exclusive
International research shows how palm oil of dubious origin could end up in Germany. Apparently Indonesian palm oil producers have found a way to circumvent sustainability rules. Several German companies now want to pursue this.
When huge areas of jungle burned in Indonesia in 2015 and 2019 and the fire enveloped the country in a gigantic cloud of smoke, many large European companies vowed to improve. There is usually a reason for the slash-and-burn practices: unscrupulous entrepreneurs are trying to make room for plantations on which palm oil is produced.
And that is in great demand in Europe. Palm oil is a valuable raw material that Indonesia exports. It is used in countless industries and products in this country: chemicals, cosmetics, detergents and palm oil can also be found in food.
But how sustainable is the palm oil that major German companies purchase from Indonesia? Research by NDR, WDR and “Süddeutscher Zeitung” (SZ), together with the International Consortium of Investigative Journalists (ICIJ) and the investigative platform “The Gecko Project” show that the German consumer goods manufacturer Beiersdorf purchased palm oil in 2022 from a company that is at least accused of doing so not to work sustainably. And according to data from 2022, the German DAX companies BASF and Henkel purchased oil from a company whose business model also raises massive questions.
Beiersdorf sources dubious palm oil
Accordingly, Beiersdorf received oil from the Indonesian company BT Bulungang Hijau Perkasa. This emerges from mill lists that the research partners were able to view. The Indonesian company has been accused by non-governmental organizations for many years of cutting down huge areas of jungle. Completely legal. Apparently she received a new concession from the Indonesian government in 2019.
Beiersdorf is committed to the so-called RSPO standard. Since 2018, this has stipulated that no new forests may be cut down for the production of palm oil. The research also shows that Beiersdorf also purchased palm oil last year from two other Indonesian companies, which are said to have felled trees on an area of dozens of hectares in Borneo in 2019 alone.
When asked, Beiersdorf said that the company had been aware of the case since spring. Since then, various measures have been introduced to remedy possible grievances on site. At the same time, Beiersdorf pointed out that the amount of palm oil purchased by the companies in question only accounts for 0.15 percent of Beiersdorf’s annual consumption.
Henkel and BASF also in focus
In addition to the Hamburg company, two other German companies, Henkel and BASF, appear in the international research. Accordingly, at least last year, both Beiersdorf, Henkel and BASF were supplied by palm oil mills that are affiliated with the Singapore company First Resources.
The research now suggests that the First Resources network does not only include companies that operate sustainably. One of them is FAP Agri. This company is accused of, among other things, years of deforestation of primary forest in Indonesia. The allegations against several groups of companies that are said to be controlled by First Resources are overall serious: including the destruction of habitats for the critically endangered orangutan population, land grabbing and environmental destruction.
Opaque Corporate network
The team of reporters spoke to 14 current and former people who worked for First Resources and the questionable company groups between 2011 and 2022: The former employees report that the companies in question were effectively controlled by First Resources.
Some were busy in a single office simultaneously analyzing data for First Resources and another company that cuts down rainforest. “I knew it from the start – it’s all First Resources,” says one employee. “The management is the same and many other things too.” This is how the IT systems of the other companies were also operated by First Resources.
A few years ago, reports from NGOs surfaced with allegations that the corporate groups could all belong together. “Building up company conglomerates where you ultimately don’t know what’s involved can be a loophole to avoid sustainability obligations,” says Gesche Jürgens from Greenpeace Germany. You then have a supplier on the surface that is considered sustainable, but you don’t know whether raw materials from completely different companies are fed into the supply chain.
Supply chains difficult to control
The London consumer goods manufacturer Unilever drew the conclusions in January 2018 and has since stopped purchasing palm oil from First Resources and the questionable company groups. Beiersdorf, Henkel and BASF, however, continued to purchase the raw materials.
German companies cannot rule out the possibility that, given the close links between corporate groups, palm oil does not come from companies that have cleared rainforest for it, says Christoph Kubitza, who is a specialist for Indonesia at the Leibniz Institute for Global and Regional Studies: “Especially then, “If First Resources has its mills in Borneo very close to the plantations of the other company groups. The supply chains can then often no longer be fully controlled.”
Company First-Resources denied this
When asked, First Resources denied all allegations and denied that it controls the groups of companies in question that are accused of deforestation in Indonesia. However, FAP Agri is a supplier to First Resources. But you don’t buy from any company that doesn’t adhere to First Resources’ sustainability commitments. The commitment is strictly adhered to not to purchase palm oil from plantations for which the rainforest has been cut down.
FAP Agri, which also owns the Indonesian company BT Bulungang Hijau Perkasa, did not comment on the allegations when asked.
When asked, the Ludwigshafen-based chemical group BASF said it had no direct business relationship with First Resources or the corresponding mills. First Resources’ palm products came to BASF via intermediate suppliers. BASF has now asked them to clarify the matter.
The consumer goods manufacturer Henkel assured that none of the questionable companies were a direct supplier to Henkel. However, it cannot be completely ruled out that the companies in question are indirect suppliers to Henkel. Henkel also emphasized that it had initiated further educational measures. So far there are only suspicions that the affected German companies now want to investigate.