New evidence has emerged that Malaysian-based agri-business, Felda Global Ventures (FGV) (USD 1.7 billion market cap), continues to clear peat forest, contrary to its policies and industry standards, on its PT Temila Agro Abadi (PT TAA) plantation in West Kalimantan, Indonesia.
President Jokowi affirmed by law his policy of no-peat development when signing Government Regulation No. 57 on December 2, 2016. The regulation, known as ‘PP Gambut,’ amends an earlier regulation (No. 71/2014) concerning the protection and management of peatlands ecosystems. The new regulation declares a ban on all new peat development in Indonesia until appropriate action plans are in place. Failure to comply will result in administrative sanctions as per article 40 paragraph (3) of the earlier regulation. These sanctions include:
- Stop-work orders
- Permit suspension
- Permit cancellations
- Requirements to restore the land
During a meeting between research-outfit Aidenvironment and FGV and its advisors in Jakarta on April 22, Aidenvironment suggested that FGV adopt an immediate stop-work order in Indonesia in view of legislation, buyers’ zero-deforestation procurement policies, RSPO standards and FGV’s own Group Sustainability Policy.
FGV’s legal advisor stated that President Jokowi’s peat moratorium would not apply to FGV because the government had previously issued permits to clear the peat. Defiance of Indonesian law may trigger the Ministry of Environment and Forestry to commence investigations, as in other previous instances. FGV’s buyers may also intervene by suspending purchases. Various buyers have previously committed to end trading with companies that violate their procurement policies.
FGV is violating its own sustainability policy, adopted in August 2016 by its Board of Directors. FGV’s deforestation is also directly in violation of RSPO’s Principles and Criteria.
Satellite and Drone Images Show Ongoing Deforestation
As seen below in Figure 1, satellite imagery shows that FGV’s subsidiary PT TAA continues to clear forest and peatland. The total cleared area since 2016 is 1,612 ha of mostly peat forest. This cleared land includes High Conservation Value (HCV) areas. Since FGV announced its new policy, it has cleared 864 ha of mostly forested peatland.
Repeated Offenses Despite Sustainability Commitments
In April 2016, Chain Reaction Research published a detailed sustainability risk assessment on FGV. The report described FGV’s that its RSPO credentials at risk and analysis showed that FGV’s subsidiaries PT CNP and PT TAA in West Kalimantan had knowingly cleared High Conservation Value (HCV) peat forest for plantation expansion.
Leading up to the August 2016 Board of Director’s announcement, FGV’s sustainability team repeatedly discussed the company’s sustainability risk exposure with Aidenvironment. In fact, this specific peat forest clearance case in West Kalimantan was discussed four different times between April and December 2016, but peat forest deforestation continued despite FGV’s management promises to stop. FGV’s ongoing deforestation clearly violates:
- FGV’s own sustainability policies.
- RSPO’s Principles & Standards.
- NDPE purchasing policies of FGV’s major customers.