Mongabay| 13 March 2024
We're razing forests for palm oil plantations again
Deforestation by the palm oil industry in Indonesia increased in 2023 for the second year in a row, bucking a decade of gradual decline, according to an analysis by technology consultancy TheTreeMap.
Palm oil companies in Indonesia, the world’s top producer of the commodity, cleared 30,000 hectares (about 74,100 acres) of forest last year to make way for plantations, up from 22,000 hectares (54,400 acres) in 2022. These increases mark the end of a declining trend that began after the record 227,000 hectares (561,000 acres) — an area nearly twice the size of Los Angeles — of deforestation in 2012.
France-based TheTreeMap used plantation concession data from Greenpeace to identify 53 companies behind the plantation expansion and resulting deforestation, of which 20 had cleared carbon-rich peatlands.
The single biggest deforester was the company Ciliandry Anky Abadi (CAA), whose three subsidiaries deforested 2,302 hectares (5,688 acres) across their concessions.
A recent investigation by The Gecko Project has linked CAA to Indonesian conglomerate First Resources, a member of the Roundtable on Sustainable Palm Oil (RSPO), the world’s largest association for ethical palm oil production. The investigation alleges that First Resources used “shadow companies” to circumvent sustainability standards while still presenting an image of environmental accountability as it adopted a zero-deforestation pledge in 2015.
According to the investigation, companies controlled by the group have cleared more than 95,000 hectares (235,000 acres) of forest since First Resources announced its zero-deforestation pledge.
TheTreeMap also identified deforestation in the concessions of a group of companies known as New Borneo Agri (NBA) or the Sulaidy Group, also allegedly linked to First Resources. These purported ties led to a complaint being lodged against First Resources at the RSPO in 2021.
In the latest development in the case, in January this year a coalition of Indonesian civil society organizations submitted further allegations against First Resources, using fresh evidence collected by The Gecko Project’s investigation.
“Documents obtained in the course of The Gecko Project’s investigation provide strong evidence that First Resources Ltd. is in breach of the current RSPO Group Membership rules which require the compulsory registration of corporate groups under one membership,” the coalition said.
The ongoing complaint against First Resources is the first to test the robustness of the 2020 RSPO Membership Rules, and is still in the deliberation phase, which means a formal investigation hasn’t yet commenced.
“It is hoped the new evidence will be considered by the Independent Investigator in their forthcoming investigation,” the CSOs said.
First Resources has denied operating any shadow companies.
“It is pivotal for us to highlight factual inaccuracies in the report, and we would like to state that First Resources does not have any ownership stake or hold any management roles in CAA and NBA/Sulaidy Group,” the company told Mongabay in an email.
“First Resources has not purchased any palm oil products from CAA and NBA/Sulaidy Group, and will not buy from any company that is not in compliance with our Policy on Sustainable Palm Oil. Therefore, First Resources cannot be held accountable for the actions or inactions of CAA or NBA/Sulaidy Group.”
Responding to the multiple complaints at the RSPO, First Resources said it remains fully cooperative throughout the process.
“Furthermore, it is crucial to convey to our stakeholders that this process will now undergo an independent investigation,” the company said. “This step is taken to ensure a thorough, fair, and unbiased examination of the matter at hand. Thus, First Resources kindly request all parties to respect the ongoing process and await the result before drawing conclusions or making any claims.”
A fifth of total national emissions
Zero-deforestation pledges like those made by First Resources have been credited with the decade-long decline in deforestation driven by oil palm plantations. Known in the industry as NDPE policies, for “no deforestation, no peat, no exploitation,” they’ve been widely adopted by producers, traders and consumers of palm oil following public pressure and campaigns by environmental NGOs and consumer groups.
Historically, deforestation for plantations in Indonesia was concentrated on the island of Sumatra, which today is the country’s palm oil heartland. But the surge in deforestation in the past two years has been mostly on the islands of Indonesian Borneo and Papua.
Crucially, a third of the 2023 deforestation, 10,787 hectares (26,655 acres), occurred on peatlands, a carbon-rich landscape that, when cleared and drained, becomes highly susceptible to fires. These can burn for weeks on end, fueled by the combustible peat soil, releasing vast volumes of greenhouse gases in the process.
Data from the Center for International Forestry Research (CIFOR) show that oil palm plantations were the largest contributor to deforestation in Indonesia between 2021 and 2022, resulting in annual GHG emissions of 200 million metric ton.
Indonesia’s total emissions for 2022, not including from the land-use sector that covers plantations, was 1,240 million metric ton, a record high, according to data from the European Commission.
“So emissions from the palm oil [industry] is around a fifth of Indonesia’s emissions,” said Herry Purnomo, CIFOR senior scientist and deputy country director.
He said the challenge that the industry faces at the moment is how to reduce its emissions through protecting forests while at the same time developing the economy of palm oil-producing regions in Indonesia. To start tackling this question, CIFOR has developed a platform called the Simulation of Indonesian Palm Oil Sustainability (SIPOS), which allows users to assess the trade-off between economic development, emissions reductions, and social benefits.
The platform can calculate the amount of emissions produced by the plantation industry, and the increase in emissions for a given increase in production output and income for smallholder farmers. The identified increase in emissions can then be offset or even reduced through various interventions, such as a moratorium on peat and forest clearance, boosting the productivity of smallholders, or buying carbon credits.
EU deforestation regulation
Beni Okarda, a senior research officer at CIFOR, said that the SIPOS platform could also be used by stakeholders to measure the impact of the European Union regulation on deforestation-free products, also known as the EUDR.
The recently adopted law bans imports into the EU of agricultural products that come from deforestation and illegal sources, with the aim of ensuring that products consumed within the EU market aren’t contributing to deforestation or forest degradation anywhere in the world since 2020.
The law applies to seven commodities — beef, cocoa, coffee, palm oil, rubber, soy and wood — and the producers and traders of these commodities have to carry out due diligence throughout their supply chains before being allowed to trade these products in the EU market.
In Indonesia, there are concerns that the regulation will disproportionately affect smallholder oil palm farmers, who account for a significant share of the country’s total palm oil production. Abetnego Tarigan, the deputy for human development in the office of the president’s chief of staff, cited government data showing that 15.7 million independent smallholders would have their livelihoods affected by the EUDR.
CIFOR’s Herry said Indonesia could actually benefit from the EUDR, but only if the country addresses the issues still plaguing the industry, such as illegal plantations in forest areas and the ongoing rate of deforestation. He noted that the cutoff date of 2020 makes it easy for Indonesia to comply, given that only 1% of oil palm production in Indonesia since then has taken place on deforested land, according to CIFOR data. This compares with 14% since 2010, and 54% from 1995 to 2000.
“We can achieve sustainable palm oil,” Herry said. “It’s OK to still have lots of work to do, seeing as how other countries aren’t much better than us [on sustainable palm oil]. So we have to be confident since we have achieved a lot, such as declining deforestation.”
