How AAL Capitalizes on Indonesia's Governance Gaps

Cultivating Conflict: How Astra Agro Lestari, Brands, and Big Finance Capitalize on Indonesia’s Governance Gaps

Cultivating Conflict: How Astra Agro Lestari, Brands, and Big Finance Capitalize on Indonesia’s Governance Gaps

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Cultivating Conflict details how protracted land conflicts, ongoing governance failures, and a lack of accountability define and enable Indonesia’s second largest palm oil company Astra Agro Lestari (AAL)’s controversial operations. The report examines AAL’s ongoing land conflicts with communities in Sulawesi and its failure to provide remedy and redress for harm done, reveals how AAL’s environmental and governance violations appear to be more widespread than initially documented, and details the failures of most of AAL’s buyers and financiers to hold the company responsible by enabling AAL’s conflict palm oil to be sold on the global market.

Key findings
  • 17 AAL subsidiaries’ concessions overlap with 17,664 hectares of Indonesia’s forest estate. 74 percent of AAL’s concessions in the forest estate are in Sulawesi, where 7 AAL subsidiaries’ concessions overlap with more than 13,000 hectares of Indonesia’s forest estate.
  • At least 1,100 hectares of AAL’s palm oil plantations in Indonesia’s forest estate appear to be illegal.
  • 3 AAL subsidiaries in Sulawesi are operating without the required cultivation permit (HGU).
  • Agribusiness traders ADM, Bunge, Cargill, Olam – amongst others – continue to source palm oil from mills associated with implicated AAL subsidiaries.
  • At least 18 global consumer brands have a recent history of sourcing palm oil from AAL.
  • Financiers including BlackRock, Vanguard, HSBC and Dutch pension fund ABP continue to provide substantial financing to AAL and its parent companies.

 

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Consumer Brands Sourcing From AAL

Consumer Brands Sourcing From AAL

Consumer brands, agribusiness traders, and investors continue to enable AAL’s violations by sourcing palm oil from the company, financing its operations, and failing to directly engage AAL to resolve conflicts and remedy harm. Despite sourcing suspensions by 10 consumer brands, numerous companies including Unilever, General Mills, and Barry Callebaut continue to source palm oil from AAL while agribusiness traders including ADM, Bunge, Cargill, and Olam are sourcing palm oil from the mills associated with AAL’s controversial subsidiaries in Sulawesi. Meanwhile, AAL’s operations are bankrolled by some of the world’s largest financiers including HSBC Bank, and enabled by shareholdings in the portfolios of BlackRock, Vanguard and other major asset managers.

Communities on the frontlines of AAL’s destructive operations continue to call on the company to return land taken without consent, provide compensation for loss of lands and livelihoods, conduct environmental restoration to degraded forests and rivers, and apologize for harm done.

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