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Sustainability post-B20: Strategic areas and governance
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Sihol Aritonang
T
he Business 20 (B20) 2022 Summit in Bali, co-hosted by the Indonesian Chamber of Commerce and Industry (KADIN), was a great success, drawing high attendance of global business leaders, governments and policymakers from around the world.
The Summit, which took place on Nov. 13-14, was part of the equally successful Group of 20 Summit hosted by the Indonesian government.
The achievements were made possible by cross-sectoral collaboration that is expected to grow even stronger in line with the G20 Indonesian presidency’s motto, “Recover Together, Recover Stronger”.
The B20 Summit issued the B20 Communiqué, which aims to drive collaborative action and calls on G20 governments to put forward national policies on priority areas. In summary, the three key messages that emerged were to promote innovation to unlock equitable post-crisis growth, facilitate sustainable development inclusive of MSMEs and vulnerable groups and drive multi-stakeholder collaborations across developed and developing countries to build a resilient and sustainable future.
To tackle the challenge, business transformation and innovation are keys to green economy as a solution offered by the private sector. Innovation is a key word at the B20 Summit and APRIL is pleased to have been able to participate in such a crucial global event that could change the world.
Coincidentally, thousands of kilometers from Bali, Egypt hosted the COP27 global climate conference in the Red Sea resort of Sharm el-Sheikh from Nov. 6-18. The event brought together world leaders, businesses and non-profit organizations to discuss action to tackle climate change. Indeed, it is time for action, as stated by Egyptian President Abdel Fattah El-Sisi in his message as he assumed presidency of the COP27.
“Egypt will spare no effort to ensure that COP27 becomes the moment when the world moved from negotiation to implementation and where words were translated to actions,” said President Abdel.
In fact, Indonesia has taken concrete steps to support efforts to tackle the effects of climate change, including by increasing the country’s emissions-reduction target from 29 to 31.89 percent, using the country’s own resources and capabilities. Indonesia submitted its enhanced NDC (Nationally Determined Contribution) to the UNFCCC Secretariat on Sept. 23.
Indonesia’s seriousness in tackling climate change is further demonstrated by the Indonesia FOLU Net Sink 2030 commitment, making it the first country to announce that the forestry and other land use (FoLU) sector, which was previously a net emitter, will turn into a net sink (net-zero deforestation) by 2030.
Private-sector companies, like APRIL, can contribute actively with tangible impacts through four strategic areas: carbon-emission reduction, promotion of conservation, transformative community development and circular econom
APRIL pledges a vision, made voluntary, to support the government’s targets through APRIL2030. Commitments embodied in APRIL2030 attempt to respond to the challenges mentioned above.
Carbon Emission Reduction
Through APRIL’s Climate Positive commitment, we have optimized the use of renewable energy through the construction of solar panels to support our commitment to lowering carbon emissions. Currently, 88 percent of our energy consumption in our mills in Riau is derived from renewable energy out of the targeted 90 percent by 2030.
To date, we have completed an 11 megawatt (MW) solar panel installation in our company’s operational area in Pangkalan Kerinci, Riau. Having seen the positive result, we are now planning to install up to 50MW. When the project is fully completed by 2025, APRIL will be a private sector company with one of the largest solar panels in Indonesia. We are also the first company in Indonesia to install solar panel on closed landfill.
We are also committed to following best practices in GHG accounting and target setting. Currently, we’re taking part in piloting the GHG Protocol Land Sector guidance to improve our GHG accounting. This is part of addressing the need for more consistency and transparency in the way companies quantify and report GHG emissions and removals.
To further strengthen our commitment to the Climate Positive pillar, we became a signatory to Kadin’s Net Zero initiative that was launched last month to spearhead the decarbonization movement and encourage the contribution of the private sector to carbon emissions reduction.
Promotion of Conservation
APRIL’s Thriving Landscape commitment champions conservation as part of production-protection landscapes while also increasing land productivity.
To deliver on the commitment, we are making sure that a significant portion of our landscape is conserved, protected and biodiverse. A set percentage of revenue from our plantation forests will go towards forest restoration and conservation. This includes expanding conservation and restoration areas outside our own operating footprint and ensuring zero net loss of protected forest area to achieve measurable gains in ecosystem values.
In parallel and to minimize the amount of land needed to meet production requirements, we are investing in silviculture research and technology innovation to achieve a 50% increase in plantation fiber productivity through silviculture enhancements, genetic improvements and soil nutrition. at present, we have increased fiber plantation productivity by 13%.
Currently, we manage and restore a 150,000-hectare degraded peatland on the Kampar Peninsula and Padang Island in Sumatra under our flagship peatland ecosystem restoration program Restorasi Ekosistem Riau (RER) benefiting climate and biodiversity.
Today, RER is the last and largest intact tropical peat swamp forest in Sumatra and home for 838 species of plant and animal. Many are of conservation concern as being Vulnerable, Endangered or Critically Endangered including the critically endangered Sumatran Tiger.
By keeping the RER intact, APRIL also ensures that the area is secured from potential human threats such as illegal logging, encroachment, fire, and wildlife poaching.
Transformative Community Development
Under the Inclusive Progress commitment, APRIL undertakes a number of transformative initiatives to reduce extreme poverty within a 50-km radius of its mill, with the goal of eradicating extreme poverty by 2030.
In 2021, we set a baseline to gather information used to tackle the symptoms of poverty & improve nutrition, aiming to reducing stunting in children in line with public health strategies. We collaborated with national institution to establish a Livelihood Study in 10 villages surrounding our mill area to identify resources needed and to develop a pilot program for eradication of extreme poverty.
We fostered entrepreneurship among local communities by empowering over 200 SMEs in six sectors while also increasing incomes for 59, out of 79, farmer groups by more than 15 percent through agribusiness program.
We also are committed to boosting women’s social and economic participation and ensuring equal opportunities for advancement. For that, we adopted and became the signatory to UN Women’s Empowerment Principles and using the Women’s Empowerment Principles Gender Gap Analysis Tool (WEPs Tool), assessed gender equality performance to identify strengths, gaps, and opportunities to determine the baseline.
Circular Economy
We are growing our business through diversification, circularity and responsible production. Our last pillar, Sustainable Growth, highlights our commitment to improving the efficiency of our resource utilization in our business.
In two years, we have successfully reduced solid waste to landfill by 56 percent as compared to the baseline and achieved 97 percent of chemical recovery, a tad below our initial target of 98 percent, as we are working to scale up our contributions to a circular bioeconomy through our investment in innovation and the widespread adoption of low-carbon and circular wood fibre products that substitute nonrenewable and fossil-based materials.
Under government permit, we are also now able to use sludge as a fuel substitute as we are promoting sustainable waste management by reusing waste to generate energy. This is one of our commitments to promote sustainable waste management by reusing waste to generate energy thus reducing GHG at landfill and at the power generation plant.
Governance for Sustainability
Delivering on sustainability commitment calls for strong governance to ensure focus, risk management and progress. The Net-Zero Summit for industrial decarbonization, a B20 side event, in Bali on 11 November highlighted the importance of governance.
While establishing climate governance is still an evolving effort at APRIL, it is enabled by our existing corporate governance structure which embeds sustainability at all levels of the business.
The main governance bodies, establishing direction and monitoring performance of our sustainability objectives are the Executive Management Committee (Board of Directors) and the Sustainability Department. The day-to-day implementation of the sustainability agendas are then shared throughout the different business units and functions such as Fiber Operations, Mill Operations, Human Resources and Community Development. These responsibilities are linked to business unit KPIs.
Additionally, we have an independent group of forestry and social experts that make up our Stakeholder Advisory Committee which oversees the implementation of our sustainability commitments and provides valuable insights and advice on business imperatives such as climate. We also work with third party KPMG LLP to assure the progress that APRIL has made in delivering on its commitments.
Climate change is a potential strategic risk to any company, and therefore moving forward our corporate governance will identify and manage it in the same way as any other strategic risk.
To summarize, our process of incorporating climate governance moving forward will rely on three key elements: first, a governance structure where sustainability and climate agendas are championed at the highest level of the organization coupled with business unit/function-level KPIs; second, integration of climate-related risks and opportunities into the company's strategy, risk management process and investment decision; and lastly, staying informed on current best practice on climate governance by maintaining dialogue with peers, policy-makers, investors and other external stakeholders like we are doing today. These efforts are still in motion and we are keen to learn from others
The ideas expressed here do not represent The Jakarta Post's views and policies.
About the writer: Sihol Aritonang is President Director of Riau Andalan Pulp & Paper, the operating arm of Asia Pacific Resources International Holdings Limited or APRIL Group. Operating in Riau Province, Sumatra, Indonesia, RAPP runs one of the largest pulp mills in the world.
