The Forest Scribe

AIDenvironment Names Industrial Timber Group as Indonesia’s Top Deforester

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AIDenvironment, a non-profit consultancy on sustainability, has named the Nusantara Fiber Group operating in Indonesia’s Kalimantan as being the group with industrial timber concessions which has conducted the most deforestation in the country, clearing 26,000 hectares of tropical forest between 2016 and October 2020.

“Spatial analysis shows that the Nusantara Fiber group has by far conducted most deforestation of all company groups with industrial tree concessions in Indonesia, over this period,” AIDenvironment said in its latest report uploaded on its official website. 

Immediate collective action was needed to stop Nusantara Fiber’s PT Industrial Forest Plantation from clearing the remaining 50,000 hectares of forest in its concession.

The Nusantara Fiber group which is composed of six timber plantation companies, has secret owners and does not have any public No Deforestation, No Peat, No Exploitation (NDPE) commitments. The group is ultimately owned by a company registered in the Polynesian island country Samoa, a recognized secrecy jurisdiction. 

But AIDenvironment said although it was still a mystery which entities owned the Nusantara Fiber group, the group was connected in various ways to Royal Golden Eagle (RGE), a large paper and palm oil conglomerate and one of the main four corporate players in the Indonesian palm oil and industrial tree sectors.

Nusantara Fiber’s Samoan holding company has a 100% daughter company — the Hong Kong-based Green Meadows Fiber Products — that was also majority-owner of Nusantara Fiber’s plantation companies. Two of the three first directors of “Green Meadows” were high ranking RGE employees. 

A number of the first directors are or were involved in various palm oil businesses totaling 27 palm oil mills and/or kernel crushers, and RGE is a customer of all 27 companies. 

Historical ownership records of Nusantara Fiber group’s companies reveal past control by entities that are part of or connected to RGE, before the companies were moved to secrecy jurisdictions.

In its brief response to a draft-report sent for review, RGE stated that it does “not have relations with the six companies that were mentioned in the report as part of Nusantara Fiber group.”

The group’s largest concession company is PT Industrial Forest Plantation with a total area of 102,000 hectares. It has cleared 10,700 hectares of forests, with more than half (5,800 hectares) of deforestation taking place in 2020, AIDenviroment said. Most of this deforestation occurred within the habitat of the critically endangered orangutan. 

As of October 2020, there remained 64,000 hectares of forests inside this concession, but only 15,800 hectares has been designated as protected area. PT Santan Borneo Abadi, another plantation company of this group, has deforested a total of 12,300 hectares since 2016.

While public audit reports reference High Conservation Value (HCV) studies for some concessions, none are publicly available. No information is available about any High Carbon Stock (HCS) assessments

At least 40 company groups are active in the oil palm growing as well as the industrial tree growing business in Indonesia but the NDPE policies of its largest palm oil refiners are restricted to palm oil, leaving their business partners the opportunity to continue deforestation in the industrial tree sector.

AIDenvironment said that RGE has leverage over the Nusantara Fiber group, given its large role as a buyer of the produce of the palm oil businesses connected to the Nusantara Fiber group. RGE has so far failed to bring the Nusantara Fiber group under the scrutiny of its sustainability commitments, it added.

“By establishing a cross-commodity NDPE policy, Indonesia’s largest palm oil refiners could stop more deforestation and create deforestation-free business partners. In the case of the Nusantara Fiber group, tens of thousands hectares of forests and orangutan habitat may still be saved,” it said.

The RGE group of companies has two pulp and paper companies in Indonesia: APRIL (pulp and paper) and APR (viscose staple fibers). In total, 1.6 million hectares (15 percent of Indonesia’s total) of industrial tree concessions in Indonesia are owned or connected to RGE (including the Nusantara Fiber group.) 

AIDenvironment said that RGE was leaving the option to deforest open for company groups that it was connected to.

“This raises serious questions about RGE’s no-deforestation commitment,” it said.

“The RGE group of companies should engage with the Nusantara Fiber group, and use its leverage to immediately stop the present and any future deforestation,” AIDenvironment said, adding that the leverage should include the palm oil businesses RGE undertakes with past or present directors of the Nusantara Fiber group. 

“The Nusantara Fiber group should immediately stop its deforestation, publish HCV and HCS assessments for its concessions and establish a No deforestation,  No Peat, No Exploitation (NDPE) policy,” it said.

AIDenvironment said that the four main corporate players handling most of Indonesia’s harvest from oil palm and industrial tree plantations — Sinar Mas, RGE, Wilmar and Musim Mas –. should expand their NDPE policy, and make sure their business partners do not deforest for both palm oil and industrial trees.

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