By Sunanda Creagh
JAKARTA, Sept 23 (Reuters) - An industry body for sustainable palm oil has made its first public censure of a member, saying Indonesia's PT SMART Tbk <SMAR.JK> breached its principles and may face sanctions, and also ticked off the firm's parent.
SMART last month released an independent audit after Greenpeace alleged SMART bulldozed high conservation value forests and damaged carbon-rich peatlands. The audit gave SMART a mixed score card, highlighting some instances in which Indonesia's environmental laws were breached. [ID:nJAK325319]
The Roundtable on Sustainable Palm Oil (RSPO) -- an industry body of planters, green groups and consumers -- said on its website its grievance panel had written to SMART and Golden Agri censuring the firms for the breaches uncovered by the audit.
SMART is a member of the RSPO but Golden Agri-Resources <GAGR.SI> (GAR) is not.
"In its letter to SMART and GAR, the panel finds there has been serious non-compliance with the RSPO code of conduct, specifically a failure by SMART to work towards implementation and certification of the RSPO principles and criteria," it said.
In particular, RSPO principles on social and environmental impact assessments and peatland management have been infringed, it said.
"Members who have been found to not be in compliance and who continue to be in non-compliance with the RSPO regulations could ultimately face sanctions, including the suspension and, eventually, the termination, of their membership of the RSPO."
The comments may be a blow to SMART's aims to win back big palm oil buyers including Burger King Holdings <BKC.N>, Nestle <NESN.VX> and Unilever <ULVR.L>, who have said they will stop buying from SMART because of environmental concerns.
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The RSPO also urged GAR to stop publicly suggesting it was in the process of obtaining RSPO certification.
"GAR is not a member of the RSPO, nor has the RSPO yet received a membership application from the company. The Panel encourages GAR to submit a full and complete application for membership," the statement said.
SMART said in a statement it would work toward the requirements set by the RSPO, including environmental impact assessments and conservation of deep peatlands.
Enormous amounts of climate-warming gases are released when deep peatlands are disturbed, and the deforestation of Indonesia's extensive tropical forests led the World Bank to name it the world's number three emitter in a 2007 report.
"We take the feedback of our stakeholders very seriously and this applies to the concerns of the RSPO, whom we are in touch with," said Daud Dharsono, President Director of SMART. Golden Agri referred queries to the SMART statement. SMART and Singapore-listed Golden Agri are controlled by the Widjaja family that founded Sinar Mas, a group with interests from plantations to property and finance.
Greenpeace welcomed the RSPO's statement, saying RSPO should follow up on its reprimand by expelling SMART within four weeks if the company does not take action.
"Greenpeace is calling on other companies, like Cargill, to follow Unilever, Nestle and Kraft's lead and cancel its palm oil contracts with Sinar Mas until it stops destroying rainforest and carbon rich peatlands," said Greenpeace activist Bustar Maitar. (Editing by Neil Chatterjee)
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