One Planet

S'pore can fight haze in its ownbackyard

Jessica Cheam

PUBLISHED SEP 29, 2015, 5:00 AM SGT

Many palm oil producers and buyers are sited in Singapore. Hit themwhere it hurts, by mandating banks and investors to have codes thatprevent loans to or investments in firms that aid deforestation and landburning.

Air pollution brought about by illegal fires raging in Indonesia hit new hazardous records this pastweek and even triggered the closure of schools in Singapore for the first time last Friday. Apart fromrising temperatures, the current haze crisis has raised tempers among political leaders and thepublic, and there is significant political pressure on governments to resolve the issue once and forall.

The people - even those typically unconcerned about environmental issues - have felt the impact soacutely that they've begun asking questions about who's responsible and what we can do about ithere.

The question of who is responsible is highly complex, involving a wide range of socio-politicalfactors and a multitude of actors. But if you had to distil the reason down to one thing, it's plaineconomics.

WHERE THE BUCK STOPS

Global demand for cheap palm oil and paper products has driven the conversion of Indonesian andMalaysian forest land into plantations and fuelled air pollution in the region for decades.

THE STRAITS TIMES

Haze in the Bugis area last Tuesday. Global demand for cheap palm oil and paper products has driven theconversion of Indonesian and Malaysian forest land into plantations and fuelled air pollution in the region fordecades. -BH FILE PHOTO

Local elites manage land transactions and mobilise local communities or smallholders to clear landby burning. Timber and oil palm planted on cleared land are supplied to large firms and, throughoutthe supply chain, many benefit from the burning - still the cheapest way of clearing land - and turn ablind eye to it.

These commodities make their way to you and me via consumer giants that use palm oil ineverything from cosmetics to biscuits to shampoo, while timber is turned into paper and tissueproducts. These groups form complex social networks that undermine government efforts toallocate land resources efficiently and enforce the rule of law.

In recent years, environment and civic groups have focused their campaigning efforts on this widespectrum of stakeholders. Greenpeace and Forest Heroes have led high-profile campaigns targetingproducers and traders such as Golden Agri-Resources, Wilmar International, Asia Pulp and Paper(APP), Cargill, Musim Mas and April Group to buyers like Kellogg, Nestle and Unilever. All thesecompanies are either Singapore-listed or have operations in Singapore.

Civic groups say the buck stops with these firms as they reap handsome profits from the cropscultivated through illegal burning. They also have the resources and influence to meaningfullychange industry practices.

Under immense pressure in recent years, firms such as Golden Agri, APP, Wilmar and Cargill havedeclared zero deforestation policies which they say also apply to their suppliers. NGOs whichfunction as watchdogs say these claims can't be taken at face value. The proof is in how transparent

these firms are in, say, releasing maps of their suppliers' concessions, and how willing they are inhaving external parties audit and verify their processes.

UNPRECEDENTED LEGAL ACTION

The stakes have gone up, with the National Environment Agency - in its first invocation ofSingapore's Transboundary Haze Pollution Act - sending legal letters to five Indonesian firms itbelieves are responsible for the burning.

Of the five, the most well-known is APP, whose Paseo tissue packets and A One photocopy paperare ubiquitous in Singapore. It has been ordered by NEA to supply information on its Singapore andIndonesian subsidiaries and its measures to fight fires.

APP says it is preparing its response, and adds that it has halted forest clearance but cannot control"unauthorised third parties" who continue burning on their suppliers' concessions. It points tooverlapping concessions with other businesses and illegal encroachment as complicated issues thatrequire other stakeholders to resolve.

APP also says that the problem of illegal fires is further exacerbated by an Indonesian ruling, calledLaw 32, which allows communities to burn 2ha of land per family. These fires then spread inparticularly dry weather.

To be fair, APP has since last year released its suppliers' mapping data to the Indonesiangovernment and to independent organisations such as the World Resources Institute.

Wilmar is another company that earlier this year started disclosing names and locations of itssuppliers via an online dashboard, following a 2013 campaign by Forest Heroes accusing it ofdeforestation.

Too few forestry companies have such a level of disclosure - all should make their maps public, evenif this means generating extra scrutiny.

It is true that the problem of illegal burning can't be tackled by companies alone, but industryobservers say they also can't pass the buck to others, since the companies holding the concessionpermits are ultimately responsible for preventing and extinguishing fires on their land, regardless ofwho started it.

NEA's legal action against the five firms - if it proceeds further - will be a litmus test of theeffectiveness of the Transboundary Haze Pollution Act, which punishes errant companies thatcause haze pollution in Singapore with fines of up to $2 million. If it manages to have enoughevidence to secure a conviction, a harsh sentence - and reputational damage - might be the wake-upcall the industry needs.

LOOKING AT OUR OWN BACKYARD

Singapore, too, should look at its own backyard when it comes to the haze problem. Research by the

non-profit Centre for International Forestry Research (Cifor) shows that oil palm plantations -

owned by Indonesian, Malaysian and Singaporean firms - reaped revenues of US$18.4 billion

(S$26.3 billion) last year. It notes that just as Singapore and Malaysia share the profits of Indonesia's

palm oil, so must they share the responsibility for fire and haze.

Singapore is a major palm oil trading hub and many of its banks are major financiers of agricultural

companies in the region. None of these banks however has any policies relating to the

environmental, social and governance standards of the companies it gives loans to. This means that

they have indirectly financed deforestation activities and, as a result, are also indirectly responsible

for the haze.

Last week, Minister for the Environment and Water Resources Vivian Balakrishnan mentioned

green procurement as a way for the Government to influence the supply chains . This is long

overdue. In the absence of any leadership from our local banks, the Monetary Authority of

Singapore should also introduce mandatory stewardship codes to promote responsible investment

practices. Its current stance that the industry should regulate itself just does not cut it.

Cifor says that besides banks, the second-largest financier is equity investors - this group

contributes 59 per cent of the capital of Indonesia's 10 largest palm oil companies. Sovereign wealth

funds such as Singapore's Temasek Holdings and Malaysia's Employees Provident Fund, and

individual shareholders all help finance the activities of some of these publicly traded companies.

As consumers and shareholders, we can all play a part - not just in speaking up on our expectations

of how Singapore companies and financial institutions should behave, but also taking the effort to

equip ourselves with the knowledge whether the products we are buying is leading to the haze that

we are suffering from.

Unless all these factors are consistently addressed, this haze crisis certainly won't be our last.

Jessica Cheam is the editor of Eco-Business, an Asia-Pacific sustainable business online

publication. This is a fortnightly column on the environment.

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