In-depth investigation reveals RGE palm oil arm APICAL sourcing from notorious forest destroyer
Rainforest Action Network (RAN) investigators have uncovered connections between major brands and banks, including Colgate-Palmolive, Nestlé, Mondelēz, Unilever, Kao and Japanese megabank MUFG as well as Dutch bank ABN AMRO and Chinese bank ICBC, and the destruction of critical habitat of Sumatran elephants and orangutans. The complicity of these brands and banks in the deforestation of this lowland rainforest is due to their sourcing from, and financing of, the Royal Golden Eagle (RGE) group. RGE’s palm oil trading and processing arm, called APICAL, has been caught buying palm oil from a mill supplied by a producer that is actively destroying forests in the Leuser Ecosystem.
“The reputations of major brands and banks continue to face serious risk of damage through association with Royal Golden Eagle,” said Gemma Tillack with Rainforest Action Network. “To insulate themselves from market backlash, these brands and banks must all suspend sourcing from, or joint-ventures and financing of, the Royal Golden Eagle group and all its subsidiaries and associated companies until the corporate group can prove its compliance with No Deforestation, No Peatland and No Exploitation benchmarks.”
Royal Golden Eagle is a group of companies set up by one of Indonesia’s wealthiest tycoons, Sukanto Tanoto. RGE has long been associated with deforestation as it has aggressively established vast areas of oil palm and pulp plantations under the control of its subsidiary companies. This case of APICAL’s connection to the destruction of the Leuser Ecosystem is just the latest example of the corporate groups’ continued failure to enforce No Deforestation, No Peatland, and No Exploitation (NDPE) practices in its global supply chains. This ongoing scandal showcases the need for those enabling this complacency––its customers, joint venture partners and financiers––to stop the financial incentives that continue to flow to the conglomerate until it strengthens its published policies and reforms its production and procurement practices.
RAN field investigators have caught RGE’s palm oil refinery buying palm oil from a mill supplied by PT. Tualang Raya, one of the worst palm oil producers in the Leuser Ecosystem. The company has increased its rate of clearance three fold from the six months prior and demonstrates further evidence of the spike in deforestation in the Leuser Ecosystem since the outbreak of Covid-19.
RGE subsidiary APRIL’s pulp plantations alone have negatively impacted over 500 communities. Over 100 communities are, or have been in active conflict with RGE and its suppliers. In the Lake Toba region of North Sumatra, the ancestral home of the Indigenous Batak people, over 20 communities, with more than 3,000 families are impacted by the pulp operations of Toba Pulp Lestari. Many of these communities continue to take action to reclaim their territory which stretch across more than 25,000 hectares of forest and customary lands.
RGE has received significant financing from multinational banks, including those with stringent Environmental, Social and Governance (ESG) financing criteria. Between 2017 and April 2020, RGE received close to $2.6 billion in loans for its pulp & paper operations, of which over $1.8 billion was directed to APRIL. Some of the largest lenders have included Japanese megabank Mitsubishi UFJ Financial Group (MUFG) as well as Dutch bank ABN AMRO, despite both being signatories to the UN Principles for Responsible Banking (PRB) and having policies on financing sustainable palm oil. ABN AMRO’s financing of RGE is particularly egregious given its explicit requirement that clients who produce or process palm oil have a “commitment to source from plantations which protect HCV Forest, HCS and peatland.” ICBC, a PRB founding member, has also financed RGE’s operations.