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RepRisk case study
IOI Group

Suspension by the Roundtable on Sustainable Palm Oil (RSPO)

September 2016

What happened

In late March 2016, the Roundtable on Sustainable Palm Oil (RSPO) announced that as of April 1, 2016, they were suspending the RSPO certification of IOI Corporation Berhad (IOI Group), a leading Malaysian palm oil producer, due to complaints it had received about its subsidiaires, PT Sukses Karya Sawit, PT Berkat Nabati Sawit, and PT Bumi Sawit Sejahtera. The RSPO claimed that the IOI had breached RSPO Principle 2: Compliance With Applicable Laws and Regulations, and Principle 7: Responsible Development of New Plantings.

Following the suspension, Moody’s announced that it was reviewing a possible downgrade of the credit ratings of the IOI Group and warned that the company’s earnings could deteriorate as a result of the suspension. Moody’s also warned that the company could face reputational damages, as this was IOI’s second suspension in five years.

Numerous multinational companies including Colgate-Palmolive, Hershey’s, Johnson & Johnson, Kellogg, Mars, Nestlé, Procter & Gamble, and Unilever then announced that they would cease trading with the IOI Group due to the RSPO suspension.

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