ADM: Investing in Human Rights Abuses

Unlike 2008′s showdown, nobody from RAN attended this year’s Archer Daniels Midland (ADM) shareholder meeting to hold CEO Patricia Woertz’ ass to the fire. Nonetheless, ADM did not get away without responding to tough questions about the company’s irresponsible palm oil supply chain.

ADM, one of the world’s largest agricultural processors with operations in more than 75 countries, held its annual shareholder meeting on Thursday in it’s hometown of Decatur, Illinois. ADM CEO Patricia Woertz proudly announced that the company increased its quarterly cash dividend from 16 cents per share to 17.5 cents per share. Happy news for shareholders, right?

Well, probably not if they knew the dirty truth: they are invested in a company complicit in gross human rights violations in Indonesia.

The most significant part of this year’s meeting was that shareholders presented a powerful resolution on palm oil, resolving that the board of directors adopt and implement a comprehensive sustainable palm oil policy. Not surprisingly, and by way of shedding light on the true nature of this company, the Board of Directors recommended a vote AGAINST this stockholder proposal.

The resolution included:

• A target date for sourcing 100% certified sustainable palm oil and for segregating and tracing certified palm oil throughout the supply chain;

• Plans to verify suppliers’ compliance with the policy; and

• Supporting a moratorium on palm oil expansion in rainforests and peatlands.

It’s too bad ADM didn’t welcome this resolution — it could have been a positive step in the right direction for a laggard of a company. A concerned shareholder attended the meeting and raised a few of her concerns about palm oil, which I’ve summarized below:

- Indonesia is the 3rd largest producer of greenhouse gases behind china and the US thanks to deforestation linked to palm oil plantation expansion, exacerbating climate change.

- ADM sources palm oil from one of the most biodiverse areas in the world, the last remaining habitat for the critically endangered orangutan, meaning they will likely become extinct.

- Indigenous people are also losing their homes and livelihoods to plantations; when they resist, they are arrested, and their homes bulldozed. This violates the standards of the RSPO, of which ADM is a member.

These comments led to an important question. The shareholder asked Woertz what ADM was doing to address the fact that Wilmar, a massive palm oil plantation company with operations in Indonesia and Malaysia of which ADM is a major shareholder, violated the RSPO code of conduct by bulldozing an Indigenous community when it got in the way of the company’s operations. Ms. Woertz responded by saying that most of the charges by the community were found to be “without merit” but that there were some issues found to have validity regarding the land, and that those investigations are still ongoing.

The CEO also said that, “as far as committing to 100% sustainable palm oil, we believe this can be done most effectively through a group effort, not by acting alone.” I beg to disagree. As the three top importers of palm oil into the US, I believe ADM, Cargill and IOI all have a responsibility to commit to 100% RSPO certified palm oil as the bare minimum standard for their US customers.

Hopefully shareholders continue to challenge ADM on its misleading claims. Any claims by ADM that it is taking the environment into consideration are completely toothless without a palm oil policy in place to make even the most basic level of assurances to its customers by adopting supply chain safeguards. With these safeguards in place, palm oil produced by companies that think bulldozing a community is a viable dispute resolution mechanism will never end up in our homes.

What's At Stake: The Rainforest in Borneo. Photo by Frans Lanting.

This is the third and final installment in a series of posts that endeavors to answer a simple question: What is sustainable palm oil?

The answer, of course, is anything but simple.

The first blog post in this series explored the weaknesses of the Roundtable on Sustainable Palm Oil (RSPO), the dominant certification standard for palm oil companies. The second post examined the colorful spectrum of positions on “sustainable” palm oil from environmental advocacy groups to scientists and industry.

The real question still remains to be answered: Can an agricultural commodity like palm oil, which displaces rainforests and peatlands and has heavy ties to slave labor and human rights abuses, ever be considered sustainable?

According to the US Department of Agriculture’s website, the word “sustain” implies long-term support or permanence. As it pertains to agriculture, sustainable describes farming systems that are “capable of maintaining their productivity and usefulness to society indefinitely. Such systems… must be resource-conserving, socially supportive, commercially competitive, and environmentally sound.”

Currently, trying to find palm oil that meet’s the USDA’s own definition of sustainability is about as hard as finding a list of Alan Oxley and World Growth Institute’s donors.

Palm oil is the most traded edible oil in the world due to its high yields and cheap prices. But the many environmental and social costs of “cheap” palm oil — rainforest destruction, alienation of local communities from their customary lands and livelihoods — are externalized, meaning that while the market price of palm oil may be low, we’re still paying far too high a price for it. The rainforests of Indonesia and Malaysia, which is where 85 percent of palm oil is grown, contain some of the oldest (older even than the Amazon) and culturally and biologically rich forested ecosystems in the world.

The cost of destroying these natural treasures is not included in the price of palm oil-laden products like Girl Scout cookies or Keebler Grasshoppers — but aren’t these products costing us far too dearly all the same?

Monoculture palm oil plantation.Photo: Treehugger

As corporations and governments struggle to meet sky-rocketing demand for cheap vegetable oil, where do we look? Are industrial palm oil plantations the answer?

Plain and simple, the industrial palm oil now flooding global markets will likely never be a model of sustainability. In fact, it is the exact opposite — a model of irresponsible and short-sighted agriculture.

However, that does not mean the current system shouldn’t be transformed to create meaningful changes for people and ecosystems already planted with oil palm. By continuing to run effective corporate campaigns we can slowly chip away at this destructive system and the status quo of business as usual. We’re working to tip the scales by creating enough public pressure that our corporate targets embrace solutions in which environmental justice outweighs profit.

For example, imagine an agricultural system that prioritized transparency, accountability, and a diversification of food crops to support a robust local economy rather than an export-based industrial monocrop that strips the local communities of their native lands and food security. Imagine if biodiverse tropical rainforest land was not dished out by corrupt governments for mere pennies, just so they can be turned into desert wasteland. Imagine if, our world’s last remaining rainforests were protected as havens of biodiversity.

There could be strictly enforced and widely respected criteria around agribusiness expansion to ensure that endangered species and Indigenous peoples don’t get displaced. But there aren’t.

Working within this dysfunctional system on near term solutions, even if they may not make the system perfectly sustainable, is essential if we want to protect what’s left. Here are some immediate steps to help mitigate the negative impacts of this destructive industry:

1. Stop deforestation. Moving forward we need to figure out how to improve production standards on existing plantations, particularly by resourcing smallholders, and only expand on degraded lands with the free, prior and informed consent (FPIC) of the local forest communities that rely on them. There is no need to expand palm oil plantations on primary forest. Should the Indonesian government prioritize its forest protection and halt all expansion, RAN would clearly be supportive of that. We strongly support a moratorium on expansion of palm oil on primary forest and designating “no go” areas for the industry.
2. Companies must demand that the palm oil they buy goes beyond existing RSPO certification. Read the second recommendation in this blog post to learn more about this.
3. The RSPO should deny certification certificates to companies that fail to put in place dispute resolution mechanisms. In addition to the many unresolved land disputes from the palm oil industry in Indonesia and Malaysia, agribusiness giants like Malaysian Sime Darby are swiftly moving into Cameroon, Ghana and Liberia creating yet additional widespread land conflicts and natural forest conversion. Sime Darby is a Cargill supplier.
4. The RSPO standard must be strengthened. RSPO membership and even RSPO certification is not enough to protect rainforests. According to the advocacy coordinator for the SPKS, an independent union of oil palm farmers, “What I see in discussions is very different than what happens in reality on the ground in RSPO certified plantations and an even bigger gap in non RSPO certified plantations. The number of land disputes is growing by the day. The RSPO is a way for companies to legalize their crime through smallholder schemes.”

While the limits of large-scale industrial agriculture likely can never yield “sustainable” palm oil, we must continue to push the limits of our current system, because doing so means the protection of real acres, the defense of diverse forest communities, and the only hope of creating a future for critically endangered species like Sumatran orangutans and tigers.

Having attended the Encontro Xingu: Vivo Para Sempre” or “Xingu Encounter: Alive Forever” gathering in Altamira, Brazil in May 2008 with thousands in opposition to the Belo Monte dam, including my friends Zachary Hurwitz, Scott Fitzmorris and the late Glenn Switkes, I know the struggle is not over. I commit to doing everything I can to supporting communities in Brazil to stop this dam. Please join me and my friends at Amazon Watch and International Rivers today!

Sunrise on the Xingu River taken by Scott Fitzmorris

Brazilian Government Shoves Belo Monte Down Our Throats Ahead of Campaign Season
By Zachary Hurwitz

In July 2009, Lula da Silva promised his personal friend and Bishop of the Xingú Dom Erwin Krautler, as well as Professor Celio Bermann of the University of São Paulo, and representatives of affected indigenous and riverine communities that “we will not force Belo Monte down anyone’s throat,” But on February 1st, the Brazilian environmental agency IBAMA did just that, releasing the first of three environmental licenses required to build the Belo Monte mega-dam on the Xingu River.

IBAMA’s Provisional License approves the project’s environmental assessment (EIA), written by Brazil’s state-run electric company Eletrobras, while imposing 40 corrective mitigating conditions that will cost R$1.5 billion (US$ 794 million) to implement. In order to mitigate the dam’s social and environmental impacts and obtain an Installation License to break ground on what will be the world’s 3rd largest dam, the construction consortium that wins the project’s auction on March 30th must meet these 40 conditions.

Carlos Minc, who is expected to leave his post as Brazil’s Environment Minister this month to run for public office in Rio de Janeiro later in the year, stated that the imposition of 40 conditions proves that Belo Monte is the “most socio-environmentally advanced dam in the history of Brazil.” Meanwhile, critics like Raul Telles do Valle of Brazil’s Socio-Environmental Institute (ISA) have been quick to point out the obvious: if an environmental assessment needs 40 conditions to be approved, then it’s most likely one of the worst environmental assessments written in the country’s history.

Indeed, it appears the project’s incomplete environmental assessment was rammed through IBAMA simply to obtain the agency’s rubber stamp of approval. In November 2009 two prominent IBAMA technicians were removed from the EIA for voicing their opposition to the poor quality and rushed timeline of the EIA, which they later stated was driven by political pressure from the top. In another case, six IBAMA technicians signed a letter voicing concern that Belo Monte’s impacts to the Xingu river basin and riverine and indigenous communities had not been adequately studied, nor had these communities sufficiently participated in public hearings.

In September 2009, 40 highly respected international technical specialists and academic experts produced a report that highlighted significant errors in the EIA and the current design of Belo Monte however, the 40 conditions that IBAMA has imposed on the provisional license hardly do justice to the lacuna in the EIA. Instead, the agency has buckled once again – as it did in approving the environmental licenses of the highly controversial Santo Antônio and Jirau mega-dams of the Madeira River Complex in Brazil’s Rondônia state – to a political agenda and timetable that appear to have been determined well before the environmental assessments were ever written.

Clearly, Belo Monte’s timetable, and that of 70 other large dam projects planned for the Amazon has been in the works since José Sarney (1985-1990) took office as the first democratically elected president since 1964. The history of patronage, corruption, and fraud that has played out since Sarney distributed strategic posts in Brazil’s “hydroelectocracy” to his supporters has set the stage for Belo Monte’s politically expedited provisional license. Sarney’s bloc of supporters in the country’s electric and corporate sectors, including Dilma Roussef, Lula’s Chief of Staff and hand-picked successor for this year’s election, owe their political lives to him want Belo Monte built at any cost.

Make no mistake: the provisional license was approved this week– lacking a complete and rigorous environmental assessment, while denying the people of the Xingú their right to free, prior and, informed consent (FPIC)—because of an election timeline. In part it boosts Dilma Rousseff’s campaign for President: a Dilma win would most likely assure a continuation of the marriage between Sarneyists and the PT agenda on social spending that has characterized the Lula administration since 2005. On the other hand, a José Serra win (of the right-wing PSDB) on October 3rd would swing the country’s economic policies back to the right, a risk to the PT’s social agenda.

Meanwhile, Amazon defender and Green Party candidate Marina Silva, running 8% in polls, has criticized Belo Monte for lacking a coherent socio-environmental plan to support the people of the Xingú. Yet both front runners – Serra and Rousseff – have a strong interest in building Belo Monte and many more mega-dams in the Amazon to keep hydroelectricity profits flowing into industry and government coffers. These establishment candidates – and their devotees like Environmental Minister Carlos Minc – will undoubtedly continue to play lip service to “sustainable development,” while offering wholly inadequate mitigation schemes; 40 conditions for a Provisional License will not prevent impending disasters like Belo Monte.

The strength and unity of the Xingú River’s inhabitants, as well as the Brazilian and international environmental movement, have delayed Belo Monte since the José Sarney administration took power 25 years ago. As we watch the provisional license being shoved down the throats of the people of the Xingú, and as light continues to be shed on Lula’s ties to the Sarney political machine, it’s more important than ever to stop Belo Monte. The people of the Xingú, the Amazon, and the world depend on it. We cannot wait for more politicians to take office only to buckle under pressure. The time to stop Belo Monte for good is now.

Zachary Hurwitz has a Masters degree in Geography from the University of Texas, Austin, and has worked on energy issues in the Amazon Basin since 2006.