Agribusiness giants ADM, Bunge trading in ‘conflict’ palm oil, report says

• A report by Global Witness has found that more than 100 Indonesian palm oil mills supplying agribusiness giants ADM and Bunge have been accused of land and human rights violations and environmental destruction.
• Global Witness found that neither company is addressing the majority of these allegations through their formal grievance processes, and effectively passing on this “conflict” palm oil to major consumer brands such as Nestlé, Unilever and PepsiCo.
• ADM and Bunge have denied any failure to police their suppliers, but have also pledged to look into the allegations.

JAKARTA — U.S. agribusiness giants Archer Daniels Midland (ADM) and Bunge are buying palm oil from mills in Indonesia that have been publicly linked to land and human rights violations and environmental destruction, a new report alleges.

Both companies are major players in the global palm oil industry, buying from 800 to 1,000 palm oil mills in Indonesia, the world’s biggest producer of the commodity. ADM is a major shareholder in Wilmar International Limited, the world’s biggest palm oil trader, while Bunge has a 70% stake in industry giant IOI Loders Croklaan.

In its newly released report, London-based NGO Global Witness found that 129 of the 330 mills it sampled that supply both ADM and Bunge have been accused of violating local community land rights, criminalizing or attacking defenders, and/or causing serious environmental degradation.

“Nearly 40% of sampled palm oil mills had credible allegations against them, yet barely any of these allegations are being investigated or addressed by the two companies,” said Ali Hines, a senior campaigner at Global Witness.

Global Witness identified 658 mills that sell palm oil to both ADM and Bunge, and chose to look into 330 of them selected at random. It ran simple internet searches using keywords for alleged land rights abuses and/or related conflicts between community members and the mill companies.

It found the majority of these allegations stemmed from the past five years, and that 17% of the mills had active and ongoing conflicts in 2019 and 2020. Nine of these disputes had been going on for a decade or more and were the subject of multiple media reports.

Furthermore, 26% of the mills sampled were accused by local communities of having seized their lands. In eight of these cases, it was explicitly reported that the communities had been evicted from their lands. The true number of unreported evictions might even be higher, according to Global Witness.

Violent confrontations between mill or state-security forces and communities were also reported for conflicts involving 13 mills, usually resulting from a long-standing land dispute.

Global Witness also found cases where land and environmental defenders who raised issues with the mills embroiled in conflicts were allegedly criminalized or prosecuted: they reportedly faced arrest, were put on trial, or otherwise subjected to judicial processes and fines after protesting against the activities of 11 of the mills.

The palm oil industry in Indonesia has long been tainted by allegations of environmental destruction and human rights abuses. The country is also one of the deadliest in Southeast Asia for land and environmental defenders, with 12 defenders killed since 2015, according to Global Witness.

Besides human rights violations, Global Witness also identified negative environmental impacts associated with the mills supplying ADM and Bunge: 22% of the sampled mills were accused of causing significant environmental damage. The most common complaint was of mills improperly dumping toxic waste into nearby river systems.

Global Witness said these violations persisted despite ADM and Bunge’s own corporate policies on respecting local communities’ rights to land.

In its human rights policy, ADM commits to “Respect land-tenure right[s] and the rights of indigenous and local communities to give or withhold their free, prior and informed consent to operations on lands to which they hold legal rights.”

Similarly, Bunge pledges to uphold “Respect of local and indigenous community rights and application of FPIC for land purchases and use.”

Hines said these findings were evidence of ADM and Bunge’s failure to mitigate, investigate or remedy the impacts of their suppliers’ operations on land and environmental defenders.

“Under international standards, global agribusiness companies have clear responsibility to monitor and address the human rights and land rights abuses in their supply chains,” she said. “Our investigation shows ADM and Bunge are failing to meet these international standards — and the frequency of reports of serious abuses in their supply chains is alarming.”

Global Witness said the agribusiness giants’ failures were caused by the absence of sufficient checks or mitigation processes to ensure the mills they source from are free from abuses. According to the NGO, while both ADM and Bunge’s policies include language on land rights, they provide few details on compliance monitoring or accountability for the failure of their suppliers to respect these rights.

This has allowed cases like the conflict between the Sambawa Indigenous community and a palm oil mill in North Konawe district, South Sulawesi province, owned by PT Sultra Prima Lestari (SPL), to fly under ADM and Bunge’s radar.

Since 2010, Sambawa community members have protested against SPL, alleging that the company seized control of more than 12,000 hectares (30,000 acres) of community-owned land, a mix of forest and shared agricultural land.

According to the community, SPL’s arrival in the area in 2004 has since altered their way of life significantly, with the women struggling to feed their families after turning to oil palm cultivation since losing access to their traditional farmland.

They also report no longer being able to harvest as many shellfish from the river, which they attribute to pollution from the mill.

In its response to Global Witness, SPL parent company the Capitol Group said that 100% of the Sambawa Indigenous people had signed a memorandum of understanding with the company as part of a palm oil production-sharing agreement. It also denied the allegations of a land grab and said SPL had brought improvements to the community.

Global Witness said there’s no evidence showing that either ADM or Bunge engaged with SPL to resolve the conflict with the Indigenous community, despite the ongoing protests against the mill.

ADM says it disputes Global Witness’s evidence base in general and rejects the criticism of its due-diligence and grievance processes, saying the latter has been reviewed favorably by external experts. ADM also told Global Witness that it conducted a third-party supplier assessment of all of its direct suppliers and that 97% of its direct suppliers were scored as top performers, including on their policies to prevent and address exploitation.

The company added that it implements a supplier engagement strategy to continuously ensure compliance with its policy.

Nevertheless, ADM said it would follow up on Global Witness’s findings by launching investigations into each of the allegedly problematic mills. ADM added that it would monitor nine mills identified in the report and continue investigations into another 36.

Bunge, meanwhile, acknowledged that the alleged incidents identified by Global Witness were in its indirect supply chain, but didn’t elaborate on its due-diligence process. It said credible cases of human rights violations are included in its grievance list for engagement.

The trail of the “conflict” palm oil doesn’t end with ADM and Bunge. The two companies have palm oil supply links to major global brands including Coca-Cola, General Mills, Kellogg’s, Mondelez, Nestlé, PepsiCo and Unilever. ADM and Bunge’s failure to identify and prevent human rights abuses and conflict in the supply chains means that consumers of these latter brands are unknowingly purchasing conflict-tainted products, according to Global Witness.

The group has called on ADM and Bunge to develop and implement a zero-tolerance policy to ensure land and environmental defenders are protected from threats and violence, as well as to ensure effective measures are in place to remedy abuses. It says both companies should also leverage their influence with governments in the countries they operate, including Indonesia, to ensure defenders are adequately protected.

“As consumers increasingly call on companies to ensure their products do not threaten local communities’ livelihoods or land rights, it’s important that ADM and Bunge take note and publicly commit to developing and implementing policies to ensure their supply chains are free from abuse,” Hines said. “To ignore these calls is both financially costly and legally risky.”

Banner image: Oil palm plantation in Indonesia. Image by Rhett A. Butler/Mongabay.