Since our policy was established in 2014, we learnt projects that recognize that issues such as the wellbeing of forests, food security, biodiversity and livelihoods are interconnected. The best chance for maximizing impact is to integrate these themes in the same communities or geographical areas.
From our projects, engagement, and independent diagnostic studies, we learned that:
- Many suppliers do not have the capacity to adopt sustainability practices due to limited resources, including conducting traceability exercises or engaging their independent smallholders like our smallholder programs.
- Independent smallholders face limited access to knowledge (eg. On Good Agricultural Practices) and resources to plant sustainably.
- There is uncertainty in land legality, especially around critical areas such as the Aceh-Leuser Ecosystem.
- The involvement of the government and local stakeholders is crucial to scaling up projects and prevent a leakage market.
Therefore, a coordinated response within companies across the industry and sectors, and levels of government is needed.
Landscape approach: A coordinated response to meeting our roadmap
As the saying goes: If you want to go fast, go alone. If you want to go far, go together.
We acknowledge the limitations one company can have and we capitalize on our relationships with our customers, technical partners and NGOs to collaborate and integrate their efforts into our current projects with our suppliers and smallholders.
As we aspire to be leading sustainable palm oil company, we want to show leadership through the landscape approach and our commitment towards our roadmap towards a responsible supply chain, including setting targets for supplier engagement and independent smallholders.
Based on our sourcing areas, volume, and pertinence of issues in geographical locations, we identified four provinces in Indonesia:
The Aceh Province contributes 5-10% of our total supply base. 87% of the Aceh-Leuser Ecosystem lies in the Aceh province. Even though Aceh is not a major producer of palm oil and has lower deforestation rates relative to other provinces, yet to the vocal critics of the industry, it is seen as being threatened by the expansion of agriculture, including oil palm.
We have established initiatives in Aceh to address the risk of encroachment into the Leuser Ecosystem. To understand the landscape further, we have since commissioned independent mill assessments across Aceh Tamiang, Timur, and Singkil. Additionally, we closely engage our third-party suppliers, independent smallholders, and stakeholders in three priority areas: Tamiang, Timur, and Singkil.
We have approximately 25 supplier mills located near the Leuser Ecosystem (Kawasan Ekosistem Leuser (KEL)). To address the gap between knowledge and action, we have developed tailored supplier engagement approaches from our experience. We reach out and assist our third-party suppliers, including the smallholders who supply to them and work towards sustainable production.
For more information about our landscape projects in Aceh, see our 2019 progress report:
PT Pati Sari
PT Pati Sari is located on the boundary of the Leuser ecosystem. In 2015, we worked with our supplier PT Pati Sari to better understand their supply base and procurement practices. We also ensured that they were complying with legal and operational requirements and conducted awareness and compliance training on our Sustainability Policy. Since 2018, we have engaged with independent smallholders supplying PT Pati Sari under our Extension Services Programme, which empowers our suppliers to engage their independent smallholders.
Extension Services Programme (ESP) to suppliers:
PT Pati Sari
As of September 2019, our team has provided training and support to 197 smallholders who supply to PT Pati Sari. The ESP curriculum includes improving market access, increasing yields through good agricultural practices, replanting efforts, and confirming the legality of their land titles.
We are integrating our project on PT Pati Sari and expanding our smallholder programs in Tamiang via a partnership with IDH (The Sustainable Trade Initiative), PepsiCo, Unilever, and other stakeholders, as both projects have overlapping focus areas. IDH has since signed a PPI (Production, Protection, Inclusion) Compact with the Government of Aceh Tamiang District, securing the government’s commitment to move Aceh Tamiang towards a sustainable commodity-producing region in Indonesia. Our collaboration with IDH also extends to Timur.
Also, together with industry peers and partners, we fund the Areas for Priority Transformation (APT) program spearheaded by the Earthworm Foundation. The goal of this program is to reduce deforestation and demonstrate to the world the feasibility of balancing commodity production, conservation as well as good social and labor practices at scale. The program focuses on three mutually reinforcing areas of work: integrated land use planning with government, NDPE (No Deforestation, No Peat and No Exploitation) support and training for industry, and intensive capacity building for communities on the forest frontier. The APT program has managed to secure an MoU (Memorandum of Understanding) with PT Semadam to protect its remaining forest and an MoU with the local government. The APT program also focuses on Southern Aceh, which houses Rawa Singkil Wildlife Reserve, south of the Leuser Ecosystem (see section ‘Singkil’ below). More here.
PT Ensem Sawita
In partnership with another palm oil company, Musim Mas engaged with PT Ensem Sawita, as well as the agents and smallholders who supply them. PT Ensem Sawita achieved 100% traceability to plantation in 2019 through traceability training. The company also educated the mill’s suppliers on the importance of conserving the Leuser Ecosystem and the land on which they operate. We are providing more support to them to ensure the implementation of proper standard operating procedures to monitor the FFB (Fresh Fruit Bunches) received from smallholders.
More on our engagement with PT Ensem Sawita can be found here.
Mopoli Raya (Parent company of PT Aloer Timur)
Since 2015, Musim Mas has been actively engaging with Mopoli Raya to improve the mill’s sustainability policy and practices, including a requirement that they implement the same policies and practices for their suppliers. Our engagement with the mill continued even though we put on hold our purchases from them. In March 2019, Mopoli Raya proved their strong commitment to sustainability by publishing the following documents on their website:
- Environmental Policy, Social Policy, Corporate Social Responsibility Policy, and a Policy on Child Labour.
- A declaration in the form of a ‘Letter of Commitment’ addressed to Musim Mas and declaring that an area of 1,382 hectares within the PT Aloer Timur concession (a subsidiary of Mopoli Raya) is now designated HCV and HCS and will not be developed in the future.
- HCS Assessment and Pre-HCV Assessment Reports conducted in PT Aloer Timur.
Due to their commitment to sustainability, we resumed business relations with them in April 2019. We are also exploring the possibility of extending our smallholder program to Mopoli Raya. Their progress was also commended by Rainforest Action Network.
More on our engagement with Mopoli Raya can be found here.
We are collaborating with IDH and other partners on a landscape project that stretches across Aceh Tamiang and Timur. IDH, together with the Government of Aceh, is developing a Green Growth Plan (GGP) to define a roadmap for producing sustainable commodities, including palm oil, while protecting natural forests. More here.
Since 2019, we have engaged our ten suppliers in Singkil on our sustainability commitments. We have been proactively reaching out to all our supplier mills within Leuser Ecosystem and Rawa Singkil to ensure that they do not source from any of the risky plantations in the Leuser Ecosystem. They are aware of the risky plantations and have informed us that they do not buy from the plantations that are at risk.
To create awareness, understanding, and acceptance of our Sustainability commitments, we conduct broad-level engagement workshops and individual supplier workshops. Our supplier workshops cover the crucial points of our Sustainability Policy, Traceability to Plantation (TTP), and how it can be achieved, educating our suppliers on the Self-Assessment Toolkit (SAT) and how to fill it out. Our supplier workshops also encourage suppliers to achieve certification in the long run. All our suppliers in Singkil, namely Global Sawit Semesta, Samudera Sawit Nabati, Bumi Daya Agrotamas, Ensem Lestari, Perkebunan Lembah I & II, Runding Putra Persada, Delima Makmur, Bangun Sempurna Lestari, Nafasindo and Socfin, have attended our supplier workshops.
In December 2019, we held a Focus Group Discussion with Golden Agri Resources (GAR) in Subulussalam for our suppliers in the Rawa Singkil, touching on Traceability and NDPE compliance. The workshop was also attended by BKSDA Aceh (Natural Resources Conservation Agency of Indonesia), Aidenvironment, The United States Agency for International Development (USAID), KFW Germany, Earthworm, Tokoh Masyarakat and representatives of agents/dealers.
As the supply chain within the Leuser Ecosystem links to multiple stakeholders, we are collaborating with industry peers and partners via the Areas for Priority Transformation (APT) program, spearheaded by Earthworm Foundation. The program aims to reduce deforestation, beginning with the Subulussalam district, and investigates the primary actors and motivations behind deforestation in this area. Earthworm has also conducted capacity-building workshops for mills and plantations in the Subulussalam district. More here. We are exploring the possibility of integrating our sustainability projects in Singkil with the APT program.
To improve the deforestation monitoring and verification system, we invested in the development of a new, publicly available radar-based forest monitoring system known as Radar Alerts for Detecting Deforestation (RADD). Aceh would be one of its pilot areas and it will be integrated into our landscape programs.
Riau is one of our top supplier provinces. We estimate that our supplier mills make up 70–80% of the total mills in the province, forming 23% of our total crude palm oil (CPO) procurement.
Riau is the largest provincial contributor to the national production of palm oil and is the fifth-largest contributor towards Indonesia’s gross domestic product (GDP). Deforestation in the landscape has been severe. It has been estimated that illegal oil palm plantations have taken over at least 40% of the Tesso Nilo National Park. Another critical protected area is the Giam Siak Kecil peatlands, of which a significant portion is dominated by the pulp and paper sector. Riau is prone to forest fires during the annual dry season.
Read our diagnostic report for Riau here.
As part of our independent smallholder program with IFC (International Finance Corporation), a member of the World Bank, we engaged smallholders supplying to our mills located in Riau. These mills are PT SAR (Sinar Agro Raya), PT BANI (Bahana Nusa Interindo), and PT ISB (Indomakmur Sawit Berjaya). More on this program here.
Musim Mas is working with UNDP (United Nations Development Programme) to engage villages in Riau to establish smallholder programs.
Musim Mas is a member of the Tesso Nilo Taskforce since 2016. We are working with WWF Indonesia and Tesso Nilo National Park Foundation to mitigate human-elephant conflict around Tesso Nilo national park.
We are also part of WWF Halt program, which helps supply chain stakeholders to register and digitally track FFB from plantation to mill. This traceability program would enable buyers (mills and traders) to identify and assess the legality of where the FFB originated, starting with a pilot around Tesso Nilo National Park.
We are collaborating with an industry peer on a bottom-up, participatory landscape-level project to understand and map HCV-HCS areas, as well as existing and potential plots for smallholder expansion. We have finalized Siak district and PT. Teguh Karsa Wana Lestari (TKWL) as our mill for engagement, and have conducted in-depth analysis, training to build awareness with the mill staff, and assessments on the ground to identify potential HCS areas.
Additionally, we are involved in a private-sector coalition, called the Siak-Pelalawan Landscape Program, which aims to support the government’s Siak Green District Initiative in its efforts to achieve sustainable palm oil production and align the delivery of sourcing commitments with the development goals of the district. These goals include protecting and enhancing forests, improving the livelihoods of smallholders and local communities, and establishing traceability data. Stakeholders involved include Cargill, Neste, PepsiCo, Golden AgriResources, Unilever, CORE, Sustainable District Platform (LTKL), Siak regent (local government).
To improve the deforestation monitoring and verification system, we invested in the development of a new, publicly available radar-based forest monitoring system known as Radar Alerts for Detecting Deforestation (RADD). Siak-Pelalawan would be one of its pilot areas and it will be integrated into our landscape programs.
Musi Banyuasin (MUBA) district has one of the highest numbers of supplier mills in our supply base. MUBA is the province’s second-largest district and its largest palm oil producer. Although deforestation in MUBA has been severe, there is still much remaining forest (160,000 hectares). This includes three protected areas covering 75,000 hectares that provide protection for important tiger habitats, including the Sembilang-Dangku landscape. MUBA offers a unique combination of supportive local government, numerous progressive companies, and multiple landscape initiatives that create a rare platform for change. The regency is the first to work towards RSPO Jurisdictional Certification.
We are implementing our Extension Services Program (ESP) for the independent smallholders in the supply chain of one of our suppliers’ mills, PT Bastian Olah Sawit (PT BOS), to assist them in improving their productivity through the implementation of good agricultural practices. PT BOS belongs to one of the supplier groups prioritized for engagement.
We are also working with Daemeter, the Cadasta Foundation, and IT consultant GeoTraceability, to develop and implement a fully functioning Oil Palm Supply Chain Traceability System at one site in MUBA. The System will be a chain-of-custody mobile application that enables individual fresh fruit bunches (FFBs) to be tracked through the supply chain. This pilot project will cover the supply chain of PT BOS.
As mentioned above, we implemented an ESP program for our supplier PT BOS, assisting to train their smallholders on good agricultural practices. As of Sep 2019, 395 smallholders were engaged.
In addition, we completed a project with Rainforest Alliance in 2019 to address sustainability issues relating to independent oil palm farmers in the region. The program also served to support the development of a jurisdictional approach for the entire regency. In the period of one year, 525 smallholders were engaged.
We intend to support a landscape program with IDH using the district government’s Green Growth Plan as a guide and develop a Smallholder Hub via the Centre of Excellence – a multi-stakeholder unit by LTKL (Sustainable Districts Association) and IDH aimed at sustainable development of a district. This includes training agriculture officers stationed in the district office or villages.
West Kalimantan contributes 5% of our supply base and is one of the six provinces that contribute 80% of our supply base. We are able to trace up to 88% to plantation within the province, representing the highest percentage among the six provinces.
We have also conducted numerous mill verifications as part of our risk assessment on our suppliers. A diagnostic report on mill verifications conducted in Central Kalimantan aims to provide a clear roadmap on what it means to achieve sustainability transformation in concrete terms. The report provides input that helps us develop a strategic approach to address issues raised at the landscape level. Read the full report here.
We have established a smallholder program targeting smallholders supplying to our mill, PT Sarana Esa Cita.
We are working with Aidenvironment to explore the Sambas conservation project potentially in the areas of agroforestry. The program aims to balance forest conservation with economic development, by supporting local communities on social forestry knowledge and capacity by:
- Providing access to local forest areas and land legalization.
- Establishing sustainable use and forest management practices.
- Establishing small business models to improve land use.
Read more about the project here.