KPMG Report on APRIL Group’s Implementation of SFMP 2.0
In this post, Joe Lawson, Chairman of the Stakeholder Advisory Committee, welcomes the publication of the latest KPMG report on APRIL Group’s implementation of its Sustainable Forest Management Policy 2.0.
As Chairman of APRIL’s independent Stakeholder Advisory Committee (SAC), I am pleased to provide you with the recently completed assurance report assessing APRIL’s ( Asia Pacific Resources International Limited ) progress in implementing its SFMP 2.0.
Commitments in SFMP 2.0 include a halt to the harvest of mixed hardwoods, the development of only non-forested areas as determined by HCV and HCS, the application of a landscape approach to optimize forest conservation, the establishment of an Independent Peat Expert Working Group (IPEWG), and a range of processes to promote engagement with local communities.
The SAC commissioned KPMG PRI Performance Registrar Inc. (KPMG PRI) to undertake a thorough assurance engagement against SFMP 2.0 for the first time in 2016, using a set of key performance indicators (KPIs) that had been developed by the SAC in consultation with stakeholders. The 2016 report set an objective baseline, available to external stakeholders, evaluating APRIL’s performance against its sustainability policy.
In 2017, the SAC selected seven core KPIs and commissioned KPMG PRI to conduct an interim assurance engagement, thus allowing shifting the assurance process to a calendar year schedule.
For this year, the SAC commissioned the second full-scope assurance report against 45 indicators, covering the period January to December 2017. In conducting the assurance engagement and producing the report, KPMG PRI’s processes included field verification of APRIL’s operations, a review of the company’s reporting methodology and data, visits to Supply Partners and Open Market supplier concessions (selected following a specific risk assessment) and interviews with key staff.
This was also the first occasion that observers were invited to accompany the KPMG PRI team in the field. These local representatives from Riau provided insightful observations, which will help continue to improve the assurance process.
An indicator revision process took place throughout 2017 whereby local and international stakeholders provided input to the 2016 set of KPIs. This resulted in the addition of seven new indicators and the addition or modification of disclosures for one third of the final KPI set.
The findings of this year’s KPMG PRI assurance report were presented to the SAC in July 2018. They can be summarized as follows:
- Zero deforestation and no mixed hardwood use commitments are upheld.
- In 2017, PT. RAPP made significant progress in developing a Conservation Management Plan within its concessions. This risk based mapping program is designed to identify priority areas for protection, and considers existing conservation and its quality, adjacent habitat features up to 5 km outside of concession boundaries that can be linked and associated risks to existing conservation (such as focal areas for encroachment). Engagement of local communities will be an important aspect of this program.
- Interviews with a number of local businesses who have been supported in their development by the PT. RAPP community development program indicated a long-term interest by PT. RAPP rather than one time support. This includes the provision of business and technical training over time to support the expansion of these businesses.
- Significant improvements were noted during 2017 in enhancing transparency in APRIL’s supply chain and its ability to access supplier data. This includes data from Open Market suppliers, a focus area for the SAC. Work continues to close remaining gaps in 2018, monitored by the SAC.
- 65 of the 118 recommendations given to APRIL by the SAC since 2014 have been successfully implemented. The SAC undertook a consolidation process whereby 15 old recommendations were incorporated into the 19 currently active recommendations (in progress or in development), which APRIL will focus on moving forward.
- A total of 2 non-conformances and 12 opportunities for improvement were identified by KPMG PRI. The areas of non-conformance related to a land recovery on peat following encroachment, where a small area was replanted in contravention of newly released operational guidelines, and discrepancies in understanding and implementation of employment conditions for one contractor. APRIL has developed Action Plans to address these non-conformances as well as areas for improvement. These have been revised and accepted by the audit firm and will be subject to future assurance reviews.
The third party assurance program is an important part of the SAC’s role of providing oversight and scrutiny of APRIL’s conformance with SFMP 2.0 requirements.
The 2018 Report represents a significant process improvement over previous reports but we consider this program a work in progress. The SAC and KPMG PRI are already developing improvements for the 2019 Assurance and all inputs are welcome. You can download the report here.