The deal, if enforced, could lead to a slowdown in the loss of tropical forests, particularly in Southeast Asia and West Africa

LONDON (Thomson Reuters Foundation) – Wilmar International, one of the world’s biggest palm oil producers, has agreed to ensure the oil it supplies will not result in any additional loss of rainforests, in a move that could significantly slow the destruction of tropical forests around the world.

The company has also vowed to better protect the rights of its workers and the forest communities where it operates.

Crucially, the commitment also applies to subsidiaries of the company, which processes or trades 45 percent of the world’s palm oil – a $5 billion a year global industry.

“If Wilmar is genuine in its commitments to deforestation-free, peat-free, exploitation-free palm oil, this could be a game-changer for the industry,” said Sharon Smith, palm oil campaign manager for the Union of Concerned Scientists.

Last year, in a Newsweek ranking of the environmental performance of the world’s 500 biggest companies, Wilmar came last, Smith noted. But if the new agreement is effectively implemented, it “could become the industry standard for sustainable plantation expansion and palm oil trading.”

Under the agreement, the Singapore-based food products company agreed that it and its subsidiaries would not cut down any additional rainforest to boost agricultural production, would not destroy important carbon-sequestering peatlands and would in particular protect forests that are habitat for endangered species such as Sumatran tigers, orangutans, elephants and rhinos.

The company also said it would ensure its employees and the forest communities where it works have the right to free, prior and informed consent about operations that affect them.

“Six months ago, fires from out-of-control deforestation in Indonesia choked Singapore and much of Southeast Asia – fires made possible by a no-questions-asked palm oil sector,” said Glenn Hurowitz, managing director of Climate Advisors, an organisation that works toward creating low-carbon policy.

“This agreement could mark the start of a new ‘Green Revolution’ that provides the deforestation-free agricultural goods global consumers are increasingly demanding,” he added in a statement.

Surging global demand for palm oil has become a major driver of tropical deforestation in Southeast Asia and, increasingly, in West Africa. Forest loss is a significant contributor to climate change, and Indonesia today ranks third in carbon emissions, behind only China and the United States, as a result of its rapid deforestation and destruction of peatland.

Industry and environmental organisations in 2004 set up a Roundtable on Sustainable Palm Oil, which runs a sustainable palm oil certification scheme, to try to deal with some of the problems.

But critics say the organisation has been less effective than hoped, both in curbing loss of tropical forests in countries like Indonesia, Malaysia and Papua New Guinea, and ensuring the rights of indigenous people living in those forests.

Palm oil is used in a huge range of products, from foods like chocolate and baked goods to soaps and cosmetics. According to The Forest Trust, a non-profit organisation that works with businesses on responsible products, U.S. imports of the oil have grown fivefold in the last decade alone.

Wilmar’s commitment follows a similar agreement by Nestle in 2010 and one by Unilever last month to track the supply of all of its palm oil by end of 2014, the trust said.

But because “few companies dominate their sectors the way Wilmar dominates palm oil,” the new commitment could have far-reaching effects,” said Scott Poynton, executive director of The Forest Trust.

The agreement “dwarfs in ambition any previous joint commitment in the sector,” he said in a statement.

Poynton and others, however, warned that enforcement of the new agreements will be the real test.

“While this policy is great news for forests and tigers, its success will be judged by Wilmar’s actions to implement and enforce it,” said Bustar Maitar, head of the Indonesian forest campaign at Greenpeace International, in a statement.

He said the deal also amounted to a gauntlet “thrown to other palm oil traders such as Cargill, Musim Mas and Sime Darby to release similar policies.”

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