27 Jan 2014: Analysis
Monitoring Corporate Behavior:
Greening or Merely Greenwash?
Companies with bad environmental records are increasingly turning to a little-known nonprofit called TFT to make sure they meet commitments to improve their practices. It remains to be seen if this is just a PR move or a turning point for corporate conduct.
For those watching the world’s largest corporations, 2013 was extraordinary. Under pressure from NGOs, a slew of global companies that are number one in their industries made unprecedented commitments to better environmental and social behavior. There is at least the chance that their promises are not greenwash, and that, as one insider puts it, "we can hold their feet to the fire, this time."
That insider is Scott Poynton, the founder and director of an environmental group you have probably never heard of, The Forest Trust (TFT)
. If one person holds the key to whether this turns out to be a genuine
BAY ISMOYO/AFP/Getty Images
Sustainability commitments from some of the world's largest companies could have major implications for Indonesia's forests.
turning point for sustainability, rather than a propaganda coup for big business, it is Poynton. Right now, in the wake of the recent announcements, it is Poynton who gets to hold their feet to the fire.
It was in November that one of the biggest global brands — one with a reputation for a ruthless focus on the bottom line — announced it was joining the good guys. Coca-Cola, the world’s largest purchaser of sugar, declared it would stop buying from suppliers that did not adhere to its new guidelines on protecting land rights, which commit the company to "zero tolerance for land grabbing" and respect for land rights of communities and traditional groups.
The commitment was given to Oxfam, the UK-based aid and development NGO, which has been campaigning against land grabbing by sugar companies and others. To prove it meant business, Coca-Cola promised to publish independent social, environmental, and human rights assessments
Wilmar, the world’s largest palm oil trader, has committed to ensuring its suppliers not engage in deforestation.
of its activities, and those of its suppliers. One Oxfam executive told me: "We were amazed. They went beyond what we asked for."
Earlier in the year, in a move that could have major implications for the forests of Southeast Asia, there was a similar announcement from the world’s largest producer of paper products, Jakarta-based Asia Pulp and Paper (APP). The company has long been a target for campaigners as it stripped the rainforests of Indonesia to feed its giant pulp mills. But last February it promised an immediate end to the clearing of natural forest by the company and its subsidiaries and suppliers. The company said
it would switch to sourcing from timber plantations and that "where new plantations are proposed, APP will respect the rights of indigenous peoples and local communities, including recognition of customary land rights."
APP’s promise, which will be policed by TFT, was enough to convince Greenpeace, which had accused the company of "pulping the planet," to call off its worldwide protests.
But perhaps the most far-reaching commitment came in December, when the world’s largest palm-oil trader, Singapore-based Wilmar, committed itself
to ensuring that no more deforestation or peatland destruction was carried out by any company that fed its supply chain. Again, TFT will help monitor the company to make sure it delivers. Since, according to Poynton, Wilmar buys palm oil from 80 percent of the world’s suppliers,
Scott Poynton, The Forest Trust's founder and director
that is a potential game changer for an industry that is probably the biggest cause of deforestation in Southeast Asia.
The pledge from Wilmar did not come out of the blue. It followed strenuous NGO campaigns to clean up the supply chain of an ingredient that is in one in three processed foods. And it came right after an announcement the previous month from foods giant Unilever, which is Wilmar’s biggest customer and is the world’s largest purchaser of palm oil. Unilever promised
that by the end of 2014, it will have tracked its entire supply chain to ensure it meets its promise to end its role in deforestation. Arguably, Wilmar had little choice.
Nonetheless, things are getting interesting. The world’s largest companies and investors are starting to use their position as market leaders to drive up standards, rather than pushing them down. From retailers on up the chain, they are demanding that their suppliers clean up their acts. Could it become a "race to the top"?
Not everyone is convinced. Talk can be cheap, and other industry leaders have made such promises before. In 2012, mining giant Rio Tinto said it would seek the "free prior and informed consent" of local communities before undertaking giant new mining projects. But it turned out that national governments keen to exploit resources enabled Rio Tinto to overturn that commitment.
Human Rights Watch said Rio Tinto was still uprooting farming communities for coal mines in Mozambique. And it certainly didn’t stop communities from around the world turning up at its annual meeting in
Somebody has to make sure the reformed rainforest trashers live up to their promises.
London last April to object to their views and land being trashed.
So somebody has to make sure the reformed rainforest trashers and land grabbers live up to their promises. For now, that someone looks like Poynton, a brash Australian former forester who set up TFT in 1999. The Europe-based nonprofit, with offices in Switzerland and Britain, has been contracted by Wilmar, APP, foods giant Nestle, and a string of top companies to ensure that they do what they promise. He says he would welcome a call from Coke. And far from being seen as an agent of greenwash, he has so far at least been trusted by some of the most aggressive environmental and social campaigners around.
The talk among NGOs is that Greenpeace and TFT have a good cop/bad cop routine going. When companies mauled by Greenpeace’s reputation-wreckers plead for mercy, the rainbow warriors advise them to go and have a chat with Poynton.
True or not, Nestle headed for TFT after its Kit-Kat chocolate bar, which contains palm oil from Indonesian forests, got into trouble with Greenpeace
. In 2010, the NGO put online a devastating advertisement against the company, in which a finger of the chocolate bar morphed into the bleeding finger of a dead orangutan. Within eight weeks, Nestle had announced a deal with TFT.
So what exactly does TFT do?
It is a nonprofit consultancy with a difference. Its website
offers companies a "partnership on supply chain responsibility." With some companies, the job has been conventional consultancy aimed, for example, at helping them meet the standards for green certification schemes like the Forest Stewardship Council (FSC) or the Round Table on Sustainable Palm Oil. For instance, it has worked since 2004 with the controversial Congolaise Industrielle des Bois logging company in the Republic of the Congo on meeting FSC rules.
But recently the aims of some companies have become more ambitious. Besides its environmental commitments, Wilmar has agreed, with the help of TFT, to adopt a policy of "no exploitation" of its labor force and free prior and informed consent on land use.
"We are not auditors," Poynton says. "Nor do we tell companies what to do. We help them develop policy responses to issues that concern them. We help them to come up with policies they are happy with, and then go into
Poynton insists TFT won’t be anybody’s stooge. 'We are painful, annoying, and strict.'
the field with them to build their capacity to carry them through." With APP, he says it took 12 months just to devise the policy.
Poynton adamantly insists he won’t be anybody’s stooge. "We are painful, annoying, and strict. If things go wrong, we walk away. We have done that when companies are not serious and open with us — if we keep learning about things through the media, for instance." He noted that TFT had, for instance, ended talks with a major global finance house, which he declined to name, because it would not divulge its client list.
But Poynton says he will stick with companies getting bad press, if he thinks they are genuine. He points to an Indonesian state-owned company running teak forests on the island of Java, Perum Perhutani. TFT spent six years trying to come up with a plan for the company. He was paid by European and North American retailers who bought furniture made from the company’s wood. During that time, company staff were shooting villagers who trespassed into its forests to cut its trees.
"Many campaigners said we shouldn’t have worked with Perhutani," he says. "But when we did get a deal in 2009, we got guns out of the forest very quickly. Nobody has been killed since. We hung in there, and I feel good about that."
Is there a danger that TFT will one day become just another consultancy, more interested in protecting company images and ensuring the next clients than in holding feet to the fire? Poynton says that will not happen. "No way. There is, of course, sometimes a fine line between greenwashing and achieving change. We accept that. Often it is a gut feeling whether to stick with a company."
None of the nonprofit campaigners I spoke with denied that Poynton means what he says. But, even so, this is a lot of power in the hands of one organization — and one man. And I did hear rumbles of discontent among NGOs devoted to protecting forests and the rights of the people who live in and around them. Elfian Effendi of the group Greenomics Indonesia said
TFT was "promoting violations of forestry law" by giving its partner Golden Agri-Resources a green light for continued forest clearance on large
Some activists want to know more about the deals TFT is striking with companies.
oil palm concessions in parts of Central Kalimantan province that are also — and confusingly — designated by the Indonesian government as forest land.
They are reluctant to take Poynton’s gut feelings on trust. They want to know more about the deals he is striking with companies, preferably with contracts published online. And they want to see details about supply chains, so they can independently test the truth of corporate claims. And where TFT is advising on ending labor exploitation or community consent for land deals, they think the communities should also be involved in the process.
Some critics point out that environment promises can conflict with social promises. A new forest conservation policy developed by palm oil giant Golden Agri Resources, with the help of TFT and the support of Greenpeace, risks doing just that. Marcus Colchester at the UK-based Forest Peoples’ Programme says a side effect of the policy’s protection of key forests in central Borneo is to ban fishing and other activities by local groups that also claim the forests. Who will speak for them?
Poynton is sensitive to such criticisms. "I am not about to start sharing my contracts, but I am open to talk to the NGOs," he said. He thinks some of his critics take the easy path by condemning the corporate world, rather
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than engaging with it. And he is convinced his path is worth following. What is involved, he says, is more than PR — it’s about changing the nature of the corporations.
Some CEOs clearly get it. They realize that to thrive long-term, they need sustainable supply chains for their raw materials and brands that won’t fall victim to having their reputations put at risk. Unilever, the world’s largest supplier of food and toiletries, is committed to halving its environmental impact by 2020. CEO Paul Polman told me last year: "If a business wants to be around for a long time, the best guarantee is to serve society. These notions have been lost in recent years, but we want to bring them back — for the greater good."
But if big brands with big reputations to lose can be amenable, what of the rest? Optimists hope that the industry leaders can be effective "first movers" and that other smaller players will follow. Pessimists fear that the others will simply see their big rivals as weakened by ethical compliance, and move in to take advantage. So it matters greatly whether Coke’s rival Pepsi comes to the party, whether fellow Southeast Asian oil-palm giant Olam sides with Wilmar, and whether APP is joined by its rival, Asia Pacific Resources.
If this really is a turning point — the moment a "race to the bottom" in corporate ethical standards becomes a "race to the top" — then we should soon know.
POSTED ON 27 Jan 2014 IN
Business & Innovation Business & Innovation Forests Oceans Pollution & Health Sustainability North America