JAKARTA, INDONESIA (January 27, 2023) - The Asian Development Bank (AfDB) has agreed to provide $15 million to PT Dharma Satya Nusantara Tbk (DSNG) to support the development of sustainable wood processing, rural development support and climate resilience. loan agreement in the amount of agroforestry in Java, Indonesia.
AfDB proceeds will finance investments to implement energy and water saving processes, as well as the purchase of indigenous Sengon and Yabon trees in Indonesia. Planted native trees can be a sustainable alternative to natural wood, preventing deforestation and supporting biodiversity.
DSNG buys trees from Central, East and West Java. Most of the Sengon and Yabo trees are grown by small farmers and intercropped with various crops such as coffee, maize and rice. In addition to using otherwise barren land, planting trees with nutrients can reduce erosion, improve soil health and, in many cases, improve crop yields.
"The region is experiencing increasing climate shocks that affect the livelihoods, food, water and health of millions of people, and women are disproportionately affected," says Carine Donges, AfDB's Chief Investment Officer of the Private Sector Operations Department. "BafDB's support will promote sustainable and inclusive agroforestry, prevent deforestation and support biodiversity, while demonstrating how the private sector can improve rural livelihoods and climate resilience through innovative procurement models and training for farmers.
A $500,000 technical assistance grant managed by the AfDB will build capacity in climate-resilient agricultural practices for complex agroforestry systems and provide financial training to approximately 4,000 farmers, including at least 1,200 women.
As a sustainability-linked loan, this financing demonstrates AfDB and DSNG's commitment to a low-carbon and climate-resilient future. It is DSNG's first sustainability-related award, with price adjustments based on the achievement of pre-defined sustainability goals, including training for farmers to achieve Forest Stewardship Council forest management certification. The sustainability-related credit has received an independent second opinion according to standard industry principles.
"Sustainability is embedded in the way DSNG does business and we constantly strive to create value and positive impact. This sustainability-linked loan with AfDB is in line with our vision to be a responsible company for our people, our planet and our shared prosperity,” said Jenti Widjaja, Director of DSNG. "By incorporating sustainability measures into key aspects of our business, from our supply chain and operations to finance, we want to strengthen the alignment between creating value and positively impacting all our businesses and stakeholders in our timber business.
DSNG was founded in 1980 and is listed on the Indonesia Stock Exchange. In the wood segment of its business, the company operates two sawmills in Central Java with an installed capacity of 150,000 square meters per month for flooring and 9,000 cubic meters per month for panels. DSNG is one of Indonesia's leading forestry companies and Japan's largest exporter of wood products.
As we continue our efforts to end extreme poverty, the AfDB is committed to a prosperous, inclusive, sustainable and resilient Asia-Pacific region. It was founded in 1966 and has 68 members, of which 49 are from the region.
