Engagement With Stakeholders
In 2021, RLU has worked together with an independent expert in social forestry from Jambi University to optimize livelihoods for smallholders through a Community Partnership Program (CPP). In the past year, more than 700 farmers joined RLU’s CPP covering over 700 hectares of land; however, to meet the ambitious CPP targets set with RLU upon investment, this program needs to significantly increase the numbers of participants in the coming years. This will likely require a revision of RLU’s approach to the CPP, with a fuller integration into RLU’s growth strategy.
RLU, together with &Green and IDH, commissioned MFC, a leading environmental and social consultancy, to develop a Land Return Roadmap and Framework that will help the company implement its land development approach. Following the
IFC Performance Standards
, this framework allows RLU to manage robust stakeholder engagement processes with land claimants and farmers in and around RLU’s concessions. The CPP will have a prominent feature in this Framework, alongside other benefit sharing models that have been designed for the different smallholders in the
landscape
. RLU has appointed resources to assess commercial feasibility of several benefit sharing models, and &Green will be closely involved to ensure that community partnerships are and will increasingly become an integral part of the business. This will be a priority in 2022.
In 2022, smallholders will be mapped out in more detail in a socio-economic baseline study. An Indonesian consultancy appointed by MFC in the Land Return Project was also chosen by RLU to carry out this baseline study on 500 households in and around RLU’s concessions in Jambi. Households directly impacted by RLU’s operations will be assessed and mapped to inform the implementation of the Land Return Framework.
Protection Forum
RLU is a member of the Bukit 30 Protection Forum (PKBT), a landscape-level collaboration platform in Jambi where five private land managers share information, knowledge, and resources for a more practical approach to protect their concessions and surrounding forest areas, including the national park. The platform, established by Partnerships for Forests (P4F), also engages with the Government and other stakeholders to ensure alignment and maximize support. Through a close engagement for the past year, the Forum has nurtured trust among the members, resulting in collaboration initiatives like joint-patrolling and joint landscape monitoring systems.
The Bukit 30 Protection Forum is currently building a web-based GIS platform with restricted access to members to exchange, for example, hazards maps (fire, illegal logging, encroachment, etc.) and other spatial information (location of
Indigenous People
, elephants roaming areas, etc.). By sharing this information, the members can adjust their protection plan, collaboratively design activities (like joint-patrolling), and monitor the impact of the collaboration on the landscape.
Financial Performance
RLU met all of its financial commitments over the year, however the expected equity injection from its shareholders did not materialize, forcing the company to seek a waiver from default for non-payment of interest in February 2022. Due to the cash reserves established to benefit the TLFF I Pte Ltd noteholders, such as &Green, the Notes remain current, having made the required coupon payments in February 2022. &Green’s further analysis and consultation with legal counsel suggests that while the probability of a default of the Notes has increased materially, TLFF I Pte Ltd will continue to be able to service the coupons through August 2022. However, the underlying loan to RLU is now officially in default. RLU’s shareholders continue to discuss long-term solutions to finance the operations and restructure loans due to TLFF I Pte Ltd. and other commercial lenders.
Both shareholders have conveyed their intention to resolve the impasse over the form and valuation at which further capital should be injected. &Green’s investment team has been working closely with all relevant parties involved with the TLFF I Notes issue, including ADM Capital, BNP Paribas, UNEP, RLU, Michelin and Barito Pacific as well as other Noteholders and the Notes Guarantor, Development Finance Corporation (DFC) of the USA to assert &Green’s rights and remain abreast of the latest developments between the Company and its shareholders.
