Sustainable Downstream Industry Assessment (SIDIA) Indonesia
Posted on 04 May 2023
Author by Yayasan WWF Indonesia & Accenture Development Partnerships
ACCEPTING THE IMPORTANCE OF SUSTAINABLE SOURCING
Sustainable Downstream Industry
Assessment (SIDIA) is a sustainable sourcing assessment tool for companies in
the downstream sector. The downstream sector refers to companies that have
direct links to everyday users and are consumer driven.
The Indonesian middle class has been a major driver of economic growth as the
group’s consumption has grown by 12% annually since 2002 and now represents
close to half of all household consumption in Indonesia.
Following policymaker’s decisions in setting environmental and sustainability
goals based on United Nations’ Sustainable Development Goals (SDG), consumer
preference has also shifted more towards products from companies that are
conscious of protecting the environment.
SIDIA targeted a variety of
downstream industries in Indonesia, such as retailers, fast-moving consumer
goods (FMCG), food and beverage (F&B), and hotels to assess the usage of
palm oil, wood/timber and paper, seafood commodities, and plastic and energy in
their products and/ or services, based on the Sustainable Sourcing Guidelines
launched in 2020. By participating in this assessment, SIDIA aimed to encourage
companies to implement and further improve their sustainable procurement
practices. SIDIA is also expected to be a reference for downstream industry
actors in their policy-making and formulation of steps to create a responsible
and environmentally friendly industry.
ASSESSMENT METHODOLOGY
The assessment was performed
through four methods: approach companies, data collection through an extensive
questionnaire filled out by companies, desk research using publicly available
data published on the company’s owned media, and verification sessions with
companies to align on the data submitted as proof of sustainable procurement
practices. The assessment was based on the pillar dimensions of commitment
(corporate strategy on sustainability, vision and mission, and stakeholder
involvement), performance (effort in implementing policies and efforts in
identifying sources of materials), and transparency (reporting, publishing, and
efforts on ensuring that the practices are known to the public); against the
category (activity/ commodity) dimensions, which consist of general initiatives,
palm oil, wood and paper, seafood, plastic, and energy.
The result of the assessment and
discussion placed the adoption level of the companies using a scoring system.
The sample sectors are hotel, food & beverage, fast-moving consumer goods,
and retail. Companies for each sector were selected through non-probability
sampling based on the following criteria:
From the list of companies
selected to be assessed, participating companies are companies that confirmed
to be assessed and go through a verification process or confirmed to only use
the deskresearch results. The non-participating companies are companies that
did not respond after several contact attempts or have stated not to
participate.
RESULTS & NEXT STEPS
In the General Initiatives
category, majority of participating companies were able to meet all the pillars
required – commitment, performance, and transparency. Although not all
companies were able to meet all 13 criteria, 11 of the 21 assessed companies
met at least 7 criteria. In the plastic category, majority of participating
companies and several non-participating companies provided their commitment to
reduce plastic use and has a policy to manage the use of plastic. This can be
an alignment to a policy rolled out by Indonesia’s national government (PerMen
LHK no 75, 2019) to end the plastic waste problem, which also aims to minimize
marine plastic waste by 70% by 2025 and be entirely rid of plastic pollution by
2040. For other categories, implementing reduction of energy uses and sourcing
sustainable wood/paper were next in line met by companies, followed by sourcing
of sustainable palm oil and seafood. Although the results cannot be aggregated
due to the different industries, the adoption of each category seems to be
drawn from the combination of existing government policies and the companies’
own initiatives. Public documents or information from the company’s owned media
were largely not available for most non-participating companies, which resulted
in low scoring in all the pillars and categories. The overall assessment
results showed that the adoption of sustainable practices varies amongst
companies. Only some companies responded to the survey and preferred to use the
desk research results as the basis of the verification process. The minimal
response may be caused due to the ongoing pandemic, where majority of the
companies were still in the recovery stage to focus on workforce health and
safety and maintain financial stability. With the increasing awareness on
sustainable sourcing through new regulations and consumer demands, SIDIA team
encourages companies to use this assessment to benchmark themselves and
self-identify areas for growth and opportunities. The SIDIA team will also
review on how to engage further with participating companies for improvements
and connect with non-participating companies to participate in the sustainable sourcing efforts in
Indonesia.
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