Dialogue in Action: Deforestation-Free Commitments in Indonesia

By Jessica McGlyn

In response to the groundswell of pledges from multinational corporations, the Forests Dialogue launched its first of a series of field dialogues on understanding “deforestation-free” commitments on April 29 in Riau Province, Sumatra, Indonesia. The event, co-convened by the Indonesian Business Council for Sustainable Development (IBCSD), brought Indonesian communities, indigenous tribes, NGOs, companies and government representatives together with international organizations to discuss the many challenges and solutions to implementation.

As stated by Andika Putraditama of World Resources Institute, one of the co-chairs of the meeting: “A big challenge is that key stakeholders on the ground don’t interpret the goal [of deforestation-free] and how to get there in the same way. This dialogue helps us understand issues faced by the people who are implementing and are directly affected by the pledges. This comprehension will help us collaborate better to make deforestation-free a reality.”

Indonesia, and the Riau province in particular, has some of the highest deforestation rates in the world, and the devastating impact of forest loss and associated fires and peatland degradation on local communities, biodiversity and global greenhouse gas emissions has been well documented. Hundreds of corporations have made deforestation-free commitments of varying scopes within the last few years, a widely celebrated development. According to the Carbon Disclosure Project, the strongest company commitments include elements of traceability, legal compliance, social criteria, and protection of High Conservation Value and High Carbon Stock forests, as well as peatland.

However, uncertainty around indigenous and community rights to land and resources; overlapping permits and concessions; legal constraints to voluntary set-asides; lack of clarity around definitions and assessments; and weak governance and conflicting laws significantly complicate implementation.

As Rod Taylor of the World Wildlife Fund, a co-chair of the dialogue, said: “We need to understand, with all the complexity on the ground, that success isn’t going to happen overnight. It’s going to be a process.”

Challenges facing Indonesian suppliers

For consumer goods and retail companies that have made or are thinking about making commitments, it’s important to know some of the obstacles their Indonesian suppliers are facing in implementing deforestation-free policies. The suppliers are delineating and setting aside areas for conservation, but that’s only the beginning. The really hard work is to make sure those areas are effectively protected and not degraded by others.

“Encroachment” is in the eye of the beholder

Smallholder encroachment on forest management concessions is widespread. As just one illustrative example, dialogue participants met with local government officials at Tahura, a Forest Management Unit (FMU) legally designated for habitat conservation, protection of ecotourism, biodiversity and endangered species such as Sumatra tiger. The park is overrun by smallholders, many of whom have moved in from other districts to establish farms upon receiving permits from village leaders.

Currently, over 70 percent of the park is planted in palm oil and rubber plantations. The FMU managers engaged the district government and the National Ministry of Forestry and Environment to contest these permits. But resolution has not been reached on many of the land disputes, and they may have to go all the way to the Supreme Court to appeal.

Conversely, government agencies have routinely given concessions to pulp and paper, palm oil, and other companies for lands already occupied by indigenous peoples and communities. Highlighting this issue, dialogue participants met with the Sakai tribe, one of eight indigenous communities in Riau. Without consultation with or consent from the Sakai, the Ministry of Forestry allocated the forest land that the tribe has lived on since the 1930s to APP to convert into acacia and eucalyptus plantations.

Mr. Lontai, a member of the Sakai, stated: “We cannot get fish or food. We cannot get the honey from the sialang trees. The forests are used up, and we can’t go into [the company-designated conservation areas] to get timber for our houses. Life has become much harder for us.” When asked what they thought about deforestation-free commitments, members of the tribe expressed confusion as to the meaning of the term, saying that they had lost their forests long ago.

A fight without a referee

No Indonesian agency is mandated to resolve the types of tenure conflicts like the one APP and the Sakai are facing. A 2013 Supreme Court ruling requires that these contested lands be transferred to the indigenous peoples, but a legal framework to implement this still needs to be sorted out.

In the meantime, companies like APP are engaging in conflict resolution with communities, but there aren’t enough mediators, either in the NGO or government sector, to handle the myriad of cases.

As Tiur Rumondang of IBCSD, a meeting co-chair, said: “We need a lot more tools and trained mediators to resolve these social conflicts. It’s imperative that NGOs, business and the government work together to fast-track this.”

Lost in the forest without (One) Map

A complex and prolonged government spatial planning process contributes to unclear tenure and land-use designations. Overlapping permits are given out by multiple ministries and agencies to different corporate and community entities. Community and indigenous land use is not typically mapped out in spatial planning processes.

The One Map process is attempting to clarify the confusion around land-use licensing, but many dialogue participants believe that the mapping needs to happen at a much more detailed scale to understand where the majority of the problematic licensing exists. To gather this information effectively, communities need to be engaged in participatory mapping, which takes a lot of time and resources and requires people who are trusted by the communities to do the mapping.

Government policy: Seeing the forests through the trees

In addition to land tenure issues, other government policies can undermine corporate deforestation-free commitments.

For example, on agricultural concessions, areas that companies voluntarily set aside for conservation might be considered “abandoned land” by the government and given to other companies to develop. The Ministry of Industry might continue to give out new mill permits without assuring added production capacity is in line with sustainable plantation inventories. Regulations allow mining licenses to be given on top of forest concessions. There are inconsistencies in applying the law and regulations, and weak law enforcement to impose them.

Challenges with third-party suppliers

Forty percent of the world's palm oil comes from smallholder plantations, and tracing supply from the mill to the growers can be very challenging depending on the trading structure. Furthermore, given the sheer number and variability of smallholder profiles, there is a high transaction cost for buyers to work with farmers on sustainable production and certification. Farmers have different needs, aspirations and organizations with respect to their palm oil plantations, and not one size sustainability scheme fits all.

However, there are good models in place from which to learn. For example, dialogue participants visited with the Dosan community palm oil cooperative, developed by the district government as a means of economic development for the village. NGOs like Greenpeace helped the farmers increase their productivity through sustainable agricultural practices, enabling them to earn even better incomes. In return, the community committed, through village regulation, to protect its remaining forest and peatland, to prohibit plantation area expansion, and to protect the area from forest fire. The plantations are now in the process of attaining Roundtable on Sustainable Palm Oil (RSPO) certification.

Initiatives like Dosan show great promise but take time and resources from supporting organizations to build farmer capacity, and only represent a small fraction of the smallholder population. And the tools, like HCV, that are being used on larger concessions are not designed for smaller areas.

As Ian Suwarganda of Golden Agri-Resources said: “We need incentives and tools that work for both small and medium players. We need to encourage producers to be sustainable and build their capacity in ways that speak to their motivations, needs and aspirations.”

Build on what’s working

Given these challenges, dialogue participants identified specific actions which could accelerate and scale deforestation-free implementation, and in which all actors along the supply chain (including Western consumer-facing companies) might support:

1. Flexible approaches: Identifying and managing conservation areas will look different for big producer companies, independent and community smallholders, and indigenous peoples, and they should be customized to the local context. And Indonesian companies who have not yet signed onto commitments and are lagging in the sustainability department may need different entry points than the leading companies into these initiatives, perhaps through some type of stepwise approach.


2. Managing legacy issues: Producer companies that have a history of conversion are excluded from the certification schemes used to verify achievement of deforestation-free commitments. They will need compensation mechanisms like what is being offered under RSPO, where a company that inadvertently converts forest after 2005 could mitigate through funding additional restoration or conservation projects. Companies might take advantage of the government’s newly allocated 2.7 million hectares of production forest for Ecosystem Restoration Concessions (ERC). Several NGO and industrial plantation companies (both palm oil and pulp) have started to acquire ERC licenses to protect and restore native biodiversity, ecosystem services and forest productivity as a means to address their legacy conversion of natural forests.


3. Mobilization and efficiency of resources: To implement the commitments at the scale required means more capacity is needed in the private and public sector for HCV and HCS assessments, land-use conflict mediation, Free and Prior Informed Consent (FPIC), and indigenous peoples and communities’ rights. And in the interest of efficiency and prevention of market-based confusion, the best innovations from the proliferation of tools should be integrated into one approach that could be used for multiple commodities.


4. Landscape approach: Company-by-company, commodity-by-commodity solutions provide suboptimal benefits. Undertaking cross-sector and cross-commodity collaboration within a specific geographic unit to manage the policy, participatory mapping, community engagement and conservation efforts may yield better results. And, if packaged well, such initiatives could attract significant conservation finance to support the effort.


5. Finance: Local and regional banks need to be better engaged in these discussions, and the private equity companies financing palm oil plantation expansion need to use better social and environmental safeguards.


6. Harmonized advocacy: Corporations belonging to the Indonesian Palm Oil Pledge (IPOP) are already lobbying the government on topics like the abandoned land issue and land-swap regulations. Having NGOs, companies from different sectors, communities and indigenous people join this advocacy effort would be very powerful. “The new moratorium creates a terrific opportunity for companies and NGOs to lobby together for things like better protection of peatland,” said Grant Rosoman of Greenpeace. Harmonized advocacy could also be part of landscape pilots, where the lobbying target might be district and provincial governments


7. Engagement: Solutions to implementing commitments should be co-created with the producers and the communities impacted, along with other local government, company and civil society stakeholders

Looking ahead

Participants agreed that, as a next step, the Indonesian organizations in attendance would work together to communicate some of the points raised in the meeting to the government, perhaps with a more formalized Indonesian-based dialogue platform. Nienke Stam of the Sustainable Trade Initiative (IDH) and co-chair of the meeting, said she hoped that “out of this gathering, we will make good progress on alignment around policy discussions. We need local dialogues to ground these global aspirations.”

IDH recently signed an MOU with The Forest Dialogue and the World Business Council for Sustainable Development to improve public-private management of landscapes in support of corporate deforestation-free pledges. One of the ways The Forest Dialogue will help contribute to this plan will be through creating local platforms across four geographies, including in Indonesia, where key stakeholders within a landscape can resolve conflicts, enable more inclusive decision-making and create a spirit of collaboration. The hope is that through these processes, sustainable solutions can be accelerated at scale.

Image credits: The Forest Dialogue

Jessica McGlyn is Founder and President of Catalynics, a consultancy with the mission to help corporations and NGOs catalyze smart strategy, partner collaboration, stakeholder engagement, project ideation and development, communications and issues management in sustainability.