NGOs-Private Sector Engagement from Forest and Plantation Sectors:

Lessons-learned

Dr Mubariq AhmadExecutive DirectorWWF-Indonesia

Presentation at TBLI ConferenceBangkok, 26 May 2006*the presentation is prepared by Dr Mubariq Ahmad and Fitrian Ardiansyah

Forests in Indonesia

• Loss: 162 million ha (1950) 98-109 million ha (2003)

• Degradation: >3 million ha/year

• Critical condition: 59 million ha (inside & outside forests)

• Forest dependent people: 48 million

• Causes:

• Increase in population, infrastructure development, forest and land fires, logging and plantation concessions, mining, etc.

1900

E.g. Tropical Forest Loss in Sumatra E.g. Tropical Forest Loss in Sumatra 1900-2010 (1900-2010 (Worldbank, 2002Worldbank, 2002))

Hec

tare

(ju

ta)

2010

Montane

Swamp

Lowland

19602000

196019802000

1900 1980Forest Cover 2000

Analysed from satellite image, others are estimation

2010Similar situation may happen in Borneo and Papua

Corporate Sector:

“PART OF PROBLEMS AS WELL AS SOLUTIONS”

Finance Side

Supply SideDemand side

consumers

Market Influencing ForcesNGOs

mediauniversities

state/ government

processing industryprimary sector

retailers

standards

labels

banks

Supporting industry & communities

“Sustainability can only be achieved if everyone involved works together”

Consumers

Politicians/ govern-ment

People in the field

Corpo-rates/Fi-nanciers

WWF‘s Approach: With People Achieving Win-Win

Solutions

CASE A: Green Investment Screening (i)

• Helping banks to avoid some associated risks (overall business, operational, compliance liability and reputation risks, etc.) in investing in the sectors (by developing manual/handbook for credit officers)

• Involving timber and oil palm plantation industries, customers and banks

• Bank’s financial power as lever for change: embracing good forest and plantation companies and reject those who destroy or degrade forests

• Partners: ProFundo, HSBC, ING, Ministry of the Environment (MoE), IPOC (Indonesian Palm Oil Commission)

• Discussions have taken place with Bank Indonesia (central bank) with the help from MoE

Challenges: • Wider acceptance from national/local banks

• Different procedures adopted by banks in screening and risks management

CASE A: Green Investment Screening (ii)

CASE B: Pulp & Paper Industry Engagement (i)

– APP & APRIL (2 biggest pulp & paper industry in Indonesia) accommodate the demand of their customers and financiers in protecting HCVF (high conservation value forests):

• APP completed HCVF assessment in its 3 concessions (± 150,000ha), and agreed to protect HCVF in its 4 concessions (± 100,000 ha) in Riau, Sumatra.

• APRIL completed HCVF assessment in its 3 concessions (> 300,000 ha) in Riau.

Challenges

• Ensuring sustainable fiber supplying capacity; demands on lands compare with the utilisation of abandoned lands

• Bridging the financial recovery gap - default risk vs accepting longer repayment term over sustainability path

CASE C: Indonesian FTN/ Forest and Trade Network (i)

• Parts of Global FTN, promoting partnership between NGOs and companies to improve the quality of forest management (using step-wise approach towards certification).

Some examples:• Through Indonesian FTN, Bank Ekspor Indonesia (BEI)

supporting Falak Jaya Furnitama (FTN member) to achieve manufacturing and purchasing of sustainable forest products(potential collaboration with other members to be explored)

• IFC PENSA assisting Inhutani and small scale industry (CV Kwas, supplied by Inhutani) to be member of Indonesian FTN to achieve sustainability

BEINEWS, Edisi 28, 2005

CASE C: Indonesian FTN/ Forest and Trade Network (ii)

Challenges:

• Limited sustainable forest products (certified or in progress) to supply the market demand

• Processes to achieve FSC (credible) certification is more challenging and usually takes a long time

• Promoting other concessions to join Indonesian FTN

• Willingness to pay for the premium has a limit

CASE D: Palm Oil (i)

• RSPO (Roundtable on Sustainable Palm Oil), a multi-stakeholder initiative incorporating producers, buyers, retailers, financiers and NGOs in the palm oil sector – succeeding to ratify Principles and Criteria on Sustainable Palm Oil

RSPORoundtable on Sustainable Palm Oil

• Mega plan (1.8 million ha, the border in Kalimantan/ Heart of Borneo); associated with CDB (Chinese Development Bank) and CITIC;

CASE D: Palm Oil (ii)

Current status of the mega plan:• Indonesian government agreed not to plan

oil palm in the HoB area and only use abandoned lands

• CITIC agreed not to invest in HoB area and only use non-forested lands with clear permits

Challenges:• Furthering joint work on the ground on

HCVF assessment and protection as well as better practices in plantations

• Mobilizing other financial institution to take the same position

‘Sustainable Palm Oil Products’

.id/

www.wwf.or

Kantor Taman A9/Unit A1Jl. Mega Kuningan, Jakarta 12950

INDONESIA(Ph):+62-21-5761070, (Fax):+62-21-5761080

www.wwf.or.id For further information please contact: Dr Mubariq Ahmad (Executive Director)

and/or Fitrian Ardiansyah (Program Coordinator, Forest Restoration & Threats Mitigation)Email: mubariqa@wwf.or.id and/or fardiansyah@wwf.or.id