PT. Toba Pulp Lestari: A Corporate Repeat Offender

In March 2024, RAN published findings from an investigation that found that despite promises to stop driving deforestation, global brands and banks are failing to stop doing business with companies driving deforestation and rights abuses in Indonesia. The example presented was the failure of major brands like Procter & Gamble, Mondelēz, Colgate-Palmolive, Unilever, Kao, PepsiCo, Nestlé and Nissin Foods and banks like Mitsubishi UFJ Financial Group (MUFG) to break ties with the Royal Golden Eagle Group (RGE). The article referred to mounting evidence that RGE operates numerous ‘off the books’ operations or ‘shadow companies’ that continue to drive deforestation across Indonesia––one of which was a pulp plantation company called PT. Toba Pulp Lestari (PT. TPL). 

Since March, RAN has commissioned further spatial analysis of forest loss in PT. TPL’s industrial tree plantation (HTI) concessions in Indonesia from December 2015 using the 2014 land cover map provided by the Indonesian Ministry of Environment and Forestry as a baseline to determine the forest area. This new analysis found 424 hectares of natural forest were cleared within PT. TPL’s concessions after the introduction of RGE’s ‘no deforestation’ policy in 2015. At least 306 hectares of this forest loss occurred after December 2020, the deforestation cut-off date for FSC Full Forest Management certification.The documented deforestation should prohibit PT. TPL’s association with the FSC, as well as preclude PT. TPL products from the EU market under new EU Deforestation Free Regulation (EUDR).

Toba Pulp Lestari Tbk is a publicly listed company, which is over 90% owned and controlled by the Tanoto family of the RGE group, through a complex series of offshore companies (outlined p. 63-71). RGE is a multi-billion dollar conglomerate owned and controlled by the notorious Indonesian tycoon Sukanto Tanoto. The company is Indonesia’s second largest pulp & paper producer and a major producer and trader of palm oil.

RGE has been repeatedly exposed for over a decade for its impacts on Indigenous and traditional communities, tropical rainforests, biodiversity and its massive carbon footprint, and allegations of tax-evasion and the violation of laws prohibiting fires in pulpwood concession areas in Indonesia. However the controversy does not end there: RGE has never been transparent about the entirety of its business interests and, as detailed in recent publications, there is mounting evidence that RGE operates numerous ‘off the books’ operations or ‘shadow companies’ that continue to drive deforestation across Indonesia, in stark violation of its 2015 and 2023 sustainability policies. Control of these companies is typically obscured by complex corporate ownership structures, offshore companies and nominee shareholders.

The Evidence 

Deforestation in RGE’s pulpwood operations in North Sumatra, Indonesia 

Since the publication of this case in March 2024, RAN commissioned further spatial analysis of forest loss in PT. Toba Pulp Lestari’s (PT. TPL) industrial tree plantation (HTI) concessions in Indonesia from 2015 using the 2014 land cover map provided by the Indonesian Ministry of Environment and Forestry as a baseline to determine the forest area. This analysis found 424 hectares of natural forest were cleared within PT. TPL’s concessions after the introduction of RGE’s ‘no deforestation’ policy in 2015. At least 306 hectares of this forest loss occurred after December 2020, the deforestation cut-off date for FSC Full Forest Management certification.

Deforestation in PT. Toba Pulp Lestari Tbk concessions in North Sumatra 

All concessions are licensed to PT. Toba Pulp Lestari Tbk in Sumatera Utara (North Sumatra) Province deforestation took place in 9 of 12 districts highlighted in orange, and corresponding maps are detailed below.

Satellite map showing the extent of deforestation inside PT. Toba Pulp Lestari’s concessions in their Aek Raja Estate between 2015 and 2023 in the districts of Humbang Hasundutan and North Tapanuli (Tapanuli Utara).

For more detailed spatial data on this additional analysis review our second case report on Deforestation in PT. Toba Pulp Lestari’s concessions in Indonesia. 

The total area shown to be cleared in this new analysis is smaller than the total area of forest loss identified in the earlier analysis of satellite imagery which was based on the 2000 land cover map provided by the Indonesian Ministry of Environment and Forestry as a baseline to determine the forest area. The earlier analysis had found that PT. TPL’s concessions lost 1,390 ha (3,434 acres) of natural forest after the introduction of RGE’s ‘no deforestation’ policy in 2015. At least 392 hectares (963 acres) of this forest loss occurred after December 2020, the cut-off date for FSC Full Forest Management certification.

The Denial 

Royal Golden Eagle Group’s response to our findings 

On March 21, 2024 PT. Toba Pulp Lestari issued a public response to RAN’s publication that stated that false allegations were made in RAN’s report. In light of PT. TPL’s response, RAN commissioned further spatial analysis of forest loss in PT. TPL’s industrial tree plantation (HTI) concessions in Indonesia from 2015 using the 2014 land cover map provided by the Indonesian Ministry of Environment and Forestry as a baseline to determine the forest area. 

The Royal Golden Eagle Group was asked to comment on these additional findings which are outlined above. A response was received from PT. TPL which reiterated its statement “that there is no deforestation as claimed in your report. Any land cover change appears to be related to legal and fully compliant plantation management activities.”  Regarding RAN’s evidence on deforestation in PT TPL’s concessions in the Aek Raja, Aek Nauli, Tele, and Habinsaran. PT. TPL referred to the areas shown in our analysis as having natural forests cleared after December 31, 2015 were “occupied by the communities who have lived in these areas since before the TPL concession license was issued.” They claimed that their analysis of our maps “shows there are no plantations in the specified areas” which implies that the clearing was not carried out by them during plantation development activities.

TPL continued to state that the extent of deforestation inside their Aek Raja Estate between 2015 and 2023 shown in the map above in the districts of North Tapanuli was “associated with illegal encroachment and illegal logging within the TPL concession which was reported to the relevant authorities in 2023.”

TPL’s comment implies that any forest loss was the result of clearing by communities, not their plantation development operations. Given the well documented reports on the extent of land conflicts between Indigenous and local communities and PT. TPL — many of which have resulted from the lack of adequate processes to seek Free, Prior and Informed Consent when the pulp plantations were first developed — the failure to resolve land conflicts may be a contributor to small-scale land clearing that persists within PT. TPL’s concession areas.

TPL also responded to the allegations of cases of intimidation of members of Indigenous communities that have spoken out against its presence on their customary lands, and their failure to provide details of efforts to ensure the excision of remaining areas of natural forests that are allocated for conservation within their concession areas that overlap with customary forests of Indigenous communities, such as the Pargamanan-Bintang Maria community in the district of Humbang Hasundutan. They “rejected any allegations of coercion or use of force and criminalization of community concerns.” and referred to their new Human Rights Policy. PT. TPL has not yet taken action on the recommendation to adopt and publish a dedicated policy commitment to zero tolerance of violence, intimidation and criminalization of Indigenous communities and human rights defenders, or demonstrated that incidents of intimidation have stopped inside their concessions.

In its public response, PT. TPL referred to a commitment to a transparent approach to community engagement and published progress reports on its dispute resolution efforts. They claim that this “work to date has achieved strong support and active engagement from community and traditional leaders, local government representatives and residents from various villages.” Despite this claim, some community members that have called on PT. TPL to resolve their land conflict by committing to excise their customary forests from its wood production areas have been left out of the process.

The denial of deforestation by PT. TPL — and the evidence published by RAN — needs to be thoroughly investigated by brands and banks that do business with the RGE Group and the Forestry Stewardship Council. RAN is calling on all actors that finance, do business with, source from, or associate with, the RGE Group to immediately suspend business or associations with the RGE Group, and investigate our findings.