Source: Mongabay Indonesia
Date: 16 July 2021

  • Indonesian-South Korean palm oil giant Korindo has been expelled from the Forest Stewardship Council after both parties couldn't come into an agreement on how to verify the company's compliance.
  • Korindo was in the process of keeping its membership at the FSC, which required the company to make significant social and environmental improvements and provide remedy to the damage it had done from its operations in the Indonesian province of Papua.
  • The FSC was supposed to verify the progress but the certification body and Korindo failed to agree on the process.
  • Korindo plans to reenter the FSC and says it remains committed to sustainability, but activists say the disassociation means the company has failed to meet sustainability standards and sends a message to other firms accused of environmental and social violations. 

Palm oil giant Korindo Group has had its membership in the Forest Stewardship Council terminated, a move that activists say sends a signal to other companies that they can't hide their wrongdoings behind green certification.

The FSC, considered the world's foremost body certifying the sustainable forestry industry, announced July 14 that it had ended its association with Korindo, an Indonesian-South Korean joint venture, because the company had failed to come to an agreement with the certification body on how to independently verify its compliance.

The disassociation will come into effect Oct. 16.

Prior to the termination, Korindo was in the process of retaining its membership with the FSC after a two-year investigation by the council found a litany of violations in the company's operation in Indonesia's easternmost province of Papua.

Papua is home to the largest intact rainforest in Indonesia, and one of the most important landscapes for the climate in the world.

Among Korindo's violations were a failure to properly consult local communities about plans to convert their land into oil palm plantations; unfair compensation to the communities; and the clearing of 30,000 hectares (74,000 acres) of rainforest, some of which have high conservation value (HCV).

The FSC said after the findings that Korindo could keep its membership but must "secure remedy" for the damage it had done in Papua and make significant social and environmental improvements as outlined in a set of preliminary conditions defined by the council in 2019.

However, "FSC and Korindo could not agree on a process for appointment of a verifier and for conducting the verification of the performance indicators," the FSC told Mongabay in an email.

Due to this disagreement, there were delays in the FSC's abilityto verify and report Korindo's progress against these conditions, which led to the decision to terminate Korindo's membership, said FSC director-general Kim Carstensen.

"It had become an untenable situation for FSC that we were not able to verify improvements in Korindo's social and environmental performance against the agreed preliminary conditions. This is why the Board decided to disassociate," Carstensen said. "We believe this will give us clarity and a breath of fresh air while Korindo continues its efforts to improve social and environmental performance."

Kwangyul Peck, the chief sustainability officer at Korindo, said the company was caught off guard by the decision.

"The decision to stop the association proceedings came as a great surprise as we fulfilled every step on the mutually agreed roadmap in the past years," he said in a press statement.

Korindo said the termination is only a temporary situation as it seeks to reactivate its process of association with the FSC as soon as possible.

The FSC said it's committed to working with Korindo to reenter into a formal process to potentially end the disassociation, which could start in 2022. The process will be based on the requirements defined in the FSC's policy for association remediation procedure, which is currently being developed.

As Korindo awaits reentry into the FSC, the company said it remains committed to sustainability and human rights under its environmental, social and governance (ESG) policies.

"Against the background of Korindo's clear commitment to ESG and Sustainability, we want to emphasize the joint commitment of both, FSC and Korindo Group, to re-enter the association process as soon as possible," Korindo vice president Seo Jeongsik said. "Our objective is still to become unconditionally associated with FSC and we will continue to make progress on the defined roadmap."

One of Korindo's oil palm estates in Papua. (Photo by Mighty Earth)

No more hiding

Despite Korindo's claim that it's upholding environmental and human rights standards, the termination of its FSC membership indicates otherwise, according to U.S.-based campaign organization Mighty Earth, which first highlighted Korindo's practices in Papua and reported the company to the FSC in 2017.

"The FSC's expulsion of Korindo provides more evidence that despite all its grandiose claims that it is embracing sustainability, the company still cannot rouse itself to meet basic standards for environmentally responsible business in the 21st century," said Annisa Rahmawati, an environmental advocate at Mighty Earth.

And with Korindo's disassociation from the FSC, the company can no longer use the certification council's tree logo, which is meant to tell consumers that the product is sustainably sourced and produced.

"Although the FSC found that Korindo had violated its policy through vast deforestation and abuse of Indigenous people's rights, Korindo has continued to spread false information about the severity of its actions and has used its continued association with FSC to greenwash its bad practices," Rahmawati said. "With today's announcement, Korindo can't hide behind the FSC anymore."

Korindo's disassociation is also a lesson for other companies that are engaging in unsustainable practices, she added.

"The FSC's decision should serve as a warning to any company that thinks they can use greenwashing and legal intimidation to destroy forests and trample on Indigenous communities' rights with impunity," Rahmawati said.

Besides allegations of human rights violations and deforestation, Korindo was also at the center of an investigation that exposed a $22 million "consultancy" payment made by the company and which played a role in its rapid expansion in Papua.

The investigation, a collaboration between Mongabay, The Gecko Project, the Korean Center for Investigative Journalism-Newstapa and Al Jazeera, found that the payment was made to a shadowy figure as Korindo secured the rights to large swaths of land in the province.

Mighty Earth said another indication that Korindo is not serious in meeting its sustainability commitments is a 2020 defamation suit filed by a Korindo supplier in Germany against civil society organizations that had been campaigning against the company.

Mighty Earth said the lawsuit is an example of what's known as a strategic lawsuit against public participation, or SLAPP. This is a form of litigation that typically has little to no merit and is brought with the main aim of harassing and draining substantial resources from critics speaking out against those in power or on issues of the public interest.

"Korindo is clearly not acting in good faith," said Hye Lyn Kim, a campaigner with the Korea Federation for Environmental Movements. "If Korindo is serious about improving its environmental and human rights performance to address its violations of FSC's standards, it needs to restore the forest habitat it destroyed, pay restitution to affected Papuan Indigenous communities and stop its legal harassment of civil society groups who have tried to stand up to its abuses.