* RSPO also asked SMART's parent to get certified
* Customers may return: trader

01/11/2010 (The Business Times), Kuala Lumpur - An industry body promoting green palm oil has approved plans by a key Indonesian planter last week to resolve concerns of environmental destruction that may prompt some customers to resume supply ties.

The Roundtable on Sustainable Palm Oil (RSPO) - a grouping of consumers, green groups and planters - set up a grievance panel against a member, PT SMART, after an environment audit gave the firm a mixed scorecard.

The results showed SMART, one of Indonesia's biggest palm oil firms, had planted in greenhouse gas-rich peatlands but did not fell pristine forests.

The RSPO also put pressure on SMART's parent Golden Agri Resources to apply for membership after ticking off the firm for publicly implying it was in the process of obtaining RSPO certification.

'Once SMART's parent becomes certified, I think customers will be comfortable, especially in the case of IOI,' a Singaporean palm oil trader said on Monday, referring to the Malaysian planter's move to cut ties with SMART.

But others say it may be an uphill task for SMART to win back some clients after it gets RSPO certification.

Burger King stopped buying from SMART even after the audit partly cleared the firm, although Unilever said it will resume ties after the planter gets RSPO certification.

Path to eco-friendly palm
In a joint statement issued with Golden Agri and RSPO, SMART agreed to provide compensation for land cleared without assessing environmental impact and to embark on a peat restoration project on some of its estates in Indonesia.

'The companies have the support and commitment of their respective managements and boards on how they will address each of the RSPO grievance panel's concerns,' the statement said on Thursday.

The RSPO has also asked Golden Agri to submit a membership application ahead of its annual meeting that starts on Nov 8.

Golden Agri has engaged an NGO to help it prepare over 430,000 hectares of oil palms and 40 mills across Indonesia as of June this year for certification audit, the statement said.

SMART runs the Indonesia palm oil operations of Golden Agri, which is controlled by the Widjaja family, whose business empire Sinar Mas has interests in pulp and paper, finance and property.

SMART officials involved in the RSPO including the firm's President Director Daud Dharsono will step down from any roles until March 2011 - a move seen as putting to rest concerns the firm will influence the RSPO's decisions.

'The RSPO is becoming a more credible intermediary between producers and buyers,' said James Ratnam, a plantations analyst with Malaysia's TA Investment Bank.

NGOs say the RSPO has become ineffectual as it works as a greenwash for planters who make up the bulk of the membership and palm oil firms contend the industry body has been hijacked by green groups - charges the RSPO has denied. -- REUTERS