From the haze to sustainability

From the haze to sustainability

31 March 2017

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Indonesia —  Southeast Asia’s skies over the last twelve months have mostly been free of haze pollution. This is a relief for the warming planet as forest fires, particularly on peatlands, typically release huge amounts of carbon dioxide and cause acrid smog.

Efforts by the Jokowi administration in Indonesia to tackle the fires at source are one reason for the improvement. Wetter weather conditions have also played a major part in the good results. But the weather is changing, and not all for the better.

This year, experts predict the conditions will be drier than normal and fear that the extreme dry weather phenomenon called El Niño will return as early as July. Concerns arise, therefore, that severe fires will break out across plantation and forestry concessions across Indonesia, causing a return of the haze.

Efforts to prevent that are being made. On Dec. 1, Indonesian President Joko “Jokowi” Widodo signed into law a blanket ban on the cultivation of carbon-rich peatland across the country.

In anticipation of the dry conditions this year, Indonesia’s Peatland Restoration Agency (BRG) is already doubling up efforts to support the prevention of fires at the local and provincial level. Such on the ground and industry-specific efforts deserve recognition and support.

More broadly, the need is to help steer the value chain of agroforestry products towards greater sustainability. It is not just dry weather that causes the haze. The haze is a terrible manifestation of various unsustainable practices that plague the plantation sectors across the region.

Small scale growers are often reported to use fires for land clearance because they see little other choice. Many suffer low productivity and small margins and also lack of access to the right machinery and financing.

On top of this, concerns are surfacing about labor and social violations suffered by workers in the plantations. Beyond small scale growers, larger agribusinesses too face allegations — even if some are unproven — which can impact their standing and business. A number of Indonesianbased companies continue to be questioned by Singaporean officials for possible fires from 2015. Singapore-based companies too have faced criticism — with instances of alleged clearing of rainforests in Gabon and human rights abuses in Indonesia.

The global value chain links back to the financial sector and the financiers behind some agroforestry companies have not been spared the spotlight. The non-governmental organization, Greenpeace, has accused HSBC bank of financing companies that are allegedly responsible for forest destruction.

In response, the bank in February issued a new “No Deforestation, No Peat, No Exploitation” policy to re-emphasize the strict conditions attached to financing of palm oil companies.

While financing rules seem far removed from fires on the ground, such measures can and will likely have ripple effects. Companies in the agro-forestry sector already face considerable pressure to adopt more environmentallyfriendly practices and, going forward, those who claim to do so will have to have their practices independently verified. A broader and important shift is underway.

Different actors in the value chains who were previously part of the problem are now becoming part of the solution. A central pillar of this will be information and transparency. Banks and investors are increasingly integrating environmental, social and governance considerations in their due diligence, making corporate disclosure on sustainability issues more critical than ever to build trust and confidence.

Frameworks to facilitate such information disclosure are emerging. Last year, the Task Force on Climate-related Financial Disclosures (TCFD) outlined a set of recommendations for voluntary and consistent climate-related disclosures, thereby helping companies to better align with investors’ expectations.

Similarly, a growing number of companies in the agro-forestry sector are placing more emphasis on “traceability” so they can prove how they source their products to prefer the growers who adopt more sustainable practices. Technology is a key enabler for better information.

Increasingly, high tech drones have been used to map and monitor land use and support the intensification of crop yields, especially in remote areas. Mobile applications to collect farmer data are another innovation, allowing small scale growers to make more informed decisions about their use of fertilizer and pesticide so that they too can move to both greater sustainability and productivity.

To help promote transparency and the adoption of best practices, non-governmental organizations and research institutions can play a critical role. Dialogue across sectors is essential during this time of change in the policy and the priorities of the sector. Governments, large growers and their key customers and financiers need to be brought to the table together.

Equally important, gaps in the value chain need to be identified so that small scale growers can participate and collaborate in the move towards sustainability, rather than oppose it.

Achieving sustainable value chains is clearly not the sole responsibility of any stakeholder and neither should it be. Instead, a concerted, collaborative effort founded on access to quality information is needed to prevent haze and other crises from returning to the region.

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