The Forest Stewardship Council (FSC) has terminated Korindo’s palm oil trademark licenses amid a disagreement over its sustainability status. The FSC official “disassociation” from the Korean palm oil giant has been prompted because of a failure to agree on the independent verification process.

However, this termination will take effect from October 16, 2021.

Before the FSC Board of Directors’ decision, Korindo was working to achieve significant social and environmental improvements as outlined in a set of preliminary conditions defined by FSC in 2019.

FSC says its Board requested to receive progress updates to ensure that a credible, time-bound, and independently verified process was in place and that visible progress was made against the commitments. 

However, FSC and Korindo could not agree on the procedure to put in place independent verification of progress, which led to delays in FSC’s ability to verify and report Korindo’s progress against these conditions.

“It had become an untenable situation for FSC that we were not able to verify improvements in Korindo’s social and environmental performance against the agreed preliminary conditions. This is why the Board decided to disassociate,” says Kim Carstensen, FSC international director-general. 

“We believe this will give us clarity and a breath of fresh air while Korindo continues its efforts to improve social and environmental performance.”

Background to the case
The case began in 2017, when global advocacy organization Mighty Earth submitted a policy for association complaint to FSC, alleging Korindo’s involvement in deforestation, human rights abuses and destruction of high conservation values in its forestry operations in Indonesia.

FSC does acknowledge Korindo’s commitment in the last year to meet the preliminary conditions to ensure improvement for the benefit of the forests in which they operate and for the people depending on them. 

However, “dissociation” has been chosen as the next move – for now – as the situation is currently described as “untenable.”

FSC says it will continue to work with Korindo to re-enter into a formal process to potentially end the disassociation. 

This is likely to begin in 2022 based on the requirements defined in FSC’s policy for association remediation procedure, which is currently being developed.

Promise to improve
Meanwhile, Korindo has put out a statement defending its position, renewing commitments to improve, and outlining what it intends to do to regain FSC’s backing and get back its trademark license. 

The Group insists this is just a “temporary situation” and stresses that it was in the process of working toward unconditional association with FSC. 

“We are confident to reactivate the process as soon as possible,” it says. 

The Korindo Group insists that it has “a clear and well-defined ESG Charter” in place and is strongly committed to sustainability, human rights and corporate governance. 

The group has partnered with FSC since 2007 and has made achievements in the areas of Environmental, Social, and Corporate Governance (ESG) factors in the past years, it argues. 

Korindo Group was in the process toward so-called unconditional association with FSC. 

To achieve that goal, a mutually agreed Memorandum of Understanding defined a clear roadmap regarding specific achievements to be verified by an independent and impartial third party.

Kwangyul Peck, Chief Sustainability Officer at Korindo Group: “The decision to stop the association proceedings came as a great surprise as we fulfilled every step on the mutually agreed roadmap in the past years.”

“It is important to understand that there were no material issues in the MoU or the roadmap but only procedural discrepancies on the selecion process of the independent and impartial verifier, which caused a delay in the association process.”

“Against the background of Korindo’s clear commitment to ESG and Sustainability, we want to emphasize the joint commitment of both FSC and Korindo Group to re-enter the association process as soon as possible. Our objective is still to become unconditionally associated with FSC, and we will continue to make progress on the defined roadmap,” says Seo Jeongsik, vice president at Korindo Group.

Even though Korindo Group is temporarily not associated with FSC, the Group insists it will not compromise on acting within its binding ESG Charter and Sustainability and Human Rights commitments.

The FSC is an independent non-profit organization that promotes responsible management of the world’s forests. It addresses issues such as illegal logging, deforestation and global warming.

Its tree logo informs consumers the product they are buying is sourced from ethical and sustainable companies.

This case comes at a time of heightened sustainability and transparency trends as global consumers demand to know more about their food and wher it comes from.