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Private Sector Action in Sabah, Malaysia Lessons Learnt from Jurisdictional Engagement

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Private Sector Action in Sabah, Malaysia Lessons Learnt from Jurisdictional Engagement PRIVATE SECTOR ACTION IN SABAH, MALAYSIA LESSONS LEARNT FROM JURISDICTIONAL ENGAGEMENT 1 The Tropical Forest Alliance is a multi-stakeholder partnership platform initiated to support the implementation of private-sector commitments to remove deforestation from palm oil, beef, soy and pulp/paper supply chains. Hosted by the World Economic Forum, our 170+ alliance partners include companies, government entities, civil society, indigenous peoples, local communities and international organizations, working together through Forest-Positive Collective Action to advance the world’s transition to deforestation-free commodity supply chains. Please visit www.tropicalforestalliance.org Contact us at [email protected] Follow us on Twitter: @tfa_global This case study was developed with generous support from the Cargill Foundation and the governments of Netherlands, Norway, and the United Kingdom. Author and researcher: Ginny Ng S. L. Editors: Leony Aurora and Róisín Mortimer Citation: Tropical Forest Alliance, Private Sector Action in Sabah, Malaysia: Lessons Learnt from Jurisdictional Engagement, July 2021 Reproduction of the text for educational or non-commercial use is authorised without prior permission from the Tropical Forest Alliance, provided that proper citation is made, and that material is used accurately and not in a misleading context. Cover by Nanang Sujana/CIFOR 2 TABLE OF CONTENTS Executive Summary 2 1. The Jurisdictional Approach at a Glance 3 2. The Case for the Jurisdictional Approach for Sabah 5 3. Framework and Initiatives for Jurisdictional 7 Sustainability in Sabah 4. Private Sector Engagement in Landscape and 11 Jurisdictional Initiatives in Sabah: Lessons Learnt 5. Conclusion 13 1 Nanang Sujana/CIFOR EXECUTIVE SUMMARY Since 2015, there has been an emerging trend by commodity-based companies to engage beyond their supply chains at the landscape level as a means to achieve greater coverage of their sustainability goals, particularly No Deforestation, No Peat, and No Exploitation (NDPE) in commodity production. Initially focusing efforts on their own supply chains and traceability, many companies recognised over time the importance of engaging with local governments and stakeholders at the jurisdictional or land- scape level to ensure greater impact at scale. Palm oil is a major export commodity for the state of Sabah in Malaysia. At the same time, various associated environmental and social issues need to be addressed, while maintaining economic via- bility, especially for smallholders. This case study showcases the efforts made to achieve jurisdictional sustainability in Sabah and identifies lessons learnt by engaged companies, with the aim to mobilise and inspire others to invest in landscape and jurisdictional initiatives. Sabah’s announcement in 2015 to certify all of its palm oil output to the standards of the Roundtable of Sustainable Palm Oil (RSPO) by 2025 as a pilot for the jurisdictional approach, enabled companies to coordinate their efforts at the state level and allowed them to profile their initiatives in support of this vision. These companies include Wilmar International, Sime Darby Plantation, AAK, Unilever, Reckitt and Walmart. Lessons learnt from private sector engagement in landscape and jurisdictional initiatives in Sabah include how strong ownership from the state government, local stakeholders and key industry leaders provides credibility and confidence for other companies to invest in the process. However, to ensure greater effectiveness, clear roles and responsibilities have to be outlined for each stakeholder involved in the process. Sabah’s jurisdictional approach and its multi-stakeholder nature, especially the involvement of the state government, helps companies achieve their sustainability goals and impacts at scale. The approach also helps companies to reduce the risk of leakage in their supply chains more effectively than if they were to focus only on traceability. Lastly, Sabah’s ability to attract support from companies with strong sustainability commitment will bring support from other actors along the supply chain, particularly as interest in landscape and jurisdictional approaches grow. The state’s continued commitment is seen by key stakeholders with cautious optimism as it would provide a baseline that all palm oil from the state would be produced at globally recognised and sustainable standards. Such jurisdictional certification at the state level would increase volume for RSPO certified palm oil, thereby increasing the economic return going to smallholders. 2 1. THE JURISDICTIONAL APPROACH AT A GLANCE Landscape approaches to sustainability are not new, with much of the initial approaches related to managing resource base, such as joint enforcement to protect key species, protection of watersheds and forests.1 Initially most of these approaches were led or initiated by civil society organisations (CSOs) and local or national governments.2 Similar to landscape approaches, the jurisdictional approach aims to reconcile competing social, eco- nomic and environmental objectives at a scale that matches the administrative boundaries of sub-national or national governments. Both landscape and juris- dictional approaches include multiple stakeholders with multiple objectives that could include reducing deforestation, improving biodiversity protection, and improving livelihoods of local communities. However, landscape approaches are not usually commensurate with a specific administrative or sub-national boundary.3 THE JURISDICTIONAL APPROACH AIMS TO RECONCILE COMPETING SOCIAL, ECONOMIC AND ENVIRONMENTAL OBJECTIVES AT A SCALE THAT MATCHES THE ADMINISTRATIVE BOUNDARIES OF SUB-NATIONAL OR NATIONAL GOVERNMENTS Since 2013, there has been an emerging trend by commodity-based companies to commit to No Deforestation, No Peat and No Exploitation (NDPE) in their supply chains. This was further strengthened with similar commitments made by the private sector through the Consumer Goods Forum (CGF) and the New York Declaration on Forests.4,5 The initial focus of these companies was to strengthen their sourcing policies, increase purchase of certified materials and map their supply chains.6 In recent years, companies increasingly recognise that the impact of these strategies is limited, and needs to be complemented by other types of action. Companies also recognise increased collaboration with various levels of government on policy, enforce- ment and stakeholder engagement would help them to achieve their objectives. Engaging actively in jurisdictional initiatives has become a strategy to bridge voluntary market-based commitments with government interventions for sustainable commodity 7 Miguel Pinheiro/CIFOR productions. This shift in discussions around sustainable land use 3 JURISDICTIONAL VS LANDSCAPE APPROACHES Jurisdictional approach covers a specific jurisdiction Both are characterised by multi-stakeholder collaboration to achieve sustainability at scale Actively involves the subnational government Commitment ends at the administrative boundary Landscape approaches are not delineated by the boundary of a jurisdiction COMPANIES ALSO RECOGNISE INCREASED COLLABORATION WITH VARIOUS LEVELS OF GOVERNMENT ON POLICY, ENFORCEMENT AND STAKEHOLDER ENGAGEMENT WOULD HELP THEM TO ACHIEVE THEIR OBJECTIVES moved the RSPO to look into jurisdictional approaches initiatives, highlighting the benefits they see from to increase their impact in the area of sustainable such engagements. It will also showcase progress palm oil. In 2018, the RSPO identified jurisdictional and best examples of how the private sector is able approaches as a key strategy in moving sustainable to mobilise, motivate and inspire others to invest palm oil into the mainstream markets in its revised similarly in these landscape initiatives. Theory of Change.8 Findings were derived from a desktop review of Since then, RSPO in collaboration with partners have publicly available literature and interviews with started piloting certification using their Principles representatives of companies that have invested in and Criteria (P&C) at a jurisdictional level in the landscape initiatives in Sabah, including several Seruyan district in Central Kalimantan, Indonesia, members of the Jurisdiction Certification Steering Sabah state in Malaysia, and the Ecuadorian Ama- Committee (JCSC), the multi-stakeholder governing zon region.9 This case study will focus on the state entity overseeing Sabah’s transformation towards of Sabah, Malaysia from the perspective of private sustainable palm oil production at jurisdictional level. sector engagement in landscape and jurisdictional 4 2. THE CASE FOR THE JURISDICTIONAL APPROACH FOR SABAH Sabah is a state of Malaysia and is located in the northern part of the island of Borneo. It is the second 21,600 HA largest state in Malaysia, with a total land area of natural forests lost 7.3 million hectares (ha) and a population of 3.9 in 2020 alone million people.10 The main economic activities for the state are services, agriculture, and oil and gas.11 It is also recognised as a state with megadiversity, 1.54 MILLION HA with populations of charismatic species such as the of oil palm planted area Bornean elephant (Elephas maximus), Orangutan and of that, about 440,000 ha (Pongo pygmaeus), the Banteng (Bos javanicus) and is RSPO-certified (about a third). the Proboscis monkey (Nasalis larvatus).12 There is also the diversity of the local communities in Sabah, with about 33 different ethnic groups speaking about 13 4.05 MILLION
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