SUSTAINABILITY REPORT

Published in 2017

In Indonesia, the oil palm industry has played an important role to elevate the socio-economic status of the country. More than 4.5 million people work in the palm oil industry, and the livelihoods of a further 15 million households indirectly benefit from it. The industry’s multiplier effect on employment, health and education in rural areas is very profound. Despite this, since 2008, the palm oil industry has been subject to heavy criticism and scrutiny linked to deforestation, the loss of habitat of protected and endangered species, forest fires and haze issues, social conflicts and its contribution to climate change.

Concerns have been voiced by environmental and social NGOs that pertain to industry stakeholders, including ourselves, as one of the largest palm oil producers in Indonesia. We are committed to managing our operations with the best management and sustainable practices. We do not tolerate palm oil operations that are managed without regard to the environment and stakeholders. These concerns, if not handled properly, will tarnish the image of the industry and would aversely impact the livelihoods of millions of households. Sustainable palm oil production is the only way forward for the industry and for the nation to maintain its socio-economic growth.

We have committed ourselves, including our smallholders, to produce sustainable and responsible palm oil.

This commitment by large estates with proven track records to produce high standard sustainable palm oil is a very important milestone for the palm oil industry. This commitment has also been recognized and encouraged by several leading NGOs.

We actively participate in the implementation of this initiative. We see this commitment as an opportunity to develop our best management practice in line with market expectations. This not only helps us to advance, but also ensures that we are on the leading edge and part of the movement to drive the sustainability agenda. We strongly encourage stakeholders to work hand-in-hand to transform the market through best management practices.

Together with the stakeholders, we have resolved to continue our engagement to better understand their expectations and work hard to respond effectively. Looking back, our journey began in February 2006 as a member in Roundtable on Sustainable Palm Oil (RSPO) and we gradually continue to advance with other sustainability standards such as the International Sustainability and Carbon Certification (ISCC) and the Indonesian Sustainable Palm Oil (ISPO).

Currently, we are 100% ISCC certified and committed to certifying all our mills and plantations based on the Principles and Criteria of RSPO and ISPO in 2017. We produced approximately 579,400 MT of certified CPO in 2017, including mills, plantations and smallholders, making us one of the largest certified manufacturers in Indonesia. In addition to certification, we have achieved 100% FFB traceability in 2017.

We are not alone in this initiative. We partner 30,000 plasma smallholders, covering a total of 60,000 hectares of land - one of the largest in Indonesia. Our plasma smallholders are also involved in sustainable practices and have also been implementing internationally recognized standards since 2011. Today, they play a significant role, contributing to 25% of our supply chain. They produce about 174,000 MT of CPO that is RSPO and ISCC certified, making them one of the largest in Indonesia.

Independent smallholders are also our strategic partners in implementing sustainability commitments. They also contribute about 25% to our supply chain production. We are currently involved with approximately 30,000 independent smallholders who have achieved good production quality through trainings of best management practices. Our independent smallholder association in Riau, The Amanah Association, has received RSPO certification in 2013, the first independent smallholders group that is RSPO certified in Indonesia.

This suggests that smallholder’s groups, either plasma or independent smallholders, are willing to work with us for a better yield. Sustainable palm oil production through best management practices has helped them get better results and be more productive, while reducing costs with higher operational efficiency, contributing greatly to their income and welfare. Sustainable palm oil is, indeed, the appropriate solution for smallholders and consumers.