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Jaringan Auditor Nusantara The Indonesian Auditor Network

Integrity, Competence, Empathy

18_JAN_01 World Indonesianists Forum 1.6F 31 October 2018 PUBLIC DOCUMENT

Jaringan Auditor Nusantara

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HERE BE DRAGONS? Background Paper for The World Indonesianist Forum 2018

Bart W van Assen, Chair (Interim), Jaringan Auditor Nusantara About two years ago I ran my own, self-imposed, social experiment... one I don’t encourage anyone to repeat: I joined several anti-oil-palm groups on Facebook. Not being much of an anti-anything myself this was my ‘here be dragons’ moment; my personal blank space on the map to explore. I meant to learn more about the global concerns over oil palm and to add some local context to these concerns. But the thunder of dragons I expected to find was but a mass of petty minds, whipped into a frenzy of prejudice through selective posts by a few super brands. It quickly became – quite literally – too depressing to continue. But the lessons learned were striking! The Western middle class rejects even the most fundamental data – including higher productivity of the oil palm – to continue their own, unsustainable consumerism. And, of course, grifters and trolls happily irked on these petty minds in their stubborn ignorance. The hallmark of these quacktivists should be a palm oil free, deep-fried, supersized tofu-burger; an oxymoron surely available somewhere. Amongst the onslaught of pettiness, I did encounter a few dragons standing tall; albeit not of the kind most would imagine… these dragons – including Orangutan Land Trusti and With Compassion and Soul Incii – counter the prejudice with the latest facts from Indonesia. This, of course, earns them the wrath and ridicule of the quacktivists. Thus, instead of challenging my dragons, I ended up befriending – and defending – them… Yet, far too little reliable facts on Indonesia reaches these dragons and the international stage. For instance, English versions of local newspapers contain far less positive news compared to their counterparts written in Bahasa Indonesia. (Infosylvaiii, FAO’s newsletter on forests and forestry related issues, rarely covers any news on Indonesia.) Far worse, various foreign brands – often promoting sustainability, conservation and/or human rights – provide alternative facts to support their agendas. (The 1950 land cover of West-Kalimantaniv, see Figure 1 right, differs significantly from maps promoted by a conservationist super brand.)

Figure 1 Detail of the 1950 Vegetation Map of Indonesia (1:2,500,000) composed by the planning department of the forest service






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Let’s examine a local success story underreported for far too long: the Timber Legality Verification System. Can its lessons learned be carried-over to other local initiatives, such as the Indonesian Sustainable Palm Oil initiative and the Indonesian Auditor Network? And if so, what role(s) could/should my “dragons” play in them? The following sections present each of these initiatives and roughly sketch their context and lessons learned. Following that, an additional section discusses the role of Indonesianists in these initiatives, and then concludes with some discussion points for the World Indonesianist Forum 2018. Timber Legality Verification System The Timber Legality Verification System (SLVK; Sistem Verifikasi Legalitas Kayuv) is a comprehensive response to international concerns over the trade of illegal timbers. Initially, these concerns resulted in a proliferation of initiatives to verify timber legality by consultants; including the Legal Verified mark by the Tropical Forest Foundation, Timber Legality & Traceability Verification by Societ́e ́ Ge ́ne ́rale de Surveillance, Verification of Legal Origin by Global Forestry Services, and Verification of Legal Origin/Compliance by the Rainforest Alliance. During consecutive development stages, various stakeholders took lead in improving the theories and practices of SLVK: including The United Kingdom Department for International Development, the Indonesian Ministry of Forestry, The Nature Conservancy, and the Indonesian Ecolabelling Institute. And while imperfect, this may come as close to a multi-stakeholder initiative as is practically possible. Currently SLVK is the gold standard for timber legality, in Indonesia as well as abroad. Compared to other timber tracking initiatives – many of which barely go beyond ensuring that outputs do not

Figure 2 Legal logging operation in the heart of Kalimantan

Figure 3 Timber tracking starts in the forest






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exceed inputs – it can be considered the several generations ahead of other standards… in many ways similar to Windows 10 versus Windows 3.11. In particular, the use of a central database for all relevant info (the License Information Unit) is a powerful tool in identifying white-washing illegal timber. Last but not least, SLVK resulted in a significant overhaul of legislation and related procedures and thus reducing the related costs for the industry. The lessons learned from SLVK are extensive, and range from the mundane to the academic. While not intended to be comprehensive, the following bullet points cover the main lessons learned from the early days of SLVK: • Despite the complexity of timber legality and the emotive debate surrounding it, a

common understanding of timber (il)legality and its issues was not considered a major task. Institutional knowledge of legality remained low, with little common terminology, few references to relevant publications or direct involvement of experts. The ensuing debate remained emotive, and didn’t lead to factual arguments. Thus, for similar initiatives to succeed, they – at an early stage – must (a) define the scope of work, (b) cross-reference relevant requirements (read legislation) and (c) research related issues.

• A substantial hurdle to progress were the numerous conflicts of interests of parties involved, despite clear guidelines from various parties (see also Lawson 2007, Nussbaum & Simula 2005, WWF & WB 2006). While full separation between accreditation, standard-setting and verification is a basic to the credibility of SLVK few of the parties involved in SLVK were sufficiently aware of this. Hence, consultants failed to achieve key deliverables and remained controversial with some stakeholders, civil society organizations were suspicious of the concession that volunteered for testing the standard, and government officials considered timber legality verification the government’s (i.e. ‘their’) private domain, and felt that independent consultants “nosing around” challenged their mandates.

• Stakeholder consultation is susceptible to “Trojan Horses”, consultants who pursue parallel agendas. Despite numerous attempts to address (a.o.) land tenure, free and prior informed consent, and state forest gazettal (Colchester 2004, ICSG 2006, SGS & URS 2004/2005a, WALHI 2006) these issues remained hotly debated. SLVK, possibly due to its mandatory nature, proved to be the wrong tool to address these issues. Equally, public legal reform (see ICSG 2006 and Lawson 2006) went far beyond the reach of SLVK.

• The above conflicts of interests and Trojan Horses may be mitigated through increased transparency, and detailed documentation of all activities. Poor documentation during key stages of SLVK hampered a clear understanding of the justification for many of the changes in the final draft standard, and fueled speculation and gossip. A systematic review of expectations concerning the scope






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of work should regularly determine if and how an initiative can address them. Indonesia is very active on social media, a tool that may support these solutions.

• Identifying stakeholder champions significantly improved (local) support of SLVK. For example, the buy- in by government representatives significantly improved due to the activities by its Secretary General. (Government is a distinct stakeholder group that derives formal and informal funds from commercial forest management.) Local experts (often defined as called academics or eminent persons) play crucial roles in bridging deviating expectations/perceptions of the various stakeholders. These champions appear closely related to my “dragons” in the introduction… here be dragons?

• Another key issue for credible standards is that they must be accessible to and cost-effective for all parties (Lawson 2007, WWF & WB 2006). Various other initiatives implement lighter requirements for community-based forest management, and thus create a perverse incentive by whitewashing timber through “community-based” setups. While initially following this “light” approach for community-based forest management, SLVK significantly strengthened this standard (and included an EIA and timber administration system). A key development is the centralized database now in use, which significantly reduced transaction costs – not in the least the informal transaction costs – in the timber trade.

• SLVK aims to improve accountability through independent monitoring by NGOs. It institutionalized this through the Independent Forestry Observers Networkvi. However, a quick review of its reports suggest it cherry-picks individual cases where issues occurred without consideration for the context of the audits done so far. It remains debatable if this approach actually improves accountability.

• Publications like Who Watches the Watchmen vii (EIA 2015; see also Lawson 2007, WWF & WB 2006) – and many informal discussions – point to a crucial issue in SLVK and other initiatives using certification/verification: the competence of auditors. Some stakeholders argue that auditors are hired by the company and therefore will falsify their findings in its favour. Auditors reject this conspiracy theory, claiming they use well- established (and accredited) procedures, and loss of credibility far outweighs any benefits of falsified findings. For instance, auditors identified identical weaknesses in the draft standard as brought forth by civil society organizations (Colchester 2004, ICSG 2006, SGS & URS 2004/2005a, WALHI 2006). Nonetheless, evidence is mounting that competence amongst auditors is declining, and they are currently the weakest link in certification/verification.






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Indonesian Sustainable Palm Oil While the roots of the Indonesian Sustainable Palm Oilviii (ISPO) initiative a ministerial decree in 2009, it took flight during a partnership between the United Nations Development Programme, the Indonesian Ministry of Agriculture, and several multinational corporationsix. Its main purposes are to support the sustainable production and use of palm oil while minimising adverse environmental and social impacts, and improving the productivity of smallholders. Although ISPO is a local response to international criticism/concerns over negative aspects of palm oil production, the debate about the (f)actual impacts continues. For instance, claims that palm oil is the main driver of deforestation is disputed by studies that state it contributes to less than 10% of the total deforestation. Similarly, many foreign activists reject the (credible) claims that smallholders play a big role in deforestation. This (over)simplification of the issues at hand by foreign super brands fuels resentment and suspicions of neo-colonialism by these brands. ISPO has so far gone through two major stages, mainly referred to as the old ISPO system (2015 to date) and the new ISPO system (awaiting presidential endorsement). Where the old ISPO was more of an internal tool for the Ministry of Agriculture, with all aspects set up within the ministry, the new ISPO separates responsibilities similar to SLVK. The new ISPO has all the signs of becoming the gold standard for oil palm cultivation in Indonesia but its supply chain tracking is still under development and its form and robustness will have serious impacts on the credibility of the whole. ISPO also aims to implement its own License Information Unit – similar to SLVK – is still under discussion. In preparing the new ISPO, the initiative took onboard experiences from SLVK, and thus was able to capitalize on many of the lessons learned above. Rather than repeat these, the bullet points below focus on additional lessons learned: • Like other “sustainability” standards (including the FSC and the RSPO)

stakeholders continue to struggle over defining sustainability. Often it is reduced to ensuring that a certain quality is kept at a sustainable level, either an amount

Figure 4 Burning is often – erroneously – associated with new oil palm plantations






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(like metric tonnes of oil or GDP) or area (such as forest area). With the various stakeholders cherry-picking data that suit their causes, little progress is made on defining sustainability. While to some extent this also occurred at SLVK, legality was a more concrete concept than sustainability.

• ISPO’s institutional settings are set to gear towards separation of responsibilities: standard-setting (ISPO Commission), accreditation (National Accreditation Committee) and certification (independent bodies). This approach will significantly increase the credibility of the initiative.

• In order to be inclusive to – and cost-effective for – industrial estates as well (independent) smallholders, ISPO developed separate standards for the different types of growers. This approach – tailored standards – occurs in several local certification initiatives and can be traced back to early discussions at the Indonesian Ecolabelling Institutex. It deserves more international exposure and research to identify its strengths and weaknesses.

• Similar to SLVK, independent monitoring is institutionalized through a lead NGO. This approach is now under review as it too often results public shaming rather than engagement – focusing too little on trial and too much on error.

• Both the online presence of ISPO and its complaints procedures are still under development, and are considered crucial to the credibility of the initiative.

• As with SLVK, competence of auditors (and credibility of certification bodies) is poor, and additional guidance and safeguards are proposed to address these flaws.

Indonesian Auditor Network Initially, the Indonesian Auditor Network (Jaringan Auditor Nusantaraxi, JAN) emerged as a counter to malpractices by a local certification body. However, recent inputs from various experts identified serious concerns over the competence of local auditors. Hence, JAN’s (interim) mission evolved into improving and safeguarding the competence of auditors active in Indonesia. JAN aims to hold its first annual general meeting this December.

“Auditors conducting the surveillance or re-certification audits are not thorough enough in identifying labour rights abuses. … obvious labour issues were unidentified in some of the audit reports.”

(Updates on Human Rights & Social Standards, RSPO CB Workshop, 15.10.2018) The issue of competence with auditors has emerged repeatedly over time in one form or another, not in the least in the form of the race-to-the-bottom (EIA 2015). However, it has long remained without evidence for follow-up. But recently Accreditation Services International and the Roundtable for Sustainable Palm Oil detailed






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fundamental flaws amongst auditors, many of which should shame even the most corrupt auditor, a.o.: lacking witness audits, poor understanding of standards/requirements and terminology, weak sampling procedures, ignorance of social issues (for both employees and communities), inaccurate facts & figures, insufficient stakeholder consultation, and poor training. Clearly, there is an urgent need to clean up this mess and drain the swamp (see Figure 4, below). Fortunately, JAN is in the “comfortable” position to implement many of the lessons learned from SLVK and ISPO. For example, based on the above lessons learned JAN drafted the following activities for discussion during its first AGM: • Define the scope of work and related definitions,

including an in-depth discussion on auditors versus (HCV/HCS) assessors;

• Cross-reference relevant requirements, including best management practices for auditors based on ISO standards (in particular ISO 17021);

• Review related issues, including improving transparency and documentation and avoiding conflicts of interests or hidden agendas;

• Engaging with stakeholder champions, and defining procedures to engage on concerns (going beyond complaints); and

• Developing tools to improve competence of auditors, including basic auditor courses and double-blind reviews.

Yet, as the (interim) chair of JAN, I often find myself in the uncomfortable position of having to counter prejudice with facts. Too often I have to “blast” my colleagues and fellow auditors over prejudiced and cherry-picked data, up to the point that I wonder if I’m turning into a dragon myself. On the rare occasion that I have the time to look in the mirror, I end up wondering: here be dragons? It’s often a good moment for introspection and contemplate over my – and other Indonesianists – role(s). The role(s) of Indonesianists in SLVK, ISPO and JAN In all of the initiatives above, Indonesianists played – and still play – crucial roles. Strategic partnerships between concerned parties, by (inter)governmental agencies

Figure 5 Struggling through a landslide to interview stakeholders in a remote village






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but also through industries and NGOs, catalyzed practical solutions to (inter)national concerns. While not always appreciated by the local counterparts, Indonesianists often bridged the international and national concerns of these stakeholders. Thus, we touch upon two crucial, interlinked issues that Indonesianists can address: the self-confidence and the language gap of local counterparts. Nonetheless many of the local counterparts I worked with had one fundamental weakness: a lack of self-confidence. Once emancipated from this misperception, and realizing they are equals in expertise and experience, they made a giant leap in competence. (Of course, I thoroughly enjoyed every time this leap took place.) My best auditors had little formal education, the best one didn’t pass primary school, because of their wealth in practical expertise and open-minded attitude that is needed in auditing. How can Indonesianists emancipate more local experts? Bluntly put, Indonesia has more than enough brilliant minds address most – if not all – of the issues it faces. Foreign IQ is rarely needed beyond the perceived added credibility. Emancipating But emancipating them in Indonesia is one thing, emancipating them against the whole world is quite another… for that the second issue must be addressed. The language gap – exacerbated by the above lack of confidence – has time again proven to be hurdle for local experts. I often noted that many local colleagues are extremely embarrassed when they discover that they used the wrong synonyms for their translation. (I do sometimes wonder if it’s an ongoing conspiracy to drive foreign counterparts mad.) This, of course, makes attempts to address errors in translations quite awkward. How can Indonesianists bridge the language gap? For me, English is just another tool for me to communicate with others, most of which are also non-native English speakers. If I get my message across, I care little about how grammatically (in)correct it was. No doubt my native speaker friends can find quite a few serious errors in this text. How can Indonesianists get this message across to their counterparts? References Colchester, M., 2004. Strengthening the Social Component of a Standard for Legality of Wood Origin and Production in Indonesia, Legal Verification Study: Final Report (link accessed May 18, 2007).






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ICSG (Indonesia Civil Society Groups), 2006. Briefing Paper on Legality Verification, Final Draft, 10 March 2006. Nussbaum, R., Simula, M., 2005. The forest certification handbook, second edition, Earthscan and ProForest, United Kingdom, ISBN 1-84407-123-5. SGS & URS (Socie ́te ́ Ge ́ne ́rale de Surveillance), 2004. Field experience with legality standard, Development and pilot testing of a third-party Wood Legality Verification and tracking program in East Kalimantan Province, Indonesia. SGS & URS (Socie ́te ́ Ge ́ne ́rale de Surveillance), 2005a. Development and Pilot Testing of a Third-Party Wood Legality Verification and Tracking Program in East Kalimantan Province, Indonesia, Final Report Volume 1, Main Report, June 2005. WALHI (Wahana Lingkungan Hidup Indonesia), 2006. The downgrading of ‘wood legality’ criteria as a systematic attempt to bypass social issues, a critical note on the formulation of ‘wood legality’ criteria and standards, 28 Nov 2006 (link accessed May 18, 2007). Endnotes

i http://www.forests4orangutans.org/ ii https://www.withcompassion.com.au iii http://www.fao.org/forestry/infosylva/en/ iv https://esdac.jrc.ec.europa.eu/images/Eudasm/Asia/images/maps/download/ID2002_VE-1.jpg v https://silk.dephut.go.id/index.php/info/svlk vi http://jpik.or.id/ vii https://eia-international.org/report/who-watches-the-watchmen/ viii http://www.ispo-org.or.id/index.php?lang=en ix http://www.ispo-org.or.id/index.php?option=com_content&view=article&id=93&Itemid=271&lang=en x https://lei.or.id/ xi http://www.auditor.id/

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