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 Environmental issues in palm oil cultivation :
intensification; being major problem during • Forest, peatland conversion
increasing yield of oil produce
• Climate change
• Biodiversity loss

Social issues in palm oil cultivation:

• Land ownership conflicts
• Worker’s rights & conditions
• Treatment of smallholders

Unsustainable Methods : National Economic issues in palm oil? cultivation:

BURNING LARGE TRACTS OF FOREST during
• 13% of Indonesian gross
land clearing to open new plantation spot
domestic product (GDP)
WHY ????? (CHEAPEST, EASY AND EFFECTIVE)
• Employed over 34% of the
population
 PARADOX AND IMPLICATION by Data ?

Contribution/Added value from Forest and peatland conversion during land

agricultural sector (% of GDP) clearing by palm oil grower → unsustainable
were decreased while production method bring effect to emitted greenhouse
rate was increased significantly gasses to the atmosphere
Year by Year tren 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 5-
10 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 2008. Small volumes of

first Sustainable Agriculture RSPO-certified palm oil first
Initiative with defining became available for
indicators of sustainable purchase, but they were
production for a range of expensive. Then Unilever
raw materials, including initiated Consumer Goods
palm oil. Forum.
2000. Unilever established 2009. Unilever’s CEO led to
a Sustainable Agriculture a doubling down of the
Advisory Board. company’s commitment to
2004. Founding RSPO (The sustainability.
Roundtable on Sustainable 2009. Unilever announced
Palm Oil) that it would sever
2007. Greenpeace commercial relations with
campaign further GAR that had been the first
accelerated Unilever’s major firm to establish a
commitment to the issue. zero burning policy.
Then Unilever came out in 2010. launched the Unilever
support of a moratorium on Sustainable Living Plan
deforestation in Indonesia (USLP) and began to reach
and committed to out to Wilmar and Cargill,
purchasing palm oil from two of the largest traders, to
only certified, sustainable change their sourcing
sources by 2015. 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 Environment Concern Economy Concern
Identification

INDUSTRY (Include Producers and Traders)

Smallholder palm oil - 1. Focused only on palm oil

plantations and plantation with low focused on
growers 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 Environment Concern Economy Concern
Identification

INDUSTRY (Include Producers and Traders)

GAR (Golden Agri - 1. Low focused on deforestation

Resources, the largest and sustainability, and collected
palm oil supplier in harvest from small growers that
Unilever) 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 Environment Concern Economy Concern
Identification

INDUSTRY (Include Producers and Traders)

Cargill 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.
Willmar 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 Environment Concern Economy Concern
Identification
Government 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 Environment Concern Economy Concern

Identification

Government 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 Environment Concern Economy Concern

Identification
• 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
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