An innovative finance project in Indonesia is providing jobs while preserving the habitat of endangered species.
Sri Hartiwi, a rubber tapper in Indonesia’s Jambi Province on the island of Sumatra, has a demanding routine. Her day starts at 3.30 a.m. when she cooks for the family and goes off to work in a plantation till 1.00 p.m. She gets a holiday on Sundays.
Her family—her husband, a cleaner in a private company, and two children—don’t own any land, making the income earned from rubber tapping critical for the household’s daily needs.
The family are beneficiaries of the Tropical Landscapes Finance Facility’s US$350 million natural rubber project, launched in October 2016, which is already reducing poverty while preserving the habitat of critically endangered species in two provinces in Indonesia.
One of the aims of the project is to transform heavily degraded land into productive rubber plantations that create livelihood opportunities for climate-vulnerable communities. More climate resilient and better planned rubber production, and the setting aside of plantation areas for protection of ecosystem services, are at the core of the project.
Under the project, Hartiwi and other community members are receiving training in rubber tapping and other sustainable rubber production techniques.
She earns a significantly higher salary than the average income per capita in Jambi Province’s Tebo Regency where she resides. Her main expense is the three sacks of rice for her household that cost US$26 per month.
“The Tropical Landscapes Finance Facility’s natural rubber project in Jambi and East Kalimantan provinces is a great example of innovative partnerships and solutions being harnessed for the benefit of people and sustainable development,” says Satya Tripathi, Assistant Secretary-General of the United Nations and Head of UN Environment’s New York Office.
With UN Environment’s partners, including BNP Paribas, ADM Capital and the World Agroforestry Centre, the Tropical Landscapes Finance Facility project is financing climate-smart, wildlife-friendly and socially inclusive natural rubber plantations for Royal Lestari Utama, a joint venture between French tyre company Michelin (49 per cent) and Indonesia’s Barito Pacific (51 per cent).
At maturity, the rubber planted across 34,000 of the company’s 88,000 hectares will represent 10 per cent of Michelin’s global supply. Roughly half the area will be set aside for protection, regeneration and livelihoods. In all, 16,000 people are expected to be employed in the plantations in fair-wage jobs.
So far, 18,000 hectares have been planted in natural rubber. Beyond working directly in the plantations, local community members are also engaged in activities that involve planting native flora in areas set aside for conservation.
A Community Partnership Programme seeks to allocate 7,000 hectares within the plantation to smallholder rubber farmers who will receive assistance in rubber plantation techniques to improve productivity and hence livelihoods. Currently, rubber smallholders produce about 1,000 kg per hectare annually, while plantation output is double that.
The project also integrates best practice in plantation management, including protection of high conservation value and “high-carbon stock” areas—where large quantities of carbon are locked up in living old-growth trees.
These conserved areas provide important ecosystem services such as watershed protection for local communities. An estimated 58,000 people live in and around the project area in the two provinces and many of them will benefit.
As the first tranche of financing for this project, the Tropical Landscapes Finance Facility announced its inaugural transaction, on 26 February 2018, of the first corporate sustainability bond in Asia amounting to US$95 million. This is also the first sustainability bond in the Association of Southeast Asian Nations.
The project is beginning to make waves beyond Indonesia. Its blended finance and partnerships-based approach is being seen as a model by other countries to promote the emergence of deforestation-free commodity production strategies that are applicable to ecologically sensitive areas.
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For further information, please contact Bryan Taylor, Chief Operating Officer, Tropical Landscapes Finance Facility:
The information on impacts was obtained through survey questionnaires developed in partnership with UN Women.