Mainboard-listed global commodities trader Olam International and US-based environmental lobby group Mighty Earth have agreed to collaborate on forest conservation and sustainable agriculture.
Olam, majority-owned by Temasek Holdings, will suspend clearing forest in the West African country of Gabon for a year, the company announced in a press release yesterday. It said that the period of the suspension can be extended.
Mighty Earth, chaired by former United States congressman Henry Waxmann, will suspend its campaign against Olam's oil palm and rubber operations for a year, including its complaint to the Forest Stewardship Council. Its suspension period can also be extended.
During that year, both parties will support a multi-stakeholder process to develop further criteria for responsible agricultural development in heavily forested countries.
The deal comes after the two sides met to discuss the impact of the palm oil and rubber plantations developed by Olam in Gabon and its third-party palm oil sourcing in South-east Asia. Mighty Earth had accused Olam of deforestation practices in Gabon and of buying unsustainably produced palm oil from third-party suppliers.
Under the agreement, Olam also committed to:
• Continue to implement its time-bound plans to map and disclose more information about its third-party palm oil supply chains in Asia and require its third-party suppliers to adhere to the high carbon stock approach as per its updated palm oil policy;
• Publish its procedures to address supply chain risks, including independent verification of compliance of high-risk sources;
• Issue a revised grievance procedure that includes third-party palm oil suppliers and protects the anonymity of those providing input. Olam will continue to routinely investigate and work to remediate complaints from indigenous or local communities; and
• Supplement its current sustainability policies with explicit references to protecting peat and ensuring no exploitation of workers or local communities.
Olam's co-founder and group chief executive Sunny Verghese said: "We hope these actions can help sovereign countries like Gabon set their own pathways to sustainable development."
The US-based World Resources Institute helped the two sides to reach this agreement.
Its president and chief executive Andrew Steer said: "Balancing forest protection and new agricultural projects can be very challenging, and it is vital for countries, companies and civil society to work together and find common ground.
"This agreement is a good example of how organisations can come together to agree on a sustainable and prosperous path forward."
Olam entered into a joint venture with the Gabon government in 2011 to set up a 300,000ha palm oil and rubber plantation, with a 60 per cent share of the venture.
In 2015, Olam secured a second joint venture with the government to develop and manage 70,000ha of smallholder plantations. It held 49 per cent of that venture.
Olam shares yesterday eased two cents to $2.07.