NDPE update
DSNG’s has committed to fully implement its
NDPE
policy throughout its supply chain by 2025. Since 2021, the company has focused on the seven concessions and six mills in the East Kalimantan province, which accounts for nearly 75% of DSNG’s CPO production, before rolling out the policy across the three other provinces. Achieving NDPE compliance of 3rd party suppliers is typically the most challenging aspect of implementing an NDPE. This is especially relevant for large players like DSNG, who source from many various external suppliers, including palm oil concessions, cooperatives, and independent smallholders. In 2022, DSNG has progressed in building its capacity, as well traceability and monitoring systems. Although the company has started tracing its supplier up to farm level, mapping smallholders’ polygons has taken longer and required more resources than expected.
Convincing smallholder farmers to assist the company in drawing their farm’s polygon, when no other buyer is requiring them to do so, has been challenging. The difficulty grows when DSNG’s relationship with the smallholders is managed through middlemen such as local dealers. This reality hints that farm-level NDPE implementation of independent smallholder is still uncommon today. Despite NDPE commitments from most of Indonesia’s top-10 palm oil producers, NDPE compliance is often implemented at the level of
CPO
mills only.
Implementation of ESMS
DSNG is progressing well in embedding the IFC Performance Standards within its operations. Following the development of its E&S Management System in 2021, the Company has established an ESMS task force to manage its dissemination and adoption. Socialisation and capacity building, particularly at concession level, has been a priority in 2022. Monitoring mechanism of the performance of all subsidiaries are undertaken through continuous updates and quarterly review meetings. As the number of ESAP towards &Green is decreasing overtime, DSNG is transitioning from a phase marked by the development of new policies and protocols to one that focuses on implementation and continuous improvement.
Land use classification in Indonesia and its impact on forest conservation
PT Pilar Wanapersada (PWP), a subsidiary of DSNG in Central Kalimantan, was subject of a production license (HGU) re-enactment in 2022, reducing the plantation from 15,153 hectares to 11,580 hectares, including HCV areas totalling 2,028 hectares. Though established in 1999, PWP’s HGU was affected by a 2012 land zonation change to Forestry usage from Agricultural Production creating ambiguity about DSNG’s ability to continue to manage the entire area covered by its HGU. In 2018 the case was further complicated by the issuance of an overlapping license for Community Forestry usage. DSNG began working with the local agencies and communities to resolve the land tenure and responsibility for the specific overlap. The result, by 2022, was the decision by the government authorities to excise the land from PWP’s HGU license area. DSNG has engaged an NGO and conducted a land inventory and participatory mapping exercise with the aim of continuing to conserve the area in its current form. A provisional agreement with the villages involved in the area has been signed, together with a 3-year plan for joint conservation of the excised HCV area along with the remaining HCV area within DSNG’s license. The case does not impact DSNG’s LPP KPIs, as PWP is in Central Kalimantan and not part of the East Kalimantan targets.
Land use planning and issuance of licenses is not centralized or coordinated in Indonesia. The agricultural production licenses can often overlap with the forestry licenses, leading to the issuance of oil palm licenses in areas of production as well as protection forest. For example, four million hectares of production-forest or protection-forest classifed areas in Central Kalimantan overlaps with agricultural production licenses. The map of Central Kalimantan below illustrates demonstrate that much of the licensed agricultural production area (white) overlaps with production forest (yellow and light green).
