Methodological Notes

Group and ownership attributions

There is no publicly available database containing full details of Indonesia’s plantation concessions and the groups that control them. Many concessions do belong to formally established, stock-listed companies with conventional parent-subsidiary structures that list their subsidiaries and/or estates more or less comprehensively on their websites or in their annual reports – sources on which Greenpeace has based its characterisation of these as groups, supplemented by information taken from permit documents and elsewhere.

However, other concessions have much less straightforward ownership and control, belonging to complex networks of companies owned by individuals or families whose links are not (or only in part) publicly acknowledged. In some cases a well-known, high-profile company may have a cluster of clandestinely linked ‘shadow companies’ in addition to its acknowledged plantation subsidiaries; in others there is no single ultimate parent company and the group consists largely of privately held companies, not listed on any stock exchange. Different family members may be the ultimate shareholders in different companies, or parts of the group may be held offshore, rendering the ultimate owner unknowable. In other cases named legal shareholders may be nominees, where arrangements exist with other beneficial owners that have not been publicly disclosed.

It is necessary to take a broad view of what constitutes a group, going beyond straightforward ownership links to include other forms of control (financial, managerial, operational or other). This must be done to get around these ways in which unscrupulous owners obscure their ownership of plantation operations engaged in forest destruction, which they may do in order to avoid compromising the market access of their publicly acknowledged subsidiaries.

The compositions of a number of these less straightforward groups, and the rationale behind Greenpeace’s interpretation of them (in general terms and individually) is set out by the Accountability Framework Initiative (AFi). This defines a corporate group as:544

The totality of legal entities to which the company is affiliated in a relationship in which either party controls the actions or performance of the other. Factors that are used to determine whether a company is part of a broader corporate group include:

Formality of relationship: Is there formal ownership, such as through an investment holding structure? Declared as a group: Has the group publicly declared the companies are linked? Family control: Are the companies owned or run by members of the same family? Financial control: Are there contractual or other financial arrangements that indicate one party controls the performance of another? Management control: Is there extensive overlap in officials between companies? Operational control: Are landholdings under a group’s operational control? Beneficial ownership: Is ultimate ownership hidden in offshore companies or by the use of nominees? Shared resources: Do companies share a registered address, land or other physical assets, or provision of company functions or services?

A concession company is considered declared as a member of a group if this declaration originates from the company itself, such as a company’s annual reports or statements to a stock exchange, its official website or its annual communication of progress to the RSPO. For all companies mentioned in this report where no such declaration exists, official Indonesian (and where relevant Malaysian and Singapore) company registry profiles have been obtained and analysed.

Indonesian company registry profiles include current and historical names and addresses for shareholders and company officers (directors and commissioners), and company address details. There is a slim possibility that very recent changes in ownership or officers may not have been detected, if they took place since Greenpeace last acquired the profile. References to an individual’s role as director, commissioner and/or shareholder of these companies is based on information contained in these profiles, as is information about the official addresses of companies and their officers.

Where concession companies are not declared as part of a group, and registry profiles do not show it to be a formal subsidiary by shares of a known group company, discovered evidence is considered to evaluate whether the other AFi indicators are met. Examples of such discovered evidence are where a company:

• Is associated with a group in statements by individuals who work for or closely with the company, eg employment details on LinkedIn profiles and

Facebook and Instagram posts of company employees/owners • Shares an official or local office address with companies belonging to a group • Has significant overlap of directors/commissioners or other personnel in management positions with other companies belonging to a group • Exhibits signs of apparent family connection with the group, for example through shared addresses and/or family names of individuals listed as shareholders or company officials • Appears in media reports as linked to a group (greater weight is given to articles where an identified company spokesperson is quoted or which contain a press release, as opposed to articles where names/owners are merely mentioned by the reporter) • Apparently conducts recruitment jointly with companies belonging to a group • Appears to be part of a group based on field documentation (eg signs in or adjacent to plantations bearing company logos, testimonies from workers) • Shows evidence of sufficiently significant financial investment by a member of a group to indicate a degree of control by that group

The task of establishing the structure and extent of an informal group is a complex one, as evidenced by the wide range of potential sources listed above, and the results obtained must inevitably be considered as potentially incomplete. In particular, many of the informal producer groups discussed frequently restructure the ownership or management of their plantation companies – perhaps in part to obscure their true control. The work of mapping their structures is therefore ongoing.

Where group attributions in this report are based on discovered evidence, it is because several independent items of evidence have been discovered that show a strong case for association based on the AFI definition above. There may of course be some uncertainty around the exact nature of this association in such cases – the aim is to establish the basis for control between companies and therefore we refer to group association rather than narrow concepts of legal ownership through shareholdings.

Prior to publication Greenpeace contacted a number of companies and individuals discussed in this report to offer them the opportunity to comment on our findings, including our conclusions on group association where relevant. Responses received can be viewed in full at this location.

Freedom of Information Requests

Greenpeace Indonesia has for several years been making requests for information on licences, permits, forest and peatland surveys and other requests for information from Indonesian government institutions. Unfortunately, despite the mandate embodied in Indonesia’s Freedom of Information law, many such requests have been refused or ignored. For this report, during 2020 Greenpeace Indonesia sent a new round of formal letters to the government agencies at the regency, provincial and national level responsible for issuing permits. Several responses were received, and that data has been relied upon in this report. However, it is not possible to be sure to have obtained full information about all permits and related documentation, and this report aims to reflect such uncertainty in the text where possible. Copies of permits shared by other NGOs which they had received from the government in the course of their own research or advocacy have also been used to complement data obtained by Greenpeace Indonesia.

Mapping and forest clearing

Observations of forest clearing in this report are based on comparing the Global Forest Change dataset, government land cover and peat maps (see sources below) and the best available concession maps, usually obtained by requesting documents from the licensing agencies, and digitising maps from individual concessions’ permit documents.

This report uses Global Forest Change data published by the University of Maryland, which provides an estimation of forest loss over the period 2000–2019. It primarily uses a collection of cloud-free Landsat imagery to derive changes to tree cover canopy. In this dataset, trees are defined as all vegetation higher than 5 metres while forest loss is defined as change of forest to non-forest state indicated by the complete removal of tree canopy cover at the Landsat pixel scale. Each pixel represents an area that is approximately 30 x 30 metres, or a little less than one-tenth of a hectare. Due to this technical limitation, land clearing in patches smaller than that particular area is not included in the annual estimation of forest loss.

Indonesian land cover maps, now produced annually by the Ministry of Environment and Forestry (MoEF), are considered to be reliable representations of forest and other land uses. The 2019 dataset is the main reference used (if historical maps are referred to, this is made explicit), and all references to forest type (primary forest, swamp forest, etc) are based on the classification in these maps unless otherwise attributed.

Data sources and maps:

Peat maps used are also Indonesian government maps. For general analysis, Greenpeace uses the peat dataset published in 2011 by the Ministry of Agriculture. Further research over the last decade has improved the data, but this remains the latest national dataset which the government has made freely available. For some areas of interest in southern Papua Province (Mappi, Merauke and Boven Digoel Regencies) Greenpeace Indonesia has purchased copies of more recent peat maps published in 2019. All findings relating to peat in those areas have been verified to be valid against that dataset. Other spatial data relating to peat is referred to at points in the report, including maps of Peatland Hydrological Units and priority areas for peat restoration by the Peat Restoration Agency.

Indicative maps of areas included in the Forest Moratorium are published by MoEF each time there is a revision to the map.

Calculations of above-ground carbon stored in forests (see box, Part 1, and Case Study 9) are based on the estimated figures for carbon stored per hectare in each of six forest classes in Indonesia’s Forest Reference Emission Level documents supplied to the UNFCCC. Note that this is an estimate of carbon stored rather than carbon which would be released into the atmosphere if the forest were to be converted to a plantation – for this a more complex methodology would need to be employed, taking into account a wider range of variables.

Greenpeace attempts to maintain a comprehensive map of plantation concessions across Indonesia, based on a range of different datasets. Since a single concession might have a location permit, IUP, forest release and HGU with different boundaries, analysis is not always straightforward. In this report, we have decided to focus predominantly on companies whose concessions were released from the forest estate, and accordingly have conducted spatial analysis based on forest release boundaries. This was felt to be the most pertinent since much of the analysis concerns decisions taken by the MoEF (or its predecessor the Ministry of Forestry).

As this report was in preparation in February 2021, a number of new regulations were issued to implement changes contained in the 2020 Omnibus Law.545 Many of these concern procedures for issuing permits and other issues addressed in this report. However, due to the amount of new legislation and limited time, we have not been able to incorporate a full analysis of these new regulations into this report.

Recent Legal Changes.

545 Law 11/2020 on Job Creation / Undang-Undang no. 11 tahun 2020 tentang Cipta Kerja, full text available at https://www.setneg.go.id/view/index/undang_undang_republik_indonesia_nomor_11_tahun_2020_tentang_cipta_kerja