FGV brazenly defying law by clearing peat forests

New evidence shows Malaysia-based Felda Global Ventures is violating its own sustainability policy, and Indonesia could commence investigations into its practices.

COMMENT

New evidence has emerged that Malaysian-based agri-business, Felda Global Ventures (FGV), with a market capitalisation of US$ 1.7 billion, 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 Joko Widodo, also known as Jokowi, affirmed by law his policy of no-peat development when signing Government Regulation No 57 on Dec 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; and
• Requirements to restore the land.

During a meeting between research outfit Aidenvironment and FGV and its advisers 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, Roundtable of Sustainable Palm Oil (RSPO) standards and FGV’s own group sustainability policy.

FGV’s legal adviser 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 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 1,612ha 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.

Figure 1

Repeated offences despite sustainability commitments

In April 2016, Chain Reaction Research published a detailed sustainability risk assessment on FGV.

The report described FGV’s RSPO credentials as at risk and analysis showed that FGV’s subsidiaries PT CNP RSPO and PT TAA in West Kalimantan had knowingly cleared HCV peat forest for plantation expansion.

Leading up to the August 2016 board of directors’ 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 management’s promises to stop.

FGV’s ongoing deforestation clearly violates:

1. FGV’s own sustainability policies;
2. RSPO’s Principles & Standards; and
3. NDPE (No deforestation peat and exploitation ) purchasing policies of FGV’s major customers.

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International Palm Oil Monitor (IPOM) is a news portal formed to be the watch dog and thought leader within the palm oil and sustainable plantation industry. -FMT