Introduction:
On 8 August this year we published a revised Group Sustainable Palm Oil Policy (SPOP), alongside a detailed Sustainability Implementation Plan (SIP). These had been prepared over several weeks in consultation with a wide range of our stakeholders, both customers and civil society.
The core components built on the four main planks of our existing policy – zero deforestation, zero planting on peat, zero burning and a focus on socio-economic well-being. As well as making each of these more robust, and much more detailed, we added considerably to our initiatives to enhance and protect peatlands, to improve fire prevention measures, and to increase the effectiveness of our labour rights monitoring procedures. We also require all our suppliers to adhere to our policies.
This is the first progress update on our overall sustainability activity since that launch. It comes at a challenging time for the whole of our industry, and we are no exception. We are very pleased that our suspension from the RSPO has been lifted, but we also accept that we still have work to do to ensure the full confidence of customers and NGOs. We remain absolutely committed to achieving that.
It also comes in the wake of the Greenpeace report of 27 September, which was critical of three of IOI’s indirect third party suppliers and one direct supplier, to which we gave an immediate response focused around the clear need for a pan industry resolution to many of the third party supply issues raised in that report. We plan to publish a detailed response to the points raised by Greenpeace shortly after this update.
1. Society:
i) Labour rights
We have identified a suitable specialist consultant and will engage the consultant in October to assist us in the implementation of fair and proper labour practices on all our plantations. The consultant will perform a full gap analysis of existing labour practices followed by assisting us to implement a labour rights monitoring system in January 2017.
ii) IOI Pelita, Sarawak – land and harvesting dispute with local community
In collaboration with the Land Custody and Development Authority (LCDA) of Sarawak (the minority shareholder in IOI-Pelita), the latest improved proposal which offers land ownership rights to the local communities has been put to their representatives last month. This is in the process of review by those communities, and there will be a follow up meeting with them in the next two months. We will continue to monitor progress on this and report back regularly.
We appreciate that the process of dispute resolution is frustratingly slow for some of our stakeholders but it is extremely complex and requires careful coordination with the government of Sarawak and the Resident of Miri who is mediating the whole process, and the agreement of more than 250 community households.
2. Environment:
i) Landscape Level Approach
IOI have contracted to participate in a consortium which is carrying out a large scale LiDAR mapping of peatlands in Kalimantan. With this participation, we will gain the most advanced analysis of peatland quality and depth relating to its four concessions in Ketapang We will have the raw flight data from the LiDAR before year end 2016 and the Digital Terrain Model (DTMs) for the landscapes in stages beginning mid-2017.
Note: LiDAR (Light Detection and Ranging) is an aerial survey which delivers a 3D model of the ground below. This is especially useful in creating a topographical map of forest canopy heights, assessing the depth of peat land.
Figure 1: LiDAR aerial survey.
ii) Review of assessments and procedures on new KPAM concession by Proforest
By way of background, this concession is under preparation for new planting in accordance with RSPO requirements and our own policies, including zero deforestation, and no planting on peat. We have received several operational permits, and have also commissioned an HCV assessment and a land use analysis. Results of both have now been delivered. Carbon stock data has also been collected.
Proforest have been contracted to provide technical support, and the first stage is to gauge whether existing reports are sufficient to ensure compliance.
Following a five day scoping visit, and comprehensive document review, Proforest will deliver a phase 1 report by mid-October – this will either confirm that existing assessments are sufficient to ensure compliance or will require additional studies in order to be so. It will include the compliance with IOI’s High Carbon Stock (HCS) commitments, using the converged HCS Approach methodology.
Phase 2 will be to carry out work to fill gaps – if any. A decision on when the new planting will commence will be taken only after the two phases have been completed.
iii) Global Environment Centre (GEC) report
GEC was commissioned by IOI to review progress up to 31 August on issues raised by the RSPO complaints panel in March in relation to the PT BSS plantation in Ketapang District, West Kalimantan. The review looked at the restoration plan following clearance of 141 ha of land in 2014, the adequacy of buffer zones for rivers, lakes and forest areas, and the status of recovery of 70 ha of HCV#2 which had been badly impacted by fire during the drought period.
In its report, GEC made recommendations with corresponding timetables and responsibilities. The August report (the third GEC report) found that progress had generally been good, with work initiated on almost all recommendations, and some completed or nearly completed.
In particular, GEC noted that rehabilitation of the 141 ha peatland had progressed well since April 2016. Water management had been enhanced with comprehensive installation of blocks of the drainage channels and water levels raised. Excellent progress has been made in transplanting peat swamp species from surrounding areas to the rehabilitation area. More than 25,000 seedlings of two species had been transplanted into 64ha in the southern portion of the rehabilitation area which was judged to have relatively poor natural regeneration during the April visit.
Figure 2: Drone shot of new blocks placed in canal in rehabilitation area: 80 blocks have been placed in 35 locations in May-June 2016 in the main canals and boundary canals. This is to ensure that any boundary canal around the restoration area is not leading to drainage by blocking it every 200m.
Figure 3: Signboards: additional warning signboards have been placed in the rehabilitation zone. In addition, the need to prevent fire was emphasized to workers and local community in meetings in July and August.
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Figure 4 and 5: Planted Alstonia (pulai) seedling (top); aerial view of rehab zone (bottom).
3. RSPO verification visit and visit by Aidenvironment
RSPO visited our Ketapang developments from 6 Sept to 11 Sept.
The RSPO verification visit was led by independent experts appointed by the RSPO. IOI was advised by the RSPO that the report on that visit would be completed by that verification team and forwarded to the RSPO Complaints Panel by end of September 2016.
During the RSPO verification visit, the independent experts also visited the Desa Natai Kuini, community surrounding our PT BSS concession. Discussions involved IOI’s project with the Desa to help provide clean water for their daily needs by helping to drill for water into the water basin, the community’s participation as volunteers for fire prevention and monitoring of fire in fire prone areas especially during the dry season and proposed farming experiment on a small plot of land with the community.
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Figure 6: Meeting between IOI, RSPO and the village elders of Desa Datai Kuini.
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Figure 7: Drilling to a depth of about 150 meters to reach the aqua basin for water.
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Figure 8: One of the firetowers built overlooking the HCS area.
There was also a visit by Aidenvironment to our Ketapang developments from 31 Aug to 5 Sept 2016. We are now working with Aidenvironment on a full closure of the complaint case through issuance of a final joint statement.
4. Transparency
i) Sourcing
Our latest Group traceability report has been published on 26 Sept. We are on track to achieve full traceability for 100% of our palm oil supplies to the mills by the end of this year, and for 100% of palm kernel oil supplies by the end of 2018. We have developed a three step approach to do this, which will enable us to know the exact origin of all our oil, the imposition of a regular risk analysis for all mills, and a continuous process of mill monitoring and verification.
ii) Grievance Mechanism
We have completed a grievance mechanism, in consultation with a number of stakeholders, which will be implemented in October. The Grievance mechanism includes regular public disclosures on new grievances and updates on existing grievances. The chart below illustrates the process.
Figure 9: Grievance mechanism
5. Resourcing:
i) Headquarters
Mr NB Sudhakaran has been appointed as the Group Head of Plantation effective from 9 September 2016. Sudhakaran joined IOI together with the acquisition of Unilever Plantations in Malaysia about 13 years ago and he was involved in the implementation of sustainability initiatives at Unilever Plantations during the early days before RSPO was formed. With his new appointment, he will be overseeing the operations and the implementation of the sustainability initiatives of IOI’s plantation division.
We are also recruiting additional team members with expertise in different disciplines for the HQ Sustainability Department.
ii) Plantations
Recognising the need for significantly enhanced resource to enable full implementation of our SIP, we are in the process of recruiting an additional 10 new employees for the plantation sustainability team. Together with the sustainability personnel recruited during the last few months, this will more than double the number of sustainability personnel employed compared to 6 months ago.
iii) Training
Internal training and awareness of our sustainability policies is an integral part of ensuring delivery on the ground, and we have begun a series of workshops for employees, which are run by Proforest. The most recent was on 5 September (see photograph), in which IOI sustainability team and Proforest trained IOI staff on third party sourcing commitments in the IOI Sustainable Palm Oil Policy (SPOP). Future workshops will cover topics on HCV, HCS, peat land, and third party suppliers engagement to ensure compliance with our policy commitments.
In addition, Sudhakaran, since his appointment, has been personally involved in conducting training sessions and workshops at various IOI plantation locations to roll out the implementation of the revised SPOP and SIP.
Figure 10: Proforest team conducts training for the IOI team in Sandakan on the revised SPOP and SIP.
iii) Looking ahead:
Key milestones coming up:
• Landscape level peatland protection plan for Ketapang to be in place by 30 November, and the raw flight data from the LiDAR mapping to be obtained before year end 2016.
• Proforest will deliver a phase 1 assessment report on our KPAM concession, by mid-October.
• By the end of December this year, we will have completed all assessments, including the HCS assessment for the KPAM concession
• Achieve full traceability for 100% of our palm oil supplies to the mills by the end of this year.
iv) Next report
Our Quarterly Update on the Sustainability Implementation Plan (SIP) will be published in end October 2016.