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By Chermaine Yap

Identifying measures to motivate suppliers are essential for successful supplier relationships. How do we encourage our suppliers to adapt their journey towards a shared vision of sustainable palm oil?

Our supplier, PT Perkebunan Nusantara I (PTPN I)

We spoke to the top management of one of our long-term suppliers for over ten years, PT Perkebunan Nusantara I (PTPN I), over Zoom. PTPN I is a state-owned enterprise that manages palm oil and rubber operations in Indonesia. PTPN I has oil palm plantations and mills located in Aceh.

Our engagement journey

Our long-standing business relationship evolved naturally to include a sustainability discussion. In 2019, when the Rainforest Action Network (RAN) first highlighted PTPN I was possibly clearing forests within the Aceh Leuser Ecosystem, we worked closely and constructively with PTPN I to ensure they remained compliant with Musim Mas’ Sustainability Policy.

“Clear and sincere engagement is important to foster trust between Musim Mas and our suppliers. Communicating our sustainability commitments to them from the outset allows them to understand our targets and feel supported throughout their sustainability journey, regardless of where they start. Ultimately, we want to provide fruitful mentorship to our suppliers. We believe that maintaining lasting relations is key for the journey towards a sustainable supply chain.”Olivier Tichit, Musim Mas’ Director of Sustainability.

Our Supplier Engagement Team interviewing our supplier, PT Perkebunan Nusantara I (PTPN I) last year over Zoom.

We also had PTPN I representatives attend our regular supplier workshops in Medan as part of our strategy to engage suppliers operating in high-risk areas like the Aceh province.

“What was sure to us when we attended the supplier workshop in 2019 was that it provided additional insights. We were able to see that a concerted effort by all players in the industry was needed to ensure the longevity of the palm oil industry, and producers like us need to do our parts so that we do not get excluded from the supply chain.

We have better insights into the NDPE policy, and the workshop provided a sound basis for us to understand the necessity of having an NDPE policy. The workshop taught us to implement stronger measures on work safety, and as a result, we now have a company-wide stance, which is the Sustainable Palm Oil Policy which is in line with the NDPE policy. – Mr. Denny Ramadhan Nasution, Senior Executive Vice President Operations, PTPN I.

Our Aceh Strategy

Our engagement with PTPN I mirrors our overall strategy towards the Aceh landscape, where we launched our five-year strategy last year. The Aceh landscape strategy comprises three objectives: Engagement, Assurance, and Monitoring and Response. So far, we have achieved 100% Traceability to Plantation (TTP) on PTPN I’s supply as a critical step in ensuring their NDPE compliance. As part of our Monitoring and Response objective, we use a combination of methods to monitor our suppliers. As of December 2021, we are actively monitoring 100% of our supplier mills with concessions for deforestation and peat, including PTPN I.

Our Aceh Strategy

Kaizen – A Progressive Improvement

Despite many challenges within its journey, we see PTPN I as a committed supplier who is determined to show its dedication towards Sustainability. Back in June 2020, RAN raised several issues related to NDPE non-compliances of the company, PTPN I, such as failing to adopt an NDPE policy and alleging that the company had deforested in the Leuser Ecosystem. Since then, PTPN I has made significant headway in their progress to prove their commitment.

Most importantly, PTPN I created a Sustainable Palm Oil Policy on 06 May 2020, which included critical elements of the NDPE. Relevant to the commitment, PTPN I is currently carrying out a High Conservation Value (HCV) Assessment, re-affirming their commitment towards responsible labor practices, and continuing their efforts to bring benefits for their employees and the surrounding community. The company set up schools, child care, and clinics in their estates, cementing their commitment to environmental and social welfare. Our detailed engagement process with PTPN I can be found here.

Our interview video with PTPN I can also be found below.