Impact Investing in Sago for Sustainable Peatland Management

Peatlands, also known as fens or bogs in Western countries and referred to as “lahan gambut” in Indonesia, are a distinctive type of wetland that constitutes approximately half of the world’s wetland areas.

They can be found on every continent except Antarctica (Winrock International, A). In total, the world’s peatland ecosystem covers an area of 398 million hectares, about 34 to 45 million hectares of which is in tropical climates, with roughly 56.6% (25 million hectares) located in South East Asian countries (Yuwati, 2021).

These waterlogged ecosystems, rich in organic matter, began forming around 12,000 years ago, shortly after the last ice age. The constant saturation of the soil slows down the decomposition of deceased plants, transforming them into a dense, dark-coloured, and malleable substance known as peat, which effectively stores the carbon that the plants had previously absorbed (Winrock International, B).

Enhancing Livelihood and Forest Protection

Indonesian cocoa sustainability in terms of increased productivity, improved farmer livelihoods, secure supply chains, and environmental preservation is an ongoing struggle.
The social, economic, and environmental implications cannot be separated one from another.

A major pressing need is for availability of quality planting material for farmers in order to increase productivity and optimize land use. Seed gardens are important to feed quality certified rootstock into cocoa nurseries for distribution of seedlings for replanting. Sulawesi, the largest cocoa-producing area of Indonesia, currently contains no certified cocoa seed gardens, creating a barrier to increased productivity for aging cocoa farms.

There are clear overlapping interests between cocoa stakeholders and non-profit stakeholders, particularly those concerned with deforestation. Cocoa is a shade crop and lends well to agroforestry models. The optimization of land use through replanting presents one of the greatest opportunities to disincentivize deforestation in smallholder farming communities. An analysis of the situation reveals the benefits of local seed garden establishment to a variety of stakeholder– government, private sector, non-profit sector, and smallholder farmers. The seed garden business case for farmers is profitable with minimum risk. The seed garden business case for the private sector is contingent upon calculation of indirect profitability related to supply chain improvement. Local seed garden establishment contributed to government and non-profit objectives.

A multi-stakeholder approach to localized seed garden establishment is preferrable, with each party weighing respective investment and return from both monetary and non-monetary perspectives. This document outlines the broad justification for such a collaboration to be initiated, driven by Cocoa Sustainability Partnership (CSP) and one or more of its private sector members located in Sulawesi, bolstered by support from central and regional Indonesian government departments and the non-profit sector.

Lesson learned from the area next to Bukit Tigapuluh National Park, Jambi

Elephant is a kind of herbivore that throughout history has become one of the large terrestrial mammals. The species spread from Africa to India and Southeast Asia. In many locations, especially in India and Thailand, elephant is used for heavy works that needed huge quantity of strength. Building roads, bridges and other infrastructures often uses the services and power of elephants. Furthermore, many of these elephants are also used for fun and entertainment, like circus and show.

In the wild, elephant lives in groups and usually lead by a dominant female, known as an alpha. Usually, baby elephant, called calf, is raised by its own group. Meanwhile dominant male that lost the competition usually step aside and wander alone, or join with new group that wants to take them.

The Case of Golder-Agri Resources

A number of studies have indicated Indonesia’s success in substantially lowering its rate of deforestation. According to Government of Indonesia data, the annual rate of deforestation in Indonesia decreased from its highest level of 3.5 million hectares a year during 1996-2000 to slightly more than one million hectares a year from 2000 to 2006, with further decreases of 650,000 hectares of land in 2015-16 and 480,000 hectares in 2016-17.

Tightened government regulations including a permanent moratorium on forest clearing for plantations and logging, forest management reform, and prosecution of companies illegally clearing forests have been the main drivers of the decline. Other factors include increased transparency, partly with the help of real-time deforestation monitoring, and collaborative programs involving government, private sector, and community, such as fire-free village programs and jurisdiction-wide sustainability programs. Recognizing the continuing need for further deforestation reduction efforts, the significant decline thus far has allowed the strengthening of focus toward sustainable palm oil management.

One area of government focus is in the rejuvenation or replanting of smallholder palm farms that are expected to reduce the need for new agricultural land. Studies show deforestation from large-scale plantations in Indonesia is declining, but that deforestation outside of concession areas is still ongoing, albeit in limited area, driven mostly by smallholder farmers. The primary reason fueling the increase is the smallholders’ need to make ends meet by finding more land to plant additional crops, given their lack of knowledge on how to maximize the efficiency of their existing land.

The Smallholder Palm Oil Rejuvenation Program or Peremajaan Sawit Rakyat (PSR) was established to assist smallholder farmers to transition to increasing productivity through replanting on existing land rather than by expansion. Launched by Indonesian President Joko Widodo in 2017, the government program works in collaboration with palm oil-based companies in Indonesia to increase the productivity of independent smallholder plantations whilst continuing to reducing deforestation.

The Case of Seruyan, Indonesia

Moving Towards Green Economy in the Advancement of SDGs

ollowing the awareness in multiple aspects to support the future of development, new concepts have been established. The Rio+20, which was held in 2012 by the United Nations and attended by global leaderships, have birthed the sustainable development concept, recognizing the issues within the environment and the development in the last few decades that go hand in hand, and therefore can no longer be viewed separately (Lavrinenko et al., 2019)1 . With preserving finance, social responsibility, and environment in mind, the sustainable development concept focuses on “people, prosperity, peace, partnership, and planet”. In 2015, the United Nations classified the concept into seventeen “Sustainable Development Goals” blueprint, grouping the global goals for each specified area.

In the context of economy to support sustainable development, the United Nations Environment Programme (UNEP) led the implementation of “green economy” which focuses on economic growth stemming from investments into activities that allow carbon emission and pollution reduction, social inclusivity, prevention of ecological losses, as well as efficiency of energy and resources. Other than environmental and energy improvement, the green economy also focuses on improving well-being and eradicating poverty. A country’s transition to a green economy could very well be complicated in practice due to the complexity of the existing “traditional” economy which has provided livelihoods to its population—however, looking at the number of environmental and social issues as the implication of the economy, the move forward is now more urgent than ever.

The Case of Wehea-Kelay Forum in East Kalimantan, Indonesia

This study, “Collaborative Actions at Landscape Scale, The Case of Wehea – Kelay Forum in East Kalimantan, Indonesia,” was developed for the Jurisdictional Action Network with generous support from Cargill and the outcome of a genuinely collaborative effort conducted by IPMI Case Center, commissioned by Tropical Forest Alliance – World Economic Forum.

We want to express our gratitude to the Wehea-Kelay Essential Ecosystem Area Forum. The forum was established by the Governor of East Kalimantan, to be managed jointly with the Ministry of Environment and Forestry, East Kutai District Government, Berau District Government, Wehea Customary Institutions, the contribution from private sectors, and the Yayasan Konservasi Alam Nusantara.

We greatly appreciate the cooperation and offer our heartiest thanks to all parties involved who actively participated in the study and provided valuable inputs through interviews, online surveys, virtual convening, and ad hoc discussions to support the study’s preparation. Also, special thanks to the respected partners of the Wehea-Kelay forum, who have been tremendously helpful in providing feedback and continuously involved towards the end of the study, for which we may not be able to name each person or institution.

We hope that the collaborative management of the Wehea – Kelay Essential Area can be a model for saving ecosystems in general and protecting orangutan habitats in particular. This truly magnificent effort can become a good lesson and be replicated in other places, especially in areas with essential ecosystems and surrounding communities.

Forest Fire and Beyond: Unleashing the Potential for Collective Actions

The 2015 mega-fires that raged across the forests and peatlands of Sumatra were the worst in the history of Indonesia, spreading smoke and haze throughout Southeast Asia. In that same year, APRIL (Asia Pacific Resources International) Group, the second-largest pulp and paper company in Indonesia and one of the largest in the world, was experiencing positive results from its Fire Free Village Program pilot: a community-based program to eliminate the use of fire in village communities surrounding APRIL’s operations.

The Fire Free Village Program (FFVP) program, piloted in 2014 and formally launched in 2015, is a community engagement program that aims to understand the root causes of forest fires and implement sustainable ways to reduce or eliminate them in the communities neighboring the company’s forestry operations and beyond.

By 2018, the program had expanded to include 77 village communities in Riau Province, Sumatra.

Results were immediately positive. Four out of the nine villages participating in the pilot program achieved a fire-free record. Two villages had less than 2 hectares of area impacted by fire during the program period, while three villages still had more than 2 hectares impacted by fire. Overall, within two years of the program, the nine villages were able to reduce fires in their respective areas by 95% (Tribolet, 2020).

Shortly afterwards, in 2016, the Fire Free Alliance (FFA) was formed, a voluntary multi-stakeholder group including forestry and agriculture companies and civil society organisations set up to address the persistent issue of fire and smoke haze arising from the burning of land in Indonesia. While fires and smoke haze have declined in intensity in recent years through government-led national fire prevention efforts, the Indonesian government was determined to find a permanent solution to the annual recurring fires. The FFVP and the FFA support the government’s fire prevention efforts in Sumatra and right across Indonesia.

A Journey Towards Smallholder Inclusivity

This business case aims to document best practices of collective actions among stakeholders in assisting smallholders. The case study showcases scalable solutions to potential private stakeholders in generating a more inclusive business model among companies. This in turn will be crucial in exploring growth opportunities and supporting sustainable value creation among smallholder palm oil farmers; in this case for smallholders in Siak Distrik, Riau. More than fifty percent of palm oil productions in Riau, Indonesia can be traced back to the private sectors; however, smallholder farmers make up for 380,000 plantations which cover a total area of one million hectares, producing an estimated number of 5.9 million tons of fresh fruit bunches (FFB) per year. Emphasized in this document are the problems faced by smallholder farmers — which contribute to a number of sustainability issues, such as deforestation and social consequences — and what can be done, as well as what has been done, to establish a healthy ecosystem, improve sustainability and practice business inclusivity with the end goal of mitigating future risks. The case study also explores business opportunities through collaborative actions, such as the inclusion of smallholder farmers as part of the business value chain, mapping the heterogeneity of actors that make up smallholder palm oil economy, implementing sustainable solutions, overcoming certification challenges, and understanding the complex nature of the palm oil sector.