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Action

Tracking sustainable palm oil and defining jurisdictional sustainability

Seeking scalable solutions in Indonesia

The European Forest Institute’s EU REDD Facility and Inovasi Bumi (INOBU) are leading a study that maps and screens jurisdictional approaches to demonstrating sustainability of palm oil production. The Terpercaya Study takes its name from the Indonesian word terpercaya, meaning ‘trustworthy’, as it aims to generate credible information and analysis. It should inform and improve understanding and trust for discussions on sustainability, trade and cooperation.

It is financed by the Partnership Instrument of the European Union, through its Delegation to Indonesia and Brunei Darussalam. The study team invites input from interested stakeholders.

Key facts

  • Year: 2018-2019
  • Country: Indonesia
  • Partners: European Forest Institute’s EU REDD Facility and Inovasi Bumi (INOBU).
  • Budget: EUR 150 000
  • Funded by: European Union

The objective

The objective of this study is to help Indonesian districts and provinces explore jurisdictional approaches to demonstrating sustainability of commodity production. The study will provide the jurisdiction and the smallholder groups involved a pathway towards clearer market visibility and incentives. It aims to design and illustrate a system that could track jurisdictional progress to: 

  • Identify and reward front-runner districts
  • Attract a second tier of districts capable of demonstrating improvements well before they reach an ambitious target of jurisdictional sustainability or jurisdictional certification

The study should help clarify definitions of ‘jurisdictional sustainability’ in Indonesia and identify pragmatic jurisdictional approaches that could be replicated in order to eventually secure global market acceptance and acknowledgement. 

Workshop on collaborative land use planning in Papua

Workshop on collaborative land use planning in Papua

Source: Mokhamad

Workshop on collaborative land use planning in Papua

Source: Mokhamad

The challenge

Consumers rely on public or private certification/licensing schemes to ensure that the items they purchase are produced according to sustainability standards. However, such schemes usually place the burden of proof on commodity producers, including farmers and other small-scale producers, without necessarily entailing price premiums on the demand side. And in many producing countries, systemic issues also make it difficult and/or expensive for producers to meet the criteria of sustainability standards. These issues include land allocation or zoning that determines where farmers can legally plant crops, administrative procedures, fair and proportionate enforcement or official monitoring. Only the government and local authorities could address these issues. In practice then, sustainability certification schemes therefore risk excluding small-scale farmers who lack the resources or skills to meet their costly standards.

Certification remains an important tool for many companies, as well as a source of inspiration and best practice. Simpler, more affordable and scalable, yet trustworthy, approaches may help, and could complement certification. A trustworthy system requires transparency, as well as simple and objective verification. Measuring sustainability performance at the jurisdiction level, based on a few Key Performance Indicators and a supply-chain tracking system, may be a first step. It could, for example, be a simpler and less costly way to ensure a reduction in deforestation from producing more and better agricultural products while including smallholders and indigenous peoples in global supply chains.

In contrast to farm level and supply chain initiatives, jurisdictional performance is the responsibility of subnational governments working in conjunction with agribusinesses, farmer groups and civil society. The jurisdictional approach relies on new synergies between the authorities and the resources of different actors to achieve common goals. Democratically-elected local governments play a central role, with both the authority and legitimacy to issue regulations and implement policies for sustainability. More importantly, local governments, unlike many other actors, have the authority to monitor and enforce sustainability laws and regulations.

The approach

In decentralised Indonesia, district governments are responsible for providing public services and for coordinating socioeconomic development at the subnational level. A new decentralisation law, issued in 2014, redistributed some of the authority of district governments to provincial governments, especially as related to forest management. However, district governments still have the authority to develop agricultural development plans, issue licences for plantation companies, and to ensure that producers, including companies and small-scale farmers, cultivate the land sustainably.

The Terpercaya Study focuses on sustainability in agricultural commodity production at the district and higher levels (provincial and national). It will give particular attention to the palm oil sector and market demands for improved sustainability information. The initiative will also seek to inform major national policies related to climate change and sustainability. These include Indonesia’s Nationally Determined Contribution under the Paris Agreement on climate change, and efforts to accelerate palm oil certification, in particular through the Indonesian Sustainable Palm Oil Initiative.

The study will benefit from innovative methods for processing and visualising supply chain data that are making it possible to track complex supply chains more quickly and cheaply than before. The study will collaborate, for example, with the Transparency for Sustainable Economies (Trase) initiative, which is developing a comprehensive tracking system for Indonesia’s palm oil sector based on diverse publicly accessible data sources. The study will assess the extent to which the newly-available information can help screening for market opportunities and for more cost-effective monitoring of the implementation of government policies and regulations, while providing higher market visibility for local supply chain actors.

This study started in February 2018 and runs until April 2019. It was officially launched at a seminar held in Jakarta on 23 April 2018. A multistakeholder Advisory Committee was established at this seminar, to ensure regular inputs from stakeholders. This Committee is chaired by the Delegation of the European Union to Indonesia and Brunei Darussalam and the Coordinating Ministry of Economic Affairs of the Republic of Indonesia. It has 15 members representing the central government, district governments, non-state actors and the private sector. The Advisory Committee held its first two meetings in July and November 2018. It is expected to meet every three months until April/May 2019. 

The study asks the following questions:

  1. Within the next two years, would it be possible to track sustainable palm oil and jurisdictional sustainability performance across Indonesia? How reliable would a system for this be?
  2. Can we build a consensus among stakeholders about the best indicators for measuring jurisdictional performance? Are these indicators acceptable and appropriate for tracking the sustainability of palm oil?

The study team encourages stakeholders to participate by providing input and suggestions throughout this period to ensure the relevance of the results and messages.

Palm oil nursery in Indonesia

Palm oil nursery in Indonesia

Source: Aul Rah

Palm oil nursery in Indonesia

Source: Aul Rah

Results and impact

This page will be updated in the second half of 2019 to share the study’s results and impacts.

Project resources

  • Terpercaya Study Infobrief 1: Tracking sustainable palm oil and defining jurisdictional sustainability at scale in Indonesia. [PDF English] [PDF Bahasa Indonesia] [PDF Español]
  • Terpercaya Study Infobrief 2: Bridging Indonesian laws, the SDGs and commodity certification criteria for defining district sustainability. [PDF English] [PDF Bahasa Indonesia] [PDF Español]
  • Terpercaya Study Infobrief 3: Tracking progress to jurisdictional sustainability: Towards a shortlist of key indicators. [PDF English] [PDF Bahasa Indonesia] [PDF Español]
  • Terpercaya Study Infobrief 4: Why jurisdictional sustainability matters for commodity producers and how it can be measured in Indonesia [PDF English]
  • Annex to Infobrief 3: List of indicators of jurisdictional sustainability for discussion - Draft. [PDF English]
  • Making the transition to sustainable agricultural production: A practical guidebook for district governments in Indonesia – Draft. [PDF English]
  • Minutes of the April 2018 inception seminar [PDF English]
  • Minutes of the first Advisory Committee meeting, including presentations [PDF English]
  • Minutes of the second Advisory Committee meeting [PDF English] and presentations [ZIP English]
  • Minutes of the third Advisory Committee meeting [PDF English
  • Complementary presentation (‘Trase update’) delivered at the second Advisory Committee meeting [PDF English
  • For more information and to provide inputs email: info.terpercaya@efi.int