Fast-Food Giant Cuts Ties With Sinar Mas

Jakarta Globe, September 02, 2010

In this file photo Greenpeace activists display a large banner with a message "APP stop destroying tiger forest" at the PT. Tebo Multi Agro concession. APP, Indonesia's largest pulp and paper producer is a division of Sinar Mas. Burger King, the international fast food company, has cut ties with Sinar Mas after Greenpeace’s successful campaign against the Indonesian group’s land-clearing practices. (AFP Photo/Romeo Gacad)

US fast food giant Burger King said on Thursday that it would no longer buy palm oil from Sinar Mas or its subsidiaries, after Greenpeace’s successful campaign against the Indonesian group’s land-clearing practices.

Burger King joins the likes of Unilever, Nestle and Kraft in shunning Sinar Mas in a move that will increase pressure on other corporate buyers of its palm oil products, such as Pizza Hut, KFC and Dunkin’ Donuts.

The news comes on the same day that Burger King, the second-largest US fast-food chain, announced that it had agreed to be bought by investment firm 3G Capital for $24 per share, or about $3.26 billion.

Indonesia is the biggest producer of palm oil, which is used in everything from biscuits to cosmetics, but environmentalists say plantations are behind deforestation blamed for habitat loss and greenhouse gas emissions.

Burger King said a recent independent audit of Sinar Mas palm oil unit Smart’s land-clearing practices — commissioned by Sinar Mas in response to the Greenpeace allegations — revealed activities “inconsistent with our corporate responsibility commitments.

“We believe the report has raised valid concerns about the sustainability practices of Sinar Mas’s palm oil production and its impact on the rainforest,” Burger King said on its Facebook page.

“As part of our … corporate responsibility program, Burger King Corp. is committed to sourcing our products from sustainable suppliers.”

It said it was looking for a new palm oil supplier for its 176 restaurants supplied by Sinar Mas.

“In addition, we are notifying our suppliers of our intent to discontinue the use of palm oil supplied by Sinar Mas in the manufacturing of our products.”

Sinar Mas Agro Resources and Technology has been struggling to repair its image after a Greenpeace campaign led several foreign buyers to cancel major contracts.

Greenpeace says the company is clearing high-value peat forest against Indonesian law and failing to wait for environmental studies before starting operations in sensitive areas of Borneo.

The company has acknowledged mistakes have been made in small areas, but denies it is a “forest destroyer.”

Rampant deforestation, much of it illegal, is a major reason Indonesia is the world’s third-biggest emitter of greenhouse gases and is driving species like Sumatran tigers to extinction.

Smart’s credibility took a blow last month when auditors Control Union Certification and BSI Group, authors of the independent verification report, complained that it had misrepresented elements of their findings.

The company had trumpeted their report as evidence that Greenpeace’s allegations were false, but the auditors said the probe’s “key findings” included that it had violated Indonesian law on forest management.

It also found that Smart had initiated operations on almost 38,000 hectares of land on Borneo before mandatory environmental studies had been completed.

Greenpeace welcomed Burger King’s announcement.

Greenpeace forest campaigner Rolf Skar wrote in a blog: “This is another blow for Sinar Mas, which had hoped its self-commissioned audit would convince corporate customers and the media that it was a sustainable company."

Smart president director Daud Dharsono has rejected any suggestion the company was trying to dodge the findings of its own audit or mislead shareholders.

Agence France-Presse

End of deal: A Burger King franchise is seen on Sept. 2, 2010, in Los Angeles. The US hamburger chain has said it will stop buying palm oil from an Indonesian company accused of destroying rainforests. – AP/Damian Dovarganes

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