As an alternative of being a burden, pursuing sustainability generally is a boon for companies, offering corporations with an amazing alternative to grow to be extra environment friendly and worthwhile.
Within the resource-based manufacturing business, Singapore-headquartered RGE, which has companies spanning from pure fibres and edible oils which are used to supply supplies that grow to be paper, tissue, cooking oil, shampoo and garments, has dedicated to a zero-deforestation coverage in its operations and provide chain in addition to carbon discount initiatives all through its group of corporations.
“By our decarbonisation efforts, we are literally saving cash,” mentioned Bey Soo Khiang, vice-chairman of RGE, citing how decreasing using extreme vitality and shifting to rely extra on renewables has helped contribute to the corporate’s backside line. “Decreasing [waste and unnecessary energy usage] has clearly been a profit for us by way of enhancing productiveness and reducing prices,” he mentioned.
Bey Soo Khiang, vice-chariman of RGE and chairman of APRIL Group, talking on the Unlocking Capital for Sustainabilty occasion organised by Eco-Enterprise. Picture: Eco-Enterprise
Bey can also be the chairman of the pulp and paper producer APRIL Group, a member of the RGE group of corporations, the place he advises the group’s operations on sustainability issues.
In recent times, the group has been no stranger to scrutiny from non-government organisations (NGOs) and environmental teams, which significantly search to carry it accountable for its no-deforestation dedication.
Bey tells Eco-Enterprise that RGE values constructive criticism and scrutiny from NGOs, even because it acknowledges challenges in instantly investigating claims and allegations given how advanced its provide chain is. The Singapore lieutenant-general, who as soon as served because the city-state’s chief of defence forces, says RGE “ground-truths” any allegations and responds with details.
As an illustration, in Could this yr, RGE clarified its stance relating to allegations by environmental campaigners that Asia Image, RGE’s pulp mill in China, had been utilizing wooden from corporations that had cleared giant tracts of tropical rainforest in Kalimantan, Indonesia’s territory on the island of Borneo. RGE carried out additional checks and speedy motion was taken, up to date Bey.
RGE’s latest pursuits of sustainability-linked loans (SLLs) to help its enterprise growth and improvement additionally means there may be further consideration and scrutiny from financiers, mentioned Bey, which the group welcomes.
On this interview, Bey shares about how the corporate has handled NGO criticisms, the considering behind RGE’s transfer to safe SLLs, and what are among the most difficult and rewarding elements of his profession at RGE.
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It doesn’t make enterprise sense if we decide to a no-deforestation coverage, and if we handle to realize 98 per cent no deforestation, solely to permit for 2 per cent of it to happen alongside our provide chain and corrupt the promise. We’ve got to ensure we adjust to the dedication to zero deforestation we made.
Drones are used to actively monitor plantations and forests managed by RGE. Picture: RGE
Are you able to inform us extra about RGE’s broad philosophy in the case of financing your sustainability efforts?
RGE operates on the premise of enhancing lives whereas managing sources. We consider that doing good for the neighborhood, the nation, local weather and our clients shall be good for the corporate. When investing in sustainability efforts, our considering needs to be that we’re not simply financing the initiatives, however truly bringing about price financial savings after we pursue these efforts.
For instance, RGE’s sustainability targets are structured round a number of pillars, and considered one of them is concentrated on discount – of all our elements of manufacturing together with extra consumption of vitality and water.
We’ve got ‘Kaizen’ tasks, or tasks that look into implementing steady enchancment throughout our enterprise operations, and for one week each month, the enterprise group is on the bottom at our websites how we will eradicate waste. Once we do this and are keen to spend money on that, there are financial savings and the prices of manufacturing goes down, whereas carbon emissions can even probably be diminished.
APRIL, a member of RGE Group, is right this moment working on greater than 80 per cent renewable vitality [for its mill energy needs] and we’re shifting additional in direction of renewable vitality and away from coal-based operations. [The company aims to increase this figure to 90 per cent by 2030 for its manufacturing operations.]
We’ve got calculated the payback interval [for investment in the shift] and the present set up of our photo voltaic panels, which has reached 11 megawatts (MW), is one thing we have been ready to do, given how the estimation then was that it’ll simply take about six to seven years for us to reap the advantages.
The payback interval was knowable and we knew it might carry us ahead on a path of decreasing fossil fuels in our vitality combine. Because it seems, electrical energy costs have gone up because of rising oil and gasoline costs and now the payback interval [for solar] is well half of what we calculated. It’s one other instance of how we profit from investing in sustainability.
What about your no-deforestation insurance policies and dedication? Is there a enterprise case to be made there?
For each licensed concession, whether or not peatland or soil, we function responsibly and convert solely about half of the world into plantations, whereas committing to preserve and restore the equal space. We take a panorama ecosystem strategy, which implies that we’re always fascinated with conservation by way of biodiversity, water retention, neighborhood advantages, and extra.
For us, it is a pretty costly proposition. A bit of concession land could possibly be close to our mills, which suggests if it was transformed, it could possibly decrease the price of transport and therefore the price of manufacturing for wooden. The choice [if we were to keep it for conservation] is that now we have to broaden additional out for manufacturing and meaning greater overheads.
Nonetheless, in 2015, we determined to decide to stopping deforestation. As an alternative, we targeted on intensifying using our land and enhancing land yields by higher practices equivalent to breeding higher-yield species.
Our yield has gone up up to now few years by about 13 per cent since 2019 and we’re asiming to additional enhance it by one other 20 to 30 per cent, and this has introduced down the prices of manufacturing. Therefore I believe necessity is the mom of invention.
When compelled to do one thing and make a dedication, one will begin fascinated with different and higher concepts, which was what occurred for RGE.
APRIL has [since March last year] invested in a brand new paperboard packaging facility, as we now have a better manufacturing capability for wooden and might have one other product line.
A researcher at APRIL’s tissue tradition lab in Pangkalan Kerinci, Sumatra, Indonesia. The power helps APRIL’s dedication to enhance the productiveness of its plantations inside its current useful resource capability. Picture: RGE
RGE made the information for securing some high-profile sustainability-linked loans (SLLs) and sustainability-linked derivatives (SLDs), a transfer described as a pivot to those comparatively novel financing mechanisms. Are you able to share extra about RGE’s considering and strategy on this?
The mortgage is one thing we will leverage on for a stronger enterprise crucial. We’ve got historically relied on self-financing for our sustainability initiatives however now that now we have established detailed motion plans and clearer metrics, it makes it simpler for banks to return to us on SLLs.
In February this yr, we closed a [US$550 million] sustainability-linked by-product with Japanese financial institution MUFG. We now have secured near US$2 billion price of SLDs and SLLs. These loans and offers will not be small they usually should be based mostly on the diligence and transparency of our sustainability practices to determine belief between the banks and RGE.
Even earlier than we safe the offers, there may be a number of dialogue and the banks have questions on our sustainability initiatives. We’ve got introduced them to the bottom to go to our websites, and take a look at what we do.
A high-level consultant from considered one of our banking companions requested to sit down on APRIL’s Stakeholder Advisory Committee, an unbiased committee composed of coverage and enterprise specialists to see if all we are saying about sustainability is for actual. We obtained permission from the committee chairman and he agreed to it.
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We’ve got historically relied on self-financing for our sustainability initiatives however now that now we have established detailed motion plans and clearer metrics, it makes it simpler for banks to return to us on sustainability-linked loans.
It’s therefore by time and thorough assessments that now we have constructed the relationships with the banks, for them to recognise that we’re a severe participant within the enterprise. We’re additionally very cautious of and anxious about greenwashing and need to ensure that we will exhibit actual motion.
RGE not too long ago was the primary overseas enterprise in China to safe a sustainability-linked syndicated mortgage. You talked about RGE’s concern with greenwashing. There may be scrutiny on China, for instance, for having much less stringent environmental, social and governance (ESG) requirements. Was this a priority or consideration when evaluating if RGE was going to work with Chinese language banks? What’s your strategy on ESG governance?
We undertake greatest practices, generally past what certification requires, and deal with transparency, to protect in opposition to greenwash. The stakeholder advisory committee for APRIl, for example, additionally retains us accountable.
We’re completely happy to have anybody go to our mills and see for themselves the work we do. We don’t consider that we’re good or superior, however we consider we try to do our greatest. There shall be areas of deficiency which we settle for and we tackle feedback on the best way to enhance. This contains any banks that need to work with us. We’ve got completely no difficulty with letting them come and examine what we do.
We’re used to the scrutiny – from forestry and social coverage specialists and others. We confronted that even earlier than SLLs took place. I additionally welcome the scrutiny as a result of it should put extra stress on our folks working within the operational items. They now have to fulfill the acknowledged targets and we’ll face materials monetary affect in the event that they don’t.
To handle your query on ESG governance in China, I consider we might help to uplift sustainability requirements and practices amongst Chinese language corporations by sharing our good practices, since local weather change is an issue for all to unravel.
RGE has confronted detrimental press in the case of scrutiny of deforestation practices alongside your provide chain. Extra not too long ago, a report from a non-government organisation (NGO) referred to as out RGE for its hyperlinks to deforestation, together with figuring out how RGE-owned Asia Image as being related to the clearance of a first-rate orangutan habitat in Central Kalimantan, Indonesia. We perceive that RGE has refuted the allegations, however are you able to share broadly on how RGE offers with such NGO criticism?
We welcome NGO criticism or any constructive criticism, significantly these holding us accountable to our no-deforestation dedication. What we do is we try to “ground-truth” what they are saying and there are lots of methods to research the allegations to see if they’re correct.
Nonetheless, it additionally must be understood that our concessions in Indonesia are about 12 instances the dimensions of Singapore. They’re in disparate patches, so despite the fact that now we have folks engaged on the bottom, extra legwork must be completed earlier than we will confirm issues.
I’ve frolicked within the Singapore Armed Forces and I’m additionally aware of how directions from the highest will be misinterpreted once they get to the soldier on the bottom, and in that sense, we’re not good due to the size of our operations. But when certainly our folks have completed incorrect, we’ll right it. Most of the older allegations have been investigated and details have been put throughout the desk.
Within the newest episode which entails allegations that time to Asia Image’s pulp and paper mill within the Chinese language coastal metropolis of Rizhao receiving wooden from deforested forests in Kalimantan, we investigated and located that as Asia Image doesn’t have their very own plantation, they employed a sourcing agent to purchase wooden chip from all around the world.
We took speedy motion and, as we mentioned on the time, Asia Image instructed its agent to droop sourcing indefinitely from any suppliers who might have engaged in actions that aren’t aligned with our sustainability commitments.
We’re severe about it as a result of it doesn’t make enterprise sense if we decide to a no-deforestation coverage, and if we handle to realize 98 per cent no deforestation, solely to permit for 2 per cent of it to happen alongside our provide chain and corrupt the promise. We’ve got to ensure we adjust to the dedication to zero deforestation we made in 2015. Then we will leverage on it as model fairness to promote our merchandise downstream, particularly with the European Union being fairly aggressive with its deforestation coverage.
Past deforestation, we additionally face criticism for our social insurance policies, although generally I consider that the NGOs want extra context earlier than they criticise. For instance, in Indonesia’s forestry sector, pulp producers like us don’t personal the land. It’s the authorities that owns the land and land claims must be made with the federal government.
It won’t be for us to speed up the method the best way we would like. What we will do is have interaction a 3rd celebration and assist native communities set up the legitimacy of their claims earlier than they strategy the federal government. This is able to hopefully assist in resolving the problem.
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We’re completely happy to have anybody go to our mills and see for themselves the work we do. We don’t consider that we’re good or superior, however we consider we try to do our greatest.
A serious difficulty that Southeast Asia must cope with is the haze, which is triggered partly by forest fires. How is RGE addressing the haze difficulty?
There are a number of explanation why folks use fires in Indonesia. One is to clear land for agriculture. One more reason is to resolve land conflicts – not an uncommon phenomena in Indonesia. They burn the forest first, then plant oil palm and the problem is one thing the federal government has been coping with. One other downside that the federal government has been working to implement in opposition to is prohibited encroachment of land.
RGE adopts a manufacturing safety mannequin to create a buffer zone for pure forests in opposition to human encroachment and unlawful logging. Picture: RGE
In 2013, what now we have completed is to start out a Fireplace-Free Village programme, which targeted on fireplace and haze prevention. We began with a number of villages that have been at excessive danger of beginning fires, appointed a villager in every village as fireman for coordinating academic programmes in class on the well being hazards of haze, in addition to the accountable clearing of land, the place we supplied the villages with the mechanical means to take action. We additionally put in air high quality measurement devices to indicate them the affect of poor air high quality.
If a village remained fireplace free by the top of the dry season, we might reward them with US$10,000 price of neighborhood tasks within the type of a street, bridge, mosque or different related tasks the neighborhood needed. It isn’t a small sum of cash, however investing in prevention will result in much less fires in future, and subsequently, be certain that burning doesn’t affect our plantations, so it makes enterprise sense.
The programme was profitable – there have been no fires in any of the villages we ran this check programme on, and now we have since expanded its protection to about 900,000 hectares of land. The areas burnt have been diminished by 90 per cent. Extra importantly, there was a mindset change among the many villages – they’re now starting to understand that utilizing fires shouldn’t be the proper method to clear land.
Are there different newer sustainability initiatives that RGE has launched into in recent times?
To fulfill shopper demand for uncooked materials feedstock, one other strategy that now we have taken is to make use of recycled pulp. For instance, if I can safely and successfully separate and recycle unique pulp from textile, ship it to our mills and add that to virgin pulp, this may grow to be one other supply of feedstock we will depend on to broaden our manufacturing capability. We discover that there’s a enterprise crucial to taking this circularity strategy too and on the identical time, it creates a really constructive affect on sustainability, together with decreasing the necessity for landfills.
This is the reason we now we have partnered with Nanyang Technological College in Singapore to determine a sustainable textile analysis centre as we’d prefer to get their assist in discovering a great design for an urban-fit textile recycling plant which may also be a sustainable one which hopefully makes use of as a lot renewable vitality as attainable, in addition to fewer heavy chemical substances. If textile waste will be recycled in city settings, this might grow to be a brand new enterprise line for RGE. The know-how will be patented and bought to different cities.
It has been nearly 15 months because the launch of the analysis centre, and though it’s a pretty novel strategy, now we have seen some success by way of technological applicability. A key difficulty, nevertheless, is that there’s nonetheless a value to the method and it isn’t a trivial problem.
At present, conventional options are large-scale ones, the place textile waste is collected at a central location and recycled at a giant plant then shipped out, however that may imply transporting the pulp for an extended distance, for instance all the best way to Europe, and instinctively we all know that the carbon footprint shall be a lot bigger.
For our mission, life cycle analyses (LCAs) to evaluate environmental impacts related to all of the phases of the life cycle of the method are completed and monitored. It’s going to take time however we’re encouraging the workforce to press on additional. We’ll first begin with a lab-scale plant, ensure that it really works earlier than scaling it right into a pilot.
We additionally decided to offer about S$3 million (US$2.24 million) in funding to Singapore Trend Council that has members all through the textile worth chain, from upstream manufacturing to retailers and designers. The textile business in Singapore wants to boost its sustainability requirements, scale back its carbon footprint and our hope is that designers will someday design with sustainability in thoughts.
We try to deal with among the impacts of design which aren’t sustainable – buttons, zips and the dye used for clothes – and a great way to do this is to boost consciousness amongst key gamers, significantly among the many small and medium enterprises.
What has been most rewarding and difficult in your profession at RGE?
Once I joined RGE, I knew subsequent to nothing about sustainability. I joined RGE primarily as a result of I noticed how they do enterprise – doing good for neighborhood, nation, local weather, buyer and firm (the 5Cs). It was a unique means of doing enterprise in comparison with different corporations 13 years in the past.
At the moment the palm oil and forestry business was below large stress from NGOs. We labored so much with NGOs through the years and have improved ourselves. 2015 was a big yr for us. We made numerous commitments together with our zero deforestation pledge. That very same yr additionally noticed the announcement of the United Nations Sustainable Growth Targets and the Paris Settlement. We labored to embed these world targets into the implementation of our ‘5Cs’ ethos of doing enterprise.
For instance, stunting [among children] is an issue in Indonesia, so one of many targets we adopted for our neighborhood was to eradicate or scale back stunting by 50 per cent. One other instance is addressing poverty in Indonesia, so we made it an goal to eradicate excessive poverty within the villages as much as 50km fromour space of operations.
All our companies now have a 10-year plan in direction of 2030 targets by way of decarbonisation, working with the neighborhood, nature-based options and circularity. These will not be simply targets set by senior administration, however we work along with folks on the bottom.
In order that has been a really rewarding a part of my journey, from figuring out nothing about sustainability and having a defensive strategy in responding to NGOs to now having the ability to take a proactive strategy in direction of sustainability.
RGE in addition to its founder Sukanto Tanoto has been supporting the Indonesian authorities’s precedence to scale back stunting prevalence in kids. Picture: RGE
Wanting past 2030, for those who have been to spotlight one space the place it will likely be necessary for RGE to make progress on in sustainability efforts, what would that be?
Expertise, together with the potential to supply hydrogen and ammonia sustainably, shall be key. At RGE, we’re monitoring these developments and we need to work with corporations to ship renewable vitality.
We’re speculated to be on a trajectory to ensure that world temperatures are beneath 1.5 levels Celsius however we are actually in disaster mode by way of reaching this, so we have to take into account all life like choices.
The interview has been edited for brevity and readability.
