Case Study

deforestation in Peru

Fighting illegal deforestation caused by palm oil in Peru

CCCA’s work in Peru aims at disrupting activities of individuals, corporations, and/or public entities that facilitate deforestation or other environmental destruction through enforcement, litigation, and/or advocacy, primarily outside the situation country.

Peru is the country that has experienced the most primary forest loss related to oil palm expansion in the Amazon region, where extensive areas of land have been deforested along the agricultural frontier. Palm oil production is also an agro-industrial activity that, given the notable growth projected in the coming years, is anticipated to have a particularly acute adverse effect on future illegal deforestation and violations of indigenous rights.

CCCA investigates the role of international actors involved in illegal deforestation in Peru, as part of its broader work in the Amazon area. The focus has been on the palm oil sector, as a global industry and a notorious driver of deforestation in Peru and beyond, as well as its impact on affected indigenous communities.

Since the establishment of palm oil plantations associated with large Peruvian producers, the indigenous peoples have faced several threats due to their tireless struggle to recover their ancestral lands.

CCCA is part of a coalition of indigenous associations and Peruvian and international NGOs tackling the impact of non-sustainable palm oil on the international market. As part of these efforts, the coalition has filed a case about illegal deforestation in the Peruvian Amazon and the palm oil supply chain before the Dutch OECD National Contact Point (NCP) for the OECD’s Guidelines for Multinational Enterprises against Louis Dreyfus Company B.V., a leading Netherlands-based company in agricultural commodities.

WHAT IS THE COMPLAINT ABOUT?

The case refers to the involvement of Louis Dreyfus Company B.V. (LDC)—a company based in The Netherlands and leader in the trading of agricultural commodities—in sourcing palm oil from illegally deforested areas in the Peruvian Amazon. The case was filed before the National Contact Point of the Organisation for Economic Cooperation and Development (OECD), due to the breach of the OECD Guidelines for Multinational Enterprise that establish principles and standards for responsible business conduct.

Despite abundant public information concerning the grave environmental and human rights impacts, since 2020 LDC has purchased crude palm oil to Servicios Agrarios de Pucallpa SAC, the extraction plant of the Ocho Sur Group whose oil palm plantations are involved in the illegal deforestation of over 12,000 ha of Amazon virgin forest, human rights violations of the Indigenous Community of Santa Clara de Uchunya and the Shipibo-Konibo people and corruption schemes for land grabbing.

Following an Initial Assessment, the Dutch NCP concluded that the complaint merits further consideration.

 

WHAT ARE THE ALLEGATIONS?

Louis Dreyfus Company allegedly failed to undertake appropriate risk-based due diligence to identify, prevent and mitigate adverse impacts caused by its business relationship with the Ocho Sur Group in Peru.

The complaint further alleges that Louis Dreyfus Company is responsible for having contributed to the adverse environmental and human rights impact in Peru by buying palm oil from Servicios Agrarios de Pucallpa, the extraction plant of the Ocho Sur Group, and failed to exercise leverage by continuing this trading partnership.

The complaint also concerns misleading claims by Louis Dreyfus Company, on its website, and in other official publications, related to palm oil sustainability, its “green” credentials and the compatibility of its operations with human rights and environment in breach of the OECD standards in relation to disclosure, communication and consultation with the interested stakeholders such as consumers, shareholders, investors.

 

WHY IS THIS IMPORTANT?

Due to the characteristics of the palm oil supply chain, just a small group of very large multinational companies refines, processes and trades palm oil from thousands of mills. Particularly, refining and trading are the most concentrated part of the supply chain, where the palm oil produced sources a conspicuous number of consumer goods companies, reaching a countless number of consumers. LDC is among the biggest of this small group of refiners and traders.

Because of this market concentration, a major trader such as LDC has important leverage on growers and mills, including in respect of the adoption and enforcement of sustainability commitments. For this reason, compliance with the OECD Guidelines and the correct implementation of sound environmental management system by a key player such as LDC, could not only enhance the implementation of No Deforestation policies on the ground, by growers, but also set the example and influence other transnational agri-commodity traders who participate in the supply chain of forest-risk commodities, making the palm oil supply chain really sustainable and deforestation-free.

This case is also important to achieve more transparency in the palm oil supply chain and provide more reliable information to the interested stakeholders—such as consumers, shareholders, investors, etc.—, who are now receiving inaccurate and misleading statements on sustainability.

 

WHAT IS THE GOAL OF THIS COMPLAINT?

Through this complaint, Indigenous leaders of AIDESEP and FECONAU, and the co-complainants not only request to address the urgent, serious and irreparable impact of corporate harm underway in the Peruvian Amazon and the impunity that surrounds and enables it, but also to acknowledge the predominant role that Louis Dreyfus Company and other major commodity traders play in the market of agricultural commodities around the world in promoting real compliance with sustainability standards, and also influencing other companies who participate in the supply chain of forest-risk commodities to put in place a sound environmental management system and carry out the appropriate due diligence.

 

FOR MORE INFORMATION ABOUT THE CASE:

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