They say that where there’s smoke, there’s fire. But Gabriel Chew, head of insurance programmes and training, Intercontinental Oils and Fats, Singapore, knows that the burning issue is how you deal with indiscriminate reputational crossfire. This is his story…
We’re a palm-oil company. We’re involved all the way from the upstream palm oil operations to the downstream. We manage and operate plantations mills, refineries and oleochemical plants.
So, when the haze problem occurred, the Indonesian agricultural companies, including palm oil entities became the suspects.
It’s quite understandable, but because of that you have to deal with the reputational impact. From an insurance risk management perspective, when something like that happens, it creates a negative impression about you among underwriters or companies, even if they are not exposed to losses arising from plantation fires.
While those negative impressions are probably not going manifest as anything materially damaging, they should not be disregarded. If our insurance programmes remain profitable, or markets do not suffer major losses from writing our business, the recent haze saga is not likely to cause us any more pain.
But a poor loss record combined with the perception that we were partly responsible for the haze can create a long-lasting image of an incorrigible insured.
As far as I’m aware, we were not one of the companies named as a possible culprit in any of the newspapers. Neither has anyone pressured us officially. But when coming into contact with insurers or reinsurers, the topic arises from time to time.
If we had been required to respond officially, we might have had the chance to publicise that we had RSPO (Roundtable on Sustainable Palm Oil) certification measures in place to ensure we did not contribute to the haze. But as we weren’t confronted with the issue officially, releasing a statement out of the blue would have come across as defensive.
Internally, we have not seen any statements, but I can safely say that we were not involved in the slash and burn techniques that have been identified as the main cause of the problem, simply because our plantations are all RSPO certified.
Having spent a tremendous amount of resources, money, time to become certified, it doesn’t make sense for us to then save a few bucks by slashing and burning.
We do try to police such activities by setting up firespotters in all our plantations to look out for fires. But plantations are gigantic’
Having said that, when you’re given a concession by the government, that often contains the landholdings of individual farmers. The government isn’t bothered if there are people already occupying the concession, so when we take over a concession already occupied by individual farmers we normally try to get them to be part of a scheme in which we actually buy the palm oil from these guys, support them financially, so that it’s a win-win situation.
Slash and burn habit
There are, of course, farmers who do not want to be part of the scheme, because along with it comes a responsibilities. So it is possible to find farmers within your concession who practice the slash and burn techniques.
So some accusations can hold water. We do try to police such activities by setting up firespotters in all our plantations to look out for fires. But plantations are gigantic in size, so it’s not always possible to spot a fire before it becomes big.
Finding a permanent solution to say that we’re not responsible for the haze problem is challenging. I can’t think of a permanent solution for dealing with the reputational fallout from such incidents because they come and go.
For us, publicising the fact that we are RSPO-certified should help, but getting that message out is the challenge. The only thing we can realistically do is to keep our house in order