IOI Group’s decision to sue the RSPO throws up many questions and points that we've encountered before

Last month the RSPO suspended the certification of IOI, one of its founding members, based on the complaints made against PT Sukses Karya Sawit, PT Berkat Nabati Sawit, PT Bumi Sawit Sejahtera, all subsidiaries of the IOI Group.

Since the suspension leading palm oil buyers including Hershey’s, Unilever, Kellogg’s, Nestle and Mars have cut back on the palm oil they buy from the company.

The saga took a new twist this week when IOI decided to sue the RSPO. In a statement issued by Dato’ Lee, CEO at IOI, he stated “the decision is a difficult and painful one for us to take… on the other hand, we feel that we have been unfairly affected by the extent and scope of the suspension decision”. He went on to say the suspension has “caused significant disruption” to elements of their business in Europe and America.

Are IOI right to sue the RSPO? Many would argue yes. If a business suffers financial loss due wrongful accusations (as the IOI are stating) then they’re within their rights to take actions to claim back their losses business. 

There is a Latin phrase “quis custodiet ipsos custodes?” which roughly translates as who is guarding the guards? And this point in hand is an example of that, if IOI weren’t to dispute the suspension then else holds the RSPO accountable?

However, even if IOI were to win the lawsuit, it won’t come out of this situation in a good-light. Many leading NGOs are already commenting on their actions and see it as a form of bullying tactics. When speaking to the Guardian Richard George, head of forests at Greenpeace UK, said: “No one should be surprised that IOI has chosen to bully its critics. The RSPO and its members must meet this intimidation head on by excluding IOI until it has cleaned up its act and repaired the forests and peatlands it has destroyed.”

And this is where history is repeating itself. In 2010 we covered the implications of McDonald’s McLibel case here. In the piece we reference Matt Haig’s book Brand Failures: The Truth About the 100 Biggest Branding Mistakes of All Time, “very few people would now know about the contents of that pamphlet if McDonald’s hadn’t taken the matter to court”.

And it’s highly likely that the end result will be the case for IOI, that even if they were to win, they’d be even more negatively affected by this situation than if they hadn’t taken action - as was the case for McDonald's.

Any leading company that is well managed will have run multiple scenario issues and devised strategies to help deal with situations if they ever arise. One would assume being suspended by the RSPO for ill-practices would be high on that list for IOI.

However, one would also assume taking an aggressive stance and deciding to sue the RSPO was not the suggested course of action - especially in knowledge of the McLibel case. When running scenario exercises its done at a time of calm and where people consider the future and likely outcomes. The action taken by IOI hints of one decided upon in the few days, and with little forward planning.

How this plays out over the coming weeks and months will be of interest to many. Will this vindicate the RSPO for taking serious action against its members? Will IOI become a 21st Century case study on how not to react in a crisis, like McDonald’s in the 20th Century?

Only time will tell…

ioi  Palm Oil  RSPO  Greenpeace