AAL has denied the allegations, citing insufficient knowledge used within the investigations.
“Astra Agro and all its subsidiaries function by relevant legal guidelines and insurance policies in Indonesia. The corporate has recognized limitations within the knowledge sources, which resulted in inaccuracies that don’t mirror the precise circumstances [on the ground],” stated Fenny Sofyan, vp of investor relations and public affairs on the firm, which is Indonesia’s second largest palm oil grower.
Based on the FOE report, near 18,000 hectares (ha) of AAL’s palm oil concessions overlap with Indonesia’s forest estates, infringing on protected areas.
These overlaps are in six of Indonesia’s provinces, with essentially the most distinguished transgressions in Sulawesi, the place over 2,000 ha of protected forests have been encroached upon by AAL’s plantations, the report finds.
AAL has been accused of failing to acquire free, prior and knowledgeable consent (FPIC) from impacted communities earlier than changing their land into palm oil plantations, leading to land conflicts in Central and West Sulawesi.
Moreover, two of AAL’s subsidiaries – PT Sawit Jaya Abadi and PT Rimbunan Alam Sentosa – have been flagged for working with out the required permits, a declare AAL disputes.
Underneath Indonesian forestry legal guidelines, the conversion of forest areas into plantations can solely proceed when the corporate has obtained all the required permits, together with a forest launch letter and a cultivation allow, often called a Hak Guna Usaha (HGU) in Bahasa Indonesia.
Contentions over claims and knowledge
AAL has refuted FOE’s claims concerning deforestation, marginalising native communities, and working unlawful plantations.
“Astra Agro’s sustainability coverage was formally applied in 2015, and it has not undertaken any enlargement or new land clearing since then,” stated Sofyan.
As a substitute, noticed land clearance has been attributed to the replanting of present plantations, she stated.
The investigation was criticised for insufficient knowledge use, counting on spatial knowledge and satellite tv for pc mapping to find out overlaps as a substitute of presidency maps.
Yayasan Genesis Bengkulu, the Indonesian non-profit that carried out plantation analysis and evaluation on behalf of FOE, additionally didn’t have entry to verified HGU knowledge, which AAL claims is important for precisely figuring out plantation boundaries.
The palm oil producer has subsequently referred to as the conclusions “deceptive”.
Nevertheless, AAL didn’t share its official concession coordinates, and the federal government has not printed HGU permits for public evaluation.
To complicate issues, a few of AAL’s plantations are located on lands the place legitimate permits have been initially granted however the space has since been designated as a forest property by the federal government.
Based on firm knowledge, 14 subsidiaries have been issued permits earlier than the decree that designated the world as a forest property, identified in Bahasa Indonesia as Surat Keputusan Penetapan Kawasan Hutan.
“Regulatory modifications at all times happen over time. Thus, there have been many circumstances of returning a part of the HGU space to a forest space, regardless that the HGU was obtained lengthy earlier than,” stated Sofyan.
Nevertheless, FOE has highlighted irregularities surrounding AAL’s allow validity, noting that beneath Indonesian regulation, the federal government can not designate areas with present permits as forest estates. The environmental organisation has referred to as for the federal government to supply extra readability and authorized certainty.
Relating to the allegations of human rights violations, AAL maintains that whereas FPIC rules weren’t relevant when the plantations have been established, the corporate had adhered to one of the best practices of that point, together with group session processes carefully aligned with present FPIC rules.
Shopper manufacturers and financiers implicated
Ten manufacturers have suspended sourcing from AAL and its subsidiaries, although many others proceed to have interaction with the conglomerate, together with main client items company Unilever, one of many world’s largest patrons of palm oil.
Primarily based on Unilever’s 2022 mill record knowledge, AAL is listed as considered one of its mills, although not as a direct provider to the model, which has publicly dedicated to utilizing sustainable and deforestation-free palm oil.
A spokesperson for the corporate confirmed this. “Astra Agro Lestari shouldn’t be a direct provider of Unilever. The palm oil from the AAL websites in query shouldn’t be not directly linked to our provide chain through a 3rd social gathering.”
The spokesperson added that the corporate is assessing the state of affairs beneath its grievance course of and won’t be able to touch upon the report’s conclusions.
Agribusiness provider Olam, additionally flagged for sourcing from mills related to AAL’s subsidiaries, didn’t remark on the time of going to press.
International monetary corporations together with Vanguard and HSBC have additionally been implicated.
BlackRock has been singled out within the FOE report for its holdings, regardless of having voted towards the re-election of AAL’s board of administrators and commissioners in April 2023 resulting from issues over the allegations.
The world’s largest asset supervisor holds 11 per cent of shares within the AAL group of corporations as of September final 12 months.
Others have chosen to divest from the group over local weather and environmental issues.
The Norges Financial institution joins 28 different financiers within the exclusion. In February, the monetary establishment excluded AAL’s mum or dad corporations, Jardine Matheson Holdings, Jardine Cycle & Carriage, and Astra Worldwide from the Norwegian Authorities Pension Fund International (GPFG), which it manages.
FOE has criticised Jardine Matheson, which holds a majority stake in AAL’s mum or dad firm Astra Worldwide, for not utilizing its leverage to hunt redress.
In response to queries from Eco-Enterprise, a Jardine Matheson spokesperson directed consideration to AAL’s public statements on the matter, in addition to AAL’s motion plan which addresses the grievances raised.
The spokesperson additionally clarified that AAL is open to dialogue with each FOE and WALHI, the Indonesian chapter of FOE, and has supplied to fulfill with the organisations to debate further measures to strengthen its programs and processes.
“Jardine Matheson firmly helps AAL’s dedication to transparency and its efforts to actively interact on this concern,” the corporate stated in a press release.
Governance gaps, murky provide chains
AAL’s violations are reflective of wider governance and provide chain administration points in the palm oil trade, environmentalists say.
“The systemic downside is weak regulation enforcement and monitoring. This situation is what AAL continues to use,” stated Uli Siagian, forest and plantation campaigner at WALHI.
A closed allow issuance course of has additionally enabled AAL to deforest and convert Indonesia’s forests to monoculture plantations at a surprising tempo, stated the report.
Indonesia is the world’s largest palm oil producer, accounting for 40 per cent of the worldwide market as of 2023. Palm oil has been recognized as one of many foremost culprits for deforestation within the nation, to which the Joko Widodo administration has responded with a ban on palm oil plantation enlargement in 2018.
The moratorium has contributed to an total declining development in deforestation since 2012, although the precise causes for the decline have been contested.
The moratorium has since expired, and deforestation charges have elevated for the second 12 months consecutive, reaching 30,000 ha in 2023. There aren’t any plans to resume the moratorium.
Broader efforts to extend the sustainability of palm oil manufacturing have additionally confronted hurdles, as a result of monitoring and regulating palm oil is notoriously advanced, with traceability a key concern throughout the provision chain.
Whereas certification schemes from organisations like the Roundtable on Sustainable Palm Oil have sought to boost traceability and transparency, institutional loopholes proceed to undermine the method, inserting such schemes vulnerable to exploitation.
“Corporations could make rhetorical commitments to upholding human rights and attaining environmental sustainability, however speak is reasonable. Accountability is required,” stated Gaurav Madan, senior forest and land rights campaigner at FOE United States.
