A new
report
from Mighty Earth — a global environmental NGO that does extensive work on
sustainable supply chains — has called out a project led by Michelin for
industrial deforestation in Jambi, Indonesia, just a few years after the
tire giant made a bold commitment to reforesting the region.
In 2015, Michelin — one of the world’s top consumers of natural rubber —
launched a joint venture to “produce natural, eco-friendly rubber” in
Indonesia.
The flagship project, undertaken with Barito Pacific Group — producer of
plantation commodities and feedstocks for the plastics industry — was lauded to
include the “reforestation of three concessions, representing a total surface
area of 88,000 hectares, ravaged by uncontrolled deforestation” and touted a
commitment to dedicate half of this area to “re-creating a natural environment
and community crops.” In 2018, the project was backed by Asia’s first $95
million corporate “Sustainability
Bond”
and presented to global investors as a way to support Indonesia’s climate-change
targets.
Mighty Earth’s report alleges that Barito and Royal Lestari Utama (RLU)
— an integrated natural rubber company based in Indonesia and a
joint-venture partner of Michelin — destroyed forests that were home to
Indigenous peoples and endangered species, cleared land to make way for their
rubber plantations, and then sought public recognition — and investment — for a
project to restore half of it.
Particularly worrying is that the Sustainability Bond was backed by global
financial institutions including BNP Paribas and ADM Capital; along with
Norway’s International Climate and Forests Initiative, the Global
Environment Facility and USAID. It also comes just a little more than a
year after the launch of the Global Platform for Sustainable Natural
Rubber (GPSNR) in 2019 — which counts Michelin as a
member; and aims to help create a “fair, equitable and environmentally sound
natural rubber value chain.”
“We know that there is a lot of deforestation and degradation of natural
resources in the global rubber supply chain,” Alex Wijeratna, Mighty Earth’s
Campaign Director, told Sustainable Brands. “We’re advocating and campaigning to
try and clean up this sector.”
Michelin contested the allegations in an email, but expressed openness to an
investigation — and stated a desire “to uncover the truth behind Mighty Earth’s
allegations. ... Michelin is committed to implementing any recommendations the
panel may make.”
The report digs into documentation, media reports, field interviews and
satellite data that provide striking evidence of industrial deforestation at the
project site and an adjacent wildlife conversation area just before Michelin
announced the joint venture. The natural rubber industry is expected to
grow as demand for tires,
medical use, and consumer goods all grows globally. Rubber trees grow in
tropical regions that host some of the world’s most important biodiversity; if
unchecked, this could lead to increased destruction of crucially important
landscapes. If even a model “green” project is destroying forests, that’s a
problem.
When compared to other incidences of deforestation in Southeast Asia, 2,800
hectares is relatively small. But this project was meant to be a model for
sustainable supply chain management in the region. Back in 2018, the attention
around it was markedly different than now: Partnerships for Forests lauded
the initiative as a “pioneering sustainable natural rubber
plantation,”
while the United Nations Environment Program (UNEP)
said
the project demonstrates “a novel way to unlock private finance to support the
Sustainable Development Agenda.”
Obviously, something went wrong. According to Wijeratna, it's something that’s
often an issue when it comes to ethical supply chains – lack of transparency.
“When we looked into it, we couldn’t get access to the due diligence documents,
and we found that really alarming,” Wijeratna said. What they did find were
local media reports and community concerns about the projects — concerns that
Michelin, and financiers, either ignored or were not aware of. There were other
red flags, too.
“We were really surprised to find non-disclosure agreements on these reports.
They need to have a much greater commitment to transparency,” Wijeratna
asserted. “It is also unclear who has had access to the due diligence
assessments during the key phase, between 2013-15, when the initiative was being
set up and established.”
Attempts to reach the organizations that were pushing for this project —
including Partnerships for Forests, an NGO that provides grant finance and
technical assistance to propose alternatives to business as usual in the land
use sector; and the Tropical Landscapes Finance Facility, which helped
create the Sustainability Bond — were unsuccessful. UNEP pointed only to RLU’s
response, in which
the company clearly states that Mighty Earth’s findings are “without basis in
fact” and denies any issues around transparency.
Mighty Earth is still awaiting responses from financial institutions, which it
hopes will play a stronger role in pushing for better accountability around
green funding. As Wijeratna says:
“We need the banks and the donors to call a time-out and say, let’s have an
independent investigation, put all the documents in the public domain and
determine what we should have known.”
Funders of this and future projects should be paying attention — as their
reputation, and ‘green’ credentials, will likely be damaged if the allegations
are proven true. They should be emphasizing proper due diligence, and ensure
transparency at all stages of project design and implementation; otherwise, the
risk of deforestation and human rights abuses will likely rise. If funders don’t
take action, instances like this could taint the entire green bond and
sustainable financing sector, where trust is key.
“We know that the Green Bond market has exploded in recent years,” Wijeratna says. “It’s really important that information around these projects is accurate, verifiable and complete.”
Mighty Earth says it released this report now so that the problem can be
addressed before it becomes too big — something we’ve seen in other industries
like the much-maligned palm
oil and
timber industries.
There’s still an opportunity to address these systemic issues when it comes to
natural rubber. The existence of the GPSNR means there is a platform to push for
sustainability — and, crucially, bring all the actors together: Mighty Earth and
Michelin are both members of GPSNR. But the organization, for all its promise,
is barely 1.5 years old; and has yet to even set up a grievance mechanism.
It’ll be worth seeing how Michelin, funders and the GPSNR all respond to this
report. If anything, this is another reminder that just because something is
promoted as ‘green,’ it doesn’t mean it is. The devil is in the details.
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Media, Campaign and Research Consultant
Nithin is a freelance writer who focuses on global economic, and environmental issues with an aim at building channels of communication and collaboration around common challenges.
Published Oct 21, 2020 2pm EDT / 11am PDT / 7pm BST / 8pm CEST