Globally, only four commodities drive the majority of deforestation: palm oil, soy, beef and wood products. The pulp and paper sector is one of the major wood products and risks contributing to tropical deforestation and other adverse impacts. The sector also has opportunities to develop more sustainable business models and production systems. Aidenvironment conducts analysis of the major sustainability risks and opportunities in Indonesia’s pulp and paper sector in order to contribute to the transformation of the sector.
Indonesia is a top 10 global producer of pulp and paper. The raw material for this industry primarily comes from industrial tree plantations (hutan tanaman industry or HTI). Industrial tree plantations are the second largest plantation sector in Indonesia after oil palm and cover more than 10 million hectares of land in Indonesia. Industrially grown trees are not only used for the production of pulp and paper, but also for timber products and energy generation.
Indonesia’s pulp and paper sector faces a number of sustainability challenges. These include deforestation, the degradation of peatland ecosystems and land conflicts with communities. Whereas deforestation rates in Indonesia have dropped markedly in recent years, the pulp and paper sector has not seen a transformation towards a No Deforestation, No Peatland, No Exploitation (NDPE) industry. Sustainability risks may turn into financially material business risks.
The Indonesian pulp and paper sector is dominated by a handful of large and influential corporate actors. These are vertically integrated actors that operate industrial tree plantations, pulp mills and paper factories. They also have substantial influence over their suppliers. At the same time, a number of other industrial tree plantation owners operate in markets outside of the pulp and paper sector. Aidenvironment investigates and monitors a set of the most influential companies that either have leverage to change the sector, and/or that face particularly salient sustainability risks.
Aidenvironment has started a project to promote pulp and paper sector transformation by
The project “Corporate Transformation in Indonesia’s Pulp and Paper Sector” is supported by the Good Energies Foundation.
A report on one of Indonesia’s largest deforesters
Sebuah laporan mengenai salah satu deforestasi terbesar di Indonesia
A TCFD-aligned scoping exercise
The company group Sumatera Dinamika Utama (SDU) was the third largest deforester in Indonesia’s pulp and paper sector in 2020, mainly due to its plantation company PT Permata Borneo Abadi, which cleared 850 hectares of forests. Little public information is ...
The company group Alas Kusuma was the second largest deforester in Indonesia’s pulp and paper sector over 2020, as its subsidiary PT Mayawana Persada cleared 2,800 hectares of forests. The clear-felling was mainly in orangutan habitat and it is ongoing ...
Aidenvironment recently released a report with Chain Reaction Research on the outsized impact of South Korean companies on the palm oil leakage market. The report reveals top South Korean buyers of palm oil do not have NDPE commitments. It finds ...
Amsterdam, 16 March 2021. One of Indonesia’s largest companies, the Royal Golden Eagle (RGE) group, is connected to 9,400 hectares of deforestation in 2020. RGE is among Indonesia’s largest companies in palm oil, pulp, paper and textile fibers. It claims ...
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