‘Sustainable’ palm oil firms continue illegal peatland clearing despite permit revocation

JAKARTA — Palm oil companies in Indonesia continue to operate on protected peatlands and clear forests, despite having their forestry permits revoked and being certified as sustainable, a new report alleges.

Local environmental NGOs Pantau Gambut and Kaoem Telapak investigated three companies operating in Central Kalimantan province on the island of Borneo: PT Agrindo Green Lestari (AGL), PT Citra Agro Abadi (CAA) and PT Bangun Cipta Mitra Perkasa (PT BCMP). Their findings implicate all three in illegal peatland conversion, deforestation and recurring fires.

Two of the three companies, AGL and CAA, are subsidiaries of the PT Ciliandry Anky Abadi, a privately held plantation company with a 120,000-hectare (300,000-acre) land bank in Central Kalimantan. Ciliandry Anky Abadi itself was identified as the single biggest deforesting palm oil company in Indonesia in 2023.

The AGL and CAA concessions cover a combined 18,224 hectares (45,032 acres) in Pulang Pisau district, overlapping with protected peatlands and high conservation value (HCV) areas. Around 6,000 hectares (15,000 acres) have been identified as critical orangutan habitat.

Satellite imagery from 2015 to 2023 reveals that most of the protected peatlands within CAA’s concessions have been converted into oil palm plantations, with planting beginning in 2022. As of 2023, 2,753 hectares (6,803 acres) of protected peat ecosystems had been cleared for planting — an area the size of 55,000 basketball courts.

These peatlands have protected status because of their deep peat layers that hold vast quantities of carbon, and also because of their high conservation value. But converting peatlands for planting requires digging canals to drain the waterlogged soil, releasing thousands of years’ worth of carbon emissions.

Field inspections in 2024 confirmed the construction of a network of canals across CAA’s concession, signaling further expansion into peatlands.

In the case of AGL, the report found 130 hectares (321 acres) of deforestation in its concession as of November 2023, overlapping with the village of Kasali Baru.

Despite these violations, both AGL and CAA hold certifications under Indonesia’s sustainable palm oil standard, the ISPO. The standard requires companies to protect natural forests and peatlands, which doesn’t appear to have been the case with AGL and CAA, according to Pantau Gambut advocacy and campaign manager Wahyu Perdana.

“What’s strange is how ISPO certificates could have been issued [for both concessions],” he said.

Operating plantations in protected peat areas also violates a 2016 government regulation on peatland protection, which limits activities in these ecosystems to research and education, Wahyu said.

Both companies have previously faced government sanctions for environmental violations. In 2017 and 2018, the Ministry of Environment and Forestry issued administrative sanctions against AGL and CAA due to recurring fires on their plantations. In 2018, the government ordered them to cease violations immediately and remedy the environmental damage they had caused.

In 2022, AGL and CAA were among the companies whose forestry permits were revoked by the ministry. However, it remains unclear whether the ministry has enforced the revocation.

AGL is also listed among palm oil companies that have developed plantations within forest areas without proper permits, said Ziadatunnisa, a campaigner at Kaoem Telapak.

BCMP’s violations

The third company named in the NGOs’ report, BCMP, was found to have 1,636 hectares (4,043 acres) of protected peatland in its concession in Kapuas district.

The company also has a history of fires within its concession, with repeated burnings from 2015 to 2020. The most severe occurred in 2015, burning 6,271 hectares (15,496 acres).

The report also found that part of BCMP’s concession overlaps with the government’s food estate program area, leading to conflicts over land use.

BCMP has also failed to register its beneficial owners since 2021, violating a 2018 presidential regulation that mandates transparency in corporate ownership. The lack of ownership disclosure makes it difficult for authorities and affected communities to hold the company accountable for deforestation or possible tax evasion.

Global climate implications

While the report focuses on these three companies, it suggest they represent a much broader problem, Ziadatunnisa said.

“All these findings show that there are still many companies that haven’t obeyed regulations in Indonesia,” she said.

The fact that they continue to operate despite repeated government sanctions indicates weak law enforcement, Wahyu added.

The environmental impact could be substantial. Indonesia is the world’s largest palm oil producer and exporter, and peatland destruction for the commodity significantly contributes to carbon emissions. The country’s peatlands store 57 billion metric tons of carbon — 55% of the world’s tropical peat carbon stocks.

Government data show that 9.5 million hectares (23.5 million acres) of Indonesia’s peatlands are occupied by plantation, logging and industrial forestry concessions. These industrial activities often drain and burn peatlands, like in the case of the companies highlighted in the report.

With peatland degradation emitting up to 86 metric tons of CO₂ per hectare annually, the illegal activities cited in the report likely contribute hundreds of thousands of tons of carbon emissions each year.

Recommendations

To mitigate greater environmental destruction and climate risks, the report calls for stricter law enforcement, including the permanent shutdown of companies that continue to operate despite permit violations.

It also urges the government to establish a “no-go zone” policy that bans economic activities in high-risk peatland areas.

The ISPO certification system should also be reformed to explicitly prohibit oil palm expansion into protected peatlands, with stronger penalties for violators, the report says.

Additionally, the European Union should expand its deforestation regulation, the EUDR, to cover peatlands, as its current focus on forests overlooks the fact that peatland degradation releases even more carbon. The EUDR, which takes full effect at the end of this year, will ban the import into the EU of commodities linked to deforestation, including palm oil, timber and rubber.

By recognizing peatlands as carbon-rich ecosystems, the EU will strengthen the capability of the EUDR in protecting tropical forests, the main motivation behind the regulation.

“Indonesia’s forests and peatlands are highly diverse, yet many of these ecosystems are not covered by the EUDR,” Ziadatunnisa said. “That’s why we recommend [the EU] to widen the scope [of the EUDR].”

The report also calls on the Indonesian government to increase transparency in the palm oil sector by requiring companies to disclose land use, environmental impact and sustainability measures. In addition, it should protect Indigenous and local land rights by enforcing free, prior and informed consent (FPIC) requirements and giving Indigenous communities a greater role in peatland management.

Finally, the report calls for increased collaboration between the government, private sector and civil society to restore degraded peatlands and prevent further environmental damage.

Banner image: Thick smoke from peat fires outside Palangka Raya, Central Kalimantan, Indonesia in 2015. Image by Aulia Erlangga/CIFOR via Flickr (CC BY-NC-ND 2.0).

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