Forest Conservation Policy Progress Update. Stakeholder Advisory Forum 8 14 March 2019

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1 Forest Conservation Policy Progress Update 8 14 March 2019

2 1 year to 2020 where are we right now? Only 6% of the companies making sustainability commitments are actually taking steps to implement them. 2

3 Forest is a critical piece in achieving climate targets 3

4 APP s contribution to global climate goals Policy commitment 1: PROTECTING NATURAL FOREST 1 2 Policy commitment 2: PEATLAND MANAGEMENT Policy commitment 3: SOCIAL COMMITMENTS 3 4 Policy commitment 4: GLOBAL SUPPLY CHAIN 4

5 FCP Impacts 68 % ZERO Casualties from human-wildlife conflict 284 Villages implementing IFFS program 100% Pulpwood supply from plantation ZERO Natural forest conversion by APP suppliers since % 0.14% Forest cover loss in protected areas 0.07% Concession areas impacted by fire Land disputes resolved 5

6 COMMITMENT 1 : PROTECTING NATURAL FOREST 6

7 No natural forest conversion within APP pulpwood supply chain Since September 1 st 2013, APP pulp mills only receive woods coming from responsibly-managed pulpwood plantations. Eversince then, APP maintains 100% supply from pulpwood plantations. Further, APP only purchase certified materials (woodchips and/or pulp) from open market. 7

8 Challenge: Addressing 3 rd party deforestation HOW TO STOP/ REDUCE 3 RD PARTY DEFORESTATION Illegal activities Forest fires Community land dispute 8

9 Natural Forest Cover Loss inside concession January December 2018, detected forest cover loss is 0.14% from total protected and HCS area. 9

10 Integrated Fire Management 0.07% APP suppliers concession areas impacted by forest fire. > USD 150m Investment made to develop and implement Integrated Fire Management since Plan Joint patrol and monitoring posts with the police, army and regional disaster mitigation agency.. 2. Rapid assessment on priority locations. 3. Strengthening community engagement for fire prevention. 10

11 Protecting wildlife and its habitat Based on data from camera traps and direct sightings, APP suppliers area are being used as habitat and corridor by: ~7% Of Sumatran elephant population in Sumatra ~10% Of Sumatran tiger population in Sumatra ~11% Of Bornean Orangutan population in Kutai National Park landscape 11

12 Rehabilitating the degraded forest areas 1. In 2018, APP has completed the development of restoration strategy for mineral and marine clay throughout APP suppliers concession areas. 2. APP has also built permanent sample plots to monitor the vegetation growth in the restoration areas. 3. In 2019, APP target to implement restoration works in up to 30,000 hectares of degraded forests across its suppliers protected and HCS areas, which also includes the work to conserve rare local tree species. 12

13 Support forest protection outside concession Target By Grantee 589,971 Hectares Target By Grantee 7,581 Hectares Target By Grantee 70,249 Hectares Target By Grantee 84 Villages Accomplished by Grantee 435,992 Hectares Accomplished by Grantee % 73.9 Accomplished from commitments 2, Hectares Accomplished by Grantee 46,970 Hectares Accomplished by Grantee 84 Villages % Accomplished from commitments % 66.9 Accomplished from commitments % 100 Accomplished from commitments 13

14 COMMITMENT 2: PEAT BEST PRACTICE MANAGEMENT 14

15 Progress in peat management APP and Deltares work on designing land zoning to determine: areas that have to be protected as water storage areas areas that will serve as buffer zone, and areas that will be maintained as production forest. APP has been working on research on alternative species which can grow well on peat and can be used for production purpose. Trials are currently on-going on the 12 alternative species that have been identified. The challenge is in finding more tree families to be used for research, due to short and limited fruiting season and accessibility. Further exploration to collect more tree varieties continue in various forest areas in Sumatra and Kalimantan. 15

16 COMMITMENT 3: SOCIAL COMMITMENTS 16

17 Community as a key actors in forest protection Communities living in and around the forest in Indonesia plays a key role in our effort to protect forest. It is therefore important for us to engage and empower them positively, so that they contribute to the effort to protect forest. APP engages with the communities through : 1. Land dispute resolution efforts. 2. Economy-development program Integrated Forestry & Farming System 3. Community forest patrol 4. Community fire patrol 17

18 Progress on Dispute Resolution 49% Land disputes resolved Challenges : 1. Trust building requires time. 2. Village political dynamics. 3. Involvement from external parties that often bring external interests. 4. Capacity of the personnel at district level to handle conflict resolution process. 18

19 Thriving communities, thriving forests Integrated Forestry & Farming System (IFFS) Launched in 2015, IFFS aims to reduce threats to forests by improving community s welfare. IFFS targets 500 villages until Villages benefitting from IFFS programs 16,807 Households benefitting from DMPA programs IDR 41.9 BILLIONS Total funds channeled to DMPA program 64 Women groups involved in DMPA programs Partnership : Martha Tilaar Group Empower 1,000 women in IFFS villages Multi-stakeholder collaboration APP is involved with several organisations to discuss the potential of implementing IFFS on a national scale. 19

20 Impact of IFFS implementation Proposed indicators for impact measurement: 1. Improved income of the participants. 2. Diversification of livelihood 3. Forests on landscape level is maintained/protected. 4. Reduced fire incidences. 5. Other positive impacts in community as a result of IFFS intervention. Current perceived impacts (internal observation): 1. Contribute and/or increase the households income of the IFFS beneficiaries in 68% target villages; 2. Increase the livelihoods diversification, provide more job opportunities to villages communities; 3. Reduce the fire incidents within the target village, and increase the knowledge of non-fire use in agriculture activities; 4. Improve perception and good relationship between the communities and the industry; 5. IFFS as the an alternative strategy to resolve the land conflicts between the communities and the company. 20

21 COMMITMENT 4: GLOBAL SUPPLY CHAIN 21

22 Ensuring suppliers compliance to no deforestation 1. Supplier Evaluation & Risk Assessment (SERA) pass/fail indicator is no natural forest conversion after February SERA process include Public Notification period to provide space for stakeholder s feedback on potential suppliers. 3. Aside from the 38 longterm partner suppliers, in 2018 APP accepted 16 one-time suppliers, 6 continuous suppliers and 3 community forests into the Approved Suppliers List % of APP Indonesia s current pulpwood supply comes from the 38 long-term partner suppliers. 2.5% are from imported materials while the remaining 1.3% are from local one-time suppliers. 22

23 OTHERS 23

24 Ownership link assessment In 2018 APP engaged a big-four auditing firm to assess the relationship, whether by ownership structure or financial influence, between APP and the pulpwood plantation companies in Indonesia. The assessment scope includes crosschecking 168 pulpwood plantation companies and the individuals listed under these companies shareholders, Board of Commissioners, and Board of Directors. Public summary of the assessment result is available for public on 24

25 THANK YOU