The CASE Journal

PZ Wilmar and palm oil expansion to West Africa

Maria Jose Murcia, Joleen Timko,
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Maria Jose Murcia, Joleen Timko, (2017) "PZ Wilmar and palm oil expansion to West Africa", The CASE Journal, Vol. 13
Issue: 5, pp.661-678, https://doi.org/10.1108/TCJ-01-2017-0005
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 PZ Wilmar and palm oil expansion
to West Africa

Maria Jose Murcia and Joleen Timko

Introduction Maria Jose Murcia is a PhD

Candidate at the University of
On July 8, 2015 Friends of the Earth, a global network representing more than two million
Downloaded by University of British Columbia Library, Ms Maria Murcia At 11:32 12 October 2017 (PT)

British Columbia, Vancouver,

activists in 75 different countries, released a public report scrutinizing leading global palm oil Canada and a Research Fellow
trader Wilmar International Ltd for abuses of human and environmental rights in a large-scale at the IAE Business School,
land acquisition in Cross River State, Nigeria (Figure 1). The report, jointly released by Friends U. Austral, Pilar, Argentina.
of the Earth US and Environmental Rights Action Nigeria, exposed Wilmar’s destruction of Joleen Timko is a Research
High Conservation Value areas, including community food-producing areas and water sources Associate, at the Faculty of
essential to local communities (Friends of the Earth US and Environmental Rights Action Forestry, University of British
Nigeria, 2015). Columbia, Vancouver, Canada.

The company also purchased a concession that encroaches on Cross River National Park and
other forest reserves, leading to an apparent increase in deforestation within these reserves and
potentially threatening endemic and endangered species in one of Africa’s most biodiverse
rainforest regions.

Back in 2013, Wilmar International, which by 2015 traded roughly 45 percent of globally
traded palm oil, adopted a broad policy commitment to “No Deforestation, No Peat and No
Exploitation” (Wilmar International, 2013). Wilmar’s commitment opened the doors for a host of
similar commitments across the palm oil and soft commodities sectors. Although Wilmar’s land
acquisitions in Nigeria pre-date the 2013 policy, plantation development has apparently
continued uninterrupted in Cross River State since that time (Friends of the Earth US and
Environmental Rights Action Nigeria, 2015).
The Friends of the Earth report called on Wilmar to halt its Nigerian operations immediately,
until it has legitimately addressed community grievances and gained community consent.
The report also warned investors that the palm oil sector was rife with environmental, social,
and governance risks; it further called on states to support efforts by the United Nations
Human Rights Commission to hold transnational corporations accountable for violating
human rights (Akpan, 2015).
Managing Director of Wilmar West Africa, Mr Santosh Pillai, was torn: where was all this
coming from? From the corporate perspective, Cross River State acquisitions were carried
out in a thorough fashion. Does Wilmar have to take the report seriously? Is the company
facing a crisis and hence is it time to call an emergency meeting? In the meantime, Pillai picked
up the phone and called a consultant at The Forest Trust (TFT). They had helped Wilmar
before when the company was dealing with other NGOs campaigning against it in the
Indonesian context.

Disclaimer. This case is written

solely for educational purposes
Palm oil: the ingredient behind chocolate bars and cosmetics and is not intended to represent
successful or unsuccessful
Palm oil is an agricultural commodity that comes from the fruit of the oil palm tree. Its versatility led managerial decision making. The
palm oil to replace animal products and other vegetable oils in a wide variety of products – in fact, authors may have disguised
names; financial, and other
according to Rainforest Action Network (RAN), in 2015, it could be found in roughly half the recognizable information to protect
packaged food products sold in grocery stores (www.ran.org/palm_oil). confidentiality.

DOI 10.1108/TCJ-01-2017-0005 VOL. 13 NO. 5 2017, pp. 661-678, © Emerald Publishing Limited, ISSN 1544-9106 j THE CASE JOURNAL j PAGE 661
 Figure 1 Map of West Africa
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Source: By ByRei-arturptenRei-artur blog – original by user: Vardion, Image: a large blank

world map with oceans marked in blue.svg, CC BY-SA 3.0, available at: https://commons.
wikimedia.org/w/index.php?curid =1446518 (accessed August 14, 2017)

In 2015, the global production of palm oil was already high and had grown over the years,
gradually overtaking a traditional substitute, soybean oil (Figure 2). There are several drivers
explaining such growth. First, that palm oil can be used for both food (roughly, 80 percent of
consumption) and non-food products (remainder 20 percent), based on the figures from
GreenPalm (http://greenpalm.org/). Among non-food products, palm oil is used directly in soaps and
plastics and as a raw material for biodiesel. In addition, the oil is used through processing of
oleo-chemicals in end-products ranging from candles, to cleaning products, and cosmetics. Second,
given that palm oil is a greener substitute for oil, new environmentally friendly fuel policies in several
countries have pushed the demand even higher. Finally, palm oil can also be a very productive crop:
yields per acre are far greater than for other vegetable oils, while production costs are lower due to
low labor costs in the countries in which palm oil is grown, as in the cases of Malaysia and Indonesia.

Figure 2 World oil production and consumption (2012)

Palm oil and

Kernel Palm Oil
Soybean

Othersa

Rapeseed

Sunf lower

Cottonseed

Groundnut
– 10.00 20.00 30.00 40.00 50.00 60.00 70.00
(Million Tons)
Consumption Production
Note: aIncludesoils and fats such as butter, lard, fish oil, tallow, and grease
Source: Oil World 2013 and Sime Darby, available at www.simedarby.com/ (accessed
September 22, 2016)

PAGE 662 j THE CASE JOURNAL j VOL. 13 NO. 5 2017

 Wilmar International was a prototypical vertically integrated business in the global palm oil
sector: the company owned the entire supply chain, from palm oil growing, to research
and development, and supply chain efficiency; the latter including international freight.
The manufacturing processes were highly capital intensive and had relatively low margins,
while higher margins could be obtained further along the value chain from more sophisticated
consumer products. Indeed, multinational consumer products corporations such as
Nestlé, Unilever, P&G, and PepsiCo accounted for the greater portion of palm oil demand
(Orsatao et al., 2014).

An integrated production and distribution business model could make plantation companies’
profitability less dependent on volatile commodity prices, and help businesses gain flexibility
in dealing with changing demand for the various applications of palm oil (Sustainable Palm Oil
Transparency Toolkit, 2017). For these reasons the palm oil industry had seen an increasing
concentration with a few players emerging. Among the leading competitors, there were
large business groups such as Cargill, Bunge, Sime Darby, and the IOI group, with Wilmar at
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the top of the list. Over the years, the company was able to build a strong financial
performance, becoming Asia’s leading agribusiness group, ranked amongst the largest listed
companies by market capitalization on the Singapore Exchange, where the company
was headquartered. Tables I and II present the company’s consolidated financial statements
for 2014.

The global palm oil expansion and its implications

Palm oil demand was expected to continue to grow given it was one of the most versatile of all
vegetable oils. At the same time, numerous environmental groups warned about threats to
biodiversity, climate, and forest-dependent populations related to palm oil expansion.

Environmental implications
Environmentalists linked palm oil with the destruction of the world’s rainforests. Indeed,
development of new oil palm plantations, coupled with smallholders expanding their farms to
meet the rising demand for palm oil, resulted in significant deforestation. In the tropics, where oil
palm trees were native, tree roots anchored the soil. Deforestation meant this important structure
was being removed, allowing heavy rains to wash away nutrient-rich soil. It is also important to
note that one of the primary means used for the expansion of plantations was through the sale of
timber (both legal and illegal).

The removal of rainforests threatened the rich biodiversity in these finely balanced ecosystems,
along with the habitat of species such as the orangutan (Levitt, 2015). In 1990, there were around
315,000 orangutans. Today it is estimated that fewer than 50,000 exist in the wild, split into small
groups with little chance of long-term survival (GreenPalm Sustainability, 2017). The orangutan
was only one of a number of species facing extinction as a result of deforestation.

Water pollution was another important environmental impact. Large palm oil plantations required
a substantial amount of water (most usually rainfall), and as crop yields began to decline, farmers
used expensive fertilizers, which not only ate into their profits, but also further damaged the
environment due to toxic runoff (World Wildlife Fund, 2016).

Finally, the removal of forest cover also released carbon into the atmosphere, speeding up
global warming and climate change. According to the Intergovernmental Panel on Climate
Change (IPCC, 2014), land use and forestry were the third-largest source of greenhouse gas
emissions. In addition, palm oil was most frequently produced on peat land, that is, in a
terrain characterized by accumulation of partially decayed vegetation or organic matter that
had high carbon content and, as such, constituted the most efficient carbon sink on the
planet because peatland plants capture the carbon dioxide which was naturally released
from the peat (Hugron et al., 2013). When peat was burned to plant oil palm trees, this
practice carried a carbon burden more than 20 times the emissions linked to crude oil
(Greenpeace, 2008).

VOL. 13 NO. 5 2017 j THE CASE JOURNAL j PAGE 663

 Table I Wilmar International – consolidated balance sheet for the fiscal year ended
December 31
Balance sheet US$ ‘000, group December 31, 2014 December 31, 2014

Assets
Non-current assets
Property, plant and equipment 9,477,284 9,337,162
Biological assets 1,860,821 1,879,671
Plasma investments 12,829 12,332
Intangible assets 4,401,908 4,420,637
Investment in subsidiaries – –
Investment in associates 2,153,196 2,035,325
Available-for-sale financial assets 592,245 417,397
Deferred tax assets 203,808 219,556
Derivative financial instruments 15,172 5,912
Other financial receivables 293,974 421,194
Other non-financial assets 31,489 41,088
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Total non-current assets 19,042,726 18,790,274

Current assets
Inventories 6,581,020 7,220,949
Trade receivables 4,044,799 4,084,679
Other financial receivables 3,995,132 2,981,170
Other non-financial assets 1,478,001 1,322,336
Derivative financial instruments 755,826 239,829
Financial assets held for trading 261,470 257,135
Other bank deposits 5,452,091 9,335,178
Cash and bank balances 1,947,096 2,400,245
Total current assets 24,515,435 27,841,521
Total assets 43,558,161 46,631,795
Equity and liabilities
Current liabilities
Trade payables 1,746,920 1,403,112
Other non-financial payables 1,191,558 1,302,124
Other non-financial liabilities 393,892 494,308
Derivative financial instruments 538,242 486,612
Loans and borrowings 15,204,154 19,391,670
Tax payables 122,366 113,591
Total current liabilities 19,197,132 23,191,417
Net current assets 5,318,303 4,650,104
Non-current liabilities
Other financial payables 28,282 38,792
Other non-financial liabilities 92,910 88,841
Derivative financial instruments 47,491 1,716
Loans and borrowings 7,158,172 6,803,904
Deferred tax liabilities 623,373 620,304
Total non-current liabilities 7,950,228 7,553,557
Total liabilities 27,147,360 30,744,974
Equity
Share capital 8,458,995 8,458,995
Treasury shares −19,282 −10,387
Retained earnings 8,767,132 7,999,887
Other reserves −1,711,911 −1,443,669
Subtotal 15,494,934 15,004,826
Non-controlling interests 915,867 881,995
Total equity 16,410,801 15,886,821
Total equity and liabilities 43,558,161 46,631,795
Source: Wilmar International (2014) Annual Report

Economic implications
A million-dollar question for palm oil producers was whether a growing supply would be met with
a comparable demand in the international markets.
On the one hand, palm oil was facing pressure due to the improvement in the cost competitiveness
of other kinds of oil, specifically soybean oil, through genetically modified organisms (GMOs)

PAGE 664 j THE CASE JOURNAL j VOL. 13 NO. 5 2017

 Table II Wilmar International – consolidated income statement for the fiscal year ended
December 31
Income statement US$ ‘000, group December 31, 2014 December 31, 2014

Revenues 43,084,875 44,085,001

Cost of sales −39,267,922 −40,360,104
Gross profit 3,816,953 3,724,897
Net loss arising from changes in fair value of biological assets −7,976 −8,554
Finance income 600,480 520,715
Other operating income 169,847 334,341
Operative profit 4,579,304 4,571,399
Selling and distribution expenses −1,668,882 −1,619,993
Administrative expenses −673,816 −681,313
Other operating expenses −191,770 −90,032
Finance costs −523,055 −539,098
Non-operating items −64,900 30,705
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Share of results of associates 80,697 103,823

Profit before tax 1,537,578 1,775,491
Income tax expense −313,674 −384,693
Profit after tax 1,223,904 1,390,798
Source: Wilmar International (2014) Annual Report

(Terazono, 2016). On the other hand, palm oil consumption was expected to rise due to concerns
over health hazards associated with trans-fatty acids and GMOs. Additionally, the rising market
penetration of biofuels presented good prospects for palm oil businesses.
Nevertheless, as markets developed, environmental concerns factored into buying decisions and the
habits of the end consumer (Thomas, 2015). One example of these social trends was the popularity
of the TV show The Checkout in Australia, which featured segments that examined the practices and
methods of manufacturers, retailers, service providers, and advertisers. Using a humorous style, the
show highlighted practices that were misleading, dishonest, unfair, or occasionally even illegal or
unethical. Some segments even took aim at specific brands and consumer products companies.
A segment on palm oil was aired in 2014, raising concern and fostering awareness of the detrimental
ecological consequences of palm oil expansion[1]. Another example was the emergence in 2011 of
the organization SumOfUs (www.sumofus.org/about/), a global community of consumers, investors,
and individuals who worked together to hold corporations accountable on issues such as climate
change, workers’ rights, discrimination, human rights, animal rights, corruption, and corporate power
grabs. Evaluations from different global food companies were also published on a regular basis
(companies’ “scorecards”) by global activist and environmental groups such as World Wildlife Fund,
Greenpeace, and RAN[2].
Unlike the boycotts and consumer awareness in developed countries, interest in sustainably
sourced palm oil in emerging consumer markets was minimal. In particular, India’s 1.2 billion citizens
in 2015 consumed approximately 15 percent of the global supply of palm oil. The vast majority of the
commodity – roughly 95 percent – was used as edible oil, with the remainder added to haircare and
beauty products (Hucal, 2015). The country imported nearly all of its palm oil – i.e., more than
two-thirds – from Indonesian traders that often combined production from multiple plantations.
Hence, oil traceability presented serious challenges. Industry analysts, however, foresaw change as
multinational companies’ global procurement policies demanding sustainable products were likely to
have an important impact in driving change, that is, increased environmental awareness, locally.

Social implications
While the global palm oil market created an opportunity to lift many communities out of
poverty, the race for land rights has left many locals on the losing team. Reports of displaced
communities and illegal land grabs[3] – i.e., land deals that happen without the free,
prior, and informed consent of communities that often result in farmers being forced from their
homes – have not been uncommon. The resulting conflicts, loss of income, and dependence

VOL. 13 NO. 5 2017 j THE CASE JOURNAL j PAGE 665

 on large plantations have had a significant impact on the social welfare of many. This was the
reason why activist groups coined the term “conflict” palm oil to refer to the social costs that
palm oil production imposed on many forest-dependent populations.

Sustainable palm oil expansion: was that possible?

Questions around the sustainability of palm oil had cast a dark shadow over the industry and this
led to the establishment of the Roundtable on Sustainable Palm Oil (RSPO, www.rspo.org/about).
Bringing together palm oil companies, global food multinationals and environmental NGOs, RSPO
was established in 2004. The organization established international standards for sustainable palm
oil production. Wilmar International committed to the RSPO certification early on in 2005, with the
aim to produce one million metric tons of certified palm oil by end 2016.
Products containing Certified Sustainable Palm Oil (CSPO) could carry the RSPO trademark.
RSPO applied different types of programs to supply palm oil to manufacturers and retailers:
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■ Book & Claim – allowed manufacturers and retailers to purchase certificates from an RSPO
certified palm oil grower to offset each ton of palm oil or palm kernel oil they used. RSPO certified
palm oil growers could convert their certified tonnage into certificates, and hence, this meant
that there was no guarantee that the end product contained CSPO. This system was similar to
carbon offsets, where the buyer of a credit had no direct link to the underlying physical material.
However, the program supported RSPO certified growers and farmers.
■ Identity Preserved – under this option, the end user was able to trace the palm oil back to a
specific single mill and its supply base (i.e. plantation).
■ Segregated – this option guaranteed that the end product contained certified palm oil.
■ Mass Balance – the refinery was only allowed to sell the same amount of Mass Balance palm
oil as the amount of CSPO purchased.
GreenPalm (http://greenpalm.org/) was one of the most prominent retailers executing the Book &
Claim supply chain trading program. It guaranteed that its palm oil producers were certified by the
RSPO. Through GreenPalm, a producer could certify a specified amount with the GreenPalm
logo. The buyer of the oil was allowed to use the RSPO and the GreenPalm label for sustainable
palm oil on his products.
In addition, by 2013, TFT (www.tft-earth.org/), a global environmental charity aimed at helping
companies run responsible supply chains, emerged as a prominent actor in the palm oil sector,
after Wilmar, the world’s biggest palm oil producer, and then Cargill, the USA’s biggest palm oil
importer, joined as members. TFT worked at the point of raw material extraction (i.e. plantation),
through to production in mills and factories, to ensure products were traceable throughout the
supply chain and that people and environment were respected.
Finally, many of the largest palm oil consumers (i.e. consumer products multinationals) were
signatories of the Carbon Disclosure Project (CDP). CDP was an international collaboration of
institutional investors concerned about the business implications of climate change. The CDP
represented a voluntary effort to develop standardized reporting procedures for firms concerning
their climate-related activities, in a form intended to complement annual financial accounts.
Nonetheless, while the CDP provided a platform for firms to showcase all kinds of climate-related
projects, it did not necessarily provide a faithful picture of the strategic stance of a firm on climate
change (Kolk et al., 2008).

Palm oil in the Nigerian context

The oil palm tree is native to West Africa, but rising demand for vegetable oils in the 1970s saw
oil palm cultivation shift to large-scale plantations overseas. Until 1934, Nigeria had been the
world’s largest palm oil producer; yet, much of the recent decades’ palm oil expansion occurred
in Malaysia and Indonesia, which as of 2015 produced approximately 85 percent of global
output. However, by that same year, there was a growing trend of multinationals being attracted

PAGE 666 j THE CASE JOURNAL j VOL. 13 NO. 5 2017

 to invest in the production and processing of oil palm in West Africa. Rise in private investment in
Africa was driven by oil palm companies from Indonesia and Malaysia seeking suitable land for oil
palm cultivation, while also facing tighter deforestation regulations in their home countries.
In particular, Nigeria was deemed one of the most desirable alternative destinations for
international investors as land was more abundant and pressure from NGOs less intense. As of
2011, Nigeria was the world’s third-largest producer, with approximately 5.7 million acres under
cultivation (World Wildlife Fund, 2016).
By 2014, Nigeria was Africa’s largest economy, with 2015 gross domestic product estimated at
$1.1 trillion (US Central Intelligence Agency, 2016). Oil had been a dominant source of income and
government revenues since the 1970s. Nigeria’s economic growth during the 2010s was largely
driven by growth in agriculture, telecommunications, and services. However, economic diversification
and strong growth did not translate into a significant decline in poverty levels: over 62 percent of
Nigeria’s 170 million people still lived in extreme poverty (US Central Intelligence Agency, 2016).
Since the early 2010s, the Nigerian Government was actively pursuing public-private
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partnerships for roads, agriculture, and power to boost the country’s economic growth. In this
context, officials launched the Nigerian Government’s Agricultural Transformation Agenda
(Adesina, 2012). The latter fostered investment-driven partnerships with businesses toward
redressing Nigeria’s food insecurity situation. According to the Food and Agriculture Organization
(FAO) of the United Nations, while agriculture was the largest sector of the Nigerian economy and
employed two-thirds of the entire labor force in 2015, production hurdles significantly stifled
the performance of the sector. Over the past 20 years, value-added per capita in agriculture rose
by less than 1 percent annually (FAO, 2016). It was estimated that Nigeria lost US 10 billion dollars
in annual export opportunity from groundnut, palm oil, cocoa, and cotton alone due to continuous
decline in the production of those commodities. Food (crop) production increases did not keep
pace with population growth, resulting in rising food imports and declining levels of national food
self-sufficiency. The main factors undermining production included reliance on rain-fed agriculture,
smallholder land holding, and low productivity due to poor planting material, low fertilizer
application, and a weak agricultural extension system (FAO, 2016). All in all, Nigerian food
imports were growing at an unsustainable rate and such growth posed a serious source of
concern, as these were fueling domestic inflation and unemployment. One of the “strategic” crops
that the Agenda intended to foster was palm oil due to its promising prospects as a source of
trade revenue due to its multiple applications in the wealthy consumer markets of the
Northern hemisphere.
The above-mentioned local government-led initiative was framed under the 2012 New Alliance for
Food Security and Nutrition (https://new-alliance.org/about), the G8 countries’[4] strategy to
mobilize large-scale foreign investment in Africa’s agricultural sector, for which Nigeria was one of
ten African signing countries. The Leadership Council of the Alliance included the African Union
Commission, the World Economic Forum, and the US Government.
While the Alliance provided an enabling framework for private foreign companies investing in
socially responsible smallholder agriculture, the Nigerian context was not exempt from significant
challenges: Nigerian politics was marked by coups and mostly military rule ever since British
independence in 1960, and until the death of a military head of state in 1998, which allowed for a
political transition. In 1999, a new constitution was adopted and a peaceful transition to civilian
government was completed. To the present day, the government faced the daunting task of
institutionalizing democracy and reforming a petroleum-based economy, whose revenues have
been squandered through corruption and mismanagement, added to longstanding ethnic and
religious tensions. Although both the 2003 and 2007 presidential elections were marred by
significant irregularities and violence, by 2015 Nigeria was experiencing its longest period of
civilian rule since independence. The general elections of April 2007 marked the first civilian-to-
civilian transfer of power in the country’s history and the elections of 2011 were generally
regarded as credible (US Central Intelligence Agency, 2016). Nonetheless, the country continued
to be hobbled by inadequate power supply, lack of infrastructure, delays in the passage of
legislative reforms, an inefficient property registration system, restrictive trade policies, an
inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute
resolution mechanisms, insecurity, and pervasive corruption.

VOL. 13 NO. 5 2017 j THE CASE JOURNAL j PAGE 667

 The industrial-scale expansion of palm oil in Nigeria thus unfolded in a weak institutional
environment, characterized by post-colonial land tenure rules, where most land in rural
areas was managed according to customary land tenure regimes. Furthermore, much of
the land was owned de facto or held in trust by the government. About 97 percent of Nigeria’s
land mass was undocumented, and the vast majority of land users had no individual or
collective title to the lands they occupied (Friends of the Earth, US and Environmental Rights
Action Nigeria, 2015).

PZ Wilmar
PZ Cussons and Wilmar International joint ventured in 2010, forming PZ Wilmar (http://pzwilmar.com/)
to enter the Nigerian market aiming to establish a food ingredients consumer brand for edible
cooking oils in Africa. PZ Cussons was an international consumer products group headquartered
in the UK and with operations in Africa, Asia, the Middle East, and Europe. Market entry by
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PZ Wilmar was facilitated within the Nigerian Government’s Agricultural Transformation Agenda
framework. Produced oils were sold under the Mamador and Devon King’s brands in tamper-proof
packaging (see http://pzwilmar.com/index.php/high-quality-products).
The joint venture acquired a total of 74,132 acres (30,000 ha) of land in South-East Nigeria, in
Cross River State during the 2011-2014 period, with plans to expand operations to 123,553
acres (50,000 ha), including the construction of a refinery to process palm fruit (Eguzozie, 2014).
During this period, in 2012, PZ Wilmar joined as a partner member of the New Alliance for Food
Security and Nutrition.
In 2014 PZ Wilmar announced an oil palm business worth $650 million in Cross River State
(Adekoya, 2015). The project would aggressively expand Nigeria’s palm oil production to
593,053 acres (240,000 ha) of plantations, employing over 250,000 people within five to six
years. At that time, PZ Wilmar asked the Federal Government to implement a backward
integration policy in the palm oil sector. Such a policy would imply that incumbent palm oil
companies would face auspicious conditions to acquire suppliers moving backwards in their
supply chain, that is, toward the delivery of raw materials. PZ Wilmar argued that a backward
integration program would save Nigeria up to 300 million yearly in foreign exchange (US dollars)
(Eguzozie, 2014). The year after the plan’s announcement, US and Nigeria-based civil society
organizations contended that PZ Wilmar operations were not complying with Nigerian laws, and
accused them of human rights violations, environmental destruction, fraud, and land grabbing.

Are we in crisis? … Again?

As soon as the Friends of the Earth-Environmental Rights Action joint report was released,
Godwin Ojo, Executive Director of Environmental Rights Action Nigeria, addressed the media
and stated:
It is a disgrace that Wilmar is painting a picture to its financiers and buyers that they have improved their
operations, when the reality on the ground shows that they are still bulldozing away people’s lives […]
Wilmar should address these evictions and human rights violations, or pack and go (Friends of the
Earth US, 2015).

In the meantime, Santosh Pillai had a feeling of “déjà vu” in the face of the ongoing situation.
Back in December 2013, Wilmar became a member of TFT in the aftermath of NGOs having
campaigned against the company for its role in destroying Indonesian rainforests. TFT had
helped Wilmar shape and implement a policy committing to no deforestation, no exploitation
and no peat in its plantations and third-party suppliers. The collaborative work with TFT toward
strengthening sustainability along the value chain was very much underway across Wilmar
International operations in Sabah, Sarawak, Sumatra, and Kalimantan in Malaysia and
Indonesia, and now in Nigeria. Moreover, while land settlement and compensation matters in
Cross River State were carried out by the Nigerian Government directly, joint consultations
were undertaken by the company together with the government to give, get, and exchange
information with the local communities.

PAGE 668 j THE CASE JOURNAL j VOL. 13 NO. 5 2017

 As he was heading to his sustainability director’s office, Pillai remembered a quote from a
renowned scholar on stakeholder management:
To be an effective strategist, you must deal with those groups that can affect you, while to be
responsive (and effective in the long run) you must deal with those groups that you can affect
(Freeman, 1984, p. 47).

Yet, in his mind, several fundamental questions were still not clear. Namely, how socially accepted,
expected, and urgent were these claims? Did these environmental groups have any real power in
relation to the company? And, last but not the least, how should the company address this issue?
Pillai was eager to hear the impressions of his executive team about these matters.

Notes
1. Available online on YouTube: https://youtu.be/Rl8zB6dNzJk (accessed November 23, 2016).
2. See, for example, RAN’s www.ran.org/sf20scorecard (accessed November 23, 2016).
Downloaded by University of British Columbia Library, Ms Maria Murcia At 11:32 12 October 2017 (PT)

3. The term “land grabs” was defined in the Tirana Declaration (2011) by the International Land Coalition,
consisting of 116 organizations from community groups to the World Bank. See Oxfam’s US website on
land grabs: www.oxfamamerica.org/take-action/campaign/food-farming-and-hunger/land-grabs/
(accessed November 23, 2016).
4. The G8 is a governmental political forum. The forum originated with a 1975 summit that brought together
representatives of six governments: France, the Federal Republic of Germany, Italy, Japan, the UK, and
the USA, thus leading to the name Group of Six or G6. The summit became known as the Group of Seven
or G7 in 1976 with the addition of Canada. Russia was added to the political forum from 1997, which then
became known as the G8; Russia was, however, suspended in 2014 following the annexation of Crimea.
Collectively, in 2012 the G8 nations comprised circa 50 percent of 2012 global GDP.

5. Wilmar International, Institutional Website, July 16, 2015 statement, available at: www.wilmar-
international.com/wp-content/uploads/2015/07/WIL-Statement-on-Nigeria-FINAL-16-July-2015.pdf
(accessed November 25, 2016).
6. Business Human Rights, Ibiae community response statement, available at: https://business-
humanrights.org/en/community-letter-responding-to-ngos-claims-of-human-rights-violations-by-
wilmar-international (accessed September 21, 2016).
7. Friends of the Earth US, Institutional Website, November 30, 2015 statement, available at:
www.foeeurope.org/sites/default/files/corporate_accountability/2015/international_statement_on_
wilmar_international_land_grab_1.pdf (accessed November 25, 2016).

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Corresponding author
Maria Jose Murcia can be contacted at: [email protected]

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