Astra responds to questions about ties to controversial palm oil supplier

(foresthints.news) - Astra Agro Lestari, Indonesia’s second largest palm oil producer, has declared that it stopped purchasing palm oil from PT Austindo Nusantara Jaya Tbk (ANJT) in November 2016. Any purchases prior to this time, it claims, were made without the knowledge that ANJT was experiencing troubles.

This was the message conveyed by Joko Supriyono, an Astra director and also Chairman of the Indonesian Palm Oil Association (GAPKI), in response to a question from foresthints.news concerning the status of Astra-KLK, a joint venture company listed as one of ANJT’s most significant buyers as of the fourth quarter of 2016.

“KJA (a subsidiary owned by the Astra-KLK joint venture company) has not bought from ANJT since November 2016,” said the written message sent to foresthints.news (Mar 15).

In a further written response to foresthints.news a day later (Mar 16), Joko explained the following. “The purchasing was made by the Astra-KLK company as the joint venture did not know that ANJT had problems. After October, there has been no more purchasing from ANJT.”

Based on data from Rainforest Foundation Norway (RFN), Astra-KLK was still listed as an ANJT buyer in the fourth quarter of 2016. However, according to Joko, there was only a small amount of purchasing in October 2016.

The following Google Earth images (2014) show how ANJT has replaced formerly intact forest in Papua with palm oil plantations on the back of a USD 12 million-dollar investment.

The clearing of Papua's intact forest by ANJT has been under the spotlight since mongabay.com reported on ANJT's operations at the end of July 2014, owing to the supply chain links Wilmar and several other palm oil giants had with ANJT.

At the end of February 2015, ANJT's operations were highlighted once again as Wilmar was exposed as retaining its supply chain links with the company. Then, at the end of May 2015, the links of a number of other palm oil giants were again revealed.

This surely begs the important question as to how Astra did not know that these palm oil giants had cut their supply chain ties with ANJT from early 2016.

Non-transparent supply chains

In reaction to Astra’s statements as delivered by Joko, RFN chose to highlight the lack of transparency in Astra’s supply chains. This lack of transparency, according to RFN, is incompatible with Astra’s sustainability policy.

“We based our information on publicly available data. This only proves the point: Astra should have transparent supply chains and provide regular public updates as pledged in the Astra sustainability policy,” Anja Lillegraven, Head of the Asia and Oceania Division at Rainforest Foundation Norway, explained via email to foresthints.news (Mar 14).

Anja added that if Astra’s supply chains were transparent, any misunderstandings associated with them could be prevented. The answer, in her view, lies simply in the extent to which Astra is willing to be transparent about its supply chains.

A number of local and international NGOs, including RFN, have strongly criticized the implementation of Astra's sustainability policy as inconsistent with its promises, causing frustration and doubt about Astra's genuine commitment to implementing its sustainability policy.

Unclear classification of HCS areas

Meanwhile, ANJT released its own sustainability policy at the end of November 2016, affirming its commitment to maintaining areas which contain High Conservation Value (HCV) and High Carbon Stock (HCS) forests.

However, in ANJT’s sustainability policy, the listed company clearly and explicitly spells out that the company is going to continue clearing secondary forest in an effort to promote rural areas, which, it says, is “in line with the nation's development goals”.

The Google Earth images (2014) below demonstrate how ANJT has cleared Papua’s previously intact forest landscape to expand its palm oil plantations.

In other words, ANJT does not classify secondary forest as part of HCS forest despite the declaration made in its sustainability policy that the company intends to safeguard HCS forest. It can thus be concluded that the HCS forest mentioned in the company’s sustainability policy only refers to primary forest.

However, by various definitions, secondary forest is clearly an important component of HCS forest. By extension, any company that clears secondary forest is, in effect, also clearing HCS forest.

As such, ANJT will continue to be regarded as a “high risk third party supplier”, as pointed out by Glenn Hurowitz, CEO of Mighty (Feb 28), to Astra’s owners and investors.