Michelin’s history is closely tied to natural rubber, which is a sustainable, infinitely renewable raw material that creates wealth and jobs. However, the Group is aware that rising global demand may lead to poor farming practices that are detrimental to tropical rain forests, biodiversity, and smallholder income.

 

Since 2015, Michelin has been working on a pilot project through its joint-venture Royal Lestari Utama (RLU)  to develop sustainable natural rubber plantations in Sumatra and East Kalimantan, Indonesia.

The Royal Lestari Utama project (RLU) in Indonesia, an out-of-the ordinary project:

A “zero deforestation” commitment on 88,000 hectares of land in tropical rainforest which supports high levels of biodiversity and provide ecosystem services of global importance, that was highly deforested and degraded prior to Michelin’s involvement.

The aim is to apply best practices to produce sustainable natural rubber, supporting the development of local communities, while protecting and restoring a key habitat for Sumatran elephants and tigers, as well as Borneo orangutans residing in and around RLU concessions in Jambi, Sumatra and East Kalimantan.

 

In 2015, Michelin and the Barito Pacific Group (BGP) combined their expertise in agronomy and re-milling and created a joint venture, Royal Lestari Utama (RLU), which is 51% owned by BPG and 49% by Michelin. The objective is to rebuild a farming operation that protects the climate, biodiversity, and community livelihood.

An open, transparent, and collaborative approach to working with NGOs and local partners

Michelin consults regularly both with its stakeholders and with the leading civil society organizations involved in natural rubber issues. Every two years, the Group brings members of civil society together to report on the progress made across the natural rubber value chain including the RLU Indonesian project and to discuss possible pathways to further improvement.

Since 2015, Michelin and WWF have engaged in a global partnership to shift the natural rubber industry towards sustainable practices and support the RLU project in addressing environmental and social challenges. WWF’s advisory role in RLU ended in March 2020.

 

RLU also works with other experts to identify and protect the most critically important biodiversity habitats and ecosystems in Indonesia ; it ensures all business operations are in line with sustainable commitments for future generations and welcomes any constructive feedback that helps deliver a sustainable natural rubber supply while protecting and strengthening the environment and local communities.

The Indonesian project tends to be spotlighted more than others. Michelin embraces its responsibility and is committed to  full, transparent disclosure of its natural rubber operations.

An All-Sustainable project

The project is organized into economic, social, and environmental focus areas; it reflects Michelin’s ‘All-Sustainable’ approach by putting people (local communities), the economy and the environment at the center of its decisions.

 

Out of three concessions, representing a total surface area of 88,000 hectares, rubber trees are being planted on almost 40% of the land to produce sustainable natural rubber. The remaining 60% is maintained as forest or rehabilitated for agroforestry activities and food crops.

The RLU plantations are targeting the highest standards in the natural rubber value chain, particularly in terms of employment conditions, health, safety, engagement of local communities,  environmental stewardship, protection of biodiversity, and the fight against pollution and forest fires.

The project also has a social dimension, including a goal to enhance the livelihoods of 50,000 locals through the creation of direct and indirect employment, as well as the training of farmers in rubber and diversified crops under the integrated farming program.

Social conflicts relating to land use remain a major challenge in the region, and a key takeaway from the RLU partnership is that Free Prior Informed Consent is a long term, continual process.

At maturity, the natural rubber plantation is expected to provide around 16,000 direct and indirect fair-wage jobs, providing a critical source of employment for local communities.

Main achievements by the end of 2020

This is an ambitious, long-term project that is emblematic of the Group’s social and environmental commitments. The past six years have been spent laying important groundwork and much progress has been made and reported : rubber trees planted on more than 22,000 of the targeted 34,000 deforested hectares, up to 30% of total concessions or 28,000 ha allocated as protected area for conservation and biodiversity, approximately 4,000 direct jobs created, more than $10 million invested in housing, access to water and electricity, and other facilities.

 

Apart from the key areas of progress, Michelin remains fully aware of the difficulties that a project of this scale is facing in a very complex and fragmented Indonesian natural rubber value chain.

The challenges for RLU remain significant, but RLU believes in building impact and making continuous efforts across the board: in commercial and ESG* matters, responsible conflict resolution, mitigation of human-wildlife conflict, implementation of community partnership programs, and leverage.

 

By participating in this project, Michelin is seeking to foster responsible land management, promote best farming and labor practices and support the development of local communities and people. The Group remains more than ever, committed to developing a model plantation that integrates economic performance, social factors and environmental protection while achieving continuous progress.

*Environmental, Social and Governance. RLU and its subsidiaries follow the international Finance Corporations (IFC) - Performance standards as baseline in its activities.

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