Monday, April 11, 2016

IOI's Environmental Shame

Malaysian palm oil company IOI have behaved disgracefully. Their environmental record did not stand up to scrutiny. It has now been revealed that the company are responsible for large-scale environmental damage in Indonesia.
Three MNCs, i.e. Unilever, Mars, and Kellog's have all dropped IOI as their palm oil supplier after the firm had been suspended from the Roundtable on Sustainable Palm Oil (RSPO) due to non-compliance of rules. The suspension came about after a year-long investigation into IOI’s activities in West Kalimantan.
The errant company were informed by the RSPO secretariat on March 25, 2016 that their RSPO certification for the entire group’s oil palm production would be suspended from April 04 following complaints by NGOs of violation of the RSPO criteria against IOI’s plantation estates.
The suspension will last until the errant firm submit an action plan and get it approved and also perform the peer reviews of the high conservation value (HCV) assessments.
Of course, the decision by the three companies is expected to hurt IOI's finances as palm oil revenue contributed 80 percent of the latter’s income in 2014.
Last Thursday, IOI Corp chief executive officer and executive director Lee Yeow Chor said in a statement that the company take the matter “very seriously” and have taken new measures to beef up their sustainable operations, which include putting in place a new sustainability team structure and setting aside land equivalent to their plantation areas for conservation to compensate for the affected HCV areas.
Already, in a note to clients dated April 03, CIMB Investment Bank plantation analyst Ivy Ng Lee Fang estimated that IOI could see up to 7% of its net profit for the financial year ending June 30, 2017 (FY17) being shaved off due to the RSPO suspension, assuming that the group is suspended for a year.
Really, companies must not just talk but also walk the talk!
I wonder if IOI practices “sustainability” as an integral part of their operations because they have embraced the philosophy of “sustainability” or is “sustainability” merely a corporate social responsibility that is divorced from business objectives. Whatever it is, IOI have a long history of complaints from pro-environment NGOs.
Companies, including IOI should know the former is the way forward!
In a Harvard Business Review article “Sustainability Is Now the Key Driver of Innovation” (September 2009) by Ram Nidumolu, CK Prahalad, and MR Rangaswami – this excerpt is telling:

“Executives behave as though they have to choose between the largely social benefits of developing sustainable products or processes and the financial costs of doing so. But that’s simply not true. We’ve been studying the sustainability initiatives of 30 large corporations for some time. Our research shows that sustainability is a mother lode of organizational and technological innovations that yield both bottom-line and top-line returns. Becoming environment-friendly lowers costs because companies end up reducing the inputs they use. In addition, the process generates additional revenues from better products or enables companies to create new businesses. In fact, because those are the goals of corporate innovation, we find that smart companies now treat sustainability as innovation’s new frontier.
Indeed, the quest for sustainability is already starting to transform the competitive landscape, which will force companies to change the way they think about products, technologies, processes, and business models. The key to progress, particularly in times of economic crisis, is innovation. Just as some internet companies survived the bust in 2000 to challenge incumbents, so, too, will sustainable corporations emerge from today’s recession to upset the status quo. By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard-pressed to match. That competitive advantage will stand them in good stead, because sustainability will always be an integral part of development”.
On Sunday, I delivered a CC#7 speech titled “Procrastination Nurtures a Healthy Lifestyle” and was even voted Best Project Speaker. Not only that – I participated in the Table Topics and again I was voted Best Table Topics Speaker.
This was at the Sai Masters Toastmasters meeting in SS3 in Petaling Jaya where I am a regular visitor.

No comments: