This report examines the environmental, social and governance impacts of the pulp and paper industry in Indonesia, with a focus on the involvement of banks in financing the sector. Since 2018, the area of Industrial Plantation Forests (HTI) in Indonesia has increased significantly, reaching more than 11,17 million hectares. Despite contributing to pulp and paper production, HTI utilization often ignores aspects of forest conservation, resulting in serious environmental damage, including forest fires and deforestation. From January to August 2023, more than 90.000 hectares of forest burned, with Riau being one of the most affected provinces.
This study explores the impacts of the pulp and paper industry in three villages in Riau: Bengkalis, Siak, and Pelalawan. The methodology used includes in-depth interviews and literature studies, involving 43 informants. Findings show that the industry's activities cause deforestation, social conflict, and pollution, as well as threatening public health.
Bank involvement in the industry is also reviewed, with an analysis of the five largest banks providing financing. Despite commitments to sustainability, funding flows remain high without considering negative impacts on the environment and human rights. Recommendations include strengthening regulations by the government and OJK, as well as the need for stricter policies from banks in providing financing to companies that do not implement sustainability principles. The study emphasizes the importance of collaboration between governments, banks, and companies to create more sustainable and responsible business models.
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