Astra Agro Lestari (AAL), a leading palm oil company in Indonesia, is accused of a series of violations in its business practices. According to findings revealed by Friends of the Earth (FoE) of the United State of America, FoE Netherlands, and WALHI, 17 of its subsidiary’s palm oil concessions overlap with 17,664 hectares of forest areas in Indonesia, with 74% or 13,000 hectares located in the forests of Sulawesi. AAL claims that the report suffers from data source limitations that result in incorrect information.
These findings were released on Tuesday (June 25, 2024), in a report titled “Cultivating Conflict: How Astra Agro Lestari, Brands and Big Finance Capitalize on Indonesia’s Governance Gaps.” The 35-page report reveals that AAL is allegedly involved in a series of environmental and governance violations broader than previously documented.
In addition to AAL’s overlapping palm oil concessions with forest areas, the report’s publishers also found that at least 1,100 hectares of AAL’s palm oil plantations within these forests appear to be illegal. Three AAL subsidiaries in Sulawesi are operating without obtaining the necessary Cultivation Right Title (HGU) permits. “Land grabbing, human rights violations, and illegal operations by AAL should be a warning sign,” said Uli Arta Siagian, National Forest and Plantation Campaign Manager WALHI, in a press release.
She added that the Indonesian government is urged to ensure that land seized by AAL is returned to the communities and farmers. WALHI also calls on the Ministry of Agrarian Affairs and Spatial Planning to further investigate AAL’s permits and concession maps and ensure public access to this data.
“Plantation companies violating licensing regulations in Indonesia should have their permits revoked. To protect Indonesia’s remaining forests, the expansion of plantations within forest areas must be stopped,” she said.
Regarding alleged human rights violations by AAL, WALHI urges the National Human Rights Commission to investigate. The “Cultivating Conflict” report is a continuation of a report released two years ago by Friends of the Earth and WALHI in 2022. The June report also reveals evidence of environmental and human rights violations by AAL, including violent land grabs, criminalization of environmental defenders, and river pollution.
Instead of resolving prolonged conflicts with communities and addressing ongoing grievances, AAL denied the allegations by Friends of the Earth as “baseless.” In 2023, AAL initiated an investigation process that FoE deemed a flawed and unilateral attempt, failing to examine most of the violations published in the 2022 report. AAL is also accused of disregarding the fact that it never obtained Free, Prior, and Informed Consent (FPIC) from communities to open their land.
“Companies can make rhetorical commitments to uphold human rights and achieve environmental sustainability but talk alone is not enough – accountability is required,” said Gaurav Madan, Senior Forests and Land Rights Campaigner at Friends of the Earth US.
In the latest report, agribusiness traders such as Archer Daniels Midland (ADM), Bunge, Cargill, Fuji Oil, Louis Dreyfus Company, and Olam were highlighted for purchasing palm oil from mills connected to AAL subsidiaries PT Agro Nusa Abadi (ANA), PT Lestari Tani Teladan (LTT), and PT Mamuang in Central and West Sulawesi.
The report also details that at least 18 global consumer brands and financiers have benefited from weak governance and administrative failures in Indonesia to sustain their business operations.
These consumer companies, including Unilever, Barry Callebaut, and General Mills, have a history of purchasing palm oil from AAL. Meanwhile, financiers such as BlackRock, Vanguard, HSBC, and the Dutch pension fund ABP continue to provide substantial funding to AAL and its parent company.
“To stop deforestation and human rights violations, we need to shift towards community-based forest management. Financiers and palm oil buyers must stop promoting the expansion of industrial plantations,” said Danielle van Oijen, International Forest Program Coordinator at Milieudefensie (Friends of the Earth Netherlands).
“Continuing to purchase from AAL carries the risk of deforestation, legal violations, and human rights abuses. Law enforcement in the European Union must thoroughly investigate all transactions involving AAL products to ensure compliance with the European Deforestation Regulation.”
Astra Agro Lestari’s Response
Fenny A. Sofyan, Vice President of Investor Relations & Public Affairs, expressed surprise that there are still reports without confirmation regarding alleged deforestation, human rights violations, and environmental damage in the company’s supply chain attributed to AAL. According to her, Astra Agro actively engages in transparent open communication in following up on these reports, both on the company’s official website, through grievance mechanisms, email, and other platforms.
Regarding allegations from civil society groups, Fenny explained that they appointed Eco Nusantara (ENS) as an independent assessor with the capability and objectivity to review all accusations and issues mentioned in the FoE and WALHI report of September 2022. During the verification process, ENS invited the parties involved, but only WALHI did not confirm their attendance.
“Despite the verification results from Eco Nusantara and without confirmation, in June 2024, FoE and WALHI republished excerpts from a report by Yayasan Genesis Bengkulu that do not align with the data and facts on the ground. As known, Yayasan Genesis Bengkulu previously published a revised report in June 2024,” said Fenny in a written statement received by Tangkasi.id, Friday (June 28, 2024).
She emphasized that AAL and all its subsidiaries operate according to the laws and policies in effect in Indonesia. They also have a Sustainability Policy officially implemented since 2015 and have not undertaken any expansion or new land clearing since then.
Furthermore, AAL identified limitations in the data sources used in both the FoE and WALHI report as well as the report by Yayasan Genesis Bengkulu, which resulted in misleading information. Firstly, Yayasan Genesis Bengkulu only used the Nusantara Atlas Map and land maps from the Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) as research sources for deforestation allegations in forest areas attributed to AAL. Secondly, Yayasan Genesis Bengkulu also mentioned that government data on Business Use Rights (HGU) is not public.
“These two statements suggest that Yayasan Genesis Bengkulu did not use the legitimate HGU/location permits data of Astra Agro’s subsidiaries issued by the Indonesian government. HGU data is crucial for assessing overlaps between forest areas and HGU/palm oil plantation permits. Without verified HGU/location permits data, the findings can be misleading,” said Fenny.
Fenny revealed that the reference data from Genesis shows that the plantation area boundaries differ from the HGU/location permits of AAL’s subsidiaries. Additionally, the analyzed plantation areas are in two different regencies from the legitimate location permits owned by Astra Agro. Furthermore, the analyzed plantation area is much larger than the officially recorded company permits.
AAL also noted that the Genesis Bengkulu report did not consider historical regulatory developments over time, particularly regarding national spatial planning and its impact on overlaps between HGU and forest areas.
“The issue of overlaps between HGU and forest areas, interpreted as deforestation in the Genesis Bengkulu Study Report, can mislead the public. The issue of overlapping forest areas and HGU/palm oil plantation permits has been regulated under the Omnibus Law,” said Fenny.
Fenny underscored that regulatory changes continuously occur over time. In several cases in Indonesia, while implementing regional spatial planning programs, the government has repeatedly revised regulations related to spatial planning. Based on regulations, the Ministry of Forestry and Environment has gradually reassigned forest areas, resulting in many cases of parts of HGU areas being returned to forest areas, even though the HGU was previously obtained.
“Yayasan Genesis Bengkulu reported deforestation within forest areas in 15 Astra Agro subsidiaries’ concessions between 2015 and 2023. This report is highly inaccurate,” Fenny emphasized.
Fenny explained that since the implementation of the Sustainability Policy in 2015, AAL has not cleared any land for new plantation development. In initiating plantation development, AAL has complied with all applicable legal procedures, including land acquisition processes involving stakeholders, including communities.
Fenny also claimed the company always conducts socialization and reaches mutual agreements before starting projects, currently known as FPIC. (*)