PROJECT TREE Initiative PROJECT TREE Initiative

PROJECT TREE Initiative

We are partnering with stakeholders and developing our own traceability system to tackle issues in the rubber industry, such as illegal logging and rights violations against local communities and labourers. Our goal is to achieve the sustainable production and use of natural rubber, starting in Sumatra, Indonesia.

Maintain Ethical Sourcing and Sustainable Supply.

PROJECT TREE mission diagram

Achieving SDGs through the PROJECT TREE Initiatives (the Initiative)

SDGs No.9 icon

Build a resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.

SDGs No.17 icon

Strengthen the means of implementation and revitalize the global partnership for sustainable development in the rubber industry.

Human Rights

Human Rights

We are offering direct incentives to suppliers (along the supply chain, including local collectors, dealers and processing companies) and using funds for smallholders to promote sustainability activities to improve productivity. This includes providing training in farming practices to increase supplier revenue and to meet the growing demand for natural rubber within the limited land resources.

Achieving SDGs through the Initiative

SDGs No.1 icon

Seek to end poverty in all its forms everywhere.

SDGs No.8 icon

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

Environment

Environment

Data from raw material collection sites are recorded in our traceability system to determine the risks of each location and monitor collection activities. PROJECT TREE aims to only use natural rubber produced in agreed areas outside of conservation areas as defined by World Database on Protected Areas. We will contribute to the conservation of wildlife by preventing uncontrolled growth of farm land, over-cultivation and illegal logging near protected areas.

* The World Database on Protected Areas downloaded from the Integrated Biodiversity Assessment Tool (IBAT). Provided by BirdLife International, Conservation International, IUCN and UNEP-WCMC. Please contact ibat@ibat-alliance.org for further information.

Achieving SDGs through the Initiative

SDGs No.12 icon

Ensure sustainable consumption and production patterns.

SDGs No.13 icon

Take urgent action to combat climate change and its impacts.

SDGs No.15 icon

Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.

ITOCHU Corporation owns PT Aneka Bumi Pratama(PT ABP), one of Indonesia’s largest natural rubber processing companies with two factories on the Indonesian island of Sumatra in the provinces of South Sumatra and Jambi, respectively.
ITOCHU became a founding member of the Global Platform for Sustainable Natural Rubber (GPSNR) in 2018.

PT ABP buys its rubber supplies from smallholder farmers operating small plantations mostly in southern and central Sumatra.
A network of mostly independently operating collectors, dealers and agents buy the rubber at the farms, at village collection points, or at local auctions and transport it to PT ABP’s factories. The structure is typical for Indonesian rubber.
It is complex with little transparency of the actual flows of rubber.
It thus does not lend itself for downstream companies to actively help to improve sustainable production.

ITOCHU therefore designed its new natural rubber transparency and sustainability program, ”PROJECT TREE”, as one way to implement its CSR policy and to apply the guidelines of GPSNR to its rubber supply chain.
PROJECT TREE has just begun its activities and is expected to grow and address as many of rubber production’s sustainability issues as possible over time and as they become known.

PROJECT TREE consists of three principal components

  1. 1) TRACEABILITY
    ITOCHU has hired ITOCHU Techno-Solutions to create a block-chain based traceability app able to track rubber supplies from smallholders to factory to provide the necessary transparency to PT ABP’s supply chain.
    The app will record every transaction between collectors and dealers as a given rubber lot travels through the dealer network to the processing factory. It will record the location of the collecting points, compare them to a database of ecologically sensitive areas across Sumatra and flag locations that indicate a potential risk to these sensitive areas.
    Traced rubber lots will be segregated at purchase and transported to the factories for segregated processing, packaging and trade on the HeveaConnect rubber trading platform.
  2. 2) INCENTIVES
    ITOCHU has designed an incentive program for farmers and dealers to improve acceptance of transparency and sustainability programs and improve farmers livelihood.
    Incentives may include training programs, bonus payments for participating in and graduating from the programs, high yielding rubber tree clones, fertilizer, farm tools, and safety equipment.
  3. 3) SUSTAINABILITY

    ITOCHU’s subsidiary company, PT ABP, has hired ProForest, an NGO, to address its rubber sustainability needs, to design a program to improve farm sustainability and farmer equity in its supply chain, and to evaluate the impact the program has on participating farmers.
    The program is based on the “Responsible Sourcing from Smallholders (RSS)” framework.

    The program which began in early 2021, identified a first group of 150 farmers, assessed their supply chain risks, designed a training program based on the risk analysis, and trained PT ABP staff to conduct the actual farmer training.

Traceability System

Traceability system schematic diagram

Currently, multiple operators (local collectors and raw material dealers) are involved in the upstream supply chain from smallholders to natural rubber processors and we felt the need for more transparency to better control the supply chain. Our traceability system with block-chain technology is used on smartphone and web-based applications, allowing them to conduct mutual authentication and to record transaction information including dates, times, geolocation data and quantity.
PROJECT TREE plans to provide a system offering a financial incentive for accurate transaction recording in order to promote cooperation from the upstream portion of the supply chain. The incentive to the upstream supply chain participants who will cooperate to record their transactions will be funded by using part of the proceeds from sales of tyres manufactured in the context of PROJECT TREE. These funds which will be managed by ITOCHU will be utilized partially to improve the sustainability of the natural rubber industry as part of the RSS program for small holders for capacity building, education to promote Good Agricultural Practices etc.
Because our traceability system can only track the activity of collectors as for now, the incentive intended for farmers is kept at bank in the so-called Joint Pool Account (JPA). How to use the funds kept in the JPA will be decided by the PROJECT TREE steering committee comprised of representatives of PROJECT TREE participants (including ITOCHU, tire manufacturers and processing companies) and audited by Proforest, a non-profit group.
*This ITOCHU traceability system does not collect or obtain the personal data of ultimate buyers of tyres.

Traceability System Reliability

Traceability system reliability diagram
Traceability system reliability diagram

Traceability System Reliability

Only the hash data* on raw materials are stored in the traceability system’s blockchain.
The hash data allows tyre manufacturers/distributors and automakers to trace the origins of the raw material collection point.
Only relevant players can control access to the raw material data and it is not shared with other stakeholders.
Any attempt to alter the raw material data changes the hash on the block chain, identifying misconduct immediately.

*Hash: A hash encrypts transaction data into an alphanumeric string to prevent data modification and corruption.

Our Approach

Responsible Sourcing from Smallholders

We have adopted the RESPONSIBLE SOURCING FROM SMALLHOLDERS (RSS) framework introduced by Proforest, in our PROJECT TREE sustainability activities.
The RSS framework helps supply chain companies to engage with smallholders in their supply base to achieve two goals (described as pillars):

Pillar 1. To minimise the risk of production which does not meet the core sourcing policies of buyers
Pillar 2. To provide support to improve smallholders’ livelihoods and production practices

Each goal is addressed through one of the two ‘pillars’ of the framework, shown in Figure 1.
In implementing the RSS program, the two pillars should be addressed separately, but many of the activities
can be effectively carried out in parallel.

More detail is here

Pillar 1. To minimise the risk of production which does not meet core sourcing policies of buyers
Pillar 2. To provide support to improve smallholders’ livelihoods and production practices

Each goal is addressed through one of the two ‘pillars’ of the framework, shown in Figure 1.
In implementing RSS, the two pillars should be addressed separately, but many of the activities
can be effectively carried out in parallel.

More detail is here

PROJECT TREE mission diagram
Traceability system schematic diagram