Bumitama Agri Ltd. Excellence Through Discipline SUSTAINABILITY REPORT 2014 BUMITAMA AGRI LTD BUMITAMA Bumitama Agri Ltd. Principal Office Jl. Melawai Raya | No. 10, Kebayoran Baru Jakarta 12160 | Indonesia 2014 REPORT SUSTAINABILITY Registered Office 10 Anson Road | #11-19, International Plaza Singapore 079903 Tel: (65) 6222 1332 Fax: (65) 6222 1336 www.bumitama-agri.com A NEW CHAPTER IN SUSTAINABILITY SCOPE OF THIS REPORT The report covers the calendar year 2014, as well as 2012 and 2013 benchmark data as available. Data includes all our operations as of 31 December, unless otherwise noted. The report does not include detailed information on our office-based operations in Jakarta and Singapore. In addition to impacts within our own organisational boundaries, the report covers material aspects for all plasma smallholders but not independent suppliers, including smallholders. Due to the rapid development of our sustainability performance and plans, the report contains updated information on some 2015 events, notably with regards to the planned implementation of our new sustainability policy published in August 2015, as we consider these to be of material importance to our stakeholders. BUMITAMA AGRI LTD. SUSTAINABILITY REPORT 2014 1 CONTENTS 2 Welcome 29 • Orang-utans and Endangered Species 4 Report Review: Eric Wakker 32 • Preventing Fires and Haze 6 Targets and Objectives 34 • Greenhouse Gas Accountability 8 About Bumitama 35 • Reducing Chemicals in Fertiliser and 8 • Our Business in Brief Pest Management 9 • Financial Summary 36 • Water 9 • Ownership Structure 37 People 10 • Operations 38 • Heart to Serve – Building Strong 12 Our Supply Chain Community Relations 12 • Suppliers 42 • Human Rights of Workers 13 • Traceability 44 • Health and Safety 13 • Customers 46 Ethics 14 Approach to Sustainability 46 • Legality of Concessions 15 • New Sustainability Policy 47 • Ethical Policies 20 • Complaints and Grievance 47 • Corporate Governance Mechanism 48 Base Data & Notes 22 • Sustainability Certification 50 Global Reporting Initiative Index 24 • Customer Comment: Wilmar 55 About the Report International 56 Glossary 25 Environment 58 Contact Us 26 • Integrating High Carbon Stock Assessments into Landscape Planning BUMITAMA AGRI LTD. 2 SUSTAINABILITY REPORT 2014 WELCOME “WELCOME TO BUMITAMA AGRI’S (BUMITAMA OR THE GROUP) FIRST SUSTAINABILITY REPORT. I am delighted that this report coincides with the launch of our new Sustainability Policy, which is supported by everyone in Bumitama from the Board level to our people on the ground. This policy is a milestone and will provide us with the guidance and direction to become a world-class palm oil producer, delivering high quality products and being an employer of choice while operating in harmony with local communities and safeguarding natural resources.” BUMITAMA AGRI LTD. SUSTAINABILITY REPORT 2014 3 Many of the commitments made in the policy are not new, through the harvesting of non-timber forest products in areas but rather areas that we have addressed since our inception. we have set aside for conservation. For example, our commitment to community development We are not perfect. Some of the grievances raised over the has been an integral part of our expansion process since past years have demonstrated that, as a young company, the beginning. The policy gives us a more structured way of we did not always do a good enough job in communicating addressing and prioritising our work in consultation with local our commitments and priorities, or in engaging with our communities. Other aspects of the policy are new and more communities. And we are still facing challenges that must challenging. In preparation for the launch of the policy, we be resolved, such as a much stronger focus on health and have decided to disengage from a number of management safety to ensure that no serious injuries or fatalities occur in contracts where legal compliance was in question. We are our plantations and mills. also working towards the elimination of Paraquat; identifying high carbon stock areas, including peat. We will be putting We have sometimes been told that we are too quiet; some great efforts into working with fresh fruit bunch suppliers to feel this means we are lacking in transparency. But as a ensure that they can meet the requirements of our policy. company it is not in our nature to make big claims until we are 100% sure that we can meet our commitments. This is The policy – and this report – is the culmination of a period of a principle that will remain with us. We must be sure that time where our company faced a number of complaints raised we can deliver before we make promises, whether they are on social media and the Roundtable on Sustainable Palm Oil to customers, financial institutions, our communities or the (RSPO) Complaints Panel. As a domestic producer, operating public at large. This inaugural sustainability report will help us within the Indonesian framework, we believed that we operate demonstrate accountability and continuous improvement. It in line with Indonesian regulations. However, the new policies documents progress and discusses the challenges we face adopted by our customers, and the increased international on our sustainability journey. By being transparent, we will focus on deforestation in the Indonesian palm oil sector be able to maintain a productive and ongoing dialogue with eventually led to our decision to improve our sustainability. our commercial and civil society stakeholders, and jointly In consultation with a wide range of internal stakeholders, as find solutions to deliver value to customers, shareholders, well as representatives from our banks, industry peers and communities and employees while protecting our precious civil society, I decided to re-affirm our commitment to RSPO wildlife and biodiversity. and continue our path towards becoming a premium palm oil producer. The work that is now starting is exciting. Some steps will be challenging, but it is a journey close to my heart: I was born I am proud of Bumitama and our communities – I truly in East Kalimantan and feel very connected to the forest and believe that when people make an effort to get to know us, the people of Borneo, and it is my aspiration that Bumitama they will come to admire the heart and dedication that can is seen as a force for good in protecting and enhancing this be found at every level of our company. We want to help unique region. I am grateful to our employees who work hard build strong communities that benefit from oil palm and from every day to make this a reality, and to our friends in civil an increasing diversity of local skills and growth capacity. society, in our industry and in the financial community who Our local economic development programmes have been have worked constructively over the past years to move us a tremendous success, building capabilities in cash-crop forward. We look forward to continuing and improving these agriculture, aqua-culture and poultry farming. relationships over the coming years. We want to contribute to sustainable development. It is important to me that we solve the dilemma that sometimes exists between the need for economic development for communities on the one hand, and biodiversity conservation LIM GUNAWAN HARIYANTO on the other. I am therefore excited about the work we are Executive Chairman & CEO doing in Kalimantan to find and develop alternative livelihoods Bumitama Agri Ltd. BUMITAMA AGRI LTD. 4 SUSTAINABILITY REPORT 2014 REPORT REVIEW: ERIC WAKKER I congratulate Bumitama Agri for realising a dual milestone statements. During the joint field visit, it was confirmed by publishing their first comprehensive Sustainability that such had indeed occurred. Realising its significance, Report along with an ambitious “No Deforestation, No Mr. Gunawan reaffirmed the CSR Department’s mandate Peat, No Exploitation Policy”. on the spot, and requested us to help resolve the company’s challenges. Aidenvironment committed to do These achievements are of great significance for so on a partnership basis. the transformation of the palm oil industry towards sustainability. Most of the world’s largest palm oil Over the course of 2014, the CSR Department stepped manufacturers and refiners have adopted strict purchasing up its leadership role internally, working to address policies today. These policies apply to their own estates pending complaints and problem cases that NGO’s had and, often the bulk of their supply, their third party raised the year before. In early September, the Group suppliers: the pure grower-crude palm oil producers. firmly declared to put an end to deforestation and peat land development. They also announced the divestment Bumitama represents the first pure grower in Southeast from several legally problematic management contracts. Asia to embrace a comprehensive sustainability policy. Towards the end of the year, the Group received its first This means that market demand for climate and human two RSPO certificates. rights friendly palm oil production is being anchored where it matters most; the growers’ level. This represents meaningful progress. I expect Bumitama’s forerunner position to be short- Jointly, we have begun to face important questions lived because the industry’s transformation towards regarding the scope of the company’s responsibilities sustainability has, in my view, already passed its tipping and abilities. For plantation companies today, tropical point. Arguably, the turn-around was sped up by the forests, peat and valuable community land have effectively launch of Wilmar International’s purchasing policy of become stranded assets. Does this imply that such areas December 2013. The CEOs of five other palm oil refiners are to be abandoned, likely to wither away? followed with similar commitments a month later. Crucially, For Bumitama, the answer is no. I applaud the company this led these industry leaders to consider their core for committing to secure some level of management values. For some, perhaps, it was the recurring haze control over approximately 8,500 hectares of forest and that blocks the view of their company board rooms in peat that it will not convert into oil palm.