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Copy of Wilmar International

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Prashant Gianani

on 26 August 2014

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Transcript of Copy of Wilmar International

Future Projects and Developments:
Comparison to Competitors:
History and Development of Wilmar International
Social Issues of the Palm Oil Market
Deforestation can have an effect on local communities and create conflicts between small landholders and local communities, governments, indigenous people, etc.
Little legal protection is given to small landholders
The Palm Oil industry has also been responsible for human rights abuses
Child and forced labor (especially of migrant workers)

Social and Development Actions by Wilmar International
One of the largest Palm Oil Companies in Southeast Asia
Established in 1991
Originally started with palm oil, but has expanded into other agricultural markets
Operates throughout the entire value chain
Expansion across both sectors and countries
Environmental Issues in the Palm Oil Market:
Environmental Actions undertaken by Wilmar International:
Environmental Actions Undertaken by Wilmar:
Financial sustainability
Certain benefits from the unique business model
Cost efficiency
Bargaining power over suppliers and buyers
Economies of scale: larger amount of production
Economies of scope: worldwide capital allocation, potential synergies happen between each part of the value chain
Effective management in the whole value chain
Control over the price movements
Quality control: company-owned factories and facilities
Strong control over the brand building, products innovation

Potential risks from the vertically integrated business model:
Risks of changing in commodity prices
Operational risks. Insure the availability of raw material, palm oil plantation.
Exchange rate risk. Impact from the global market.
Interest risk. The cost of borrowing
Credit risk. Insure enough amount of cash flow
Political risk. Certain regulations in different countries will affect Wilmar’s profit.
Inventory risk
Rapid growth of revenue and profit before 2008
Revenue went down in 2009, but net profit kept increasing
Revenue was increasing rapidly during 2009 to 2012, but the profit was quite stable.
In the year of 2012, the profit was lower compares to the year of 2011

Facts from the 2012 Annual Report
Deforestation & Biodiversity Threats
The expansion of palm oil cultivation causes rainforests losses especially in Indonesia

Water Pollution
Effluents dumped into water bodies

Soil Degradation
Palm oil lands left no vegetation but weedy grasses, tinder for wildfires

Greenhouse Gas Emissions & Air Pollution
Deforestation and peatlands, together with liberal use of petroleum-based products in palm oil cultivation, generates considerable CO2

Indonesian Sustainable Palm Oil Certificate

International Sustainability Carbon Certification (ISCC)

Founding member of the Asia-Pacific Business and

Sustainability Council (APBSC)
CSR Leadership Award 2011

Healthy China 2012 Most Socially Responsible Enterprise Award

Environmentally Friendly Foreign Enterprise Award 2011

Corporate Social Responsibility Outstanding Case Award
In 2011, became the world’s second largest producer of Certified Sustainable Palm Oil (CSPO), 43% of total area planted

3 Clean Development Mechanism (CDM) projects for methane capture from wastewater

48% decrease in newly cultivated area in 2011, from 5,132 ha to 2,650 ha in 2010

Also encouraging third-party suppliers to join the RSPO and pursue certification

Upstream Competitors
• Sime Darby (530,987 ha): multinational conglomerate involved in 5 core sectors
plantations, property, industrial, motors, and energy & utilities
• Golden Agri-Resources (427,000 ha): world second largest palm oil plantation company
• Environmental: Forest fire in Indonesia in June 2013
• Social: Land rights in Liberia

Comparison to Competitors:
Strategic Initiatives:
Africa: expansion of land for cultivation
Australia: acquisition of Sucrogen
Pressure from Governments
Developing countries: food supplies

Pressure from Environmental groups
Wilmar: operations & activities

Reporting Initiatives:
CDP (2008)
Global Reporting Initiative (2008)
Wilmar's Sustainability Report (2011)
Environmental Actions Undertaken by Wilmar:
Expansion into sugar market (Sucrogen acquisition-2010)
Sucrogen: largest sugar producer in Australia and second largest producer of sugar-based ethanol from biomass
Various sustainable agribusiness practices:
Water conversation, Carbon Working Group, renewable energies

Further Expansion into Biofuel market (ADM, Elevance Renewable Sciences)

Downstream Competitors:
Wilmar International Limited
Managing Multiple Stakeholders in a Global Palm Oil Agribusiness Group
A Case Study Presentation by: Fei Fei Fu, Alex Wang, Huang Dong and Veronika Thieme
Support of Small Landholders (Plasma Scheme)
Protection of landowner rights according to free, prior and consent principle
Creation of jobs and economic growth in developing countries, benefits for employees
Expansion into Africa (employment, food security, poverty reduction)
No Deforestation
No development on high carbon stock (HCS) forests
Protect high conservation value (HCV) areas
No burning
Progressively reduce GHG emissions on existing
No Development on Peat
No development on peatland regardless of depth
Best management practices for existing plantations on peat
Explore options for peat restoration by working with expert stakeholders and communities
No Exploitation of People and Local Communities
In 15th Dec 2013, formally announced the following as Company Policies
Rainforest Action Network. "How U.S. Snack food brands are Contributing to orangutan extinction, Climate Change and human rights violations". 2013
Wilmar International. "Staying the Course through Challenging Times". Wilmar Sustainability Report. 2011
Geok,Wee Beng;Chen, Geraldine ;Buche, Ivy. "Wilmar International Limited: Managing Multiple Stakeholders in a Global Palm Oil Agribusiness Group". The Asia Business Case Centre. Nanyang Technology University. 2010
Wilmar International. "No Deforestation, No Peat, No Exploitation Policy". 2013
Full transcript