January 7, 2019

Wilmar claims of ceased sourcing remain questionable

( - Wilmar International has announced that due to non-compliance on the part of the Pundi group with its NDPE policy, it has ceased sourcing from the group, which continues to remove Bornean orangutan-inhabited peat forests, effective from December 2018.

However, despite Wilmar's announcement, this has not led automatically to the cleaning up of its supply chain from Pundi’s palm oil. In fact, Wilmar has only ceased sourcing from the Pundi mill, and not rejecting Pundi’s palm oil from its indirect supply chain altogether.

As such, Wilmar's supply chain is still indirectly linked to Pundi's palm oil through its other suppliers. This should be a key concern with respect to Wilmar’s new policy measures

As reported earlier by (Jan 3), the Pundi group continues to clear and drain Bornean orangutan-inhabited peat forests. Moreover, this has carried on even after a sanction was imposed on it by the Indonesian Environment and Forestry Ministry.

The Planet Explorer images below show how a Pundi palm oil company (PT PWA) continued to drain the home of the Bornean orangutan in its concession as of the end of December 2018. Wilmar's supply chain is thus still indirectly tied to this destructive practice. 

As long as Wilmar’s supply chain cannot deal with its indirect sourcing problems, this supply chain will continue to be involved in new deforestation and peat drainage despite the issuance of its new policy measures.

AidEnvironment responds

Eric Wakker, Co-Founder of AidEnvironment Asia, which was one of the primary signatories to a joint statement with Wilmar (Dec 7), was asked for his opinion by regarding Wilmar's indirect sourcing linked to the Pundi palm oil. 

"It usually takes some time for the full supply chain (from producer to retailer) to adjust to new policies, and supply chain exclusions," was part of Wakker's written response to (Jan 4).

He also wrote that Wilmar had only ceased purchasing from the Pundi mill as of December 2018. This means that the world's largest palm oil trader has not removed Pundi's palm oil from its indirect supply chain completely. 

However, Wakker stressed that, “one has to be aware that there is some inevitable time lag in public reporting of supplier data.” 

This situation makes it clear that ceasing sourcing from a supplier mill does not equate to banning the palm oil from the supplier in question through indirect sourcing, as in the case of Wilmar and Pundi’s palm oil.

This serves as a lesson learned that the new Wilmar policy measures still need to address indirect sourcing problems in order to prevent ‘dirty palm oil’ from becoming part of Wilmar's supply chain.