Nearly a year after an Indonesian court ordered a timber company to pay country’s largest ever fine for deforestation, the government has been unable to collect the money, prompting campaigners to call for tougher sanctions against illegal loggers.
Merbau Pelalawan Lestari (MPL), a timber company, has launched a case review against the court’s decision to impose a 16tn rupiah fine (£900m), which it incurred for illegally deforesting nearly 2,000 hectares of Sumatran forest.
Timber companies and agricultural commodity firms, especially palm oil producers, have benefited for too long from illegal deforestation in Indonesia, says Kiki Taufik, global head of Greenpeace’s Indonesia forest campaign.
“Consistent and systematic law enforcement is urgently needed to send a serious warning that other destructive plantation companies should heed: deforestation has consequences,” Taufik says. “The government must take more serious measures when companies break the law, including revoking licenses or seizing assets.”
It is not only MPL that hasn’t yet been required to pay up. Palm oil producer Kallista Alam is challenging a 366bn rupiah fine (£20.4m) levied in 2015 for using fire to clear around 1,000 hectares of the Leuser Ecosystem, a protected rainforest in Sumatra.
Tom Johnson, head of research for non profit Earthsight, echoes calls for tough government action. Asset seizures would likely create a “better disincentive” than fines, which companies are either too small to pay or which can be challenged in the courts, he states.
“Companies in Indonesia will keep clearing forest illegally if the rewards continue to outweigh the risks,” says Johnson, whose organisation monitors illegal deforestation.
Other experts, such as Herry Purnomo, a scientist at the Center for International Forestry Research in Indonesia, strike a more conciliatory tone. “Since the fines involve a lot of money, negotiation between the Ministry of the Environment and Forests and the Ministry of Finance and the companies, on how and when they are paid is necessary.”
Purnomo also calls for greater legal and policy harmonisation across government to prevent rogue companies avoiding justice. It’s an opinion echoed by the Forest Legality Initiative, a cross-sector partnership, which argues that Indonesia’s “patchwork regime” of laws and regulations serves to create confusion for companies.
But the basics of compliance are clear enough, says Johnson. Under the country’s forestry law and its recent Presidential Instruction (pdf) companies are obliged as a minimum to have an authorised environmental impact assessment (EIA) before a single tree gets cut down.
In practice, EIAs often look very much like an afterthought. Johnson points to Indonesia’s central Kalimantan region, where palm plantation owners routinely deforest beyond permitted boundaries and where fire is illegally used to clear land.
“All of these offences are obscured by a lack of transparency on the part of both the government and the private sector, but have been exposed repeatedly by diligent NGOs and community activists,” Johnson says.
A prime example is the IOI Group. The Malaysian palm oil giant had its certification suspended in March 2016 over allegations of deforestation, following an investigation by consultancy Aidenvironment.
If legal action doesn’t work, then perhaps market forces will. Following its suspension from sustainability body the Roundtable on Sustainable Palm Oil, IOI Group lost lucrative contracts with food and beverage titans Unilever, Kellogg’s and Mars, among others. The palm producer only had its suspension lifted after agreeing to an independent inspection of its land.
MPL found itself in a similar boat. April Group, a major pulp and paper manufacturer, announced it would terminate its supply contract with the indicted firm immediately after news of the fine.
Yet markets are not a failsafe deterrent. It took more than a decade for the case against MPL to reach a guilty verdict, during which time it traded freely with the likes of April. Furthermore, most of the worst offenders are often small or unregistered firms that operate off the radar of the mainstream media and of big buyers.
Could technology come to the rescue? That’s the hope of Andrew Mitchell, founder director of thinktank Global Canopy Programme (GCP). GCP recently launched a mapping service that connects deforestation to specific agribusiness firms and traders.
Trase Earth is currently being used to pin the destruction of forests to soya production in Brazil and Paraguay, as well as the region’s beef industry. The service draws on mapping technology and then overlays it with commodity export data.
GCP is starting a new programme to map Indonesian palm oil exports back to their areas of origin, revealing which companies are linked through the supply chain to forest destruction.
“This means companies can identify risks, such as deforestation, and governments and others can better monitor progress,” explains Mitchell.