Gotong Royong Palm Oil - SG2 - Rev3 [PDF]

Citation preview

GOTONG ROYONG Toward Sustainable Palm Oil*) *) REBECCA



HENDERSON, HANN-SHUIN YEW, MONICA BARALDI Harvard Business School Paper Release : June 2016



Presented by Group 2 :



29320050 Akhmad Kurnia 29320081 Andi Wibowo 29320014 Arlinda Wibiayu 29320019 Fatati 29320071 Putra Gusrianto



THE CASE PROBLEM?



BUSINESS LANDSCAPE OF PALM OIL



India and China is the main importer (28% world market share)



HOW PALM OIL BEEN USED MOSTLY ?



More Than 50% usage, cheapest essential fat source



HOW PALM OIL BEEN CULTIVATED? WHAT’S THE PROBLEM? Capitalization and land expansion instead of intensification; being major problem during increasing yield of oil produce



Environmental issues in palm oil cultivation : •



Forest, peatland conversion



•



Climate change



•



Biodiversity loss



Social issues in palm oil cultivation:



Unsustainable Methods : BURNING LARGE TRACTS OF FOREST during land clearing to open new plantation spot WHY ????? (CHEAPEST, EASY AND EFFECTIVE)



•



Land ownership conflicts



•



Worker’s rights & conditions



•



Treatment of smallholders



National Economic issues in palm oil? cultivation: • 13% of Indonesian gross domestic product (GDP) • Employed over 34% of the population



PARADOX AND IMPLICATION by Data ?



Contribution/Added value from agricultural sector (% of GDP) were decreased while production rate was increased significantly Year by Year tren



Forest and peatland conversion during land clearing by palm oil grower → unsustainable method bring effect to emitted greenhouse gasses to the atmosphere Year by Year tren



THE INITIATIVE



Palm oil plantations ranged in size from two-hectare plots managed by independent smallholders to the nearly 500,000 hectares (ha) controlled by Golden Agri-Resources (GAR), one of the world’s largest palm oil growers. Crude palm oil was sent to company mills for processing and refining before being consumed locally or sold by large global traders such as Wilmar and Cargill to a wide range of buyers, including Unilever, Nestlé, Proctor & Gamble



Palm oil was the world’s most widely produced and consumed vegetable oil. Demand quintupled between 1990 and 2015 and was expected to triple again by 2050. Palm oil was both cheap and versatile. Land planted with palm yielded 510 times more oil on average than land used to produce other oils like soybean or rapeseed (canola). Thousands of products, including food, detergents, cosmetics, biofuels, and other goods, contained palm oil or its derivatives.



Unilever : a central role in the transformation of palm oil production



1998. Unilever formed its first Sustainable Agriculture Initiative with defining indicators of sustainable production for a range of raw materials, including palm oil. 2000. Unilever established a Sustainable Agriculture Advisory Board. 2004. Founding RSPO (The Roundtable on Sustainable Palm Oil) 2007. Greenpeace campaign further accelerated Unilever’s commitment to the issue. Then Unilever came out in support of a moratorium on deforestation in Indonesia and committed to purchasing palm oil from only certified, sustainable sources by 2015.



2008. Small volumes of RSPO-certified palm oil first became available for purchase, but they were expensive. Then Unilever initiated Consumer Goods Forum. 2009. Unilever’s CEO led to a doubling down of the company’s commitment to sustainability. 2009. Unilever announced that it would sever commercial relations with GAR that had been the first major firm to establish a zero burning policy. 2010. launched the Unilever Sustainable Living Plan (USLP) and began to reach out to Wilmar and Cargill, two of the largest traders, to change their sourcing policies



In 2018, Unilever became the first consumer goods company to disclose a full list of our suppliers on their website



There were 521 suppliers on the list published in 2019 and 1 of them was suspended



in one way or another, all of our suppliers have technically infringed either RSPO standards or Indonesian law. It isn’t as easy as saying just pick the best, we can’t. We are not in a position to do that. The industry almost certainly has to go through fundamental change.



THE STAKEHOLDER



STAKEHOLDER IDENTIFICATION



 GOVERMENT  MANUFACTURER



 UNILEVER  RSPO (Round Table of Sustainable Palm Oil)  PALM OIL TRADER  PALM OIL GROWERS (Golden Agri-Resources (GAR))  NGO (green peace, WWF)



INDUSTRY (1) Stakeholder Identification



Environment Concern



Economy Concern



INDUSTRY (Include Producers and Traders) Smallholder palm oil plantations and growers



-



1. Focused only on palm oil plantation with low focused on deforestation and sustainability to gain more profitable crops.



-



2. Have direct environmental and social impacts on the ground.



3. Pressured from NGO and community make them implemented sustainability pratices by applying best planting and harvesting practices based on RSPO standards.



-



4. Several palm oil growers such as Wilmar, Cargill, Asian Agri, GAR, have signed the Indonesian Palm Oil Pledge (IPOP in 2014) which their objective was to engage with Indonesia Government to lobbying for policies and law.



INDUSTRY (2) Stakeholder Identification



Environment Concern



Economy Concern



INDUSTRY (Include Producers and Traders) GAR (Golden Agri Resources, the largest palm oil supplier in Unilever)



-



1. Low focused on deforestation and sustainability, and collected harvest from small growers that implemented non-sustainability practices.



2. Committed to a Forest Conservation Policy in 2011



-



3. Pushed from The Costumer and NGO change GAR become the first palm oil company launched a Forest Conservation Policy (2011)



-



4. GAR is committed to extend its forest conservation policy across all of its third-party suppliers include to small growers



-



INDUSTRY (3) Stakeholder Identification



Environment Concern



Economy Concern



INDUSTRY (Include Producers and Traders) Cargill



Willmar



1. Cargill had adopted sustainable practices on its company and their smallholders in 2010.



-



2. Collaborated with the WWF for research that global palm oil production could potentially be doubled over next 20 years without deforestation



-



3. Updated palm oil policy commiting to sustainable, deforestation free, social responsible palm oil.



-



1. Signed a sweeping “No Deforestation, No Peat, No Exploitation” pact.



-



-



2. Several NGO focused on Willmar contribution on deforestation by buying palm oil from problematic suppliers.



GOVERNMENT (1) Stakeholder Identification Government



Environment Concern



Economy Concern



1. Indonesian government promised to spend $1 billion per annum to reduce deforestation (2009) 2. The governments of Indonesia and Norway signed a Letter of Intent in which Norway agreed to provide $1 billion in financial support to Indonesia in return for a number of actions (2010) 3. Formed the Council of Palm Oil Producing Countries (CPOPC) with Malaysia (2014) 4. Continue the moratorium on awarding new land concessions in primary forests and peatlands (2015)



GOVERNMENT (2) Stakeholder Identification



Environment Concern



Government



Economy Concern



5. Hosted the first TFA2020 (The Tropical Forest Alliance) meeting in Jakarta (2013) 6. Codify the companies’ policies into law (2014), engage with The IPOP 7. One Map initiative, aiming to bring together spatial data for Indonesia into a single database (2010) 8 Making policies related to environment and sustainable palm oil



SOCIETY Stakeholder Identification



Environment Concern • Make publication “The Year the World Caught Fire” • Together with companies such as Unilever, Golden Hope Plantation Berhad (Malaysia), Loders Croklaan (Netherlands), Pacific Rim Palm Oil Ltd. (Singapore), and the Body Shop (U.K.) as initial member of RSPO Campaign further accelerated Unilever’s commitment to Sustainable Palm Oil



Economy Concern



POLICIES IN INDONESIA  Undang Undang No 32 Tahun 2009 Tentang



Perlindungan dan Pengelolaan Lingkungan Hidup (UUPPLH)



 UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 39



TAHUN 2014 TENTANG PERKEBUNAN



 Instruksi Presiden No.8/2018 tentang Penundaan



dan Evaluasi Perizinan Perkebunan Kelapa Sawit serta Peningkatan Produktivitas Perkebunan Kelapa Sawit.



 Permentan No. 11/Permentan/OT.140/3/2015



tentang Sistem Sertifikasi Kelapa Sawit Berkelanjutan Indonesia (ISPO) yang bersifat wajib (Mandatory)



 PERATURAN PRESIDEN REPUBLIK INDONESIA NOMOR



44 TAHUN 2020 TENTANG SISTEM SERTIFIKASI PERKEBUNAN KELAPA SAWIT BERKELANJUTAN INDONESIA



ONE MAP – KEBIJAKAN SATU PETA



RECOMENDATION  All stakeholder make a role/ Gotong royong to preserve environment and ensure the sustainabilty



of palm oil  The Government should continue on the commitment related Aggreement with Norway that one of



the issuee is moratorium on on awarding new land concessions in primary forests and peatlands.  NGO with high commitment continued being cooperation with government to promote the danger



of deforestation by burning land.  Commitment from supply chain palm oil to implement RSPO standar  The Law enforcement in Indonesia



THANK YOU