in a letter dated April 25, 2012 to the Government of Loreto, in Peru. Another director within the company group, Dennis Melka, refers to the first RSPO-certified plantation in Sarawak as part of an application for new lands from the government of Loreto.** In the cases described here, the RSPO was ineffective in preventing deforestation in Sarawak. Because Keresa Plantations retained RSPO membership despite the group’s evidenced deforestation, their RSPO credentials were used in an effort to acquire further forested land in the Peruvian Amazon for agro-commodity development.

The credibility of the RSPO, and the oil palm plantations it certifies, are greatly cast into doubt by this case study. If auditors do not, or cannot, effectively question information provided to them by the company, or cross-reference it for accuracy with publicly available corporate information, audits simply serve to lend undue legitimacy to whatever image companies may wish to promote. In this case, with a company founded in 1981, which received its land lease in 1995, it is unclear why no information was provided in the audit report what had happened on Keresa Plantations’ watch, for decades. In fact, publicly available accounts show that Keresa Plantations was fully owned by a major logging company in Sarawak, Rajang Wood Sdn. Bhd., and that it financed and owned stakes in Asian Plantations Ltd., another group of plantation companies responsible for deforestation in Sarawak. Information uncovered by EIA about company relationships and the history of Keresa Plantations’ land itself is consistent with the information about auditor failings in the recently released report.

Hearteningly, the RSPO now says it will work to improve the third party audit organizations and auditing procedures. EIA Forest Campaigner Tomasz Johnson said, “It is reassuring that most RSPO members have accepted the evidence presented in our report and have voted for this resolution,” in reference to newly adopted ‘Resolution 6h,’ which passed Thursday at the RSPO’s annual meetings. “But the extent to which this resolves the problems we have identified will only be clear when the recommendations are implemented.” As EIA tracks the expansion of the oil palm industry across new frontiers in Latin America and the Congo Basin, we will be watching to see whether the RSPO can crack down on bad actors, or whether abuses in new areas further threaten the scheme’s credibility. Thus far, EIA investigations in Peru show that the RSPO risks losing credibility there, since at least two companies found to be illegally deforesting natural rainforest have emphasized their links to the scheme.

For more information, check out EIA’s April 2015 report Deforestation by Definition.

*The boundary layers displayed in the attached maps do not represent an on-the-ground survey and only represent the approximate relative location of property boundaries from analysis of satellite imagery, in addition to datasets produced by CIFOR. These maps have been produced by EIA for the sole purpose of geographic reference and no warranty is made by EIA regarding specific accuracy or completeness. Datasets produced by CIFOR were produced from the paper Gaveau et al. (2014). Four Decades of Forest Persistence, Clearance and Logging on Borneo. Plos One. and data in ArcGis was obtained via "BorneoIndustrialPlantation" submitted by Mohammad Agus Salim (Salim, M.A.) BorneoIndustrialPlantation. ArcGis. Retrieved from: http://tiles.arcgis.com/tiles/P8Cok4qAP1sTVE59/arcgis/rest/services/BorneoIndustrialPlantation/MapServer)"

**The corresponding letter referenced here may be viewed in the following images here, here, and here.

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