JAKARTA – The implementation of Environmental, Social and Governance (ESG) principles is a necessity among industries, including the palm oil industry. It is concerned with sustainability of the industries from upstream to downstream sectors.
From the social perspective, Indonesia’s economic coordinating ministry reported that the palm oil industry has contributed significantly to the efforts of eradicating poverty as the industry has created more than 16 million job opportunities.
The palm oil industry has also contributed significantly to Indonesia’s national economy as indicated by its exports which account for around 15% of the total non-oil-gas exports of Indonesia. It is related to its position as the world’s largest producer of palm oil and market leader with a market share of 54%. Considering such encouraging facts, the government has stated that all stakeholders should keep the sustainability of the palm oil industry.
The implementation of ESG principles is a way of the palm oil industry players to maximize their contribution in maintaining the sustainability.
Then, how is it implemented so far? What is its importance for industries to implement the ESG principles?
Following is an excerpt from the interview of TrenAsia with the Indonesian Palm Oil Association’s (GAPKI) Communication Division Head Tofan Mahdi in mid-September 2022.
Currently, how important is the ESG implementation for industries, especially GAPKI members?
All members of GAPKI have implemented their ESG commitment. Implementing such commitment is very important as sustainability of the palm oil industries is a necessity. Actually, the industries’ obligation to get the certification of Indonesian Sustainable Palm Oil (ISPO) has proven that governance of oil palm plantations in Indonesia has been in line with the implementation of the ESG principles.
To what extent the ESG principles have been applied by GAPKI until now? Has it been implemented or in the process of application?
Certainly, it has been implemented. The commitment to the good environmental governance has been realized in many programs, such as preserving the areas with high conservation value (HCV), protecting peat lands, preventing forest and land fires, etc.
In terms of social benefit, it’s something for sure, as the oil palm plantations are adjacent to the communities. It is impossible for us not to develop a good social relationship with the local people.
It should be noted that of the total 16.3 million hectare of oil palm plantations in Indonesia, 41% are owned by smallholders. On the governance, all member companies of GAPKI have implemented the good corporate governance.
What kind of socialization already conducted or being conducted among GAPKI member companies?
We have always reminded all members on the importance of implementing their commitment of ESG principles.
Is there any data on the percentage or number of GAPKI members that had implemented the ESG?
We’ve targeted that 100% of GAPKI member companies will get the ISPO certification. With the achievement, we can measure the implementation of ESG by each member company of GAPKI.
Generally, what is the challenge, if any, facing the palm oil industry players in implementing ESG?
The main challenge is how to maintain the same vision among industry players to ensure that the palm oil industries will continue to be sustainable.
What kind of appreciation GAPKI will give to palm oil players who already implemented the ESG?
We’re not in a position to give or not to give appreciation to member companies. Each of them will enjoy all the benefits they get from the implementation of ESG commitment. (*)