Massive Deforestation and Accountability Issues Remain at Royal Golden Eagle Group

The Problem: Lack of Corporate Group Accountability  

The Royal Golden Eagle (RGE) Group continues to face scrutiny for its connections to rights abuses, land conflicts, and widespread deforestation through various entities within its extensive corporate structure.

In March 2024, a coalition of NGOs published the Deforestation Anonymous report, documenting over 33,000 hectares (81,545 acres) of rainforest cleared since 2021 within the pulpwood concession of PT. Mayawana Persada (Mayawana) in West Kalimantan and highlighting the numerous links between Mayawana and the RGE Group. The report outlines how the operations of this company have resulted in social conflict with a local Indigenous Dayak community over the clearing of their sacred forest and degraded the habitats of critically endangered species like the Bornean orangutan and helmeted hornbill. 

Shortly after the report’s release, the Indonesian Ministry of Environment and Forestry issued a letter to PT. Mayawana Persada, instructing them to cease logging activities.

Despite the government’s clear instruction, satellite analysis conducted by Indonesian civil society organization Auriga Nusantara found that an additional 2,206 hectares (5,452 acres) of critical forested peatlands were cleared by Mayawana between April and May 2024.

The RGE Group has denied any connection to Mayawana. However, the report adds to the growing evidence that RGE is indeed connected to numerous companies not formally acknowledged as part of the group but controlled through a complex web of corporate structures across multiple tax havens, including Bermuda, Samoa, and the British Virgin Islands, where ownership structures are shielded from public scrutiny. These ‘shadow companies’ are often involved in deforestation or other damaging business activities that are prohibited under RGE’s ‘No Deforestation, No Peat, No Exploitation (NDPE)’ policies. 

This shielding of ultimate control allows companies to bypass their sustainability policies and best practice NDPE industry standards, continuing destructive practices under the guise of an anonymous and seemingly separate entity that ultimately benefits the same group.

It is now widely accepted that environmental and social policies must be applied consistently over all legal entities over which a conglomerate like RGE exerts control. The Accountability Framework Initiative (AFi) – which sets standards for ending deforestation and other issues in supply chains and finance – sets out a number of indicators of control. Applying these indicators to the case of Mayawana, corporate documents, operational management connections and supply chain links indicate the company is under common control with RGE group (for more information on methodologies for determining control, see Shining Light on the Shadows report). 

Major brands and banks have failed to suspend their business and financial relationships with the RGE Group by refusing to apply their No Deforestation, No Peatland, and No Exploitation (NDPE) policies at the corporate group level. This neglect of a critical loophole undermines their own credibility by failing to hold bad actors accountable within their spheres of influence. In the case of the RGE Group, this inaction has led to further forest clearance by its shadow company Mayawana.

The Evidence

Ongoing deforestation and peat development  

Since the publication of the Deforestation Anonymous report in March 2024, satellite imagery analysis conducted by the environmental group Auriga Nusantara found that deforestation has continued in deep peat areas confirmed to be habitat for orangutans and other threatened and endangered species. The analysis found 1,879 hectares (4,642 acres) of rainforest cleared in April and another 327 hectares (808 acres) cleared in May.

Canals measuring 6.83 kilometers East-West and 72.35 kilometers North-South have also been developed deep into the remaining forests including on peatland areas with ecosystem protection function critical for storing carbon and biodiversity conservation. 

These developments pose a major threat to more than 50,000 hectares (123,553 acres) of forests that remain within Mayawana’s concession, particularly the 7,315 hectares (18,075 acres) of natural peat forest surrounding the canals. Peatlands store massive amounts of carbon that gets released into the atmosphere when drained, making the carbon-rich soil vulnerable to catastrophic fires that harm human health and accelerate the global climate crisis. Mayawana is a high-risk case, given that over 60 percent, or 82,238 hectares (203,238 acres), of its concession is on peatlands.

RGE Group’s future deforestation risk

Mayawana is just one case in a long list of RGE scandals. In May 2023, the same coalition documented another RGE-connected shadow company, woodchip mill PT. Balikpapan Chip Lestari (PT. BCL), in East Kalimantan sourcing from suppliers that have cleared 37,105 hectares (91,668 acres) of natural forest in Central, East, and North Kalimantan. Asia Symbol, RGE’s flagship paper company based in China, confirmed that it has sourced wood pulp from one of the controversial suppliers caught clearing rainforests––PT. Industrial Forest Plantations–via its sourcing from PT. BCL. 

Since November 2021, RAN and local partner KSPPM have highlighted the RGE group’s connection to PT. Toba Pulp Lestari (PT. TPL), a pulp and paper company in North Sumatra that has failed to respect the right of a group of Indigenous Pargamanan-Bintang Maria community members to say ‘no’ to development on their customary lands.

While RGE chairman Sukanto Tanoto has been revealed to be the beneficial owner of PT. TPL, RGE has long denied that it is part of the RGE group. In 2022, the RGE Group issued a statement confirming that it exerts influence over PT. TPL, and since then PT TPL has been included within the scope of RGE’s corporate group by the Forest Stewardship Council (FSC).

The RGE group is ambitiously expanding its operations, pushing ahead with the addition of a new pulp production line at its pulp mill in Riau in breach of its sustainability commitments. Additionally, it is in the final stages of constructing a new mega-scale pulp mill through another ‘shadow’ company, PT. Phoenix Resources International, on the island of Tarakan in northeastern Kalimantan.

RGE has denied any connection to this entity, and that its mill expansion in Riau is in breach of its sustainability commitments. The planned expansion for these two projects is estimated to require nearly 750,000 hectares of new pulpwood plantations–over double the net planted area currently managed by APRIL and its existing network of suppliers. 

RGE has historically expanded pulp processing capacity beyond the means of its plantation resources. The resulting deficit has driven deforestation, as suppliers converted natural forests to develop new plantation land. There is a high risk that this pattern looks to be repeating itself in Kalimantan through shadow companies like Mayawana and PT. Balikpapan Chip Lestari. 

The Market Connections

The RGE Group is a global producer of pulp, paper, packaging, tissue, viscose, and palm oil. It published a policy of “zero deforestation” in 2015 following pressure from global campaigns. Major brands Procter & Gamble, Mondelēz, Unilever, Kao, PepsiCo, Nestlé, Ferrero, and Nissin Foods are connected to the RGE Group through palm oil sourcing. These brands may also be connected to RGE’s global pulp operations as their disclosures do not provide sufficient details of the raw material producers in their paper and packaging supply chains to verify otherwise. Nestlé is the only brand with known sourcing of pulp from APRIL’s pulp mill in Indonesia. 

Major global brands have failed to break ties with the group, including Unilever and Kao, which have recently strengthened their NDPE policies to require adherence at the corporate group level.

RGE Group is a recipient of credit from global banks with NDPE commitments including Mitsubishi UFJ Financial Group (MUFG), which has recently acted as sustainable finance advisor and lead arranger for USD $ 2 billion loans and derivatives for RGE’s palm oil division. MUFG’s contribution to RGE’s credit is estimated to be US$ 625 million (2016-2023). 

Mayawana and other ‘shadow’ companies related to the RGE Group serve as a test case for banks and brands to meaningfully implement their NDPE policies. 

RAN and allies are calling on all actors that finance, do business with, source from, or associate with the RGE Group to immediately suspend business or associations with RGE, call for an immediate stop to deforestation and social conflicts driven by Mayawana and other ‘shadow’ companies related to RGE, and investigate our findings.

FSC Risks Its Reputation to End Its Disassociation with RGE 

RGE has a long history of controversies including wide-scale deforestation and human rights violations that resulted in its main pulp arm APRIL being disassociated from the Forest Stewardship Council (FSC) certification system. Recently the FSC controversially changed its Policy on Conversion and certification standard to allow Full Forest Management Certification for areas of forests that were converted from forests to wood production areas between 1994 and 2020. RGE’s main pulp company APRIL is seeking to end its disassociation from the FSC via implementing a Remedy Framework for converted lands that has been outlined by the certification system.  

Given the growing evidence that RGE is connected to a web of ‘shadow companies’ involved in deforestation, civil society organizations continue to call on the FSC to suspend the “remedy process” for APRIL to gain re-entry into the sustainability certification scheme, at least until Mayawana stops deforestation and peat drainage in its concession and resolves its conflicts with local communities in an equitable and accountable manner.