No.

002/Sustainability/FR/III/2017

9 March 2017

RSPO Secretariat Sdn Bhd (Attention: Complaints Panel)

Unit A-37-1, Level 37
Tower A Menara UOA Bangsar
5 Jalan Bangsar Utama 1 59000
Kuala Lumpur, Malaysia

Dear Members of the Complaints Panel and the RSPO Secretariat,

RE: REVIEW OF PT. LIMPAH SEJAHTERA (LS) HCV ASSESSMENTS UNDERTAKEN

IN 2008 AND 2010 FOR THE FIRST RESOURCES (FR) COMPLAINT AND
COMPENSATION CASE

We refer to the above-titled report produced by reviewer MEC and we wish to provide our
comments. In order to keep our comments concise, we shall direct our comments only at the
final conclusions1 made by the reviewer. However, this does not imply that we concur with all
other sections of the report.

Reviewer’s Conclusion 1
The 2008 HCV report is considered unreliable, although it was undertaken in a period where
there was more potential HCV areas present. The credibility of the internal assessment
should be questioned as there is no evidence that it was undertaken by competent and
sufficiently trained personnel.

The 2008 HCV assessment for PT LS was commissioned in mid-2008. We wish to highlight
the backdrop at the time this HCV assessment was carried out:

(i) the concept of HCV and HCV assessments was still very new to RSPO members
and even more so to PT LS, which at that time was not yet a subsidiary of First
Resources. This initial unfamiliarity has been acknowledged by the RSPO:

- “Some tolerance was initially given for RSPO producer members for plantings
done from end November 2005 to end November 2007, due to an array of factors
(notably the initial field trial period for the P&C, which lasted until 2007, the
requirements to develop national Interpretations of the P&C, the rudimentary
nature of HCV assessment guidance at that time, the near-absence of
qualified HCV assessors, purchase of plantations from non-members, and
communication problems”.

(RSPO Remediation and Compensation Procedure related to Land Clearance

Without Prior High Conservation Value Assessment, versions 9 May 2014 and 12
Nov 20152 - by the RSPO)

1
Page 37 of the report
2
Annex 1 of the Procedure

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(ii) there was no guidance from the RSPO on the qualifications of a HCV assessor. Such
guidance was given only in January 2010 with the introduction of the New Planting
Procedure. Even then, the first list of RSPO-approved HCV assessors was released
only in May 2010.

- “Growers should also note that with the introduction of the New Planting
Procedure (NPP) from 1 Jan. 2010, HCV assessments shall be conducted by
HCV assessors approved by the RSPO (after 1 Jan 2015 under the HCV
Assessor Licensing Scheme (ALS)). New requirements under the criterion 7.3
as stated in the 2013 P&C will not apply retrospectively on past HCV
assessments.”

(RSPO Remediation and Compensation Procedure related to Land Clearance

Without Prior High Conservation Value Assessment, versions 9 May 2014 and 12
Nov 20153 - by the RSPO)

(iii) the existing 2003 HCV toolkit4 guided that companies can conduct HCV assessments
as an internal exercise, without the need for externally-sourced specialists. The team
that conducted PT LS’s 2008 HCV assessment comprised multi-disciplinary staff
from the estate, GIS, sustainability and social/community departments. In the
absence of any guidance then, this diverse team was in our view, the most
appropriate to carry out the assessment.

- “Forest managers can carry out evaluations on their forest areas to

determine whether any of the defined HCVs are present within their FMU. Forest
managers can integrate HCV identification and management into their overall
forest management planning and activities”.

“The preliminary assessment is a simple methodology to see if HCVs are likely to

occur or not. This acts as a coarse filter, to rapidly exclude all those forests that
definitely do not contain HCVs, and to identify forests that do potentially contain
specific HCVs. The preliminary assessment should be straightforward enough to
be undertaken by people without specialist knowledge of biological or
social sciences (e.g. forest managers and timber purchasers). The
preliminary assessment is usually in the form of a “yes or no” question and asks
about the presence of certain values.”

(Identifying, Managing, and Monitoring High Conservation Value Forests in

Indonesia: A Toolkit for Forest Managers and other Stakeholders, Version 1,
August 2003 - by the Rainforest Alliance and ProForest on behalf of the WWF
and IKEA Co-operation on Forest Projects)

3
Annex 1 of the Procedure
4
The available HCV toolkit during mid-2008 was the 2003 toolkit.
(https://www.hcvnetwork.org/resources/national-hcv-interpretations/hcvf-toolkit-for-indonesia-
english.pdf).
The revised and current HCV toolkit was published only in 2009
(https://www.hcvnetwork.org/resources/national-hcv-
interpretations/Toolkit%20HCVF%20English%20version_final-26Jan10.pdf), although it was
completed and dated Jun 2008.

Page 2 of 6
(iv) the existing 2003 HCV toolkit had its shortcoming, as acknowledged later by industry
stakeholders, which was why a revised toolkit had to be issued. By reviewing the
2008 HCV assessment (which was guided by the 2003 HCV toolkit), against revised
and improved HCV standards, the assessment will obviously not measure up.

- “This original 2003 version of the HCVF Toolkit for Indonesia served a vital
purpose, but overtime became increasingly difficult to use for the following
reasons:

o The Toolkit was originally designed to support assessments in the

context of FSC certification for responsible forest management.
However, as time passed, the Toolkit became the de facto manual for
HCV assessment in other sectors as well, including pulp and oil palm
plantations, and for provincial- and District-level spatial planning. These
applications required a different assessment approach beyond that
outlined in the original Toolkit.

o Use of the original Toolkit by practitioners of various backgrounds

demonstrated a lack of clarity and consistency in key concepts, definitions,
and methods of evaluating HCV due primarily to:
 an inconsistent and unsystematic scope and spatial scale for
evaluating various HCVs
 adaptation of certain features of the Global HCVF Toolkit proved to be
inappropriate for the Indonesian context2
 imperfections in the translation from English (the language used in the
Global HCVF Toolkit) to Bahasa Indonesia (the language used in the
original Indonesian HCVF Toolkit).

o Use of the HCV concept outside the FSC context is viewed by many as
high risk, because the HCV process as defined in the original Toolkit did
not provide adequate social safeguards, as required by other Principles of
the FSC system.

o Broader use of the HCV concept in Indonesia has been controversial at

times due to inadequate efforts to raise awareness and understanding
about HCV among civil society. The original Toolkit was never approved
by stakeholders involved in its planning and field testing, and, as such, its
credibility in defining the HCV process has been questioned.”

(Guidelines for the Identification of High Conservation Values in Indonesia (HCV

Toolkit-Indonesia) - by Consortium for Revision of the HCV Toolkit for Indonesia,
2009)

Under the circumstances highlighted above, we are of the opinion that PT LS should not be
penalised on the basis that the 2008 HCV assessment was conducted internally by non-HCV
specialists. As the reviewer had pointed out - the competence of the assessors (who did the
2010 HCV assessments) is acceptable as it was undertaken during a period where HCV
assessment was evolving and it is probably the “best” that the team could achieve - we
strongly believe the same should be said of the 2008 assessment, which was undertaken

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during a period when the HCV concept was just emerging. It is not reasonable to use current
expectations to rate an assessment that was carried out almost a decade ago, as
sustainability standards have evolved so rapidly on all fronts.

Reviewer’s Conclusion 2
The 2010 HCV assessment cannot be rejected on a technical basis as it was undertaken by
competent personnel and overall is a document graded as fair. The competence of the
assessors is acceptable as it was undertaken during a period where HCV assessment where
evolving and it is probably the “best” that the team could achieve. Saying this however, this
assessment should also be rejected as at the time that the assessment was undertaken the
company had cleared 98.1% leaving small remnant areas that were obviously earmarked as
HCV. This HCV has subsequently been disturbed and serves little purpose for conservation.
The commitment as an RSPO member abiding to the RSPO P&C requirement is not
demonstrated.

In 2010, PT LS was already majority land-cleared for oil palm planting. During this time, the
complainant raised concerns over existence of orangutan habitats in PT LS. In response to
the complainants’ concerns and RSPO’s request, and especially since RSPO had just
released its list of approved assessor at that time, PT LS conducted another HCV
assessment for the then remaining unplanted area in PT LS. The assessor for this 2010
assessment was from RSPO’s list of approved assessors.

The reviewer’s rejection of this 2010 HCV assessment because it was undertaken on the
remaining unplanted part of the concession lacks of any technical justification, and unfairly
penalises the company for cooperating with the complainant/RSPO and taking steps to
address stakeholders’ concerns.

Contrary to the reviewer’s conclusion that the HCV area serves little purpose for
conservation (basis of conclusion unclear), this HCV area still serves as a wildlife habitat
today. As part of its HCV management and monitoring, the conservation team at PT LS
conducts daily patrols of the HCV area and sightings/indications of orangutans and other
wildlife presence have been documented regularly. We currently also share our monitoring
results with the complainant on a monthly basis.

There was indeed some deterioration to the HCV area as a result of a 2015 fire that
occurred in an adjacent concession, as per what we have previously shared with
stakeholders5. We have begun rehabilitating this part of the HCV area since 2016 and will
continue to update stakeholders of the rehabilitation programme though First Resources’
periodic sustainability progress reports6.

5
http://www.first-resources.com/upload/file/20160329/20160329130218_66230.pdf
6
http://www.first-resources.com/upload/file/20170109/20170109055645_12146.pdf

Page 4 of 6
Reviewer’s Conclusion 3
The validity of the HCV assessment is questionable as the summary below indicates that the
area identified in 2008 is larger than the area identified in 2010. This does represent the
actual HCV loss over that time frame and provides the basis for rejecting both reports.

The reviewer had interpreted and therefore presented the above set of data wrongly.

The 2008 HCV assessment had an area of interest (AOI) of 20,000 ha, of which 1,256.25 ha
of HCV was identified. The 2010 HCV assessment had a smaller AOI of 1,004.37 ha
(remaining unplanted area of the concession at that time), of which 650.74 ha of HCV was
identified.

2008 HCV areas that do not show up in the 2010 assessment (ie. the difference) are located
outside of the 2010 AOI.

HCV areas that were identified in either of these 2 assessments and within the boundaries
of PT LS’s HGU, are being managed and monitored by the conservation team at PT LS.

Reviewer’s Conclusion 4
The potential HCV loss in the concession is significant.

As we have highlighted above, we do not agree with the basis of the reviewers’ conclusions
1-3. We therefore do not agree with his resulting conclusion 4.

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Reviewer’s Recommendations
PT. Limpah Sejahtera should submit a full Land Use Change Analysis (LUCA) based on the
satellite images used in this report or any other images they see fit for the period 2006 –
2016. PT. Limpah Sejahtera must compensate for the potential HCV loss based on the 2006
vegetation classification. The RPSO provided vegetation coefficients should be used to
calculate the compensation due.

PT. LS has already submitted a full Land Use Change Analysis (LUCA) to RSPO in August
2014 as requested by the Complaints Panel. The LUCA was conducted in accordance to
the RSPO’s Remediation and Compensation Procedures7 and the 2008 HCV assessment
report had also been submitted to the Compensation team. The comprehensive review of
the LUCA, carried out by WRI on behalf of RSPO, went through several rounds of
clarifications and was approved by the Compensation Task Force in June 20158.

Constructive Feedback

We feel that the reviewer MEC may not have been sufficiently briefed on the background of
the complaint case and the two HCV assessments, which may have led to the conclusions
and recommendations in their report. For example, the reviewer did not seem to be provided
a copy of PT LS’s HCV Management and Monitoring Plan, an important document to review
in order to address the Complaint Panel’s objective of improving PT LS’s HCV management
and monitoring9. To pre-empt such risks, we had repeatedly requested to be jointly involved
in a transparent engagement of the reviewer, but was regrettably not given the opportunity.

As a feedback for future complaint cases, we suggest an open engagement of both the
company and the complainant to help avoid miscommunication, wastage of valuable time
and other resources. Open engagement will also enable stakeholders to exchange
viewpoints, learn from one another, and more importantly strengthen trust and partnerships.

We thank you for your time in reading and considering our comments above.

Yours Sincerely

Bambang Dwi Laksono

Head Sustainability

7
Dated 9 May 2014
8
PT LS LUC Analysis Verification Result Document - by World Resources Institute
9
Objective as stated in Page 2 of the reviewers’ report; RSPO’s letter to FR dated 20 Apr 2016

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