2016 Sustainability Benchmark: Indonesian Palm Oil Growers – PT Dharma Satya Nusantara Tbk

reminiscences of a stock operator pdf

Recently reported by Chain Reaction Research and written by Albert ten Kate (Aidenvironment), Gabriel Thoumi, CFA, FRM (Climate Advisers) and Eric Wakker (Aidenvironment), as of Q4 2015, the Oetomo family owned 28 percent of PT Dharma Satya Nusantara Tbk (DSNG), and Theodore Permadi Rachmat and family owned 25 percent. Two other families and other investors held the remaining 47 percent. DSNG generates 70 percent of its revenue through oil palm segment and 30 percent from its wood products segment.

As of 30 September 2016, DSNG had a planted area of 90,000 hectares (including plasma), of which 65,000 ha contained mature oil palm trees. The company’s planted area is located in Kalimantan. The mature areas are mostly located in East Kutai district, East Kalimantan.

Sustainability Policy and Recent Practices

  • 2015 oil palm revenue: IDR 3,100 billion
  • 2015 CPO-production: 407,000 tons
  • Sustainability policy and recent practices: moderate risk
  • 2016 No Deforestation, No Peat, No Exploitation (NDPE) CPO buyers: Golden Agri-Resources, Wilmar
  • 2016 NDPE buyers percent revenue: 70%
  • Since 2015, strengthened sustainability policy, slowed down operations in contested areas

DSNG lacks a specific NDPE policy. However, on its website it states its intention to avoid development in peatlands and areas with high carbon reserves, to preserve areas that have High Conservation Value (HCV), and to implement Free, Prior and Informed Consent in its land development process. In Q4 2015 it started publishing carbon assesments for some of its undeveloped plantations. The company has no official policy for complying with the United Nations Guiding Principles on Business and Human Rights or the ILO core conventions.

DSNG is a member of the RSPO. The company has never submitted any New Planting proposals to the RSPO, even though it has cleared and planted oil palm in new concessions. Three of its six mills have been RSPO certified. It aims to achieve 100 percent RSPO certification in 2018.

In 2013, 2014 and 2015, DSNG expanded its planted area by 9,000 ha annually. In 2016 no expansion occurred. As shown in Figure 1 below, since 2013 the company has developed oil palm concessions in a forested area in West Kalimantan that is orangutan habitat. In this time, DSNG cleared 1,500 ha of High Carbon Stock (HCS) forests.

Figure 1: Concession boundaries of DSNG’s plantation companies PT Kencana Alam Permai and PT Prima Sawit Andalan (Sintang district, West Kalimantan). Since June 2015, some small patches (maximum 30 ha) of HCS forests have been cleared (marked in red). Presently, remaining HCS forests inside the concessions comprise 3,700 ha.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)






About the Author

Gabriel Thoumi, CFA, FRM
Gabriel Thoumi, CFA, FRM works as Director Capital Markets at Climate Advisers where he manages global financial analytics focusing on mitigating systemic climate risk while advising on “greening” capital markets. He has 18 years of experience managing and deploying frameworks to improve global capital markets sustainability through risk mitigation and return enhancement. Previously, for Calvert Investment Management, he valued global equity, index, and fixed income portfolios and their component positions in the utilities, energy, materials, chemicals, and financial sectors. He worked on quantitative index construction and asset allocation strategies. He engaged Fortune 500 CEOs on approaches to mitigating climate risk using financial risk management tools. He led initiatives to improve financial accounting of exchange-listed products and incorporated natural capital into financial tools. He has also worked at Morgan Stanley's carbon offset company, Wells Fargo Capital Management, and American Express. He is an adjunct at John Hopkins University.

Be the first to comment on "2016 Sustainability Benchmark: Indonesian Palm Oil Growers – PT Dharma Satya Nusantara Tbk"

Leave a comment