This is an expanded version of A New Leaf in the Rainforest: Longtime Villain Vows Reform, which ran on Yale e360 last week. This story was originally developed in January and finalized in February.
Fragment of peat forest amid a landscape of land cleared for plantations in Riau, Indonesia in February 2014. All photos by Rhett A. Butler
Skirting the Malacca Strait near the Indonesian city of Dumai the air is thick with haze from peat fires burning below. As the sky clears, a landscape of sharply-cut geometric shapes becomes apparent. What was once carbon-dense peat forests and rainforests are today massive oil palm and wood pulp plantations.
The conversion isn’t limited to Sumatra. Since the mid-1980s more than 5 million hectares of rainforests and peatlands have been destroyed across Indonesia for industrial plantations, making palm oil, timber, and pulp and paper production among the biggest drivers of deforestation and largest sources of greenhouse gas emissions in the Southeast Asian nation.
Rising consumer demand for paper, cheap cooking oil, and biofuels has altered not only Indonesia’s landscape; it has also changed the corporate landscape. Commodity-producers are growing bigger and becoming more globalized. In Indonesia these companies wield substantial political power and have benefitted from a system that favors large concessions, while ignoring traditional land use communities and smallholders. The arrangement drives both environmental degradation and social conflict, while concentrating resources in the hands of a few.
But while big export-driven companies can exploit resources faster and more efficiently than ever before, their desire to sell in major markets exposes them like never before. With concerns over climate change, environmental degradation, and human rights becoming increasingly prominent among big consumer-facing companies, environmentalists are driving a shift in business-as-usual approaches to commodity production. Under pressure from these groups—activists and major buyers—some of the biggest players in Indonesia are making striking commitments to protect forests and address social conflict. But will these be enough to save the country’s fast-shrinking forests?
Global Forest Watch map showing forest loss and gain in Indonesia between 2000 and 2012. Click for interactive version.
The Amazon to Indonesia
The shift underway in Asia didn’t happen overnight. The first breakthrough came thousands of miles away in South America.
In the early 2000s, with deforestation just coming off near-record rates in the Brazilian Amazon, Greenpeace launched a campaign against one of the most prominent drivers of deforestation in the region: big soy. To get the soy industry’s attention, Greenpeace targeted McDonald’s, a fast-food giant with a self-proclaimed commitment to environmental responsibility. The activists released a report and staged colorful demonstrations linking soy-based feed used to produce McNuggets to chainsaws and smoldering rainforests in the Amazon. McDonalds told its Brazilian soy suppliers to clean up their operations.
Facing the potential loss of one of their biggest buyers, the Brazilian soy industry responded in an unexpected way: crushers declared a moratorium on soy produced on newly deforested lands. Importantly the agreement included verification backed by satellite imagery used to monitor compliance. Deforestation for soy farms plunged shortly thereafter and the moratorium has been renewed on an annual basis since then.
The soy moratorium was followed three years later by a similar pact among major beef processors in Brazil. While the supply chain for beef is considerably more complex than soy, cutting deforestation out of the cattle supply chain has substantial upside: roughly two-thirds of deforestation is driven by cattle ranching. Today companies ranging from Brazil’s biggest supermarkets to slaughterhouses have deforestation policies.
In both cases, activists running relatively small-budget campaigns pushed multi-billion dollar companies to adopt policies with the potential to transform industries. But most of the success was limited to the Amazon. At the same time, deforestation for plantation development in Indonesia continued at a torrid pace.
Forest conversion in Riau, Indonesia in February 2014.
The main challenge for slowing commodity-driven deforestation in Southeast Asia is the political economy of the plantation business. Pulp and paper and palm oil are simply far more profitable than Amazon cattle ranching. That profitability translates into political power that enables companies to win huge land grants, driving massive deforestation while simultaneously disposing traditional communities of their lands.
But the situation in Indonesia is arguably far more dire than in the Amazon. Spread across an archipelago, Indonesia’s rainforests are individually more vulnerable and declining at faster rates than those in the Amazon. Combine this with the fact that much of the world’s palm oil and paper is consumed in markets that show no preference for environmental performance and its easy to understand why many see a disaster in the making in Indonesia.
Progress started to come after activists launched major campaigns against key companies with international exposure. It started with big palm oil buyers like Unilever and Nestle, which enacted policies to set minimum social and environmental standards for the product they bought. These steps were incremental at first, largely driven by Unilever, which consumes three percent of the world’s palm oil, and its leadership at the Roundtable on Sustainable Palm Oil (RSPO), a body that sets eco-standards.
The first big breakthrough came with Nestle, which after manhandling its response to Greenpeace’s campaign that featured an office worker eating a KitKat bar that morphs into an orangutan’s finger, established a policy that excluded deforestation from its palm oil supply chain. That policy was to be implemented by The Forest Trust (TFT), an NGO that works with companies to clean up their supply chains.
Less than a year later, TFT signed a similar deal with Golden-Agri Resources (GAR), one of Indonesia’s largest palm oil producers. The policy excluded conversion of forests with more than 35 tons of above ground biomass – effectively any forest more substantial than old scrub. That agreement would become the baseline for future deals.
While welcomed in some quarters, GAR’s deal was initially viewed with skepticism in some quarters. Norway’s pension fund — the world’s largest sovereign wealth fund — went ahead and divested from the company despite the policy. One point of contention for some was the GAR’s sister company, Asia Pulp & Paper (APP) continued to log peatlands and rainforests with impunity.
Acacia plantation with an oil palm plantation in the far upper right corner in Riau, Indonesia in February 2014.
A big pulper’s steps toward reform
APP has been widely viewed as an environmental pariah for the better part of a decade for its large-scale conversion of ecosystems in Sumatra, especially in Riau. Perhaps worse was APP’s approach to handling criticism—it seemed to do everything it could to conceal the damage it was doing to Indonesia’s forests. APP hired public relations firms to launch attacks on its critics, ran advertisements in the New York Times and The Economist touting its dubious environmental credentials, and fed misinformation to journalists. To top it off, APP also broke two high profile promises to stop pulping Indonesia’s rainforests. WWF, Rainforest Alliance, and the Forest Stewardship Council (FSC) all severed ties with the forestry giant after it failed to abide by its commitments. But APP’s greenwashing couldn’t stem customer defections—it lost the business of dozens of major buyers between 2009 and 2012.
So when APP announced a new forest conservation policy in February 2013, observers were shocked to see that it came with an endorsement from Greenpeace, which until that point was arguably APP’s fiercest critic. On paper the policy was indeed impressive: it committed APP to the standards adopted by GAR: zero deforestation in high carbon stock (HCS) and high conservation value areas (HCV), acquiring free, prior informed consent (FPIC) from communities for new plantation development, and setting up a disputes resolution process. But APP’s policy went further, applying to all of its suppliers and adding a peatlands management component to limit emissions in existing plantations. Importantly APP’s policy also came with apparent support from the highest levels of the organization, something that was lacking with previous pledges.
Nonetheless, several of APP’s critics—including WWF and the Rainforest Action Network—remained unsurprisingly skeptical, wanting to see if APP would deliver on its promises this time around.
Acacia plantation and canal belonging to APP supplier PT Sekato Pratama Makmur. Harvested acacia is on the right, standing acacia trees on the left. Staples and BJ Ball have returned as customers in the past month due to APP’s forest conservation policy.
APP’s policy is now a year old and some changes are plainly visible. Gone are the greenwashing specialists, replaced by sustainability consultants with strong credentials. The company has self-reported two breaches of its deforestation moratorium, while quickly sending policy implementer TFT to investigate complaints. And in late January, APP hired Rainforest Alliance to conduct an independent audit on its implementation of its policy as well as adherence to any public commitments it has made since the policy was signed.
Rainforest Alliance didn’t enter into the agreement lightly after being burned by APP in 2007, according to Richard Donovan, the organization’s Vice President of Forestry.
“We wouldn’t be our reputation on the line if we didn’t think APP was serious this time around,” he said, speaking at the airport in Jakarta in late January.
“There were three factors that influenced our decision,” Donovan told mongabay.com. “First, there is strong commitment at the highest levels of the organization, which signals that APP is serious this time around.”
“Second, we have great respect for both NGOs — The Forest Trust and Greenpeace — that are working with APP on its policy. And third, we know that deforestation and community rights are important to a number of APP’s key buyers. If APP doesn’t address these issues, it will face intensifying market pressure going forward.”
Lafcadio Cortesi, Forests Campaign Director at the Rainforest Action Network, which remains an outspoken critic of APP despite the policy, says Rainforest Alliance’s agreement is important for the credibility of APP’s commitment.
“Independent verification is one signal that this is moving along on the right track,” said Lafcadio Cortesi, Forests Campaign Director at the Rainforest Action Network.
FAPP acacia plantation in Riau, Indonesia in February 2014.
APP’s progress is clearly apparent, but has its truly transformed? Among its critics, the jury is still out. WWF, RAN, and Indonesian NGO Greenomics are waiting to see the results of HCS and HCV assessments conducted over the past year by TFT and Indonesian auditors. And environmentalists are now raising the bar—asking APP to not only abandon deforestation, but commit to addressing its deforestation legacy, including ecosystem restoration. APP says that restoration is indeed on the table.
“Restoration has been a very key element in our Forest Conservation Policy,” said Aida Greenbury in a panel last month in Jakarta. “It’s never been off the table.”
As the debate between APP and its critics has shifted from merely stopping deforestation to arguing over details of restoring forests, another issue looms ever larger: when will it be acceptable to give the green light to buyers?
For RAN and WWF, independent verification of compliance is key.
“Commitment is not compliance, said Cortesi. “We need to see verification.”
“APP’s new commitment is just the starting point, not the finish line. The hidden story here is the controversial paper giant’s long and deep history of broken promises, land conflicts and human rights violations across its operations. The lesson learned again and again is the essential importance of clear measurable implementation measures and mechanisms, implemented in close cooperation with key stakeholders, including NGOs, and confirmed by credible, independent verification. It is still too early to say if APP’s latest commitments will bear fruit, as we all hope they will, or withers on the vine as has happened too consistently in the past.”
Scott Poynton, the Executive Director of TFT, takes a different tact, arguing that APP needs to be encouraged through market recognition of its efforts, which he says will drive other companies toward adopting similar policies.
“Customers should start buying again from APP to give encouragement to their nervous heart that yes, they’re on the right track,” said Scott Poynton, the Executive Director of TFT. “By slowly coming back, APP will be encouraged and they will get a strong signal that they made the right choice – having made such a dramatic shift akin to jumping off a cliff, the falling person needs to know the parachute will kick in at some point.”
“If other companies in the palm oil and pulp and paper sectors see APP taking market share because of strong implementation of their new policy, then they’ll be more likely to go down a similar route.”
FAPP acacia plantation in Riau.
Greenpeace is more cautious.
“The markets should reward companies who genuinely clean up their act. In the case of APP, Greenpeace cautions that any company intending to resume any trade with the company must apply strict conditions to commercial contracts requiring continued progress be made against its FCP and those outstanding policy issues such as forest conservation and restoration,” said Phil Aikman. “Our view is that the extra layer of scrutiny that responsible buyers bring will be crucial in ensuring the longer-term delivery of APP’s commitments.”
Looking to its sister company GAR, APP is hoping that its not-inconsequential investments in greenery will eventually pay off. GAR, which has forgone development of forested plantations in Indonesian New Guinea and won applause for compliance with its policy to date, has already seen some benefits, including a $500 million loan and returning customers. In January it was the only palm oil company spared of divestment by Storebrand, one of Norway’s largest life insurance and pension savings companies, which dumped holdings in 11 other producers.
“Policies that protect forests and peatland can only be economically viable if there is market recognition for the businesses that invest resources in them,” said Aida Greenbury, Managing Director of Sustainability and Stakeholder Engagement at APP.
Whether or not buyers return fast enough for APP to justify its commitment to shareholders, the process of implementing its policy have raised some issues with implications that extend well beyond the company and its suppliers. For example, one of the breaches reported by local NGOs turned out to be the result of an overlapping permit. The Ministry of Forestry—a central government institution—had granted the land to an APP supplier, but a local district agency had given a concession for the same area to an unrelated palm oil company, which cleared the forest. Overlapping concessions are a widespread problem in Indonesia, making it difficult to assign responsibility for, and therefore address, issues like deforestation and haze-causing peat fires.
In another case, APP is negotiating with a conflict with a community that wants to clear-fell carbon-dense swamp forest that lies within a pulpwood concession. APP says it wants to preserve the forest as part of its forest policy but the community won’t agree to a swap for an equivalent area of non-forested land. If the community moves forward, APP fears it will breach its moratorium. Issues like encroachment and illegal logging are also readily apparent. With its public commitment, APP now has a strong an incentive to address these issues, much like the Indonesian government after signing its emissions reductions pact with Norway and its nationwide moratorium on new forestry permits across millions of hectares of forests and peatlands.
Clarifying issues like these will help push the private sector and the Indonesian government to finally addressing the problems underlying deforestation in the country.
Illegal encroachment into the Giam Siak Kecil-Bukit Batu peat forest landscape for oil palm development.
Market transformation
But if APP’s task is daunting, a commitment made late last year by Wilmar looks almost insurmountable. Wilmar is easily the world’s largest palm oil company, accounting for roughly 45 percent of palm oil trade and buying from up to 80 percent of the world’s palm oil companies. Therefore its decision in December to establish a policy that goes even beyond that signed by APP is potentially transformative of an entire industry (APP represents less than 5 percent of the global pulp and paper market). If Wilmar successfully implements the policy, it could truly mean that zero deforestation becomes the standard for palm oil production.
“Few companies dominant their sectors the way Wilmar dominates palm oil, controlling 45 percent of global trade. Today’s announcement by itself transforms the industry,” said Poynton in a statement issued when the policy was made public. “It dwarfs in ambition any previous joint commitment in the sector and raises the bar for responsible global agricultural production. We commend Wilmar for their strong new policy, and now is the time for transparent and verifiable implementation.”
While the world waits to see whether Wilmar will be able to implement its commitment, GAR and APP are now three and one year into their commitments respectively and confidence in their progress has grown. These policies may move others to action. For example, APP’s biggest customer, APRIL, announced a forest policy in late January. While it still substantially weaker than APP’s policy, the commitment raises the possibility of sweeping change across the forestry sector. Environmentalists hope that once big companies view forest policies as being in their best interest, they’ll push for establishment and better enforcement of environmental laws that could rein in some of the worst actors.
Already this is happening. APP is asking for the Indonesian government’s help with issues like encroachment and overlapping permits. Aida Greenbury says it wants the government enforce the law – a thought most environmentalists would have never conceived coming from APP just a year ago.
“We need to make sure that the conservation area in our concession, or inside our suppliers’ concessions stays intact,” she said. If there is any encroachment by the local community, we need to be able to engage them… But our action is also very limited, we can report it to the authorities but that’s about it.
“If we want to save our forests, we need the government’s help on these issues.”
Block of Indonesian rainforest.
A New Leaf in the Rainforest: Longtime Villain Vows Reform – Yale e360
Related articles
Corporations, conservation, and the green movement
(10/21/2010) The image of rainforests being torn down by giant bulldozers, felled by chainsaw-wielding loggers, and torched by large-scale developers has never been more poignant. Corporations have today replaced small-scale farmers as the prime drivers of deforestation, a shift that has critical implications for conservation. Until recently deforestation has been driven mostly by poverty—poor people in developing countries clearing forests or depleting other natural resources as they struggle to feed their families. Government policies in the ’60s, ’70s, and ’80s had a multiplier effect, subsidizing agricultural expansion through low-interest loans, infrastructure projects, and ambitious colonization schemes, especially in the Amazon and Indonesia. But over the past two decades, this has changed in many countries due to rural depopulation, a decline in state-sponsored development projects, the rise of globalized financial markets, and a worldwide commodity boom. Deforestation, overfishing, and other forms of environmental degradation are now primarily the result of corporations feeding demand from international consumers. While industrial actors exploit resources more efficiently and cause widespread environmental damage, they also are more sensitive to pressure from consumers and environmental groups. Thus in recent years, it has become easier—and more ethical—for green groups to go after corporations than after poor farmers.
How Greenpeace changes big business
(07/22/2010) Tropical deforestation claimed roughly 13 million hectares of forest per year during the first half of this decade, about the same rate of loss as the 1990s. But while the overall numbers have remained relatively constant, they mask a transition of great significance: a shift from poverty-driven to industry-driven deforestation and geographic consolidation of where deforestation occurs. These changes have important implications for efforts to protect the world’s remaining tropical forests in that environmental groups now have identifiable targets that may be more responsive to pressure on environmental concerns than tens of millions of impoverished rural farmers. In other words, activists have more leverage than ever to impact corporate behavior as it relates to deforestation. A prime example of this power is evident in a string of successful Greenpeace campaigns, which have targeted some of the largest drivers of deforestation, including the palm oil industry in Indonesia and Malaysia and the soy and cattle industries in the Brazilian Amazon. The campaigns have shared a common approach: target large, conspicuous consumer-facing companies that sell in western markets.
Changing drivers of deforestation provide new opportunities for conservation
(12/09/2009) Tropical deforestation claimed roughly 13 million hectares of forest per year during the first half of this decade, about the same rate of loss as the 1990s. But while the overall numbers have remained relatively constant, they mask a transition of great significance: a shift from poverty-driven to industry-driven deforestation and geographic consolidation of where deforestation occurs. These changes have important implications for efforts to protect the world’s remaining tropical forests in that environmental lobby groups now have identifiable targets that may be more responsive to pressure on environmental concerns than tens of millions of impoverished rural farmers. In other words, activists have more leverage than ever to impact corporate behavior as it relates to deforestation.
In absence of measures to address consumption, REDD may fail to protect forests
(12/02/2009) Rising demand for timber and agricultural products could work against a proposed initiative to reduce emissions from deforestation and degradation (REDD), warns a new report from the Environmental Investigation Agency (EIA). The briefing, Putting the Brakes on Drivers of Forest Destruction: A Shared Responsibility, says that investment in REDD will not be enough to protect forests if the underlying drivers of deforestation — namely consumption — are not addressed. It urges negotiators to re-insert critical text that has been dropped from the working text on REDD ahead of next week’s climate change conferences in Copenhagen.
In absence of measures to address consumption, REDD may fail to protect forests
(12/02/2009) Rising demand for timber and agricultural products could work against a proposed initiative to reduce emissions from deforestation and degradation (REDD), warns a new report from the Environmental Investigation Agency (EIA). The briefing, Putting the Brakes on Drivers of Forest Destruction: A Shared Responsibility, says that investment in REDD will not be enough to protect forests if the underlying drivers of deforestation — namely consumption — are not addressed. It urges negotiators to re-insert critical text that has been dropped from the working text on REDD ahead of next week’s climate change conferences in Copenhagen.
Shift from poverty-driven to industry-driven deforestation may help conservation
(08/06/2008) A shift from poverty-driven deforestation to industry-driven deforestation in the tropics may offer new opportunities for forest conservation, argues a new paper published in the journal Trends in Ecology & Evolution. Citing research showing a transition in the forces driving tropical forest destruction, Rhett A, Butler of mongabay.com, a tropical forest web site, and William F. Laurance of the Smithsonian Tropical Research Institute in Panama suggest that the “industrialization” of deforestation provides environmental lobby groups with identifiable targets that may be more responsive to pressure on environmental concerns than tens of millions of impoverished rural farmers.
