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Terpercaya – building a supply chain of understanding and trust

Terpercaya – building a supply chain of understanding and trust

A new blog by the EU REDD Facility’s Asia Coordinator Jeremy Broadhead poses the question – whose responsibility is forest protection and restoration? Drawing on his experience in the Kayu Mas timber concession in Indonesia and with the Terpercaya initiative, Broadhead sees a growing recognition of a healthy environment as an economic necessity. With the demise of the dichotomy between environment and economy, he sees cause for optimism about the successful establishment of supply chains of sustainably produced commodities - palm oil in particular.

The palm oil industry is a major contributor to Indonesia’s economy, and in 2018, 36.6 million tonnes of palm oil were produced, equal to roughly half of the world’s supply. The expansion of oil palm plantations has helped lift more than 10 million Indonesians out of poverty since 2000 and the industry supported the livelihoods of 23 million people in 2018, 4.6 million of them involved in independent smallholdings.


Wheel loader and logging truck in Central Kalimantan, 1994 by Jeremy Broadhead  


Yet palm oil is blamed for destroying the environment and violating the rights of communities and workers where it is produced. EU economies continue to import palm oil, but calls to stop exporting deforestation and the emissions it produces are growing ever louder. Industrialised countries are increasingly taking responsibility for negative impacts overseas. Most countries and many companies have committed to reducing deforestation and forest degradation.  

Questions over rights and responsibilities remain. But with domestic legal frameworks supportive of elements of the Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs) under the Paris Agreement, a foundation for equitable progress exists. Through accompanying dialogue and data collection, domestic laws can serve to facilitate sustainable production of commodities, and market-related benefits of sustainable production can be more widely communicated.  

For supply chains of sustainably produced commodities to be successfully established, says Broadhead, a supply chain of understanding and trust working in both directions is needed. Progress has been seen in recent years in Indonesia through Government adoption of a moratorium on oil palm expansion, ISPO revamp, and peatland restoration efforts. The country’s timber legality assurance system (SVLK) has been successfully implemented, the Indonesia-EU Voluntary Partnership Agreement in place, and there is, according to a blog post from Global Forest Watch, falling poverty and steady, measurable reductions in deforestation rates. 

In Indonesia, the Terpercaya initiative is supporting dialogue and cooperation on sustainability and trade and accelerating district transitions to sustainability. Terpercaya means ‘trustworthy’ in Bahasa Indonesia. The Initiative’s rationale is that by collectively defining sustainability at scale and disseminating information on related indicators, trust can be built amongst supply chain actors and policy and market incentives can be established to encourage positive progress. This approach supports meeting SDGs and NDC targets in producer countries, while reducing the environmental footprint of consuming countries. This all points in the direction of a change from conflict between nature and industrialisation, says Broadhead, to complementarity. There is cause for hope, he argues, that by building a supply chain of understanding and trust, supply chains of sustainable commodities can flourish. 


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