2016 Sustainability Benchmark: Indonesian Palm Oil Growers – PT Astra Agro Lestari Tbk

0
2016 Sustainability Benchmark: Indonesian Palm Oil Growers – PT Astra Agro Lestari Tbk

PT Astra Agro Lestari Tbk (AALI:IJ)

As published by Chain Reaction Research and written by Albert ten Kate (Aidenvironment), Gabriel Thoumi, CFA, FRM (Climate Advisers) and Eric Wakker (Aidenvironment), Astra Agro Lestari (Astra) is the second largest publicly traded palm oil company in Indonesia in terms of CPO production. The company is majority-owned by Jardine Matheson Holdings, which is controlled by the Scottish Keswick family. As of December 2015, Astra managed 298,000 ha of oil palm plantations with concessions scattered over Kalimantan, Sumatra and Sulawesi.

Since 2014, Astra has been active in downstream palm oil refining. In 2015, its refinery business generated 41% of its revenue. Together with the Malaysian oil palm giant Kuala Lumpur Kepong (KLK), it has formed a marketing joint venture for palm oil products from West Sulawesi. In January 2015, Astra bought a 50% stake in the refinery company PT Kreasijaya Adhikarya, located in Dumai, Riau province. KLK is the joint venture partner.

ValueWalk’s August 2021 Hedge Fund Update: Point72 Suffers Loss; Hedge Fund Assets Hit $4 Trillion

Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Point72 Asset Management losing about 10% in January, Millennium Management on a hiring spree, and hedge fund industry's assets under management swell to nearly Read More


Sustainability Policy and Recent Practices

  • 2015 oil palm revenue: IDR 13,100 billion
  • 2015 CPO-production: 1,737,000 tons
  • Sustainability policy and recent practices: moderate risk
  • 2016 No Deforestation, No Peat, No Exploitation (NDPE) CPO buyers: KLK, Musim Mas, Asian Agri / Apical, Golden Agri-Resources, Wilmar
  • 2016 NDPE buyers percent revenue: 70%
  • Adopted a NDPE-policy in September 2015, has moratorium on land conversion

In June 2015, Climate Advisers ran the She’s Not a Fan campaign engaging Astra for its deforestation-linked palm oil. As a result, Astra introduced a moratorium on land conversion across all its operations in Indonesia. In September 2015, it published a NDPE policy. Astra is not a member of the RSPO.

As shown below in Figure 1, spatial analysis has showed that, between June 2015 and mid-August 2016, Astra cleared no peatlands and there has been no deforestation for plantation development inside Astra’s concessions.

However, since the publication of its NDPE policy, Astra has not made visible progress with its policy goals on supply chain transparency and suppliers’ compliance. Astra‘s supply chain mainly comprises smallholders. Yet, it does also source from large companies such as PT Austindo Nusantara Jaya (ANJT:IJ) to fill its refineries.

 

Figure 1: During Indonesia’s 2015 haze disaster, about 2,400 ha of forests were lost due to fires inside Astra’s largely undeveloped peatland concession of PT Cakung Permata Nusa in Tabalong district, South Kalimantan. The red dots are recorded hotspots. No evidence was found on any intentional burnings by Astra.

Astra’s supply chain has social conflict. In September 2016, the Indonesian NGO KKI WARSI stated: “The indigenous Orang Rimba people in Jambi are suffering as a result of Astra’s palm oil plantations. Because Astra expropriated their lands, they live in extreme poverty and despair. We urge Astra to return land to the 400 Orang Rimba within Astra’s plantation so they can live a decent life.”

Previous article Michael Mauboussin: Since the end of 2006, investors have withdrawn nearly $1.2 trillion from active
Next article Mike Tyson “The Investor”
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.

No posts to display