2014 ANNUAL REPORT

The Borneo Initiative FoundationPublic version

Abbreviations

APHI Asosiasi Pengusaha Hutan Indonesia (Indonesian Forest Concession Holders Association)

CoC Chain of Custody

CW Controlled Wood

FSC Forest Stewardship Council

GFTN Global Forest & Trade Network

IDH Sustainable Trade Initiative

IWPA International Wood Products Associations

PT Perseroan Terbatas (Limited Liability Company)

TBI The Borneo Initiative

TFF Tropical Forest Foundation

TFT The Forest Trust

TNC The Nature Conservancy

WWF World Wildlife Fund

visit the website www.theborneoinitiative.org June 2015

The Borneo InitiativeWith this public version of the 2014 annual report,

The Borneo Initiative (TBI) aims to inform a broader

public about its work. This version is fully based on

the annual report as externally audited and appro-

ved by KPMG.

TBI is a foundation established in 2008, with offi ces

in The Netherlands, Indonesia and the USA. Our

mission is to prevent the loss of tropical forests due

to deforestation and over-exploitation.

Our target is to contribute directly to the increase of

FSC® certifi ed natural forest areas in Indonesia, from

a base of 1.2 million hectares in 2009 to 5 million ha

by the end of year 2015 i.e. a contribution of 4

million ha extra FSC-certifi ed. In a subsequent phase,

if new funding can be accessed, we aim to expand

our coverage to 6 or 8 million ha as from year 2016.

Our primary focus is the Indonesian part of Borneo

(Kalimantan), but we also keep open the option to

extend our support into other regions, like Papua

and Moluccas, and neighbouring countries, like

Papua-New Guinea and Malaysia. We link up players

at either end of the marketing chain whose coopera-

tion is required to make certifi cation a success: wood

suppliers in Indonesia and end users in FSC markets

e.g. Europe or the USA.

We offer forest concessions support via funding,

transfer of know-how and market linkages. We

provide a 2 to 3 $/ha subsidy to forest concessions

to cover part of the costs of the certifi cation of forest

management.

Our principal advisors and partners in this initiative

are APHI and WWF. Partner organisations TFF, TFT,

GFTN, TNC and Wana Aksara offer coaching to the

forest concessions and also dedicate their own

resources into the process.

Looking back and aheadSince 2010, we have signed support agreements

with 46 forest companies, together covering 4.7

million ha. This implies a potential coverage well

above the initial target of 4 million ha. However, not

all of these support agreements were continued:

up to December 2014, 6 companies terminated their

support agreements prematurely (542,000 ha

involved), while another 4 early resignations are

expected in year 2015. Combined with the expected

resignations in 2015, these will reduce our scope by

some 1.4 million ha.

Nevertheless we are confi dent that in 2015, at least

a group of 12 forest concessions can achieve either

CW or full FSC certifi cation (709,000 ha) and a

remaining group of 16 (1.5 million ha) can do so in

2016.

Forest Certifi cationIn 2014 we signed no support agreements although

we saw the early resignation of 1 company (48,420

ha). In sum, a total portfolio resulted of 40 forest

concessions with altogether 4.2 million ha.

We added 1 FSC certifi cate: PT Carus, 72,170 ha.

This leads to a total of 12 forest concessions

(1,311,915 ha) that achieved full FSC certifi cation

with our support. Plus 2 forest concessions that

achieved CW (90,455 ha). Together 1,402,370 ha;

of this, an area of 1,253,470 ha is in Indonesia and

148,900 ha in PNG.

With the FSC certifi cation of PT Carus Indonesia, and

the forthcoming incorporation of forest concessions

into the program in 2015, an inter-connected block

of sustainably managed forests in Central Kali-

mantan is created – see fi gure below. These forests

offer both a buffer for a core protected area, and an

expanded range area for endangered species,

orang-utans in particular. Thus, a tangible contribu-

tion to the concept of a green Heart of Borneo.

Achievements 2014 in brief

- We support 40 forest concessions with 4.2 million

ha, of which 12 have earned full FSC certifi cates

and 2 Controlled Wood (CW) certifi cates,

together covering 1.4 million ha.

- 300,000 ha set-aside for full protection.

- 1.3 million ha range area for iconic and

endangered species.

- 1 new forest concession with FSC certifi cation

in 2014, 12 overall since 2010.

Baseline 2010:

10 forest management units with 1,201,265 ha

Target 2014:

19 companies FSC certifi ed (1.7 million ha)

Actual contribution:

12 companies with 1,311,915 ha FSC certifi ed and

2 companies with 90,455 ha CW certifi ed.

FSC concessions in Central Kalimantan

Support agreements signed: 4,714,647 ha.

Early exits: -541,972 ha.

Portfolio size December 2014: 4,172,675 ha.

Early exits foreseen 2015: -840,125 ha.

Expansion of support agreements 2015: 324,922 ha.

Expected portfolio size December 2015: 3,657,472 ha.

PT Dwimajaya utama and PT Carus Indonesia Landscape map

Legend

FSC Certifi ed Consessions

FSC In Progress Consessions

Other Logging Consessions

Candidate Group 8

Orang Utan Sightings

Timber Plantations

Conservation Zone

Forest Cover

Non Forest Cover

Source

1. Natural forest concessions from Ministry

of Forestry 2011

2. Timber plantations from Ministry of Forestry

3. Forest cover from WWF Modis 2011

4. Conservation zone from WWF 2011

5. Agricultural Plantations from WWF 2011

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ID Company name Area (ha) Entry year Location

1 PT Suka Jaya Makmur 171,340 2010 West Kalimantan

2 PT Belayan River Timber 97,500 2010 East Kalimantan

3 PT Roda Mas Timber 69,330 2010 East Kalimantan

4 PT Sarmiento Prakantja Timber 216,580 2010 Central Kalimantan

5 PT Indexim Utama 52,480 2010 Central Kalimantan

6 PT Narkata Rimba 41,540 2010 East Kalimantan

7 PT Kemakmuran Berkah Timber 82,810 2010 East Kalimantan

8 PT Dwimajaya Utama 127,300 2010 Central Kalimantan

9 PT Ratah Timber 97,690 2010 East Kalimantan

10 PT Gema Hutani Lestari 148,450 2010 Maluku

11 PT Wapoga Mutiara Timber Unit II 169,170 2010 Papua

12 PT Rizki Kacida Reana 55,150 2011 East Kalimantan

13 PT Wukirasari 116,320 2011 West Papua

14 PT Mamberamo Alas Mandiri 677,310 2011 Papua

15 PT Sari Bumi Kusuma Delang 60,700 2012 West Kalimantan

16 PT Gunung Gajah Abadi 74,980 2012 East Kalimantan

17 PT Inhutani I Meraang 70,700 2012 East Kalimantan

18 PT Adhi Mitra Lestari 52,100 2012 East Kalimantan

19 PT Wanasokan Hasilindo 49,000 2012 West Kalimantan

20 PT Graha Sentosa Permai 44,970 2012 Central Kalimantan

21 PT Kandelia Alam 18,130 2012 West Kalimantan

22 PT Bina Ovivipari Semesta 10,100 2012 West Kalimantan

23 PT Sumalindo Lestari Jaya IV 63,550 2012 East Kalimantan

24 PT Sumalindo Lestari Jaya V 61,465 2012 East Kalimantan

25 PT Bina Balantak Utama 298,710 2012 Papua

26 PT Telaga Bhakti Persada 63,405 2012 Maluku

27 PT Mitra Pembangunan Global 83,950 2012 West Papua

28 PT Cloudy Bay 148,900 2013 Papua New Guinea

29 PT Carus Indonesia 72,170 2013 Central Kalimantan

30 PT Wana Bakti P.U. 44,402 2013 East Kalimantan

31 PT Aditya Kirana M 42,700 2013 East Kalimantan

32 PT Inhutani II Sei Tubu 99,100 2013 East Kalimantan

33 PT Inhutani II Semamu 71,375 2013 East Kalimantan

34 PT Inhutani II Malinau 29,040 2013 East Kalimantan

35 PT Multi Wahana Wijaya 107,740 2013 West Papua

36 PT ASCO Prima Nusantara 171,270 2013 West Papua

37 PT Utama Damai Indah Timber 49,250 2013 East Kalimantan

38 PT Karya Lestari 49,123 2013 East Kalimantan

39 PT BUMWI 82,120 2013 West Papua

40 PT Wijaya Sentosa 130,755 2013 West Papua

Total 4,172,675

List of forest concessions supported by The Borneo Initiative in 2014

The Dutch wood market is not expecting any major

recovery yet this year, but signals are more positive

in the other European markets (the UK) and the USA.

Our Market Links Coordinator for the USA started in

March 2014. He has promoted Indonesian certifi ed

timber among 30 large American buyers of plywood,

fl ooring, decking, veneer and garden wood. We

collect the profi les of all the forest concessions and

industries it supports. In association with partner

organisations in these markets, these profi les are

distributed to leading trading companies in the

major FSC markets, EU and USA, but potentially also

Japan, China and Australia. We facilitate information

exchange and business dialogues, and monitors the

impact of forest certifi cation on trade.

In November APHI and TBI hosted a second trade

seminar, this time in Surabaya, the Indonesian centre

of wood processing industries. The seminar was

attended by the CEO and president of the USA-

based International Wood Products Association

(IWPA), a representative of the UK Timber Trade

Federation, USA companies, European companies

and Indonesian FSC CoC certifi ed industries. The

event was successful due to concrete contracts for

the USA market in truck fl ooring, decking, moul-

dings and plywood. IWPA agreed to assist us in the

promotion of Indonesian certifi ed wood products in

2015. We agreed with all participants to host a

repeat event in 2015.

Programme ImpactEconomic

Of the 40 concessions that we support, 39 are

actively logging with a total output of 1.8 million

cu.m roundwood, harvested from a total production

area of 2.6 million ha. A proportion of 88 per cent

of these logs is supplied to plywood industry, and

the remainder 12 per cent is supplied to saw mills.

We estimate that the log harvests from the FSC

concessions alone allow for the production of

422,000 cu.m of plywood, and 61,000 cu.m of sawn

wood products.

Social

The forest concessions altogether employ 7,400

regular staff in their concessions, not counting

numerous seasonal workers.

Ecological

The whole area that has been FSC certifi ed thus far

with our support (1.4 million ha) is natural forest.

Around 300,000 ha (16 per cent) has been set-aside

for full protection. Moreover, 17 forest concessions

(1.36 million ha) share borders with a protected area

and thus have a buffering function. And 16 forest

concessions offer habitat for such iconic endangered

species like orang-utans, proboscis monkeys,

elephants and Sumatran rhinos.

Market links • Expected result: FSC certifi ed forest concessions

with our support have new market links to the

Netherlands (75,000 cu.m/year) or wider EU

(120,000 cu.m/year) and USA (120,000 cu.m/year).

Of the 40 concessions that we support, 39 are

actively logging with a total output of 1.8 million

cu.m roundwood.

• Target 2014: 19 (nearly) FSC certifi ed forest

concessions supply FSC wood products to the

Dutch (40,000 cu.m) or other European markets

(20,000 cu.m).

• Status: 16,000 cu.m (i.e 58 per cent of a total of

28,000 cu.m) FSC products traded between

Indonesia and the Netherlands.

Adessium Foundation e 950,000 0 e 950,000 2008 - 2011

Adessium Foundation e 950,000 0 e 950,000 2012 - 2015

IDH e 2,000,000 e 1,800,000 e 200,000 2009 - 2013

IDH e 1,500,000 e 1,350,000 e 150,000 2012 - 2015

Postcode Lottery e 2,300,000 e 2,070,000 e 230,000 2010 - 2015

BAM e 250,000 e 225,000 e 25,000 2009 - 2013

Bouwfonds e 250,000 e 225,000 e 25,000 2009 - 2013

Skantrae e 40,000 e 36,000 e 4,000 2012 - 2013

Aldrik Lifttechniek e 1,500 e 1,350 e 150 2011

Foreign and

Commonwealth Office e 19,219 e 0 e 19,219

25 housing corporations e 275,000 e 247,500 e 27,500 2010 - 2016

TOTAL (core + programme) e 8,535,719 e 5,954,850 e 2,580,869

Financial report

Expenditures 2014

Certification e 589,000

Certification support activities e 135,000

Market links e 230,000

Organisation and management e 208,000

Financial costs e - 2,000

Total e 1,160,000

Programme donors: Total donation Forest Organization Period

(90% forest certification & certification and support

10% organisation & support)

Core donors: Total donation Forest Organization Period

(100% organization & support) certification and support

Donations received

visit the website www.theborneoinitiative.org June 2015

Organisation and ColofonWe run our activities from three offices.

The head office is based in the Netherlands, the others in Indonesia and the USA.

The Borneo Initiative

De Corridor 7, 3621 ZA Breukelen, the Netherlands

Email: info@theborneoinitiative.org

Mobile phone: +31 610 665564

Pictures: Maurice Spees and TBI

Editing: ImpactReporters, Han van de Wiel

Design: Studio 10, Tineke Kooistra

Printer: drukkerij Mart. Spruijt BV, Amsterdam

This annual report is printed on 250gr FSC paper.