Dato’ Sri Dr. Haji Wan Junaidi bin Tuanku Jaafar, Minister of Natural Resources and Environment, Malaysia
Prof Simon Tay, Chairman, Singapore Institute of International Affairs
Ladies and gentlemen
It is my pleasure to be here at the 4th Singapore Dialogue on Sustainable World Resources.
2. Last year, I spoke about the benefits that a sustainable agroforestry sector can bring to the region, and the roles that the government, civil society and the financial community play in encouraging the sustainable development of the sector. I am happy to see the progress made by the various stakeholders over the past year.
3. Sustainable development is often defined as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. Extreme advocates of sustainability may come across as arguing against all forms of development – for example that every inch of forest must be saved in the same state as today. This extreme position is difficult to defend because it ignores the real and legitimate needs of the present generation. The palm oil sector, for example, brings important economic benefits to the region. Palm oil contributes an estimated 2-2.5% to the Gross National Product in Indonesia, and is the fourth largest contributor to Gross National Income in Malaysia. It also supports the transition of many communities out of poverty and significantly improves the lives of smallholder farmers. With demand for palm oil projected to grow by another 50% by 2020, there is tremendous potential for growth.
4. And yet, we are all acutely aware of the social and environmental costs that an expanding agro-forestry sector has brought. Social conflict between indigenous communities and corporates is common, due to discrepancies in land allocation. New areas for cultivation of palm oil often come at the expense of the rainforest, and all the resources it contains.
5. It is therefore critical that we continue to strike the right balance by actively shaping the agro-forestry sector into a more sustainable one. Let me elaborate on how various stakeholders can collectively work together to achieve sustainable supply chains for the agroforestry sector.
6. First, a credible, strong and vibrant civil society serves as a catalyst for change, to broaden and deepen environmental consciousness among the population. There have been promising domestic developments and ground-up efforts by civil society over the past year. Let me name a few.
7. WWF Singapore and founding members Unilever, Danone, Ayam Brand, IKEA and Wildlife Reserves Singapore, have established the Singapore Alliance for Sustainable Palm Oil (SASPO) in June last year. The Alliance sends an unequivocal signal to consumers that many major businesses are committed to the production, usage and trade of certified sustainable palm oil. I hope their numbers will grow quickly. These companies and organisations lend credibility to the alliance for sustainability. This is both because they walk the talk, but more importantly, they have a deep knowledge of sustainability issues in the real world and how to steer and shape them. Since the establishment of the Alliance, more Singapore based companies have been engaged on their sourcing and policies on palm oil. I encourage companies to make the transition to sustainable palm oil by joining like-minded companies to source responsibly through SASPO.
8. The Singapore Environment Council (SEC) had in January this year announced a new and more holistic green label category for pulp and paper products which encompasses peatland management and fire prevention standards as part of its criteria. The new category maintains one of the most stringent environmental performance standards globally, and requires companies to have their entire supply chain audited against these criteria. The Government will support companies in this effort by only procuring printing paper with this label in future.
9. The SEC also launched a new certification category for palm oil-based products last year. When it has taken off, the new category for palm oil products under the Singapore Green Labelling Scheme (SGLS) will lead to greater transparency in the palm oil supply chain and provide consumers greater assurance of sustainable sourcing.
10. Through its #GoHazeFree campaign, the People’s Movement to Stop Haze (PM. Haze) has been encouraging households and industry to switch to haze-free palm oil as part of its outreach programme. PM.Haze has also produced a “Haze-Free Cooking Oil” Guide.
11. The government strongly supports these ground-up initiatives that will allow for more informed purchasing decisions and influence consumers towards more environmentally sustainable attitudes and behaviours.But I hope that our NGOs will also deepen their expertise in the area they are championing. This is the best way the government and the civil society can work together so that as the government legislates for sustainability, NGOs have the credibility to help shape our society that supports sustainability.
12. Second, sustainability should no longer be an afterthought for companies, as it can directly impact the bottom line. With increasing global awareness of the impact of unsustainable farming practices, a lack of oversight over supply chains can result in serious reputational and financial risks for companies.
13. Hence, forward-looking companies are already taking steps to realize sustainability targets in their supply chain. Unilever is one such example. In 2015, Unilever only had 19% of its palm oil physically certified, but it has committed to increasing this figure to 100% by 2019. Others such as Mars, Mondelez, Nestle, Cargill and Olam have also taken steps in the same directions. They are sending a strong and right signal to the industry.
14. However, having a strong public showing of a company’s sustainable commitment is not sufficient. In a landscape where the traceability of agroforestry commodities is often elusive, this has to be matched by the concrete actions a company takes to scrutinize its upstream suppliers. Recently, a report by the Rainforest Action Network uncovered illegal clearing activities at a UNESCO world heritage rainforest site in Sumatra. This prompted Nestle to raise concerns over unsustainably-produced palm oil that it could have acquired from its upstream supplier. Nestle’s upstream supplier subsequently responded by putting on hold purchases from the alleged producer of unsustainable palm oil.
15. This episode shows that companies cannot let their guard down when it comes to upholding sustainability standards. It is only with continued vigilance – constantly making suppliers accountable, weeding out bad players, and so on - that we can move towards a truly sustainable and reputable agroforestry sector.
16. Third, governments in the region have moved individually and collectively to act on forest and land fires.
17. Our region has set its sights on achieving a haze-free ASEAN by 2020. Last year, ASEAN Member States developed and adopted a Roadmap on ASEAN Cooperation towards Transboundary Haze Pollution Control.
18. Each ASEAN Member State is doing its part to turn this vision into reality. Indonesia has taken positive actions to contain the number of hotspots over the past year. In 2016, there were just over a hundred hotspots as compared to many thousands in 2015. After Riau and Jambi began experiencing land and forest fires from mid-Jan 2017 as a result of drier weather conditions, Indonesia acted expeditiously by declaring a state of emergency in Riau on 24 Jan 2017. This allowed for the timely deployment of resources and tighter coordination between the central and provincial authorities in containing the fires.
19. More importantly, there are longer-term measures being put in place to address forest and land fires at source. Just last year, the Indonesian Government announced a five-year moratorium on new licenses to establish palm oil concessions. The moratorium will halt the draining and clearing of new carbon-rich peatland. This decision extends to concession land previously licensed to plantation companies as well. The Executive Director of the United Nations Environment Programme Mr Erik Solheim recently praised this move by President Jokowi, calling it a positive and historic decision, both for Indonesia and for global efforts to tackle climate change.
20. While the central government actively tackles the haze problem, provincial governments also play a critical role. Under the leadership of Governor Alex Noerdin, the South Sumatra province is taking on an exemplary role by embarking on a Green Growth Development plan. As you have heard, the plan adopts a multi-stakeholder approach towards the sustainable management of forested lands. In June last year, more than 2,700 independent smallholders covering 5,500 ha in South Sumatra received the Roundtable on Sustainable Palm Oil (RSPO) certification. This is currently the world’s largest individual group of independent smallholders to be RSPO-certified. I was not in the room but was told that Governor Alex Noerdin made a pledge today that this year, there will be no haze coming from the South Sumatra region. Thank you Governor.
21. Since its establishment in 2016, Indonesia’s Peatland Restoration Agency (BRG) has also gone from strength to strength in its peatland mapping exercise despite the challenges it had faced with plantation companies. It has also achieved successes in working together with NGOs and local communities on peatland restoration projects.For instance, BRG recently signed a Memorandum of Understanding with the Alliance of the Indigenous Peoples of the Archipelago to drive peatland restoration efforts and empower indigenous communities economically. BRG’s efforts bode well for the sustainable growth and development of the agriforestry sector.
22. Fourth, nascent sustainable financing efforts are gradually gaining a foothold in our domestic financial sector.
23. Following the launch of the Association of Banks of Singapore’s (ABS) Responsible Financing Guidelines in 2015, ABS member banks are now expected to factor into their lending and investment policies sustainability issues such as greenhouse gas emissions, deforestation, resource efficiency, labour standards, and corporate integrity. The local banks have since established internal taskforces on environment, social and governance issues, to help integrate the ABS Guidelines into their lending and business practices. Banks have also implemented environmental risk weightings as part of their loan assessment criteria. Loan decisions relating to companies which are assessed to have high environmental risks will be escalated to the banks’ senior management. More recently, the ABS has also introduced specific guidelines for banks on dealing with haze-related risks, such as no open burning on plantations and building capacity on fire prevention with local communities.
24. Investment firms have also moved to anchor sustainability in their investment processes. Temasek recently established a new sustainability and stewardship group to lead the company’s future initiatives around the themes of sustainability and stewardship. This is an important move that demonstrates the growing role that investment firms can play to drive sustainability, and bring about green transformation in the financial sector. I hope it will inspire and spur other financial institutions to do the same.
25. As the region develops, private sector financing will play an increasingly important role in infrastructure and project finance. If private capital can be directed to projects that take environmental factors into account, projects that engage in unsustainable business practices will be starved of credit. This will help to gradually shift the business landscape towards more sustainable practices. As a leading capital market in the Asia-Pacific, Singapore is well-poised to play an influential role in making this happen.
26. Each and every one of us has a part to play in realizing a sustainable agroforestry sector in the region. Governments need the political will to act quickly to curb forest and land fires, and will have to take on a larger custodial role in safeguarding the rainforest and high carbon-stock areas. Civil society will need to continue fostering the environmental consciousness of the people, while keeping businesses on their toes as it pushes for greater transparency. Major buyers should insist on purchasing from producers who subscribe to higher and more sustainable standards. Finally, enlightened buyers who make the right choice can help to create added incentives by encouraging producers to move towards sustainable practices. Let us have everyone on board this journey towards a more sustainable and responsible agroforestry sector as there is no other way.
27. Thank you, and I wish you a lively, constructive discussion ahead.