Sinarmas Sustainability Report
Miina Hunker
We believe that multi-stakeholder collaboration is the best way of achieving solutions for sustainable palm oil production. Through our sustainability reporting, we hope to provide stakeholders with a better understanding of our approach to sustainability and our progress in meeting our sustainability commitments.
Our policies, practices, initiatives, and programmes relating to environment, community development, employee relations, and product responsibility is disclosed comprehensively in our Annual Report. Please click here to download the latest report.
Following widespread criticism of its role in driving deforestation and contributing to social conflicts, APP launched in February 2013 its Forest Conservation Policy (FCP), in which it pledged to not destroy natural forests for its pulpwood plantations.
Under its FCP pledge, the pulp giant vowed to exclude timber sourced from the clearing of peatlands and rainforests as well as to reduce social conflict and seek free, prior and informed consent from communities when establishing new plantations. The policy was meant to apply to all APP operations and those of its suppliers, beginning in February 2013.
To support the implementation of the FCP, APP has been taking some actions, such as implementing the High Carbon Stock Approach, a widely supported mechanism to distinguish forest areas that should be protected from degraded areas that can be developed.
APP also imposed a moratorium on natural forest clearance for the development of pulpwood plantations until the assessments of areas with high conservation value (HCV) and high carbon stock (HCS) are completed.
In its report, Greenpeace listed a litany of violations, from destruction of tropical peat ecosystems to changing its deforestation cutoff date to the prevalence of burning to persistent community conflicts.
Using an analysis by forest monitoring platform Nusantara Atlas run by technology consultancy The TreeMap, Greenpeace found 75,000 hectares (185,300 acres) of deforestation in APP supplier concessions or companies connected to APP between February 2013 and 2022. The analysis was based on forest loss data from the University of Maryland.
The Greenpeace report also cited previous findings of ongoing deforestation within concessions connected to APP, such as a 2022 report by Indonesian NGO Eyes on the Forest, which found evidence of forest clearance and HCV areas within a UNESCO biosphere reserve. The areas are known as habitat for critically endangered Sumatran elephants (Elephas maximus sumatranus).
Besides the alleged deforestation that has happened since the adoption of the FCP, Greenpeace also pointed out that APP might have intended to continue deforesting in the future by changing its cutoff date in 2022, from 2013 to 2020.
APP said the change was necessary to align the company with internationally accepted standards like the Tropical Forest Alliance and Forest Stewardship Council (FSC), the latter of which also recently changed its cutoff date from 1994 to 2020.
Besides committing to stop deforestation, APP also committed to protect peatland and rehabilitate degraded peat ecosystems through a number of policies, such as ban on the development of canals or other infrastructure and burning.
As part of its commitment to protect peatland, APP announced in 2015 that it would retire 7,000 hectares (17,300 acres) of its peat concessions in South Sumatra and Riau to save a national park located next to the concessions.
A 2020 report by the Environmental Paper Network, a coalition of NGOs that advocate for sustainability in the pulp industry, identified at least 107 villages or communities in active conflict with APP affiliates or its suppliers.
APP listed only 30 grievances on its dashboard, all of which have either already been resolved or are already in the implementation stage of resolution. And these cases would be published only if the stakeholders involved consented to making such information public, APP said.
But tensions flared up again at the end of 2019, when the villagers accused WKS of operating too close to their farms while using heavy machinery to harvest acacia trees. Then, in 2020, WKS flied a drone to spray herbicide to prepare for planting a new batch of acacia seedlings.
Banner image: Active clearance and drainage of peatland rainforest in PT Asia Tani Persada in Kalimantan in 2012. The Sinar Mas group affiliated concession, which contains orangutan habitat, is a supplier of pulpwood to Asia Pulp and Paper (APP). Image courtesy of Ulet Ifansasti / Greenpeace.
"By the end of 2022, we had achieved 98 percent traceability to plantation (TTP), one of our key sustainability goals. This is the culmination of years of intensive effort, beginning in 2015 when we launched our supply chain traceability project. As a result, we are likely one of the few agri-businesses to have mapped their palm critical suppliers this comprehensively in Indonesia.
"Investing in mapping, knowing our supply chain, and using that data to monitor compliance with sustainability commitments is paying off. Our traceability and related efforts enable us to mitigate risks in our supply chain while offering our customers a clearer overview of their supply chain."
Continued progress on the path to 100 percent TTP. GAR has extended its palm supply chain traceability efforts and has achieved 98 percent TTP, providing comprehensive monitoring of compliance with the company's sustainability commitments, including the implementation of No Deforestation, No Peat and No Exploitation (NDPE) policies. This is reported on annually through the NDPE Implementation Reporting Framework (NDPE IRF).
In line with its commitment to providing robust, transparent sustainability data, selected supply chain indicators, including TTP achievement, have been externally assured by an independent third party for the first time. NDPE IRF data is also externally assured. These advances in supply chain traceability put GAR at an advantage to comply with increased regulatory scrutiny of deforestation-free supply chains such as the European Union Anti-Deforestation Regulation (EUDR).
Accelerating climate action through the Agriculture Sector Roadmap to 1.5C. At COP27, GAR and 13 other companies signed the Agriculture Sector Roadmap to 1.5C, which aims to accelerate existing action by the agri-commodity sector on deforestation to align with global climate goals in a way that contributes to food security, economic development and farmer livelihoods. As agreed in the roadmap, all of the company's palm oil volumes are expected to be in the "Delivering" category of the NDPE IRF by 2025. GAR has already achieved more than 90 percent "Delivering" for all of its crude palm oil (CPO) and palm kernel oil (PKO) production.
Stepping up leadership in reporting and transparency. GAR has started implementing Taskforce on Climate-related Financial Disclosure (TCFD) recommendations and is reporting both scope 3 emissions and Land Use, Land-use Change, and Forestry (LULUCF) emissions for the first time. Work is also progressing on strategies to curb GHG emissions.
Building resilience in rural communities through increased incomes and improved livelihoods. GAR has launched 76 Community Economic Empowerment projects throughout its Indonesian operations, providing training in organic farming and growing valuable crops like coffee, moringa, medicinal plants and pepper. The company is supporting communities to scale up these initiatives with training in business planning and digital and financial literacy. 37 Micro, Small and Medium Enterprises (MSMEs) have been set up through this programme to date.
Enhancing fire vigilance in anticipation of El Nio. Over 100 villages are enrolled in GAR's long-term fire prevention programme, Desa Makmur Peduli Api (DMPA), to tackle fire and haze. GAR has also enhanced its fire detection capacity, launching the GeoSMART app to detect hotspots three times faster than previous methods. With the possibility of El Nio weather conditions returning in 2023 and 2024, these strategic collaborations are critical to fire and haze mitigation - protecting GAR employees and the community while avoiding GHG emissions.
GAR is a leading fully-integrated agribusiness company. In Indonesia, it manages an oil palm plantation area of 536,399 hectares (including plasma smallholders) as of 31 March 2023. It has integrated operations focused on the technology-driven production and distribution of an extensive portfolio of palm-based products throughout its established international marketing network.
Founded in 1996, GAR was listed on the Singapore Exchange in 1999 and has a market capitalisation of US$2.7 billion as of 31 March 2023. Flambo International Limited, an investment company, is GAR's largest shareholder, with a 50.56 percent stake. In addition, GAR has several subsidiaries, including PT SMART Tbk, which was listed on the Indonesia Stock Exchange in 1992.
As an integrated agribusiness, GAR delivers an efficient end-to-end supply chain, from responsible production to global delivery. In Indonesia, its primary activities include cultivating and harvesting oil palm trees; the processing of fresh fruit bunch into crude palm oil (CPO) and palm kernel; refining CPO into value-added products such as cooking oil, margarine, shortening, biodiesel and oleo-chemicals; as well as merchandising palm products globally. GAR's products are delivered to a diversified customer base in over 100 countries through its global distribution network with shipping and logistics capabilities, destination marketing, on-shore refining and ex-tank operations. GAR also has complementary businesses such as soybean-based products in China, sunflower-based products in India, and sugar businesses.
Terrascope is an end-to-end decarbonisation platform, with agriculture value chain expertise, empowering enterprises to measure and reduce their emissions across operations, supply chains, and portfolios.
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