Royal Lestari Utama, Indonesia
A challenging and long-term project reflecting Michelin’s All-Sustainable approach by seeking a balance between People, Profit & Planet.
Since 2015, Michelin through its joint venture Royal Lestari Utama (RLU) has been working on a pilot project for the development of sustainable natural rubber production in Sumatra and East Kalimantan provinces in Indonesia.
The Royal Lestari Utama (RLU) project in Indonesia, ambitious project: it consists of a "zero deforestation" commitment on an area of 88,000 hectares of tropical forest with a very rich biodiversity, which was heavily degraded and deforested prior to Michelin's involvement.
This project aims to promote good practices for sustainable natural rubber production and to support the development of local communities. It also helps to protect and restore the vital natural habitats of the Sumatran tigers, as well as the Bornean orangutans, which live in and around RLU's.
In 2015, Michelin and the Barito Pacific Group combined their expertise in agronomy and natural rubber processing and created a joint venture, Royal Lestari Utama (RLU). Owned 51% by Barito Pacific Group and 49% by Michelin, it aims to rebuild agriculture that protects the climate, biodiversity and the livelihoods of local communities.
An open and transparent collaborative approach with NGOs and local partners
Michelin regularly consults with its stakeholders and the main civil society organisations interested in natural rubber issues. Every two years, the Group brings these organisations together to report on progress across the natural rubber value chain and to identify potential areas for improvement.
In 2015, Michelin and WWF entered a global partnership to promote sustainable practices in the natural rubber industry and support the environmental and social objectives of the RLU project. WWF's advisory role in the RLU project ended in March 2020. RLU also works with other experts to identify and protect the most important biodiversity habitats and ecosystems. The company ensures that all its operations are consistent with commitments to sustainable development for future generations and welcomes constructive feedback that helps to ensure a sustainable supply of natural rubber, while protecting the environment and supporting local communities.
The Indonesian project tends to be more exposed than others. Michelin accepts its responsibilities and is committed to providing transparent and comprehensive information on its natural rubber activities.
A sustainable project
The project is based on three axes: economic, societal, and environmental. It reflects Michelin's All-Sustainable approach, which places people (especially local communities) and economic and environmental issues at the heart of its decisions.
On three concessions, which total 88,000 hectares, rubber trees are planted on about 40% of the land. The remaining 60% is forest preserved or rehabilitated for agroforestry activities and food crops.
RLU's plantations have extremely ambitious targets for the natural rubber value chain, including employment conditions, health and safety, local community engagement, environmental and biodiversity protection, and pollution and forest fire control.
The project also has a social dimension: one of its objectives is to improve the livelihoods of 50,000 people through direct and indirect job creation, training farmers in rubber cultivation and crop diversification as part of an integrated farming program.
Social conflict over land use remains a major challenge in the region, and one of the main lessons of the RLU partnership is that free prior and informed consent (FPIC) is an ongoing and long-term process.
When mature, the rubber plantation is expected to create around 16,000 direct and indirect jobs with fair wages, and thus represent a vital source of employment for local communities.
Main results by end of September 2022
This is an ambitious, long-term project, emblematic of the Group's social and environmental commitments.
The last eight years have been devoted to extensive preparatory work, and much progress has been made and documented.
Beyond these major advances, Michelin remains fully aware of the difficulties that a project of this scale must face in Indonesia, where the natural rubber value chain is extremely complex and fragmented.
Despite these significant challenges, RLU is committed to generating positive impact and making continuous efforts in all areas: commercial, ESG (1), responsible conflict resolution, human-wildlife conflict mitigation, implementation of community partnership programs.
(1) Environmental, Social and Governance. RLU and its subsidiaries follow the international Finance Corporations (IFC) – Performance standards as baseline in its activities.
June 2022, a new step
Michelin, which previously held 49% shares, has bought a further 51% of the capital of Royal Lestari Utama (RLU), a joint venture with Barito Pacific Group.
Becoming the sole owner of RLU, Michelin reasserts its long-term ambitions and commitment to sustainable natural rubber production in Indonesia and to improving the living standards of local communities.
Through this project, Michelin aims to foster responsible land management, promote best agricultural and labour practices, and support the development of local communities. The Group remains more than ever committed to developing an exemplary plantation model that integrates economic performance, social dimension and environmental protection while allowing for continuous progress to transform the Indonesian industry.