New fund of palm derivatives users seeks to restore ecosystems and drive economic growth in Indonesia

This impact story was originally published by ASD Action for Sustainable Derivatives here.

A group of cosmetics, personal care, healthcare and oleochemicals companies working with Action for Sustainable Derivatives (ASD) will support the Inobu Mosaik Initiative, to build an enabling environment for sustainable palm oil production at scale while empowering local communities.

Six members of ASD – Croda International, The Estée Lauder Companies through its Charitable Foundation, GSK Consumer Healthcare, Natura &Co, Seppic and Stéarinerie Dubois – announced the launch of the ASD Impact Fund last month.

The Fund has officially begun supporting the Inobu-led Mosaik Initiative, which is focused on finding ways to sustainably restore the landscape and drive economic growth in two of the largest palm producing districts in Central Kalimantan, Indonesia – Seruyan and Kotawaringin Barat. Contributing ASD members source on average 8% of their palm derivatives from Central Kalimantan.

With the help of Inobu, the two districts, which cover a total area almost as large as Belgium, are developing ways to restore forest ecosystems while protecting the remaining forests. Among other activities, the project will:

  • create a jurisdictional farmers association for agroforestry products to increase their value and encourage local communities to protect and restore natural forests in their villages;
  • provide upfront financing and technical support for smallholders’ sustainable farming practices and RSPO certification; and 
  • establish programs to ensure all palm oil production is aligned with sustainability principles and criteria 

The Project Selection Process

Each year, ASD conducts an investigation to map its members’ supply chains and monitor risks. This helps to identify priority supply chain players to engage, as well as the priority areas in which to focus investment.

ASD carried out an extensive mapping of more than 100 projects in Indonesia and Malaysia, and prioritized these based on an agreed set of criteria, including their location and relevance to ASD Members’ supply chains, project needs, impact and scale-up potential.

In partnership with The Estée Lauder Companies Charitable Foundation, ASD supported the Inobu Mosaik Initiative last year, which helped progress the development of ASD’s approach to collectively drive more meaningful impact on the ground.

“The Inobu Mosaik Initiative is part of a larger effort to improve sustainability practices in the palm oil supply chain,” said Ricki Berkenfeld, Manager, Consumer Sectors at BSR. “From this effort, we expect to gain valuable insights into collective approaches to field-level impact, while protecting natural ecosystems and supporting smallholder farmers.” 

Ecosystem restoration in Mendawai Seberang, Central Kalimantan, Indonesia

“The Government of Indonesia has made significant progress in reducing deforestation, especially from oil palm and other commodities. But support is needed to maintain this trend while encouraging more large and small-scale producers to join these efforts,” said Silvia Irawan, Executive Director of Inobu.”

“This commitment made by ASD is an important step in this direction, acknowledging the work done by the local governments while supporting local communities to farm sustainably and restore degraded landscapes. It also shows that global manufacturers from the cosmetics and pharmaceutical industries care about what happens in the tropical landscapes where agricultural commodities, such as palm oil, are produced.”

The ASD Impact Fund, launched with Tides Foundation, intends to provide €1.5 million to support the Inobu Mosaik landscape initiative over the next five years. This includes supporting the certification of more than 2200 smallholder farmers covering up to 4400 hectares of land, implementing regenerative agriculture in 650 hectares of land, and encouraging local communities to protect around 6500 hectares of natural forests in their villages.

This is a significant stride forward for ASD – the first step in bringing together a smaller segment of the palm market, palm derivatives users, to collectively impact on-the-ground. Over time, ASD expects the Fund to grow, with more ASD Members participating in the Fund and an expanded portfolio of supported projects.

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