Case Study: Business Risks and Human Rights, Reputational Risks in Wilmar's Palm Supply Chain
Wilmar International (SGX:F34) is one of the largest listed palm plantation companies on the Singapore Exchange and its public stock is held by major U.S. institutional investors, including mutual funds, pensions, endowments and foundations. Over the past several years, the company has been implicated in scandals involving violations of workers’ rights and land disputes in its Indonesian palm oil business.
About Wilmar International
Founded in 1991, Wilmar International Limited is one of the largest publicly listed palm plantations in the world, and the largest global processor and merchandiser of palm and lauric oils. Wilmar is a vertically integrated agribusiness, with business activities ranging from cultivation, to refining, to manufacturing of consumer products. While palm oil-related businesses account for a significant portion of Wilmar’s revenue, its businesses extend into oilseeds, grains, and sugar.
Wilmar is one of the world’s biggest oil palm plantation owners, with a total planted area of 228,443 hectares (as of 30 Sep 2018), 66 percent of which is in Indonesia and 25 percent in East Malaysia. It has over 500 manufacturing plants, distributes to more than 50 countries and employs about 90,000 people worldwide.
The company has certifications from the four major sustainable palm organizations: International Sustainability & Carbon Certification (ISSC), Indonesian Sustainable Palm Oil (ISPO), Malaysian Sustainable Palm Oil (MSPO) and the Roundtable for Sustainable Palm Oil (RSPO). As of 2017, Wilmar reported 28 mills and more than 80 percent of planted area across Malaysia, Indonesia and Ghana being RSPO-certified.
For fiscal year 2017, the company posted an 5.9 percent increase in annual revenue to US$43.85 billion. Its tropical oils division, which comprises the company’s entire value chain of palm oil assets, generated over $18 billion in revenue in fiscal year 2017.
Wilmar lists 19 key subsidiaries, eight of which are palm oil cultivation, milling or refining operations in Indonesia. Wilmar benefits from optimistic growth outlooks for the global demand palm oil in both food and non-food applications. Wilmar’s stock would mostly be found in sector- and region-specific portfolios. Archer Daniels Midland (ADM) has been gradually increasing its ownership of Wilmar and is reported as having a 24.89 percent interest in the company as of March 13, 2018. ADM views its ownership of Wilmar as a key part of its Asia strategy.