Recent announcements by several leading U.S. consumer products companies that they will purchase palm oil only from growers who are taking steps to protect the world’s rain forests should be welcome news to all of us.
For most of my adult life I’ve been helping corporate executives improve their operations, grow their companies, gain advantage and maximize profits. While I’ve counseled many to go slow, I’ve never sounded retreat. Until I took a trip to Borneo.
Celebrated in a string of oldie-but-goodie movies, including such unforgettable titles as “Wild Women of Borneo” (1932), “The Beast of Borneo” (1934), and “Borneo: Land of the Devil Beast” (1948), the Southeast Asian island traditionally has been cast by Hollywood as a land of jungle savages and headhunters.
While there was some truth to such depictions — especially prior to World War II — the island today has 15 cities of 200,000 or more. While it would be a stretch to describe its economy as booming, it does have a thriving logging industry, it’s a major producer of palm oil and it’s starting to develop its energy resources.
And therein lies the problem: a largely unspoiled tropical island with a 130 million-year-old rainforest — one of the oldest in the world — is being threatened by encroachment.
Some quick facts. Though most Americans probably couldn’t locate Borneo on a map — I couldn’t, until my wife suggested we go there — it’s actually the third-largest island in the world. At more than 287,000 square miles, it’s larger than France; larger than Texas.
The island is divided among three countries: the tiny nation of Brunei sits on the island’s north coast and occupies 1 percent of the land. Surrounding Brunei are three Malaysian states, which occupy 26 percent of the land. Indonesia controls the rest.
According to the WWF (formerly the World Wildlife Fund), Borneo is home to an estimated 15,000 plant species, including 6,000 that are found nowhere else in the world. That’s why we went there: so my wife, a Chicago Botanic Garden geneticist, could study the rare and endemic plants and wildlife.
As in many tropical areas around the world, Borneo’s rainforests are disappearing.
A major factor driving deforestation is the growth of oil palm plantations. Malaysia and Indonesia account for more than 90 percent of the world’s total palm oil production. As demand increases — and it will, since palm oil is the cheapest vegetable oil there is — more land will be lost. The Indonesian government already has set its sights on increasing palm oil production to 40 million tons annually by 2020; that’s double the 2009 total.
Although deforestation is unlikely to be stopped in its tracks, more and more major companies that use palm oil in their products have pledged to purchase from suppliers that aren’t engaged in clear-cutting the rainforests. This is a step in the right direction.
Another thing that would help preserve Borneo’s biodiversity would be for the Malaysian and Indonesian governments to focus more on the economic benefits of the rain forests, especially in the areas of tourism, ecotourism, food production, and nutrition and medical innovation — since many of the endemic plants are thought to have medicinal value.
If manufacturers were to substitute other oils for some of the palm oil they now use, it wouldn’t be the end of the world. In fact, it might be a good thing, since palm oil is loaded with saturated fat, and is far from the best vegetable oil if you’re interested in a heart-healthy diet.
It would also be a good thing for the plants and animals indigenous to the rainforests. When the forests are gone, these plants and animals could disappear as well.
(Harold L. Sirkin is a Chicago-based senior partner of the Boston Consulting Group, a professor at Northwestern University’s Kellogg School of Management, and co-author, most recently, of “The US Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback.”)