May 282015
By Merel van der Mark, BankTrack, 28 May 2015

A month ago BankTrack released an investor briefing warning prospective investors of the risks of investing in a USD 400 million bond offer by Singapore based Golden Agri-Resources (GAR). Although the bond seems to have sold well, the bond issuing at the end of April was followed swiftly by a number of developments in May which together have seen GAR’s sustainability risk skyrocket:

Kalimantan deforestation

Deforestation for an oil palm plantation in Central Kalimantan in 2013. Photo by Rhett A. Butler, Mongabay.


  • In early May, Rainforest Action Network launched a petition against GAR and other palm oil traders, demanding them to stop sourcing palm oil from the Leuser Ecosystem on Sumatra, which is among the most biodiverse and ancient ecosystems ever documented.
  • On May 8th, the Roundtable on Sustainable Palm Oil (RSPO) prohibited GAR from “acquiring or developing any new areas” pending the resolution of a formal complaint with the RSPO, lodged by the Forest Peoples Programme, against the palm oil giant’s activities in Indonesia’s West Kalimantan province. GAR has plans to expand its plantations in 18 of its subsidiaries in Kalimantan despite evidence that one of them, Kartika Prima Cipta, had taken over community land without obtaining informed consent, and had failed to properly conduct a high-conservation value (HCV) assessment.
  • On May 19th, The Forest Trust suspended GAR’s subsidiary PT Smart’s membership because of several breaches in its Forest Conservation Policy.
  • On the same day, Forest Heroes downgraded GAR in its Green Tiger rankings to the category of a company with “serious issues in its supply chain”.
  • On May 20th, Greenomics launched a report showing that GAR has been extensively clearing high carbon stock (HCS) forests in Papua; further evidence of the company’s lack of commitment to its stated sustainability policies.
  • Finally, on May 21st Greenpeace, with whom GAR pioneered the development of a methodology for protection of High Carbon Stock landscapes that has become the industry norm, has issued a statement saying they are very disappointed with the way the company is currently dealing with the commitments they made when they launched their policy.

In GAR’s prospectus for its April bond offering, one of the selling points highlighted by the company was its commitment to sustainability. The prospectus stated: “The Group declared its commitment to forest protection in the 2014 New York Declaration on Forests at the United Nations Climate Summit. GAR also signed the Indonesia Palm Oil Pledge with other major palm oil players and the Indonesian Chamber of Commerce and Industry (“KADIN”), as a commitment to improving environmental stewardship together. GAR has made further progress in its RSPO certification plans.”

The developments described above show that many stakeholders and key observers beg to differ with GAR on the robustness of its sustainability commitments. These developments make it all the more urgent for banks and investors financing or considering finance for GAR to pressure the company to commit to meeting the commitments we set out in our investor briefing, including halting operations in areas of disputed land, upholding its obligations under the RSPO, and eliminating conflict palm oil from its supply chains.

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