Peat forest areas restored by APRIL Group in the Kampar Peninsula. (Photo Courtesy of APRIL Group)

How the Private Sector is Helping Drive Progress in the Adoption of Circular Economy Practices in Indonesia

OCTOBER 21, 2020

Jakarta. As a response to the environmental challenges and action to move to a low-carbon economy, shifting the economy towards circularity will be important to ensure efficient resource management and reduce the impact of economic development on the environment.

The World Business Council for Sustainable Development (WBCSD), in a recent report, stated that while the global population has doubled over the last 50 years, resource extraction has tripled. Around 90% of biodiversity loss and water stress are caused by natural resource extraction and processing. 

The report says that the world  will be confronted with the catastrophic consequences of climate change, biodiversity loss and resource scarcity unless we become more effective in how we harvest, process, use and reuse biological resource. 

In Indonesia, the Ministry of National Development Planning (Bappenas), in partnership with the United Nations Development Programme (UNDP) and with support from the Government of Denmark, launched Indonesia’s  first circular economy support initiative early this year to support the development of a new economic model that can further boost growth, create new jobs and address climate change at the same time.

 Through this initiative, Indonesia  can gain a competitive edge to further attract private sector investment, according to Bappenas. Adopting a circular economy will also accelerate Indonesia’s progress towards achieving the  Sustainable Development Goals, particularly SDG12 on sustainable consumption and production.

“A circular economy model is key to achieving zero pollution and a toxic free environment as Indonesia embarks on an industrial and service-based economy in the next decade. The Indonesian Government is pleased to welcome this much-needed initiative which will ease the country’s transition away from a resource-based economy,” said Mr. Monoarfa.

 In addition, the circular economy could unlock $4.5 trillion of economic output by 2030 based on a 2015 study by Accenture. This could allow private sector businesses to grow while using  sustainable business models that are more environmentally friendly.

According to the 2020 Circularity Gap Report, the world economy is still far from being circular, as only 8.6% of waste across business is reused. This represents a decline from the 9.1% level  in 2018. The pandemic could also potentially hinder circularity initiatives because countries are now focusing resources on curbing the impact of the virus. 

However, a number of companies in Indonesia are actively pursuing alternative approaches to the linear take-make-waste model that decouple economic growth from resource constraints. The concept of circularity has captured the attention of many companies that see the economic opportunities in a viable model to effectively tackle sustainability challenges, drive performance, competitiveness, and innovation, while also  stimulating wider economic growth and development.

Indonesian pulp and paper producer APRIL Group, for example, has shown its commitment to sustainable growth by increasing its focus on circularity and renewable energy.  

Operating an integrated pulp and paper mill in Pangkalan Kerinci, Riau, the company manages to reduce its dependence on fossil fuel by transforming waste into renewable energy. APRIL re-uses much of its solid waste, such as wood chip residues, and black liquor, which are by-products of the process that converts wood chips into pulp and converting it to biofuel.

This renewable energy is used to power its operations and neighbouring communities in place of fossil based fuels. According to APRIL's 2019 Sustainability Report, 79% of the company’s operational activities are powered by renewable energy sources. The company continues to seek innovations and initiatives to improve its energy efficiency as part of effectively managing its carbon footprint. 

APRIL’s focus on circularity and renewable energy is also aligned with its commitment to addressing the SDGs, specifically Goal 7 (Affordable and Clean Energy) and Goal 12 (Sustainable Consumption and Production). The company is continuing its engagement with PwC Singapore to assess the impact of its operations using the SDGs as a framework, having identified seven priority Goals last year, including Goal 13 (Climate Action) and Goal 15 (Life on Land).

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