Meaningful partnerships to manage our resources wisely

By Fitrian Ardiansyah, published in Coal Asia, November 23 – December 15, 2013, page 142-143

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_NovDec2013

CoalAsia_NovDec2013_Meaningful partnership

With the alarming global challenges in the forms of climate change, natural resources depletion, environmental degradation, financial crisis, extreme poverty and social inequality, it is more than relevant now for countries and institutions around the world to find new and innovative solutions.

Some scholars have calculated that if human and industrial activities are set to continue with their current trend, the associated impacts resulting from respected activities may push our planet close to its ‘tipping point’, and if particular key environmental factors are measured, the impacts can move the present situation beyond the globally known ‘planetary boundaries’.

The planetary boundaries, as defined by reputable scientists like Professors Dave Griggs and Will Steffen, are a safe operating space for humanity, which are identified and quantified so that human activities can move forward without causing unacceptable environmental changes.

These boundaries include biodiversity loss, atmospheric aerosol loading, chemical pollution, climate change, ocean acidification, stratospheric ozone depletion, nitrogen and phosphorous cycles, global freshwater use and change in land use.

Since most changes in ecosystems are asymmetrical in nature, as defined in these planetary boundaries, once the impacts push our planet to reach its ‘tipping point’, it may be too late for humanity to formulate and implement actions to address these challenges.

One clear example is the anthropogenic climate change that has affected and will continue to affect the global world. A recent report by the Nobel Prize winning Intergovernmental Panel on Climate Change projects that small-island and archipelagic nations, including countries in Southeast Asia, and their communities and ecosystems are among the most vulnerable.

Some scholars argue that we have witnessed the early signs of this change including a significant increase in climate related disasters such as extreme weather events, flooding, land sliding, drought, and fires and haze.

Such disasters will put further pressures to our already degraded environment due to decades of natural resources overexploitation and environmental degradation, among others, as a result of destructive and illegal logging, expansion of infrastructure and agriculture, and mining extraction activities.

Therefore, to find new and innovative solutions may require us to substantially reform our current development paths, for instance, by rethinking the overall economic growth, advancing social equity and ensuring environmental protection at all levels.

It is clear that to undertake such reforms, both industrial and developing countries need to come up with additional and adequate financial and technological resources. A country or an institution cannot do these reforms individually. Existing partnerships have to be strengthened and new and creative platforms of partnerships need to be explored and promoted.

With the current global economic and financial situation, no individual countries have sufficient financial muscles to address the global environmental challenges, without other countries to complement their actions.

In fact, hundreds of multinational corporations may have financial capitals which are more than the gross domestic products of most nations in the world.

This means that when it comes to addressing environmental issues and promoting sustainable management of our remaining natural resources, global partnerships need to be forged not only between the developed and developing nations, among developing countries, but also between state and non-state actors, more particularly with the private sector and key communities.

Such partnerships, if based on common but differentiated responsibilities and respective capabilities, can open doors of new opportunities which are crucial to address global environmental challenges and eventually achieve the goals of green economy and sustainable development.

From the region of Southeast Asia, the Heart of Borneo (HoB) initiative can be considered as one of the platforms which can be a good test for the countries who support it – i.e. Indonesia, Malaysia and Brunei – to show that conserving and sustainably managing 22 million hectares of important forest and terrestrial ecosystems are not only possible but also economically and socially beneficial.

The three countries in this region which share the same island of Borneo and its remaining valuable terrestrial resources agree that no single country can deal with difficult environmental problems, such as large scale and widespread deforestation and forest degradation, and bring about sustainable solution in this island.

As a result, pledges and commitments have been announced by these countries and stipulated in key documents including the HoB Strategic Plan of Action.

Civil society groups have also taken part in this initiative by supporting some programs and efforts such as through on the ground conservation actions and community empowerment.

Although driven by the three governments and assisted by non-governmental organizations (NGOs), it appears that the HoB initiative can only work properly and achieve its goal if the private sector takes a major part in this initiative.

With mining exploitation and exploration, logging concessions and plantation development as key sectors influencing the development of the island, the involvement of actors from this sector as deemed crucial.

A recent initiative taken by the Government of Sabah State in Malaysia in launching its Forever Sabah initiative to support the HoB can be seen as an effort to promote a wide-range of partnership among key stakeholders influential in land use management in the HoB’s part of that state.

This effort, for instance, has brought together an energy company, that has a plan to increase renewable energy intake which could lead to further protection of forests, along with an award winning community based eco-tourism cooperative that will benefit from further conservation of fragile ecosystems, and plantation companies that try to restore forest important for wildlife corridors as an encouraged under the Roundtable on Sustainable Palm Oil.

An NGO focusing on empowering indigenous and local communities through a model of kampong universities that provides useful knowledge and skills for natural resource management, and other key stakeholders, also have made strategic contributions to this initiative.

Similar efforts have taken place in the Indonesian part of the HoB, including in West Kalimantan province, particularly in Kapuas Hulu district, and in East Kalimantan province (Kutai Barat district). Both areas are striving to achieve an ideal goal of green economic development at local level by promoting a platform of collaborative actions among different stakeholders.

In another part of the world, such as the Amazon region, a multi-partners work that launched a 10-year initiative to preserve 12 percent, or 60 million hectares, of the Brazilian Amazon under the Amazon Region Protected Area can be used as a showcase. Other similar efforts in the Amazon have now ensured further protection and improved management of 80 percent of the Amazon’s original forest and establishing hundreds of millions of conservation fund.

Promoting such partnership at that large-scale requires not only political willingness but also concrete incentives and practical solutions on the ground. Otherwise, key actors and stakeholders may not necessarily have the ownership and be willing to support the agenda coming from the partnership.

It is of course still a long way to go for these partnership models to shine.

The involvement of non-state actors, in the government led initiative, however, displays that different actors’ efforts can complement each other.

The private sector and civil society, for example, can be actively involved in addressing the challenge in changing the unsustainable production and consumption patterns, while the governments can provide and improve enabling conditions, namely good economic policies and governance.

If such partnerships can be maintained, enhanced and magnified, one can dream and hope about the bright future of our human civilization.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award.

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The private sector and ‘green’ transformation

By Fitrian Ardiansyah, published in Coal Asia, July 19 – August 17, 2013, page 82-83

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_JulyAugust2013

CoalAsia_JulyAugust2013_privatesector

With growing environmental and social problems faced by the society resulting from economic activities, there is a clear need for substantive solutions that cut to the heart of the economy at different levels. The private sector, as a key actor involved in economic activities, hence has a significant role to push for the transformation of the economy into greener and sustainable.

Indonesia is currently at the forefront of many sustainability issues. Deforestation, depletion of natural resources, water and air pollution, flooding and drought, are among huge challenges that the country has to deal with.

The private sector, including investors and corporates, has often been perceived as one of the main culprits causing environmental problems. In the recent event of forest and land fires in Sumatra, an analysis by World Resources Institute indicated the occurrence of fires in lands belong to a number of plantation and forestry companies. The mud flow in East Java is also an example in which the public view that a particular corporation is the sole cause of the disaster.

The private sector, nevertheless, has also been commencing initiatives with other stakeholders, including the government and civil society groups, to address environmental issues and provide immediate and long-term solutions.

At the global level, platforms such as the Forest Stewardship Council that promotes certification for sustainable forest management and the Roundtable on Sustainable Palm Oil that promotes the production and use of certified sustainable palm oil have emerged.

According to the 2012 Association of Chartered Certified Accountants report, there has been a significant increase in the application of socially responsible investment by institutional investors around the world and over 1,000 investors representing US$32 trillion has signed up to the UN Principles for Responsible Investment.

In Indonesia, although there is yet to be a comprehensive assessment on the private sector’s sustainable activities, it appears there are sections of the sector which have seen sustainability as business opportunity.

Indonesian corporations linked with foreign investors or markets which have stricter environmental regulations or requirements, for instance, may likely to promote and adopt sustainability standards for their operations or could face further pressures and negative consequences.

Pressures and demands from the Indonesian government and its society for greener economy and development have also sent signals to the private sector that destructive operations which result in negative environmental impacts need to be mitigated or stopped.

Local social conflicts could rise due to the perceived negative risks and unwanted impacts resulting from particular business activities, such as from mining, oil and gas extraction, infrastructure development, plantation establishment, logging operations, buildings and settlements.

Avoiding the halt of particular business activities resulting from tensions and conflicts could mean helping investors and corporates to save unwanted costs which could reach millions of dollars.

Creating incentives and rewards can also trigger more active involvement of the private sector to promote, develop and implement sustainable practices.

The latest increase in the tariff for renewable energy in Indonesia (i.e. geothermal, biomass, solar), for example, has created a better level of playing fields for renewable energy investors and corporates. This is expected to further attract larger investments from the private sector which eventually help reducing the country’s dependency on fossil fuels, providing wider and accessible energy for its citizens, and reducing greenhouse gas emissions.

Incentives created for reducing emissions from deforestation have also begun to attract investors and corporates to be pioneers in forest and peat land conservation and restoration. If conducted responsibly, taking into account the needs and rights of local and indigenous peoples, the private sector can demonstrate that this type of actions can produce benefits for the economy, environment and communities.

Such responsible approach is not an easy task to do. The private sector may need help from a variety of groups, including the government and civil society, to understand the complexity of the issues, calculate the costs and initial investment associated with the approach, and be patient but persistent in undertaking the journey towards sustainability.

Multi-stakeholders platforms built collaboratively by the private sector, the government and civil society groups to provide business solutions for sustainability issues can also improve the level of trusts among these actors, especially if transparent discussions and exchange of knowledge take place regularly.

Regardless of the growing number of companies taking part in sustainability platforms, it seems that the current and future environmental problems may be too big to be solved by even “the progressives” and “champions” of the private sector. There is definitely a need for a critical mass of investors and corporates so that there will not be any significant “bootleggers” and “free-riders”.

A significant and larger number of investors and corporates which promote and undertake sustainable practices can reduce costs and investments in greening the economy. A critical mass of the private sector involving in sustainability means that “the champions” of the industry will not be isolated just because they implement sustainable practices.

To achieve such situation, the private sector needs to pro-actively engage the government and seek for the support from the civil society and the media to push for better corporate governance, in which transparency is promoted, corruptions are seriously dealt with and a level of playing field is created.

According to the Global Compact Network Indonesia, good governance is a critical enabling factor. Good governance principles, such as transparency, accountability and responsiveness, therefore, should be promoted as fundamental values to guide efforts to achieve sustainability.

The private sector can further lead the way by improving its internal policies and operations, and creating funds to support such actions. The private sector may require innovation in its approach at different levels so that sustainable development can be carried out in a cost-effective and efficient way.

There is, however, an important component of education and outreach to the public and consumers. Consumers need to understand that efforts to operate in a sustainable manner require their support. Hence, identification of products or services which are really delivered in a responsible and sustainable way is a key.

Honest, clear and accessible information is vital to further promote green products and services. To achieve this, the private sector needs to undertake efforts along the supply chain.

When the private sector can push for both sustainable production and consumption, green transformation can then be considered as “effectively running”. If this is the case, many will likely applaud the contribution of the private sector, particularly toward achieving a healthier and liveable planet.

In a total economic value term, increased investors and corporates focus on sustainability not only are creating better products and services but also fundamentally addressing challenges of natural resource depletion and environmental pollution.

The journey towards greener economy may be long and uneasy, but if the private sector recognizes itself as a key stakeholder and is willing to collaboratively lead the way, this journey may yield immediate benefits and better outcomes in the future.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award.

Indonesia’s fires: a hazy challenge for Southeast Asia

Published in East Asia Forum, July 8th, 2013
Author: Fitrian Ardiansyah, ANU,Original link: http://www.eastasiaforum.org/2013/07/08/indonesias-fires-a-hazy-challenge-for-southeast-asia/

In June 2013, Forest and land fires caused choking smog and transboundary haze in Southeast Asia. Indices of air pollution in Singapore, the southern Malaysia peninsula, and Indonesia’s Riau province had reached dangerous levels.

Smoke is seen while emanating from the grounds of a private palm oil concession company, formerly a peatland forest area, on 29 June 2013 in the Kampar district (Riau province), on Sumatra island. (Photo: AAP)

Indonesian President Susilo Bambang Yudhoyono has apologised to Malaysia and Singapore for this dangerous hazard, stating that his administration is tackling the problem seriously. The National Agency for Disaster Management, for instance, has been given Rp25 billion (US$2.725 million) to create artificial rain to extinguish the fires.

Serious forest and land fires, although occurring in many countries, reoccur regularly in Indonesia, mainly in the islands of Sumatra and Borneo (in 1982–83, 1987, 1991, 1994, 1997–98, 2005, 2006–07, 2010 and now in 2013).

The official data from Indonesia’s forestry ministry show that 339 hotspots were found in Riau during the period of 14–17 June. The current number of hotspots may still be lower than at the peak of massive fires in times past, where the amount of hotspots reached 25,000 to 35,000 in a month — the highest in August 1997 when 37,938 were counted. But the Indonesian Agency for Meteorology, Climatology and Geophysics predicted that due to a weather anomaly trapping smog and haze above Singapore, southern Malaysia and Riau, the accumulation of haze in that area was more severe than usual.

Conventional suppression approaches — extinguishing fires after they occur — are likely to be inadequate. Artificial rain, water bombing and firefighting on the ground may tackle the immediate symptoms but not necessarily the causes.

In the past, haze and massive forest and land fires were usually caused by clearing and preparing the lands with fire, to develop plantations, agriculture and other land-use activities.

A recent analysis conducted by the World Resources Institute appears to show a similar pattern of causality. The analysis indicates that in the period of 12–20 June 2013, 48 per cent of fires occurred outside of land concessions, 27 per cent in timber plantations, 20 per cent in oil palm plantations, 4 per cent in protected areas and 1 per cent in logging concessions. A significant number of fires happening inside timber and oil palm plantations and other land uses — in other words, outside of concessions, and so likely associated with activities for clearing further land for agriculture/plantation — suggests that actions in addressing forest and peat conversion, as well as forest and land fires in Indonesia, are yet to address the root causes of the problems.

Indonesia has enacted policy placing a moratorium on forest conversion. But the recent fires could mean that policy implementation is lacking, including when it comes to prosecuting offenders, from low-level farmers up to big-plantation owners or even the financiers. Deforestation and peat conversion — for logging or to establish plantations and agriculture lands — very often leads to fires during the dry months, and this is why effectively enforcing the moratorium is essential.

There is need for a breakthrough in programs, cutting to the heart of the political economy of land uses at different levels, to fundamentally transform and positively influence land users’ behaviour in managing their lands.

It is a common perception among land users that using fires is one of the cheapest land preparation methods available. It is therefore important for the government to equip its policies with the appropriate incentives and disincentives; operational and technical guidelines; a clear institutional framework with a strong mandate; and a system for implementation, monitoring and enforcement.

Some land-use actors have used loopholes arising from unclear policies and poor coordination between ministries and different layers of governments, to gain an unfair advantage. If this continues, deforestation, peat lands conversion and fires may well become an annual catastrophe for Southeast Asia. This can be alleviated if investors and private land-use workers cooperate with authorities and other stakeholders to ensure the implementation and enforcement of responsible and sustainable practices, including conversion moratoriums and zero-burning activities.

Regarding law enforcement, and changing corporate practices on the ground, it is clear that regional collaboration among, at least, Indonesia, Malaysia and Singapore is urgently needed. Such collaboration should cover not only government but the private sector and civil society groups too.

Concessions and plantations are owned and financed by Indonesians, Malaysians, Singaporeans and others. Serious and proactive involvement and support for sustainable practices, by promoting, adopting and implementing zero-burning activities, as well as helping smallholders and local farmers to follow suit, are key elements of success in addressing Southeast Asia’s haze challenge. Financial institutions in the three countries and beyond, for instance, can develop robust investment screening policies to discourage high-risk investment patterns leading to deforestation and fires. Substantive investments, financial support and technical capacity need to be provided for small holders and poor farmers so that they have options to adopt zero-burning practices.

The public and consumers in Indonesia, Malaysia and Singapore can further push companies to adopt sustainable practices by only purchasing products (palm oil, timber and the like) which have been produced in a sustainable manner.

Southeast Asian people, especially the citizens in these three countries, have every right to breathe fresh air and demand their governments and corporations act seriously, urgently and transparently so that responsible and sustainable practices become the norms. If such efforts can be done, this could send a strong signal to the market and governments that the people in the region will not tolerate environmental disasters now and in the future.

Fitrian Ardiansyah is a climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of the Australian Leadership Award and Allison Sudradjat Award.

In search for agreed land use solutions

Published in COAL ASIA MAGAZINE, OPINION, SEPTEMBER 22-OCTOBER 22, 2012, PAGE 102-103

by Fitrian Ardiansyah

To see the pdf version, please click: Opinion Fitrian Ardiansyah_CoalAsia_Sep2012

Searching for agreed sustainable land-use management in a developing country like Indonesia is a balancing act. The two recent government regulations issued this year, namely number 60 and 61, provide ample proof on this issue.

As a tropical forest developing nation, rapid development of forests – for forestry, agriculture, infrastructure or mining activities – in Indonesia has led not only to economic growth but also to environmental degradation and greenhouse gas (GHG) emissions.

If no immediate actions taken, the unsustainable economic growth may push the already fragile ecosystems in this country close to its ‘tipping point’ – a threshold in which damages to ecosystems are irreversible and causing unacceptable environmental changes.

This country is home to peatlands, savannas and the third largest of the world’s tropical forests, which are considered among the most valuable ecosystems in the world.

Indonesia is hence considered as one of the mega-biodiversity countries. In the 2010 State of Biodiversity of Asia and the Pacific, however, the UN Environment Program (UNEP) ranked Indonesia second after Australia as having the most threatened plant and animal species in the region. This is due to, among other things, high rates of fragmentation and net loss of forests that have continued between 2000 and 2009.

In 2009, data from the Forestry Ministry show that Indonesia had 132.4 million hectares of forest estates (kawasan hutan) and out of these only 90.1 million hectares were covered by forest vegetation – of this roughly one-third was covered by primary forests, one-third by logged over areas and one-third by vegetation other than forest.

To address the ever declining state of the country’s forests, the Indonesian government has issued the moratorium of forest conversion in 2011 and introduced the overall REDD+ framework – that include efforts to reduce deforestation, forest degradation, conservation, sustainable management of forest and enhancement of forest carbon stock.

Implementing the moratorium, REDD+ and sustainable forest management is of course very challenging given the pressures coming from variety of sectors that have interests in forest and land use – sectors which, furthermore, are often regulated under different ministries and layers of government. These institutions are known to have issued overlapping policies on land use and land use changes, and influenced the issuance of different documents and maps of forest and land use.

These respected sectors are, nevertheless, crucial in the development of the economy of Indonesia. They are the main engine of this so-called emerging economy.

Commercial exploitation of natural forests began in 1967 and was one of the main drivers of the Indonesian economy since then. Billions of US dollars contributed from the export of forest products on a yearly basis consisting of plywood, sawn timber, and processed timber as well as pulp and paper, furniture and other processed timber products.

With regard to agriculture production, especially the palm oil sector, Indonesia in 2009 surpassed Malaysia to become the biggest producer of palm oil in the world, with production accelerating dramatically in recent years. Indonesia’s CPO (crude palm oil) exports and resultant revenues have increased significantly, from 3.8 million tons (valued at US$1 billion) in 1999 to 17.85 million tons in 2010 (US$10.03 billion).

The mining sector also contributes significantly to the country’s revenue. For instance, it is reported that the mining industry accounted for 10.8 percent of Indonesia’s GDP in 2009, with minerals and related products contributing one-fifth of the country’s total exports. This sector looks set to post strong average annual double-digit growth of 11.2 percent in real terms over the forecast period to reach US$149.8 billion in 2015.

To date, many scholars agree when it comes to land use change – including forest cover change – in Indonesia, forestry, palm oil, mining and infrastructure sectors are the most important and influential causes.

Given close association of these development sectors with land use and forest cover change, agreed and appropriate solutions need to be identified and reached so that economic development can still flourish while forest protection is ensured.

The issuance of the two government regulations – the Government Regulation (GR) No. 60 of 2012 on the amendment of No. 10 of 2010 on Procedures for Conversion of Allocation and Functions of Forest Areas and GR No. 61 of 2012 on the amendment of No. 24 of 2010 on Forest Area Utilization – has been perceived as an attempt by the Indonesian government to find such solutions.

As analyzed by one law firm (LGS) in its website, these two regulations have been issued to address a number of outstanding issues with the regulatory framework. This law firm argues that GR No. 60 of 2012 simplifies land replacement for permanent or limited production forests by removing the “adjacent to a forest” requirement, and GR No. 61 of 2012 is intended to provide certainty for borrow to use license holders, allow strategic industries to operate in forest areas, and reconcile conflicts with the Law No. 26 of 2007 on Spatial Planning Law.

There are always two sides of the coin. In the context of GR No. 60, the supporters of this regulation argue that this regulation improves legal certainty for the development activities, especially agriculture plantations, to take place.

This also ensures that plantation activities using particular forest estates need to replace these areas with the same size or bigger. The regulation, furthermore, puts the threshold of forests that cannot be converted in that particular estate (30 percent of the total area) and explicitly mentions about the importance of ensuring the environmental carrying capacity of the estate.

With regard to GR No. 61, this regulation offers improvement of legal certainty for particular mining activities which have been operated or obtain licenses in forest areas.

Many critics, however, claim that this regulation will only jeopardize the future sustainable forest management and forest protection in this country. Some environmental organizations refer to the fact that rapid expansion of oil palm plantations, for instance, has caused the conversion of a significant area of forests and peat lands.

These organizations are backed up by some scholarly studies including the one conducted in 2008 that estimated that palm oil development was responsible for a significant percentage of deforestation in Indonesia.

A similar accusation is labeled against the mining industry. A study conducted in 2000 argues that the development of mining will result in negative impacts including extensive land disturbance, loss of forest cover and habitat, contamination of rivers used for drinking water and food supplies, and increasing social conflict over access to mineral resources.

It is clear that regardless of the issuance these two regulations, conflicting claims and arguments will remain.

The role of the government is critical to ensure that land use processes and outputs resulting from these two regulations are synchronized with the efforts carried out by the process put in place under the moratorium of forest conversion that has resulted in one land use and forest cover map as well as the overall REDD+ process.

Without synergizing these two regulatory and substantive processes, Indonesia will miss the opportunity to provide legal certainty for both economic development and environmental protection.

As a country that has committed to sustainable development agenda, it is important that the country is not just focusing on economic performance but also on the environmental and social aspects of development. This means that the government needs to provide guidance and push for sustainable and responsible practices in the plantation and mining industry’s operations.

Many has argued that plantations and mining operations which overlap with Indonesia’s forests, especially overlaps with areas of high ecological values, have already caused significant impacts on biodiversity and ecosystems.

It is, therefore, important for the players in these sectors, particularly the private sector, to show that they are as much as responsible and willing to improve their practices for the better.

Indonesia is at the cross road in showing whether the country can develop its economy without further harming its environment.

These two recently issued regulations show once again the challenge in achieving that balancing act.

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Fitrian Ardiansyah

The writer is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award. He can be reached at fitrian.ardiansyah@anu.edu.au

Iniciativa de la Mesa Redonda sobre Aceite de Palma Sostenible: principios y criterios

By Fitrian Adiansyah, Andrew Ng, Si-Siew Lim, published in Palmas Journal, Vol. 28 No Especial, Tomo 2, 2007, pp. 297-318. For a full article (in Spanish) please click here: RSPO_Spanish_Palmas_Vol28_2007_FitrianArdiansyah

Resumen:

La Mesa Redonda sobre el Aceite de Palma Sostenible fue establecida el 8 de abril de 2004 bajo el Artículo 60 del Código Suizo con una estructura organizacional que garantiza una representación justa de sus protagonistas a través de toda la cadena de suministro. Su Secretariado tiene domicilio en Kuala Lampur, cuenta con 103 miembros ordinarios y 38 miembros afiliados (un total de 141 miembros a mayo 22 de 2006), lo que representa aproximadamente de 25 a 30% de la oferta global de aceite de palma. La Mesa Redonda sobre el Aceite de Palma Sostenible (RSPO, por su sigla en inglés), es reconocida como la principal fuente para las organizaciones ampliamente aceptadas y creíbles de aceite de palma. La Mesa Redonda o RSPO fue creada como una plataforma de múltiples protagonistas, participativa, incluyente, voluntaria y orientada hacia la acción que se convertiría en el vehículo de una discusión constructiva hacia un propósito común que es aquel de “promover el crecimiento y uso sostenible del aceite de palma a través de la cooperación dentro de la cadena de suministro y de un diálogo abierto con sus partes interesadas”. Con este propósito en mente, la RSPO ha logrado grandes pasos, tal como se puede ver por el interés en la misma, en los principios y criterios de la RSPO para el aceite de palma sostenible (P/C) y en otras iniciativas. Sin embargo, esto no quiere decir que la RSPO no ha estado libre de desafíos y problemas. Esta ponencia resalta los logros clave, su importancia para el comercio del aceite de palma y cómo la RSPO se ha convertido cada vez más en un símbolo de sostenibilidad con reconocimiento global para tener una industria sostenible del aceite de palma. Al rastrear los eventos clave y la cronología del desarrollo y la evolución, este documento tiene como objetivo presentar el contexto esencial sobre el argumento central para el curso actual de la RSPO, articulado a través de programas de acción y de la participación activa de los protagonistas. Aún se cuestiona la eficacia y la función de la RSPO entre los diferentes grupos de partes interesadas que participan en la misma como plataforma para tener un diálogo constructivo para la solución de los  problemas más difíciles que enfrenta la industria del aceite de palma. Sin embargo, por el solo hecho que la RSPO ofrece lo anterior, eso ha facilitado la comprensión de la industria del aceite de palma por parte de sus actores y críticos y ha sacado a relucir problemas enfrentados por aquellos que están impactados por el desarrollo del aceite de palma y la arista cortante en las acciones y el pensamiento sobre el aceite de palma sostenible en los años venideros.

Summary:

The Roundtable on Sustainable Palm Oil was established on 8 April 2004 under Article 60 of the Swiss Civil Code with a governance structure that ensures fair representation of all stakeholders throughout the entire supply chain. With a Secretariat based in Kuala Lumpur, 103 Ordinary and 38 Affiliate Members (totalling 141 total members as of 22 May 2006), that translates to approximately 25%-30% of the global palm oil supply, RSPO is recognised as the primary source for the most widely accepted and credible organisation for sustainable palm oil. The Roundtable on Sustainable Palm Oil or RSPO was formed on the basis a multi-stakeholder, participatory, inclusive, voluntary and action oriented platform that would be the vehicle for the constructive discussion towards a common goal of “promoting the growth and use of sustainable palm oil through co-operation within the supply chain and open dialogue with its stakeholders”. To this end, RSPO has made big strides, as demonstrated by the level of interest in RSPO, the RSPO Principles & Criteria for Sustainable Palm Oil Production (P&C) and other initiatives. However, RSPO has not been without its fair share of challenges and setbacks. This paper would highlight the key achievements, their significance to the palm oil trade and how RSPO is steadily becoming a globally recognised symbol for sustainability in the palm oil industry. Tracing key events and the chronology of RSPO’s development and evolution, this paper lays down the essential context for the central argument for the present course of RSPO, articulated through programmes of action and active engagement of stakeholders. While the jury is still out as to the effectiveness and role of RSPO amongst all the different stakeholder groups present in RSPO, the unique platform for constructive dialogue towards addressing some of the most difficult problems posed to the palm oil industry. The very fact RSPO provides this has facilitated better understanding of the palm oil industry by stakeholders and critiques, brought to light issues faced by those impacted by palm oil development and will bring about the cutting edge in thinking and action on sustainable palm oil for some time to come.

New lending rule helps protect our environment

The Jakarta Post, Opinion, June 09, 2005, Jan Willem van Gelder and Fitrian Ardiansyah, Amsterdam/Jakarta
 

Let us hail the new regulation issued by the central bank (Bank Indonesia or BI), which demands that banks assess their corporate clients, does not do enough to protect the environment (BI Regulation No. 7/2/PBI/2005, concerning Asset Quality Rating for Commercial Banks).

This can be seen as a promising first step to stimulate the financial sector to help save the environment as banks play important roles in financing the forestry, plantation, mining and other important sectors related to environmental issues.

Few countries around the world have such an abundance of natural resources at their disposal as Indonesia has. Various forest products, oil and gas, minerals and agricultural commodities: all these are produced in large quantities in Indonesia.

By exporting these commodities, Indonesia is earning valuable foreign currency — 56 percent of the export value was made up by the export of such commodities in 2003. These export earnings can theoretically be used to finance numerous development projects.

But reality speaks differently in Indonesia. While the abundance of commodities could be a blessing to all, for many Indonesians as well as for its natural environment it is nothing less than a curse. The United Nations Food and Agriculture Organization (FAO) said Indonesia was among the countries that suffered the greatest losses of natural forests.

Precious ecosystems get destabilized and their functions and services ultimately disappear, causing the demise of many wildlife species and valuable biodiversity as well as the loss of rights and means of living for indigenous and local communities dependent on extensive interaction forms of agriculture and forestry.

The question now becomes, why is this abundance of commodities not bringing wealth to the country as a whole, and improving life for all the poor people?

There are many factors contributing to this. The insatiable international demand for Indonesian commodities stimulates a continuous increase in production capacity and exploitation of natural resources. Unfortunately, because of corruption and a weakly enforced judicial system, irresponsible corporate behavior is not controlled.

Many actors (e.g. producers, buyers, financiers, government officials) are involved in these processes and each carries its own responsibility and could contribute to a more responsible management of commodities.

We must not forget the other actors — banks and other financial institutions (FIs) — that play an indispensable role in supplying capital to commodity producing companies by providing loans or buying their shares.

In the past decade, for instance, more than US$10 billion was invested in the oil palm plantation sector by both national and foreign investors. In pulp and paper industries, the growth over the past decade involved an aggregate capital investment of approximately $12 billion.

But many of the loans poured into natural resource exploitation have become soured, thus bankrupting many Indonesian banks.

It took the Indonesian government several years and billions of dollars in public money to get straighten out these bad loans and to reform the banking system. Learning lessons from this episode and trying to prevent these events from happening again therefore, is of the utmost importance. If not, problems with bad loans and the financing of non-sustainable forms of commodity production will resurface.

It is thus very important that BI, the Indonesian banks’ supervisor, issue a regulation that gives directions to banks on how they should rate the quality of their loans. The regulation lists a number of aspects of the client’s business, which need to be assessed by the bank. When a client scores negatively on one or more aspects, the bank runs a large risk of ending up with a non-performing loan when it lends to this client.

What is most significant here, is that BI explicitly lists “measures taken by the debtor to conserve the environment” as one of the issues that needs to be taken into account by the bank.

BI clearly acknowledges that companies that do not pay attention to their environmental behavior are more likely to become bad debtors and therefore should be avoided.

Outside Indonesia, several commercial banks have developed detailed forest, plantation and mining policies over the past few years. According to the policies, these banks strive to finance only companies which care for High Conservation Value Forests, minimize their environmental impacts and respect the rights and needs of local communities.

Building upon its existing regulation and information from overseas, BI has the opportunity to further develop world-class standards and procedures on assessing the social and environmental behavior of commodity-producing companies.

In addition, BI’s work can be strengthened by relevant ministerial agencies (i.e. the Ministry of the Environment, the Ministry of Forestry, etc.) and environmental and social organizations. They can contribute to the assessment of impacts on commodity producing sectors, as well as helping the identification of company initiatives that merit financing and those that need to first adjust their business plans and policies.

Avoiding future bad loans and banking crises as well as environmental destruction and social conflicts needs to be everyone’s mutual interest.

———–

Jan Willem van Gelder is a financial sector specialist with Profundo in the Netherlands. Fitrian Ardiansyah is a program coordinator for World Wide Fund for Nature (WWF) in Indonesia
 
 
 

 

Impact assessment on oil palm development

By Dr Asril Darussamin (Indonesian Palm Oil Commission), Fitrian Ardiansyah and Suhandri (WWF-Indonesia)

This paper is presented at the 2nd Roundtable Meeting on Sustainable Palm Oil, 6 October 2004, Jakarta.

Original link: http://www.rspo.org/files/pdf/RT2/Presentations/Impact%20Assessment%20on%20Oil%20Palm%20Development%20(IPOC%20&%20WWF).pdf

Please read the full paper here: Impact Assessment on Oil Palm Development (IPOC & WWF)

Summary:

As one of the leading representatives of the palm oil industry in Indonesia and a non-structural organisation under the Ministry of Agriculture, Komisi Minyak Sawit Indonesia (The Indonesian Palm Oil Commission or IPOC) saw the needs to deal with sustainable palm oil issues directly and was willing to find appropriate solutions for the problems. The aim of the organisation was to provide clear information, steps and guidelines, to its members (mostly industry players) and decision makers from the government, on the way to move forwards in implementing better management practices based on appropriate consideration of environmental and social aspects. The first step taken was to conduct a study that identifies the interaction and impacts of oil palm plantations on the environment. This study or assessment intended to obtain clear and sufficient knowledge on environmental issues relating to oil palm plantations including the conversion of HCVF and the loss of wildlife habitat. The next step was to find and formulate ‘best solutions’ that combine both interests of business and the environment. This kind of solutions hopefully will positively change the practices and image of the Indonesian palm oil industry. In taking these two steps, IPOC reaches out WWF-Indonesia for collaboration and assistance. In April 2004, an MoU basing the collaboration between these two organisations was signed by Dr. Delima Azahari (Chief of IPOC) and Dr. Mubariq Ahmad (Executive Director of WWF-Indonesia).

The overall objectives of this impact assessment were to acquire clear and sufficient data on the positive and negative impacts of oil palm plantations on forests and biodiversity in Indonesia and to find appropriate
solutions of the problems. These solutions would act as a starting point in showing the responsibilities of Indonesian palm oil industry and changing the practices and image of the industry. The specific objectives of this assessment were to identify and learn the impacts and interaction of oil palm plantations in Riau and West Kalimantan provinces on High Conservation Value Forest (HCVF) – inside and in the surrounding plantations – and to understand actions that have been or need to be taken to maintain or improve the quality of the HCVF. The findings would also be used to recommend any adjustments on existing sustainable palm oil criteria (including the one that is being developed by Proforest for RSPO/Roundtable on Sustainable Palm Oil).