S'pore-listed palm oil producer faces inquiry by Indonesia govt, others deny involvement & cite El Niño

A number of Singaporean or Singapore-listed palm oil producers have issued general announcements to explain their position in relation to the ongoing forest fires in Kalimantan and Sumatra that are responsible for the worst transboundary haze in over a decade.

One of them, Kencana Agri, confirmed that it is facing an inquiry by Indonesian authorities and is cooperating fully.

All have stated a zero or no-burning policy.

Cited El Niño

Five such companies, Wilmar International, First Resources, Kencana Agri, Bumitama, and Golden Agri-Resources, reporting through their Indonesian subsidiary SMART Agri-Business and Food, published their announcements on Oct. 15 and 16.

Four of them, Kencana excluded, cited El Niño-related drought conditions causing an “unusually severe” dry season.

Wilmar stated that all of its land preparation, clearing, and development is done mechanically.

Bumitama went on to say that the dry conditions make vegetation and peat more combustible as water availability falls.

Bumitama, along with Kencana, First Resources, and Wilmar, said fires came from areas outside of their concessions or directly managed areas, spreading inward with significant speed.

Kencana noted that it is currently undergoing a preliminary inquiry by authorities into a fire incident at a subsidiary in North Kalimantan.

All companies noted that they had personnel equipped to fight fires, and some, such as Wilmar and Bumitama, said that they had dedicated on-site firefighting teams.

Seeking information on impact of fires

The statements came in response to reports and queries, including from the Singapore Exchange Regulation (SGX RegCo).

In an Oct. 16 statement, SGX RegCo said it takes the ongoing forest fires and the consequent haze "seriously".

It has engaged with listed issuers with agricultural operations and plantations in Indonesia to seek information about the impact of fires on their operations, whether their activities might have contributed to the haze, as well as their responses.

SGX RegCo said it had also strengthened its Environmental, Social, and Governance disclosure and reporting standards, seeking to improve issuers’ disclosure on environmental policies, risks, and practices.

"SGX RegCo will take appropriate regulatory action where companies fail to meet their disclosure obligations under the SGX Listing Rules," the subsidiary said.

All options open

On Oct. 16, Minister for Sustainability and the Environment Grace Fu and the National Environment Agency announced that seven companies have been issued with preventive measure notices under the Transboundary Haze Pollution Act.

Three of these companies had been issued similar notices in 2015.

Fu said that the Singapore government would “keep all options open”, including “fines or charges”, when dealing with the companies, should they not comply with the measures, which include fighting the fires burning on their land and ceasing burning activities.