As reported by Chain Reaction Research and written by Albert ten Kate (Aidenvironment), Gabriel Thoumi, CFA, FRM (Climate Advisers) and Eric Wakker (Aidenvironment), PT Salim Ivomas Pratama (SIMP) is the parent company of PT PP London Sumatra Indonesia Tbk (LSIP:IJ). Indofood Agri Resources Ltd. (IFAR:SP) is the parent company of SIMP. It trades on the Singapore Stock Exchange. Both SIMP and LSIP trade on the Indonesian Stock Exchange.
SIMP is the upstream oil palm plantation, manufacturer, and refiner for Indofood Sukses Makmur (INDF:IJ), Indonesia’s largest food company. As of Q3 206, SIMP has a 247,000 ha plantation landbank, primarily in Sumatra and Kalimantan. SIMP is the third largest publicly traded palm oil company in Indonesia in terms of CPO production. Its cooking oil brand Bimoli is the market leader in Indonesia. The company also has businesses in sugar, rubber, oil palm seeds, and timber.
Anthoni Salim, the third richest Indonesian according to Forbes, controls Indofood’s operations. Indofood is one of the world’s largest instant noodle producers. He also has stakes in businesses other than Indofood, some of which are also involved in oil palm plantations.
Sustainability Policy and Recent Practices
- 2015 oil palm revenue: IDR 13,800 billion
- 2015 CPO-production: 1,002,000 tons
- Sustainability policy and recent practices: moderate risk
- 2016 No Deforestation, No Peat, No Exploitation (NDPE) CPO buyers: Golden Agri-Resources, Musim Mas, Wilmar
- 2016 NDPE buyers percent revenue: 20% to 30%
- Since 2015, no apparent changes in land-use policies to mitigate risks
SIMP is the largest publicly traded palm oil company in Indonesia without an NDPE policy. The company has yet to commit to the protection of High Carbon Stock (HCS) forests. Moreover, it has no official policy for complying with the United Nations Guiding Principles on Business and Human Rights or the ILO core conventions.
In 2013, IFAR announced its policy to refrain from planting on peat. The company has been in compliance with this specific policy. In 2015 and 2016, SIMP did not expand its oil palm planted area.
SIMP is a member of the RSPO. As of Q3 2016, 388,000 tons of its CPO production (39 percent of its total production) was RSPO-certified. SIMP aims to achieve 100 percent RSPO-certification by 2019, yet it has a history of pushing back its RSPO-targets.
SIMP is related to several issues concerning breaches of RSPO rules and NDPE policies:
- In 2013 and 2014, it cleared 1,000 ha of primary forests in West Kutai district, East Kalimantan. The company had filed no proposals under the RSPO New Planting Procedure (NPP) prior to this development. The total forest clearance comprised 4,600 ha in the area. The area was also subject to burnings in 2014 and 2015.
- In October 2016, the NGOs OPPUK, RAN, and ILRF filed a complaint with RSPO. According to their investigation, SIMP had violated both workers’ rights in North Sumatra and RSPO’s principles.
- In May 2016, the website Awas MIFEE revealed strong evidence that Anthoni Salim’s other business, apart from SIMP, had acquired and started to develop oil palm concessions in West Papua province, which could result in deforestation of 117,000 ha. Anthoni Salim’s other plantations in Kalimantan in Sintang, West Kalimantan and East Kutai, East Kalimantan lack NDPE policies.