Investment Rationale
&Green’s maiden investment in the palm oil sector establishes a 10-year partnership with a well-regarded, Top-10 Indonesian palm oil company with a strong commitment to sustainable and inclusive production of palm oil. Anchoring this partnership is DSNG’s public commitment to fully implement its NDPE throughout its supply chain by 2025 and to achieve RSPO certification of its remaining 8 CPO mills by 2023. In making itself accountable to &Green and its other stakeholders, DSNG is setting a high standard for transparency, which makes its NDPE unique in the industry. Moreover, DSNG has committed to deliver valuable Environmental Return (“ER”) outcomes immediately in East Kalimantan, where 75% of its mature plantations and the majority of its mills are situated.
These ERs comprise:
- forest conservation of nearly 8,000 hectares;
- up to 700,000 tons of Crude Palm Oil certified to be sustainably sourced and produced;
- sustainable intensification of over 85,000 ha of productive land on-concession; and
- the ability to reduce pressure on over 200,000 hectares of forest cover in surrounding forestry license areas by securing smallholder livelihoods with its NDPE.
By 2025, similar additional ERs will be achieved from estates beyond East Kalimantan. Over 8,000 smallholder farmers and 11,000 individuals are expected to benefit from jobs, services and improved incomes as the NDPE is implemented by DSNG’s 10 mills to all its suppliers.
The transaction will thereby be a strong signal to the Indonesian palm sector for how sustainable palm oil production can be profitable while safeguarding valuable ecosystems and supporting long-term community economic development.
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Environmental Return & Social Inclusion
Environmental returns below are delineated for East Kalimantan only. However, the NDPE will apply across DSNG’s West, Central and North Kalimantan concessions. Forest conservation and social inclusion outcomes that can be achieved outside East Kalimantan will be assessed and subsequently monitored throughout the loan tenor.
The Landscape Protection Plan (LPP) sets out how the environmental return and social inclusion impact will be generated during the financing period, within the landscape or project area. The LPP for DSNG is defined by the land use plans of seven subsidiaries for their respective estates (including plasma farms), as well as their surrounding landscapes. This is an overall complex and large geography that DSNG will manage under a single cohesive plan at the group level.
For more information refer to the Landscape Protection Plan.
DSNG has already exhibited strong commitment to the deliverables required by &Green, as evidenced from the updates to the Best Practices section of its website and the specific reference to the &Green Fund in the Board of Director’s report in the DSNG 2019 Annual Report.
Environmental Return
On-concession, DSNG is generating its ERs by protecting and maintaining over 4,000 ha of forest in all concessions, including high conservation value (HCV) and riparian buffers, in East Kalimantan. Furthermore, DSNG is restoring small areas of degraded forest.
In the off-concession areas, DSNG is emphasising the protection of the forest left standing outside the concessions through its NDPE implementation strategy. This does not yet take into account the expected reduction of illegal or destructive activities (logging, burning for crops), which threaten the forest conservation areas within the landscape, nor the amount of HCV areas its plantation estate suppliers might report. Quantification of these possible outcomes will further contribute to the ER over time.
Forest Cover in and around Kalimantan
Forest Conservation:
Agricultural intensification:
Forest restoration:
